Red Cat Holdings, Inc.
For the period ended Sep 30, 2025. Filed Nov 13, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 13, 2025
RCAT$4.04+18.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001641172-25-024075
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-13.
0000748268-25-000010
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 61 previous paragraphs and 59 current paragraphs.
36 unchanged; 18 reworded; 4 added; 7 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
General and administrative expenses totaled $9,215,783 during the 2025 period compared to $4,108,844 during the 2024 period, representing an increase of $5,106,939 or 124%. The increase was mainly due to payroll expenses and stock based compensation as a result of a higher headcount.
Current report
Consolidated revenues totaled$14,494,631 during the nine months ended September 30, 2025 (or the “2025 period”) compared to$14,326,145 during the nine months ended September 30, 2024 (or the “2024 period”) representingan increase of$168,486, or 1%. The increase related to higher product revenue as the Company started delivering drones to the US Army under the SRR program.
Current report
Research and development expenses totaled $12,998,991 during the 2025 period compared to $4,838,004 during the 2024 period, representing an increase of $8,160,987, or 169%. The increase was primarily due to an increase in professional fees for continued product development and higher payroll expenses due to higher headcount across all entities.
Current report
General and administrative expenses totaled $20,331,980 during the 2025 period compared to $9,931,624 during the 2024 period, representing an increase of $10,400,356 or 105%. The increase was mainly due to payroll expenses and stock based compensation as a result of a higher headcount across all entities.
Removed paragraphs (7)
Previous report
Research and development expenses totaled $3,598,267 during the 2025 period compared to $289,016 during the 2024 period, representing an increase of $3,309,251, or more than 11 times. The increase was primarily due to a higher headcount, including the addition of employees from the FlightWave acquisition.
Previous report
General and administrative expenses totaled $6,235,749 during the 2025 period compared to $2,738,285 during the 2024 period, representing an increase of $3,497,464 or 128%. The increase was mainly due to a higher headcount, including the addition of employees from the FlightWave acquisition. In anticipation of winning the production contract under the Army’s Short Range Reconnaissance program of record, the Company increased investment in personnel necessary to fulfill the contract as well as anticipated demands for future products.
Previous report
Consolidated revenues totaled $4,848,239 during the six months ended June 30, 2025 (or the “2025 period”) compared to $13,033,698 during the six months ended June 30, 2024 (or the “2024 period”) representing a decrease of $8,185,459, or 63%. The decrease related to lower product revenue as the Company has begun shifting manufacturing focus from the Teal 2 to the Black Widow.
Previous report
General and administrative expenses totaled $11,116,197 during the 2025 period compared to $5,822,780 during the 2024 period, representing an increase of $5,293,417 or 91%. The increase was mainly due to a higher headcount, including the addition of employees from the FlightWave acquisition. In anticipation of winning the production contract under the Army’s Short Range Reconnaissance program of record, the Company increased investment in personnel necessary to fulfill the contract as well as anticipated demands for future products.
Previous report
Recently Issued Accounting Pronouncements
Previous report
We have implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations, except as follows:
Previous report
In November 2024, the FASB issued guidance expanding disclosure requirements related to certain income statement expenses. The amendments require tabular disclosure of certain operating expenses disaggregated into categories, such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The amendments are effective for our fiscal year ending December 31, 2027 and may be applied retrospectively. While the Company is still evaluating the specific impacts and adoption method, the Company anticipates this guidance will have a significant impact on our consolidated financial statement disclosures.
Reworded paragraphs (18)
Previous wording
Consolidated revenues totaled $3,218,577 during the three months ended June 30, 2025 (or the “2025 period”) compared to $6,419,669 during the three months ended June 30, 2024 (or the “2024 period”) representing a decrease of $3,201,092, or 50%. The decrease related to lower product revenue as the Company has begun shifting manufacturing focus from the Teal 2 to the Black Widow.
