Unusual Machines/UMAC

Unusual Machines Inc. announced that its Fat Shark Aura First-Person View (FPV) camera has been added to the U.S. Defense Department's Defense Innovation Unit's Blue UAS (unmanned aircraft system) Framework.

Federal agencies use the framework to purchase secure, trusted products that meet U.S. requirements. The company said in a release the Fat Shark Aura FPV camera is the only camera on the Blue UAS list purpose-built for FPV applications, "providing a high-performance, NDAA (National Defense Authorization Act)-compliant option for defense and government users."

The camera is the latest Unusual Machines product to join the Blue UAS framework. Already listed are its Rotor Riot Brave F7 Flight Controller and the Brave 55A ESC.

"We remain committed to providing a complete suite of NDAA-compliant FPV solutions for both commercial and defense applications," said Chief Executive Officer Allan Evans. "We are getting closer to having a Blue-certified option for every covered component required to build an FPV drone. A video transmitter and command link for FPV drones are the last two parts we need to finish."

The Fat Shark Aura FPV camera is equipped with a SONY 1/3-inch CMOS image sensor, offering 1200TVL resolution and Wide Dynamic Range (WDR) processing for excellent image clarity and low-light performance, the company said.

Unusual Machine believes that this advanced feature set "ensures a superior flying experience for both recreational and professional drone pilots," Unusual Machines has said.

Working Toward Approval for Other Components

Unusual Machines said it is now working toward Blue UAS approval for the remaining additional key drone components.

"We have enjoyed working with DIU (the Department of Defense's Defense Innovation Unit) to review and certify multiple FPV components," UMAC Chief Operating Officer Drew Camden said. "Their feedback has helped us refine our designs early in development, allowing us to proactively address compliance considerations. Having this level of collaboration has helped us streamline bringing cost-effective and NDAA-compliant FPV technology to market."

Headquartered in Florida, the company manufactures and sells drone components for defense, commercial, and recreational use. It owns two brands it acquired from partner Red Cat Holdings Inc. (RCAT:NASDAQ). One is Fat Shark, specializing in FPV ultra-low latency video goggles for drone pilots. Another is Rotor Riot, a direct-to-consumer online store for small, acrobatic FPV drones and equipment.

Universal Machines said the Fat Shark Aura FPV camera is available for purchase through the Rotor Riot store.

Analyst: 'An Enormous New Market'

According to a research report by Analyst Barry M. Sine initiating coverage of the company on February 19, China's DJI dominates the drone import market with an estimated US$4 billion in global revenue.

Sine, who gave Universal Machines' stock a Buy rating with a US$20 price target, noted the critical need of sourcing non-Chinese components and said existing and proposed laws would create "an enormous new market" for drones and components domestically.

"The growth plan is to leverage the enormous global demand growth for drone parts and become a components supplier with revenue in the hundreds of millions of dollars the same way German manufacturer Bosch is a supplier of high-end components (such as fuel injection systems) to global automakers," Sine wrote.

Sine noted that "using conservative assumptions, we believe the company get to US$150 million in components revenue, while we model US$40 million for 2026."

"The company has a rock-solid balance sheet which we estimate will have no debt and about US$7 million cash after a surge in the share price upon the announcement of Donald Trump Jr. as an advisor allowed the company to eliminate debt and convert its warrants," the analyst wrote. "The December balance sheet should show dramatic improvement with the full effects in the March balance sheet."

UMAC's stock experienced a major surge in December, Sine pointed out.

"The shares have settled in and have found technical support above the US$10 level, so we think this represents a good entry point for new investors," he wrote. "Looking ahead, we think the company should exceed fourth-quarter revenue estimates and we expect some sizable order announcements for its growing line of drone components."

*Technical Analyst Clive Maund wrote on December 12, 2024, that the stock looked attractive again and appeared ready to move higher.

"Fundamentally, the company is in the right place at the right time as it is a drone company, and to put it mildly, this is a growth industry with demand exploding," in large part due to increasing global conflicts, he added.

Industry Due for 'Explosive Growth'

Sine with Litchfield Hills noted there are many ways drones are used besides defense, including in the enthusiast/racing market, the movie and TV production market, agriculture, logistics and delivery, energy and mining, law enforcement, and construction.

"Drones range from small toys available at retailers such as Walmart and Amazon.com for under US$50 to the military’s General Atomics MQ-9 Reaper which sells for $32 million," the report noted. "Mid-sized commercial and military drones sell for around US$30,000."

Sine said such a wide variation of uses and definitions makes it difficult to truly estimate the entire industry's size but said that the firm does "agree with the consensus that the industry is due for explosive growth."

In the U.S. between now and 2034, demand for autonomous drones is projected to expand at a 19.7% compound annual growth rate (CAGR), and demand for fixed-wing drones should see a 19.1% CAGR, according to Fact.MR.

The global military defense drone industry is also on a growth trajectory, reported Grand View Research. By 2030, this market's revenue is projected to double from where it is now, hitting US$88 billion from US$40.5 billion. During this forecast period, a 13.9% CAGR is expected. Last year, North America generated the most revenue in this sector.

Ownership and Share Structure

About 11.1% of the company is owned by management and insiders, UMAC said. The rest, 88.9%, is retail.

Unusual Machines has 15.12 million outstanding shares and 13.08 million free float traded shares. Its market cap is US$173.45 million. Its 52-week high and low share prices are US$23.62 and US$0.98 per share, respectively.