Red Cat Holdings, Inc.
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
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.
Jun 30, 2026 · Filed Aug 6, 2026
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 2026-03-31; filed 2026-05-07.
0001628280-26-032121
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001628280-26-054368
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 40 previous paragraphs and 53 current paragraphs.
27 unchanged; 12 reworded; 12 added; 1 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 6 previous and 11 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 (12)
Current report
Consolidated gross profit totaled$3.3 million during the 2026 period compared to gross profit of$0.4 million during the 2025 period, representingan increase of$2.9 million. On a percentage basis, gross profit was 16.1% during the 2026 period compared to gross profit of 11.6% during the 2025 period. The gross profit increase was primarily due to higher revenue and increased manufacturing efficiencies in the 2026 period compared to the 2025 period.
Current report
General and administrative expenses totaled $21.2 million during the 2026 period compared to $6.2 million during the 2025 period, representing an increase of $15.0 million or 241%. The increase was attributable primarily to higher payroll and related personnel costs resulting from increased headcount, higher stock-based compensation expense, and increased software and technology costs associated with corporate IT infrastructure and the Company's pursuit of Cybersecurity Maturity Model Certification compliance.
Current report
Other income totaled $3.4 million during the 2026 period compared to other expense of $0.6 million during the 2025 period, representing an increase of $4.0 million or 639%. This increase was attributable to the change in fair value and extinguishment of convertible notes payable, which resulted in a loss of $0.8 million during the 2025 period, which was not present during the 2026 period. Interest income also increased from $0.2 million during the 2025 period to $1.9 million during the 2026 period. Additionally, the Company recognized an unrealized gain on equity securities of $1.5 million in the 2026 period, which was not present during the 2025 period.
Current report
Discussion and Analysis of the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
Current report
Revenues
Current report
Consolidated revenues totaled$35.7 million during the six months ended June 30, 2026, or the “2026 period” compared to$4.8 million during the six months ended June 30, 2025, or the “2025 period,” representingan increase of$30.8 million, or 636%. The increase is attributable primarily to increased revenue associated with the scaling of drone deliveries to the U.S. Army and the commencement of drone deliveries to the Japan Ground Self-Defense Force.
Current report
Gross Profit
Current report
Operating Expenses
Current report
Stock-Based Compensation
Current report
During the 2026 period, we incurred stock-based compensation costs of $9.9 million compared to $3.6 million in the 2025 period, resulting in an increase of $6.2 million or 171%. This increase was driven by equity awards granted to new employees, as well as annual equity grants made to eligible employees as part of the Company's employee compensation program.
Current report
Other (Income) Expense
Current report
Net cash provided by financing activities totaled $249.4 million during the 2026 period compared to net cash provided by financing activities of $86.2 million during the 2025 period. This increase is attributable primarily to proceeds from the May Registered Direct Offering which was approximately $258.75 million, before deducting the underwriters’ fees and other offering expenses payable by the Company.
Removed paragraphs (1)
Previous report
Net cash provided by financing activities totaled $2.8 million during the 2026 period compared to net cash provided by financing activities of $14.7 million during the 2025 period. This decrease is attributable primarily to proceeds from issuance of convertible notes payable of $15.0 million received during the 2025 period which were not present in the 2026 period. This decrease was partially offset by proceeds from warrant exercises of $2.8 million during the 2026 period which were not present in the 2025 period.
Reworded paragraphs (12)
Previous wording
Consolidated revenues totaled$15.5 million during the three months ended March 31, 2026, or the “2026 period” compared to$1.6 million during the three months ended March 31, 2025, or the “2025 period” representingan increase of$13.9 million, or 849%. The increase is attributable primarily to increased revenue associated with the scaling of drone deliveries to the U.S. Army under the SRR program.
Current wording
Consolidated revenues totaled$20.2 million during the three months ended June 30, 2026, or the “2026 period” compared to$3.2 million during the three months ended June 30, 2025, or the “2025 period,” representingan increase of$17.0 million, or 527%. The increase is attributable primarily to increased revenue associated with the scaling of drone deliveries to the U.S. Army and the commencement of drone deliveries to the Japan Ground Self-Defense Force.
