First Breach Inc. Common Stock LD Micro 20th Annual Main Event Conference

Good evening. Good afternoon. Thank you for being here. I'll be standing between you and the closing of the event, means the bar will be open when we get wrapped up, so we'll keep the questions and the proposals and the presentations all moving along smoothly. First Breach, an American-made defense technology company. It's based in Hagerstown, Maryland. We have some forward-looking statements because we were fortunate to do a direct public offering on August 20 of this year. We went ahead and put all the proper forward statements on this. We're a vertically integrated company. We make, manufacture ammunition and components for ammunition, and drones and drone components, trying to provide law enforcement and military and other significant parts of industry the tools to be successful in this new world. Quick overview of what we're doing. We're working in the small arms business.

You want to think 9 millimeter, 5.56, .223, the kind of ubiquitous rounds that everybody in the world wants to use. We're also involved in the expanding drone market. Here, we're in a Group 1 category size. Group 1 is the smallest of all drone sizes. They go from 1 to 7, and it's a quadcopter design and style. There's a really hot demand market right now. The demand signal for drones is everywhere. I was just at AUSA down in Washington, D.C., and there were at least 1,000 more vendors talking about drones than there were last year. It's also one that works well with us because we believe that at First Breach, ammo and drones are very similar. Ammo, it has to go bang when you pull the trigger. A drone has to work every time.

You cannot have a drone having a failure over a school or a problem. We believe that low-cost, scalable drones and ammo are some of the ways we can best help the United States bring back its core military industrial competency. Together, our relationships have made it easy for us to move forward in the drone marketplace by leveraging our ammunition experience, our energetics experience, our precision manufacturing, and our ISO 9001 plant. Currently, we have a single cap market set up with a single stock, no convertibles, nothing funky, super easy for people to get their hands around. 55 million shares, cash on hand, market capitalization about $47 million at today's price. Talk about our plant. This is one of the things that we're most proud of, is that the Hagerstown plant of First Breach. It's 300,000-plus square feet of manufacturing facility.

It's got 80,000 currently working with the ammunition and another 216,000 where we're going to be expanding into our drone manufacturing. In this picture, you'll see Jeff Low and Jordan Low, two founders of the company and my associates there, giving you the good crossed arm look. I like that. We are proud to say that our manufacturing facility is the home of the A-10 Warthog. Fairchild Republic made the Warthog there for many, many years. Every Warthog that exists went through that plant. Because it's a slice of Americana like that, it has the kind of facilities that really make precision manufacturing easier. We've got the ability to bring in power and substation. We've got all sorts of concrete floors that 13 to 15 inches that allow us to run our presses without any flex.

We've got 50-foot ceilings, the kind of thing that makes manufacturing a lot easier. We're happy to be in Hagerstown, and we just think that that section of the world really appreciates our defense tech attitude. Executive management starts as a family business. Jeff Low had years of experience in healthcare, and his son, Jordan, had experience in the IDF, fighting as a sniper. Rich Leimbach, our CFO, many, many years doing public accounting and public work. Myself, 45 years of experience in the sales and development of financial services. Ben Donivan, senior Vice President, we like to call him Big Ben because he's six foot five and 300 pounds. He is a fabulous resource for us. He's run multiple major industrial plants, and today he's got First Breach cranking 12-hour shifts, seven days a week. We've been working on our ammo side for a while.

We've been growing what's called a match grade line of ammunition. Match grade means that we're not just using SAAMI spec. SAAMI spec is the military spec for ammunition that's required for NATO and other countries. Match grade is a whole order of magnitude better than SAAMI spec. It's the kind of bullet that you would want to give to the US Olympic shooting team. In fact, we have. We had First Breach precision bullets being used in the Olympics in Paris, France. It is, for us, the only way to go into this business. This is a lot of legacy businesses out there. Companies have been around for 100 years making ammunition, and we're the new boy on the block. We wanted to make sure we had better accuracy, enhanced reliability. We were using our powder at the very highest quality.

