Red Cat Holdings (NASDAQ:RCAT) +36.4% in early trading Wednesday after disclosing a day ago that its Teal Drones subsidiary was selected as the winner of the U.S. Army's Short Range Reconnaissance Program of Record, supplying its portable drones to Army infantry platoons to expand their reconnaissance abilities.

"The goal of the program is to provide a small, rucksack portable, fully encrypted small, unmanned aircraft system that provides all Army infantry platoons with situational awareness beyond the next terrain," the company said.

Teal has almost no record as a defense supplier, but now it is poised to become the recipient of potentially the largest-ever U.S. military contract for small uncrewed aircraft, according to The Wall Street Journal.

Red Cat (RCAT) said the SRR contract selection builds on significant momentum following the company's acquisition of FlightWave Aerospace, the announcement of the ARACHNID family of systems, and the creation of the Red Cat Futures Initiative.

Also, Palladyne AI (PDYN) +15% in early trading after announcing an expanded partnership with Red Cat (RCAT) to encompass joint sales and marketing.