Red Cat (RCAT) – FOIAs Reveal Key Army Contract Way Smaller Than Claimed; More Hype & Chinese Parts Exposed; Guidance Miss Coming

• Army Revealed Contract 60% Smaller Than Red Cat Promised Investors – Only $12.9 million
  • Army Also Confirmed Multiple Vendors Still Competing for its Short Range Reconnaissance (SRR) Program
• FANG Exposed as Nothing More Than a “Marketing Concept” Made with CHINESE Parts
  • Army Said FANG Didn’t Even Apply for Recent Competition
  • FANG Video Also Exposes New Drone is just from Another Company – Logos Don’t Lie
• Hyped Entry into NATO Catalogue – Red Cat Drone was Actually Approved 2 Years Ago
• Facing Large Guidance Miss Because of Small Army Deal

We are short Red Cat (RCAT), a drone company that uses paid stock promotion, and we believe that management has now been caught red-handed misleading investors about:

• Key Army Contract is ~60% smaller than claimed
• Legal documents expose new drone, FANG, as “marketing concept”
  • Product images expose FANG made with Chinese Parts & another company’s old drone
• RCAT drones have been in NATO’s catalogue for ~2 years and have NOT generated significant sales

Red Cat’s stock took off on the hopes of sales to NATO countries and excitement over a new product, FANG. This was right after management promised investors the Army SRR LRIP contract would allow them to still hit guidance.

Army LRIP Contract is ~60% Smaller Than Management Promised

We reached out to the Army after Red Cat’s LRIP announcement to find the true size of the LRIP contract. Jeff Thompson originally claimed it would be >$55 million and allow Red Cat to hit the lower end of its $80-$120 million guidance for FY 2025. Sell-side analysts estimate LRIP is currently worth >$30 million.

Army officials told us the Low-Rate Initial Production contract is only worth $12.9 million.

We believe that Red Cat has a Big Guidance Miss Coming.

Red Cat First Joined NATO Catalogue 2 Years Ago & Still NO Significant Sales

We discovered the inclusion into the NATO catalogue is essentially old news – Red Cat’s drones first entered the NATO catalogue back in November 2023. That was 2 years ago! Red Cat has virtually no disclosed NATO sales to show from it.

Red Cat’s New FANG Drone = Another Company’s Old Drone? Key Parts Exposed as Made in CHINA!

Meanwhile, legal documents say that the new FANG product should be considered nothing more than “a marketing concept.” FANG evidently wasn’t even ready in August 2025 to be demonstrated at an Army drone fly-off event. The new marketing video from Red Cat does not even bother to hide that FANG is actually primarily another company’s drone, from UMAC’s Rotor Riot. Photos of the FANG drone taken on Wednesday show that key components are made in CHINA!

It reminds us of 2 EV implosions ELMS & NKLA which both are now worth $0. But at least ELMS removed the logos of their Chinese manufacturer and Nikola covered up their non-proprietary tech with masking tape.

When a paid stock promotion jumps on hype of future contracts, slapped together prototypes and misleading statements about their actual contracts it presents a great opportunity to sell the stock.

Fuzzy Panda Research is Short Red Cat (RCAT)

Fuzzy Panda Research and Fuzzy Panda “Affiliates” are short securities of Red Cat (RCAT). Please see additional disclosures at the end of report and in our terms of service.

Army Deal Only $12.9 million = Investors Getting LRIP’d Off

• ~60% Smaller than Management Claimed
• Army Confirmed Multiple Vendors Still Competing for Next SRR Contract

Management told investors that the Army SRR contract was enough to hit the lower end of their guidance for FY 2025 of $80-120 million. It isn’t. It’s nowhere near the >$30 million or >$55 million that management has promised in the past. Army officials told us the reality. The Army confirmed LRIP SRR contract is only for ~$12.9 million.

That is at least 60% smaller than management told investors.

Quick Background – In November 2024, Red Cat announced their subsidiary Teal Drones winning a contract for the Army SRR (Short-Range Reconnaissance) drone contract. Red Cat claimed it was a “long-term contract” and that it was “sole-sourced.” The reality was that at the time Red Cat didn’t even have a signed contract. It then took 9 months for them to get the initial LRIP (low rate of initial production) signed.

Red Cat’s CEO even said in their August earnings call that the LRIP contract was enough to hit the lower end of their guidance for FY 2025 of $80-120 million. We believe they have no shot of hitting guidance.