Current wording
Consolidated revenues totaled$9,646,392 during the three months ended September 30, 2025 (or the “2025 period”) compared to$1,292,447 during the three months ended September 30, 2024 (or the “2024 period”) representingan increase of$8,353,945, or 646%. The increase related to higher product revenue as the Company started delivering drones to the US Army under the SRR program.
Previous wording
Consolidated gross profit totaled $375,054 during the 2025 period compared to a gross profit of $267,804 during the 2024 period representing an increase of $107,250, or 40%. On a percentage basis, gross profit was 12% during the 2025 period compared to a gross profit of 4% during the 2024 period. The gross profit increase was primarily due to lower warranty expenses in the 2025 period compared to the 2024 period.
Current wording
Consolidated gross profit totaled$637,502 during the 2025 period compared to a gross loss of$391,963 during the 2024 period representingan increase of$1,029,465. On a percentage basis, gross profit was 7% during the 2025 period compared to a gross loss of 30% during the 2024 period. The gross profit increase was primarily due to higher revenue and lower warranty expense for the Company's product mix in the 2025 period compared to the 2024 period.
Previous wording
Research and development expenses totaled $7,030,860 during the 2025 period compared to $2,958,518 during the 2024 period, representing an increase of $4,072,342, or 138%. The increase was primarily due to a higher headcount, including the addition of employees from the FlightWave acquisition.
Current wording
Research and development expenses totaled $5,968,131 during the 2025 period compared to $1,879,486 during the 2024 period, representing an increase of $4,088,645 or 218%. The increase was primarily due to an increase in professional fees for continued product development and higher payroll expenses due to higher headcount across all entities.
Previous wording
Sales and marketing costs totaled $3,187,585 during the 2025 period compared to $2,203,522 during the 2024 period, representing an increase of $984,063 or 45%. The increase was driven by higher payroll expenses due to an increased headcount.
Current wording
Sales and marketing costs totaled $2,984,677 during the 2025 period compared to $1,968,441 during the 2024 period, representing an increase of $1,016,236 or 52%. The increase was driven by higher payroll and stock based compensation expenses due to an increased headcount.
Previous wording
During the 2025 period, we incurred stock-based compensation costs of $2,035,061 compared to $958,406 in the 2024 period, resulting in an increase of $1,076,655 or 112%.
Current wording
During the 2025 period, we incurred stock-based compensation costs of $3,621,387 compared to $1,277,177 in the 2024 period, resulting in an increase of $2,344,210 or 184%.
Previous wording
Other expense totaled $632,413 during the 2025 period compared to $2,784,001 during the 2024 period, representing a decrease of $2,151,588 or 77%. This decrease is primarily related to a loss of $2,295,000 recognized in the 2024 period on the impairment of the investment in Unusual Machines, Inc.
Current wording
Other income totaled $2,209,203 during the 2025 period compared to other expense of $3,991,934 during the 2024 period, representing a decrease of 6,201,137 or 155%. This decrease is primarily related to a loss of $4,008,357 recognized in the 2024 period on the impairment of the investment in Unusual Machines, Inc. In the 2025 period, a gain of $2,448,328 was recognized on extinguishment of convertible notes payable.
Previous wording
Net loss from continuing operations totaled $13,278,960 for the 2025 period compared to $8,160,019 for the 2024 period, resulting in an increase of $5,118,941 or 63%.
Current wording
Net loss from continuing operations totaled $16,016,448 for the 2025 period compared to $12,433,718 for the 2024 period, resulting in an increase of $3,582,730 or 29%.
Previous wording
Discussion and Analysis of the Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024
Current wording
Discussion and Analysis of the Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
Previous wording
Consolidated gross loss totaled $475,356 during the 2025 period compared to a gross profit of $1,389,008 during the 2024 period representing a decrease of $1,864,364, or 134%. On a percentage basis, gross loss was 10% during the 2025 period compared to a gross profit of 11% during the 2024 period. The gross loss in the 2025 period was due to inventory write-offs occurring as we transition sales and production from the Teal 2 to the Black Widow.