We weren't having any stove piping or problems caused by nicks and dings. You can dial up the quality for your ammo if you want to, if you have the right equipment. We were lucky that we have the laser and the optic testing equipment that allows us to be able to produce world-class ammunition, and the results speak for themselves. Go to our website, you'll see over 25 articles from major gun magazines and papers around the world talking about the quality of First Breach ammo. We want to expand our product lines in the future beyond just 9 millimeter, .223/5.56. We'll be going into 7.62x39 and some other specialty SKUs, but it's not been the bread and butter for us.

The bread and butter is the most popular brands where we can use our scale and our ability to manufacture to meet the overwhelming demand signal that we're getting from the market. Since the Ukraine-Russian War started, the U.S. cut off Russian ammo to the U.S. market. That took 2 billion rounds out of the 8 billion rounds being consumed every year by U.S. consumers, not even talking about military, off the marketplace. That, along with the need now after five years of conflict between Russia and Ukraine for NATO to reload their armories with ammo, has made this a unique marketplace to be growing a new ammo business in. There is overwhelming need for 5.56 NATO, and prices have reflected that. Even though you would think that the market would be able to adjust for it hasn't.

We will continue to see going forward, I think, demand for ammo exceeding capacity to manufacture. We've worked also at expanding our ability to service that. We've gone from eight-hour shifts five days a week to 12-hour shifts seven days a week. Now we'll be going to 24 hours a day, seven days a week to try to get our plant running at maximum capacity so that we can meet the demand for 9 millimeter and 5.56. Now I'm going to pivot to where the future of warfare seems to be headed. Drones. Attritable, adaptable, American is what we like to say. An attritable drone is a drone that goes one way, sometimes known as a suicide drone. It goes, it blows up something. It goes, it hits a target.

It could be either a kinetic drone that hits it at 160 miles an hour, or it could be that it has an energetic attached to it, and that energetic is timed to explode near or around the other drone. In this space, we've focused on having in our Group 1 class of drones, we're focused on three types of product. One of them is an attritable drone that goes out and takes out a target with an energetic. The next one is what's called a mid-range interceptor. There, we're sacrificing some of our energetics and adding a little bit more in terms of battery, and the idea is to be able to go farther in distance at a higher speed, and once again, it's a counter-UAS drone.

Then you've got your standard counter-UAS drone that works with an energetic and takes out an opposing drone of some sort by blowing up nearby. If you look at the picture that we've got here, it's a sample of some of the design work we've been doing with our current Group 1 drone. Some of the key factors that make this a great design are the two camera lenses in the front. Many people have been showing single-lens drones that do not have the stereoscopic capacities to do SLAM architecture. SLAM architecture is when you get denied your GPS signal, or somebody cuts your fiber optic cable, or you can't talk to it with your FPV in any manner, and you need to remap where you are in real-time so that your software can get you to finish your objective or be able to return home safely.

To do that, it helps to have some stereoscopic camera, or to be at least a FLIR camera for nighttime and a regular camera for the daytime. Design-wise, this is an improved design over a lot of things we've seen in our competition. Below it, you'll also see what's called a weapons package. This is a drop bomb package versus one that might have tail fins and changeable, interchangeable weapon systems on the front. There are all sorts of designs that you've been seeing promulgated now in the Army and other military groups. The important thing to see is the commonality here. Everybody wants to have common delivery systems, and we want to be designing and bringing best practices with common design systems. The common design system here is a Picatinny rail system on the bottom in which you attach an ESAD.

An ESAD is electronic safety that allows you to remotely drop from the Picatinny rail, a bomb system. It's also one that typically for the U.S. will have a manual safety while it's in transportation. You can think of those little red flags that you pull off, that you see in the movies for the jet fighters, remove before flying or firing. That's your manual safety, but the ESAD's the important thing. The ESAD is something that we have the capacity to build at scale with our electronics and our component group, and it's important that you have a strong ESAD that allows you to put multiple UAS' on wings of helicopters and other craft because motherships will be delivering smaller drones in huge quantity. It's not just limit me to the life of my battery, I can go 40 kilometers.