rcat-20250930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File Number: 001-40202

Red Cat Holdings, Inc.

(Exact name of registrant as specified in its charter)


Nevada						88-0490034
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


15 Ave. Munoz Rivera, Ste 2200 San Juan, PR						00901
(Address of principal executive offices)						(Zip Code)

(800) 466-9152

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.001

RCAT

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 11, 2025, there were 119,371,139 shares of the registrant’s common stock outstanding.

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TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of Septemb er 30, 2025 and December 31, 2024 (Unaudited)	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	5
	Condensed Consolidated Statements Stockholders’ Equity for the Three and Nine Months Ended Septemb er 30, 2025 and 2024 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited)	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	30
ITEM 4.	Controls and Procedures	30

PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	32
ITEM 1A.	Risk Factors	32
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
ITEM 3.	Defaults Upon Senior Securities	32
ITEM 4.	Mine Safety Disclosures	32
ITEM 5.	Other Information	32
ITEM 6.	Exhibits	33

SIGNATURES		34

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains certain forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “believes,” “will,” “expects,” “anticipates,” “estimates,” “predicts,” “potential,” “continues,” “intends,” “plans” and “would” or the negative of these terms or other comparable terminology. For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, and plans are all forward-looking statements. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:

•the market and sales success of our existing and any new products;

•our ability to raise capital when needed and on acceptable terms;

•our ability to make acquisitions and integrate acquired businesses into our company;

•our ability to attract and retain management;

•the intensity of competition;

•changes in the political and regulatory environment and in business and economic conditions in the United States and globally;

•changes in macroeconomic conditions, including inflation, interest rates, and geopolitical conflicts;

•the imposition or increase of tariffs and other trade barriers that could impact the cost of raw materials, components, and finished goods;

•delays or disruptions in our supply chain due to global trade restrictions or political instability;

•fluctuations in customer demand in response to broader economic conditions; and

•government shutdowns, which could adversely impact any existing programs, including the timely payment of prior shipment, as well as receipt of future orders;

All of our forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.

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This Quarterly Report on Form 10-Q may include market data and certain industry data and forecasts, which we may obtain from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third-party sources. Given these uncertainties, readers of this Quarterly Report on Form 10-Q are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

All references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us,” or “our,” are to Red Cat Holdings, Inc., a Nevada corporation, including its wholly owned consolidated subsidiaries, which include Skypersonic, Inc. (“Skypersonic”), Teal Drones, Inc. (“Teal”), Red Cat Propware, Inc. (“Propware”), FW Acquisition, Inc. (“FlightWave”), Blue Ops, Inc. ("Blue Ops"), and UAVPatent Corp.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RED CAT HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


	September 30, 2025		December 31, 2024

ASSETS
Current assets
Cash	$	206,425,996	$	9,154,297
Accounts receivable, net	6,106,951		489,316
Inventory	22,642,051		12,950,941
Prepaid inventory	7,953,616		641,959
Prepaid expenses and other current assets	5,673,884		2,561,744
Total current assets	248,802,498		25,798,257

Goodwill	17,671,065		17,671,065
Intangible assets, net	7,294,798		8,453,068
Property and equipment, net	2,634,486		1,880,709
Other long-term assets	1,185,813		309,823
Operating lease right-of-use assets	8,435,706		1,491,345
Total long-term assets	37,221,868		29,806,010

TOTAL ASSETS	$	286,024,366	$	55,604,267

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	2,974,836	$	2,049,519
Accrued expenses	6,192,798		1,240,115
Debt obligations	350,000		350,000
Contract liabilities and deposits	467,914		227,484
Operating lease liabilities – short term	550,020		311,532
Convertible notes payable	13,351,000		—
Total current liabilities	23,886,568		4,178,650

Deferred income taxes	694,562		—
Operating lease liabilities	8,169,367		1,306,064
Total long-term liabilities	8,863,929		1,306,064

Total liabilities	32,750,497		5,484,714
Commitments and contingencies (Note 18)

Stockholders’ equity
Series B preferred stock, $0.001 par value - shares authorized 4,300,000; issued and outstanding 4,676 and 4,676	47		47
Common stock, $0.001 par value - shares authorized 500,000,000; issued and outstanding 118,162,270 and 85,215,136	118,162		85,215
Additional paid-in capital	430,319,122		174,778,994
Accumulated deficit	(177,163,462)		(124,744,703)
Total stockholders’ equity	253,273,869		50,119,553
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	286,024,366	$	55,604,267

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RED CAT HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Revenues	$	9,646,392	$	1,292,447	$	14,494,631	$	14,326,145

Cost of goods sold	9,008,890		1,684,410		14,332,485		13,329,100

Gross profit (loss)	637,502		(391,963)		162,146		997,045

Operating Expenses
Research and development	5,968,131		1,879,486		12,998,991		4,838,004
Sales and marketing	2,984,677		1,968,441		9,487,010		5,582,469
General and administrative	9,215,783		4,108,844		20,331,980		9,931,624
Impairment loss	—		93,050		—		506,049
Total operating expenses	18,168,591		8,049,821		42,817,981		20,858,146
Operating loss	(17,531,089)		(8,441,784)		(42,655,835)		(19,861,101)

Other (income) expense
Convertible notes payable fair value adjustment	1,451,996		—		12,939,387		—
Gain on extinguishment of convertible notes payable	(2,448,328)		—		(2,448,328)		—
Interest (income) expense, net	(771,101)		17,166		(980,927)		39,292
Loss on sale of equity method investment	—		4,008,357		—		4,008,357
Gain on divestiture of consumer segment	—		—		—		(9,642,428)
Impairment on equity method investment	—		—		—		11,353,875
Equity method loss	—		—		—		1,237,768
Other income, net	(441,770)		(33,589)		(441,770)		(856,605)
Total other (income) expense	(2,209,203)		3,991,934		9,068,362		6,140,259
Loss from continuing operations before provision for income taxes	(15,321,886)		(12,433,718)		(51,724,197)		(26,001,360)
Provision for income taxes	694,562		—		694,562		—
Net loss from continuing operations	(16,016,448)		(12,433,718)		(52,418,759)		(26,001,360)

Loss from discontinued operations	—		—		—		(1,373,457)
Net loss	$	(16,016,448)	$	(12,433,718)	$	(52,418,759)	$	(27,374,817)

Loss per share - basic and diluted
Continuing operations	$	(0.16)	$	(0.16)	$	(0.57)	$	(0.35)
Discontinued operations	—		—		—		(0.02)
Loss per share - basic and diluted	$	(0.16)	$	(0.16)	$	(0.57)	$	(0.37)

Weighted average shares outstanding - basic and diluted	99,581,172		75,743,971		92,127,345		74,732,056

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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RED CAT HOLDINGS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Series B Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Equity
	Shares	Amount		Shares	Amount
Balances, December 31, 2023	4,676	$	47	74,166,262	$	74,166	$	123,125,007	$	(71,434,754)	$	4,621	$	51,769,087

Stock based compensation	—	—		—	—		805,634		—		—		805,634

Vesting of restricted stock units	—	—		116,247	116		(9,767)		—		—		(9,651)

Net loss	—	—		—	—		—

SEC Form 10-Q filed by Red Cat Holdings Inc.