Current wording
Consolidated gross profit totaled $162,146 during the 2025 period compared to a gross profit of $997,045 during the 2024 period representing a decrease of $834,899, or 84%. On a percentage basis, gross profit was 1% during the 2025 period compared to a gross profit of 7% during the 2024 period. The gross loss in the 2025 period was due to inventory write-offs occurring as we transition sales and production from the Teal 2 to the Black Widow.
Previous wording
Sales and marketing costs totaled $6,502,333 during the 2025 period compared to $3,614,028 during the 2024 period, representing an increase of $2,888,305 or 80%. The increase was driven by higher payroll expenses due to an increased headcount and an increase in tradeshow attendance in efforts to spread awareness of new products and the Red Cat Futures Initiative.
Current wording
Sales and marketing costs totaled $9,487,010 during the 2025 period compared to $5,582,469 during the 2024 period, representing an increase of $3,904,541 or 70%. The increase was driven by higher payroll and stock based compensation expenses due to an increased headcount.
Previous wording
During the 2025 period, we incurred stock-based compensation costs of $3,634,033 compared to $1,764,042 in the 2024 period, resulting in an increase of $1,869,991 or 106%.
Current wording
During the 2025 period, we incurred stock-based compensation costs of $7,255,420 compared to $3,041,219 in the 2024 period, resulting in an increase of $4,214,201 or 139%.
Previous wording
Other expense totaled $11,277,565 during the 2025 period compared to $2,148,325 during the 2024 period, representing an increase of $9,129,240 or more than 4 times. This increase is primarily related to a fair value adjustment loss of $6,864,056 recognized in the 2025 period on the February 2025 Note to Lind, based on its fair value and loss on extinguishment of convertible notes payable of $4,623,335.
Current wording
Other expense totaled $9,068,362 during the 2025 period compared to other expense of $6,140,259 during the 2024 period, representing an increase of $2,928,103 or 48%. This increase is primarily related to a fair value adjustment loss of
Previous wording
Net loss from continuing operations totaled $36,402,311 for the 2025 period compared to $13,567,642 for the 2024 period, resulting in an increase of $22,834,669 or 168%.
Current wording
Net loss from continuing operations totaled $52,418,759 for the 2025 period compared to $26,001,360 for the 2024 period, resulting in an increase of $26,417,399 or 102%.
Previous wording
Net cash used in operating activities was $28,804,656 during the six months ended June 30, 2025 (or the “2025 period”) compared to net cash used in operating activities of $6,569,510 during the six months ended June 30, 2024 (or the “2024 period”), representing an increase of $22,235,146 or 338%. The increased use of cash primarily related to lower gross profit and higher cash based operating expenses compared to the 2024 period. Net cash used in operations, net of non-cash expenses, totaled $16,232,815 during the 2025 period, compared to $5,813,615 during the 2024 period, resulting in an increase of $10,419,200, or 179%. Net cash used related to changes in operating assets and liabilities totaled $8,635,160 during the 2025 period, compared to net cash provided of $1,184,517 during the 2024 period, representing a decrease of $9,819,677. Changes in operating assets and liabilities can fluctuate significantly from period to period depending upon the timing and level of multiple factors, including inventory purchases, vendor payments, and customer collections.
Current wording
Net cash used in operating activities was $52,656,680 during the nine months ended September 30, 2025 (or the “2025 period”) compared to net cash used in operating activities of $14,692,766 during the nine months ended September 30, 2024 (or the “2024 period”), representing an increase of $37,963,914 or 258%. The increased use of cash primarily related to lower gross profit and higher cash based operating expenses compared to the 2024 period. Net cash used in operations, net of non-cash expenses, totaled $20,094,751 during the 2025 period, compared to $11,135,324 during the 2024 period, resulting in an increase of $8,959,427, or 80%. Net cash used related to changes in operating assets and liabilities totaled $20,332,672 during the 2025 period, compared to net cash provided of $173,270 during the 2024 period, representing an increase of $20,505,942. Changes in operating assets and liabilities can fluctuate significantly from period to period depending upon the timing and level of multiple factors, including inventory purchases, vendor payments, and customer collections.