Misleading Investors about Army LRIP Contract

Army Revealed it is Only for $12.9m

We do not see how it is possible for Red Cat to hit even the lowest end of its guidance with a mere $12.9 million Army contract. Jeff Thompson told investors in August that Red Cat would deliver 690 systems for LRIP and that systems were priced at $45,000. Investors have done Jeff’s basic math and believe the LRIP deal is worth $31.05 million or more. According to the Army, it’s worth only $12.9 million.

The math does not work:

• Red Cat’s total revenue to date was $4.9 million. Annualized that’s ~$10 million.
• The Army says Red Cat’s LRIP contract is worth $12.9 million.
• That leaves Red Cat’s estimated revenue ~$57 million short of the low end of their $80-$120 million guidance.

Army Confirmed Multiple Vendors Competing for Future SRR Deal

The Army told a Fuzzy Panda Research investigator that it was looking at other vendors than just Red Cat-Teal Drones for the next award of the SRR contract.

“This [contract] is only low-rate initial production … there will be another contract awarded … but it is not necessarily going to be awarded to Teal Drones. There are other vendors that are still competing”

~ Army official speaking about Army SRR Tranche 2 Contract

The Army’s commitment to use multiple vendors is also blatantly evident because competitor Skydio delivered “hundreds of drones” to the Army for the SRR contract back in May 2025. Skydio delivered drones for Army SRR Tranche 2 BEFORE Red Cat.

Contrast the Army’s statement with what Thompson had to say during the Aug. 14 earnings call:

Q: Jeff, where do you see Red Cat this time next year?

A: “All the stuff we’re talking about is only Black Widow [the Army drone] … $148 million plus like $65 million for SRR”

Thompson was referring to the Army’s preliminary budget requests for next year. But nothing in those requests says what company will be supplying the drones, and the Army told us that it has not yet made any decisions on the next contract to be awarded for the SRR T2 program.

Is FANG Actually Snake Oil?

FANG Drone Exposed as Another Company’s Drone with Chinese Components; Failed to Compete in Recent Army Test

• RCAT’s Own Marketing Video Exposes FANG as a Cheap Rotor Riot Drone
• Key Components Exposed as Made in China!?
• Legal Documents Reveal FANG Drone Was Just a “Marketing Concept”
• Red Cat Did NOT Participate in Army’s Aug 2025 Flyoff – Employee said RCAT had “Nothing Like” What Was Promised

Documents from a legal complaint revealed the truth about Red Cat’s newly released FANG drone. Red Cat lacked a FANG product as of August 2025. The legal filings state that FANG was a failed project that had been suspended in the fall of 2024. It called FANG a “marketing concept.”

This matters because Thompson has been known to overhype potential revenue impact from products. Earlier this year, Thomspon even claimed Red Cat would “probably sell a lot” of FANG drones this year back in Jan 2025.

We think the hopes of FANG sales anytime soon is just another Thompson Tall Tale.

• Red Cat’s own marketing video shows FANG as another company’s drone.
• Appears that marketing Photos Expose Key Components are “Made in China”
• FANG did NOT even apply to compete at an Army Event in August 2025.

FANG’s Own Marketing Video Exposes It is a ~$700 Rotor Riot Drone

Why spend years on R&D making a unique drone when you can buy a $650-$750 Rotor Riot drone, tie a bomb to it and rename it FANG F7? Red Cat’s own marketing video accidentally shows that the new FANG drone is actually just a Rotor Riot drone.

It reminds us of ELMS, an electric vehicle company that went to $0, after we exposed ELMS was actually importing Chinese EV’s and slapping the ELMS name on them. At least ELMS would remove the Chinese company’s logo from their own marketing videos.

Red Cat’s marketing videos haven’t even bothered to hide that FANG is a renamed Rotor Riot drone.

They are using another company’s drone that doesn’t even have good reviews.

Photos Show FANG’s Key Components are Chinese Parts

A photo of the FANG taken at a drone competition on Oct.9 in North Carolina and posted on LinkedIn by Red Cat itself clearly show motors made in China by a Chinese company called BrotherHobby.

Motors are Made in China by BrotherHobby

Antennas Appear to be Made in China by CaddxFPV

Red Cat also posted a promotional video on Oct.8 that showed a FANG with what appears to be a Chinese made antenna.

The Controller Too?!?

Red Cat’s website also shows a FANG controller that says “RadioMaster” and appears to be identical to the $78 RadioMaster controller that is made in China.

Bill of Lading Show Rotor Riot Importing Drone Motors From China

Why is a company that is betting its future on Pentagon business using Chinese parts?

Army Says Red Cat’s FANG Drone DID NOT EVEN Apply for August Drone Competition

Craig Martin, the UAS Program Integrator for the Army, said Red Cat did NOT compete in an August 2025 flyoff. There were 100+ respondents, but Red Cat apparently did not even have a product ready in time to enter the event. Red Cat missed the boat on the Army flyoff.

