Shares of Red Cat Holdings Inc. (RCAT) are skyrocketing more than 20% in pre-market trading on Thursday, following the announcement that its subsidiary Teal Drones' Black Widow System has been approved and added to the NATO Support and Procurement Agency (NSPA) catalogue. This approval marks a significant milestone for the company, potentially opening up new revenue streams in the defense sector.

The inclusion of the Black Widow system in the NSPA catalogue is based on a three-year contract with options for two additional years at the agency's discretion. This approval enables NATO member nations and eligible partners to procure the Black Widow drone system through NSPA-managed channels, including direct catalogue ordering and sponsored tenders. The move is expected to streamline the acquisition process for allied forces seeking U.S.-manufactured drone technology, potentially boosting Red Cat's sales and market presence.

The Black Widow is a small uncrewed aerial system (sUAS) that was previously selected by the U.S. Army as one of two vendors to manufacture systems for its Short Range Reconnaissance program. Weighing under 3 pounds with over 45 minutes of endurance, the drone is equipped with advanced EO/IR sensors for day and night operations. It is designed for tactical intelligence, surveillance, and reconnaissance missions, as well as perimeter security and overwatch operations. The system's features, including NDAA compliance, encrypted communications, and a modular payload architecture, make it an attractive option for defense and security applications, potentially driving future growth and revenue for Red Cat Holdings.