Previous wording
Research and development expenses totaled $8.0 million during the 2026 period compared to $3.4 million during the 2025 period, representing an increase of $4.5 million or 132%. The increase was attributable primarily to increased investment in engineering personnel costs, prototype development, testing, and other expenses associated with the development of new and enhanced drone platforms and related technologies.
Current wording
Research and development expenses totaled $14.2 million during the 2026 period compared to $3.6 million during the 2025 period, representing an increase of $10.6 million or 295%. The increase was attributable primarily to increased investment in engineering personnel costs, prototype development, testing, and other expenses associated with the development of new and enhanced drone platforms and related technologies.
Previous wording
Sales and marketing costs totaled $4.6 million during the 2026 period compared to $3.3 million during the 2025 period, representing an increase of $1.3 million or 38%. The increase was attributable primarily to higher payroll and related personnel costs associated with expanding our sales and marketing team to support increased business development and customer engagement activities.
Current wording
Sales and marketing costs totaled $6.4 million during the 2026 period compared to $3.2 million during the 2025 period, representing an increase of $3.3 million or 102%. The increase was attributable primarily to higher payroll and related personnel costs associated with expanding our sales and marketing team to support increased business development and customer engagement activities.
Previous wording
During the 2026 period, we incurred stock-based compensation costs of $4.8 million compared to $1.6 million in the 2025 period, resulting in an increase of $3.2 million or 201%. This increase was driven by expense from new grants awarded since March 31, 2025, primarily due to increased headcount.
Current wording
During the 2026 period, we incurred stock-based compensation costs of $5.0 million compared to $2.0 million in the 2025 period, resulting in an increase of $3.0 million or 148%. This increase was driven by equity awards granted to new employees, as well as annual equity grants made to eligible employees as part of the Company's employee compensation program.
Previous wording
Consolidated gross profit totaled$2.0 million during the 2026 period compared to a gross loss of$0.8 million during the 2025 period representingan increase of$2.8 million. On a percentage basis, gross profit was 13% during the 2026 period compared to a gross loss of 52% during the 2025 period. The gross profit increase was primarily due to higher revenue and lower inventory write-offs in the 2026 period compared to the 2025 period.
Current wording
Consolidated gross profit totaled$5.2 million during the 2026 period compared to a gross loss of$0.5 million during the 2025 period, representingan increase of$5.7 million. On a percentage basis, gross profit was 14.7% during the 2026 period compared to a gross loss of 9.8% during the 2025 period. The gross profit increase was primarily due to higher revenue and increased manufacturing efficiencies in the 2026 period compared to the 2025 period.
Previous wording
General and administrative expenses totaled $16.7 million during the 2026 period compared to $4.9 million during the 2025 period, representing an increase of $11.8 million or 243%. The increase was attributable primarily to higher payroll and related personnel costs resulting from increased headcount, as well as higher stock-based compensation expense. These increases reflect the expansion of our corporate, administrative, and compliance functions to support growth during the 2026 period.
Current wording
General and administrative expenses totaled $38.0 million during the 2026 period compared to $11.1 million during the 2025 period, representing an increase of $26.8 million or 242%. The increase was attributable primarily to higher payroll and related personnel costs resulting from increased headcount, as well as higher stock-based compensation expense. These increases reflect the expansion of our corporate, administrative, and compliance functions to support growth during the 2026 period.
Previous wording
Other income totaled $0.8 million during the 2026 period compared to other expense of $10.6 million during the 2025 period, representing an increase of $11.4 million or 107%. This increase was attributable primarily to the change in fair value of convertible notes payable, which resulted in a loss of $10.7 million during the 2025 period compared to a loss of $0.9 million during the 2026 period. Interest income also increased from $0.1 million during the 2025 period to $1.3 million during the 2026 period.