Employees Reportedly Said in August 2025 Red Cat Didn’t Have a Competitive Product in FANG’s category

A Red Cat employee even admitted they “had nothing like” Vector’s Hammer FPV drone and even inquired about joining the competitor that makes it, Vector Defense.

Former CTO Says No Resources Spent on FANG & Thompson Saw No Money in FPV Market

According to George Matus, Red Cat’s former CTO, Red Cat spent no resources on developing FANG while he was there. Jeff Thompson didn’t believe there was money in FPV drones!

FANG Background – based on the legal filings, FANG was originally supposed to be a white-labeled Orqa FPV drone. But Orqa decided to not proceed with their Red Cat partnership. Legal docs say that Red Cat viewed Orqa as building the best first-person drone, but Orqa wanted Red Cat to pay millions to license the product, and Red Cat couldn’t afford it. As a result, Thompson was left with the option of partnering with/purchasing drones from Unusual Machines (UMAC) – a company also founded by Thompson in which he owns shares.

Red Cat revealed their FANG drone on Oct 8 and the specs say the drone uses UMAC’s propulsion system and UMAC announced a $800k purchase order from Red Cat. Red Cat seems to have accidentally exposed themselves via their marketing video which shows the FANG product is a white-labeled $650 Rotor Riot drone that they tied a bomb to. RCAT didn’t even bother to remove the Rotor Riot label.

We wonder if they RCAT considered naming the new drone Snake Oil instead of FANG?

NATO False Hopes – Red Cat Has Been in NATO Catalogue since 2023 But Still De Minimis Sales

Red Cat’s stock has soared recently on the hopes of potential NATO contracts after management press released their inclusion in the NATO catalogue.

We got access to the NATO catalogue and uncovered that Red Cat drones were for sale in the NATO catalogue since 2023!

Red Cat’s Drones Approved for Sale in NATO Catalogue Back in 2023

We believe that Red Cat’s NATO sales dream will be proven to just be more hype. We think management is trying to fly away from the truth regarding their NATO struggles to date. Red Cat’s Drone system was initially approved for sale by NATO NPSA back in November 2023!

How you can view Red Cat’s NATO approved products (that don’t generate meaningful sales) yourself:

• Set up a NATO NSPA account here:
• Access the NATO Master Catalogue
• Do an Advanced Search for Teal Drones (NCAGE #83WJ7) & Red Cat (NCAGE #94P56)

You’ll discover that Red Cat drones have been available for NATO countries to buy since 2023. So why is no one buying them?

>200 Drone Systems Approved in NATO Database

Searching the NATO catalogue (NMCRL) database you will also find that there are 231 drone aircrafts listed and 210 drone systems by multiple vendors. We believe Red Cat will continue to have a difficult time distinguishing themselves and getting NATO countries to buy their drones.

NATO Drone Hype – Feels More Like a Participation Trophy

Within the NATO NSPA database we uncovered that Red Cat’s Teal Drones subsidiary submitted bids August 2024 (pg 23) for NATO’s “Nano category UAS” last year along with 6 other companies (only 5 of which appear to be actual drone companies). NATO signed framework agreements with 4 of them. The contest basically turned into a child’s birthday party where almost everyone got a participation trophy.

A NATO framework agreement essentially means that NATO NSPA’s has already negotiated guaranteed terms and pricing on the drones, which then is available for NATO members to purchase at those set discounted rates. We believe that the reason Red Cat didn’t press release getting the framework agreement is because the agreement comes with no actual sales attached to it.

While Red Cat’s “participation ribbon” looks nice on the wall and in a press release, it doesn’t add up to much in the field. The NATO sales have still all been going to Skydio.

Skydio Supplies 15 NATO Countries & Recently Won Other Large Orders to Supply NATO Countries:

Skydio, a private drone competitor, has managed to win the actual NATO sales. Skydio supplies 15 NATO member countries.

Skydio has also won the other major orders announced by NATO countries. Many have publicly chosen Skydio, so far none have gone with Red Cat/Teal Drones.

• Spain – Feb 2025 – €18 million deal to supply drones to Spain’s defense ministry.
• Norway – July 2025 – $9.4 million deal to supply Norway’s Armed Forces.  

It’s not surprising that Skydio has been significantly more successful given that Skydio also has:

• A local presence with an European R&D center
• European partners to help train NATO members via Cobb’s BV
• Proven ability to deliver drones quickly.

A Fuzzy Panda is Short a Red Cat (RCAT)