Previous wording
Net cash used by investing activities was $579,626 during the 2025 period compared to net cash provided by investing activities of $912,937 during the 2024 period, resulting in a decrease of $1,492,563 or 163%. During the 2025 period, proceeds from the divestiture of the consumer segment was $0 compared to $1,000,000 during the 2024 period.
Current wording
Net cash used by investing activities was $1,249,217 during the 2025 period compared to net cash provided by investing activities of $5,250,314 during the 2024 period, resulting in a decrease of $6,499,531. During the 2025 period, proceeds from the divestiture of the consumer segment was $0 compared to $1,000,000 during the 2024 period and proceeds from the sale of equity method investment was $0 compared to $4,400,000 during the 2024 period.
Previous wording
Net cash provided by financing activities totaled $86,160,460 during the 2025 period compared to net cash used in financing activities of $297,819 during the 2024 period. The increase relates to the proceeds from the issuance of common stock and convertible notes payable during the 2025 period.
Current wording
Net cash provided by financing activities totaled $251,177,596 during the 2025 period compared to net cash used in financing activities of $588,003 during the 2024 period. The increase relates to the proceeds from the issuance of common stock and convertible notes payable during the 2025 period.
Previous wording
At June 30, 2025, we reported current assets totaling $91,573,633, current liabilities totaling $24,129,516 and net working capital of $67,444,117. Cash totaled $65,930,475 at June 30, 2025. Inventory related balances, including pre-paid inventory, totaled $20,996,936.
Current wording
At September 30, 2025, we reported current assets totaling $248,802,498, current liabilities totaling $23,886,568 and net working capital of $224,915,930. Cash totaled $206,425,996 at September 30, 2025. Inventory related balances, including prepaid inventory, totaled $30,595,667.
Previous wording
Goodwill and Long-lived Assets – Goodwill represents the future economic benefit arising from other assets acquired in an acquisition that are not individually identified and separately recognized. We test goodwill for impairment in accordance with the provisions ofASC 350, Intangibles – Goodwill and Other,(“ASC 350”). Goodwill is tested for impairment at least annually at the reporting unit level or whenever events or changes in circumstances indicate that goodwill might be impaired. ASC 350 provides that an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if an entity concludes otherwise, then it is required to perform an impairment test. The impairment test involves comparing the estimated fair value of a reporting unit with its book value, including goodwill. If the estimated fair value exceeds book value, goodwill is considered not to be impaired. If, however, the fair value of the reporting unit is less than book value, then an impairment loss is recognized in an amount equal to the amount that the book value of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.
Current wording
Goodwill and Long-lived Assets – Goodwill represents the future economic benefit arising from other assets acquired in an acquisition that are not individually identified and separately recognized. We test goodwill for impairment in accordance with the provisions of ASC 350, Intangibles – Goodwill and Other, (“ASC 350”). Goodwill is tested for impairment at least annually at the reporting unit level or whenever events or changes in circumstances indicate that goodwill might be impaired. ASC 350 provides that an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if an entity concludes otherwise, then it is required to perform an impairment test. The impairment test involves comparing the estimated fair value of a reporting unit with its book value, including goodwill. If the estimated fair value exceeds book value, goodwill is considered not to be impaired. If, however, the fair value of the reporting unit is less than book value, then an impairment loss is recognized in an amount equal to the amount that the book value of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
$12,939,387 recognized in the 2025 period on the February 2025 Note to Lind, based on its fair value, offset by a gain on extinguishment of convertible notes payable of $2,448,328.