Current wording
Other income totaled $4.2 million during the 2026 period compared to other expense of $11.3 million during the 2025 period, representing an increase of $15.4 million or 137%. This increase was primarily attributable to the change in fair value and extinguishment of convertible notes payable, which resulted in a loss of $11.5 million during the 2025 period compared to a loss of $0.5 million during the 2026 period. Interest income also increased from $0.2 million during the 2025 period to $3.2 million during the 2026 period. Additionally, the Company recognized an unrealized gain on equity securities of $1.5 million in the 2026 period, which was not present during the 2025 period.
Previous wording
Net cash used in operating activities was $31.9 million during the three months ended March 31, 2026 (or the “2026 period”) compared to net cash used in operating activities of $15.9 million during the three months ended March 31, 2025 (or the “2025 period”), representing an increase of $16.0 million or 101%. The increase was attributable primarily to inventory purchases made during the 2026 period, partially offset by accounts receivable collections. Net cash used in operations, net of non-cash expenses, totaled $6.2 million during the 2026 period, compared to $12.9 million during the 2025 period, resulting in a decrease of $6.7 million, or 52%. Net cash used related to changes in operating assets and liabilities totaled $11.6 million during the 2026 period, compared to net cash used of $5.7 million during the 2025 period, representing an increase of $5.9 million. 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 $78.7 million during the six months ended June 30, 2026 (or the “2026 period”) compared to net cash used in operating activities of $28.8 million during the six months ended June 30, 2025 (or the “2025 period”), representing an increase of $49.9 million or 173%. The increase was attributable primarily to inventory purchases made during the 2026 period, partially offset by accounts receivable collections. Non-cash expenses totaled $11.2 million during the 2026 period, compared to $16.2 million during the 2025 period, resulting in a decrease of $5.0 million, or 31%. Net cash used related to changes in operating assets and liabilities totaled $28.1 million during the 2026 period, compared to net cash used of $8.6 million during the 2025 period, representing an increase of $19.5 million. 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 in investing activities was $6.8 million during the 2026 period compared to net cash used in investing activities of $0.3 million during the 2025 period, resulting in an increase of $6.5 million. This increase was due to increased purchases of property and equipment.
Current wording
Net cash used in investing activities was $13.0 million during the 2026 period compared to net cash used in investing activities of $0.6 million during the 2025 period, resulting in an increase of $12.4 million. This increase was primarily due to increased purchases of property and equipment.
Previous wording
At March 31, 2026, we reported current assets totaling $209.7 million, current liabilities totaling $19.1 million and net working capital of $190.6 million. Cash totaled $131.9 million at March 31, 2026. Inventory related balances, including prepaid inventory, totaled $62.7 million.
Current wording
At June 30, 2026, we reported current assets totaling $425.1 million, current liabilities totaling $28.6 million and net working capital of $396.5 million. Cash totaled $325.6 million at June 30, 2026. Inventory related balances, including prepaid inventory, totaled $84.8 million.
Previous wording
In addition to our critical accounting estimates and polices below, refer to “Note 2 – Summary of Significant Accounting Policies” for further information.
Current wording
In addition to our critical accounting estimates and policies below, refer to “Note 2 – Summary of Significant Accounting Policies” for further information.
Previous wording
Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. Proprietary technology is being amortized oversix toseven years. Backlog is being amortized overtwo years. Customer relationships is being amortized over seven years. Non-compete agreements are being amortized over three years. Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Current wording
Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. Proprietary technology is being amortized oversix toseven years. Backlog is being amortized overtwo years. Customer relationships are being amortized over seven years. Non-compete agreements are being amortized over three years. Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Research and development expenses totaled $22.2 million during the 2026 period compared to $7.0 million during the 2025 period, representing an increase of $15.2 million or 216%. The increase was attributable primarily to increased investment in engineering personnel costs, prototype development, testing, and other expenses associated with the development of new and enhanced drone platforms and related technologies.
Current report — wording carried from elsewhere
Sales and marketing costs totaled $11.0 million during the 2026 period compared to $6.5 million during the 2025 period, representing an increase of $4.5 million or 69%. The increase was attributable primarily to higher payroll and related personnel costs associated with expanding our sales and marketing team to support increased business development and customer engagement activities.