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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 ~~June~~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~~	88-0490034
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
(State or other jurisdictionof incorporation or organization)		(I.R.S. EmployerIdentification No.)

15 Ave. Munoz Rivera, Ste 2200 San Juan, PR	00901
15 Ave. Munoz Rivera, Ste 2200San Juan, PR		00901
(Address of principal executive offices)	~~(Zip Code)~~	(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 ~~August 12~~November 11, 2025, there were 99119,~~764~~371,~~256~~139 shares of the registrant’s common stock outstanding.

Table of contents

TABLE OF CONTENTS

		~~Page~~		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	~~Financial Statements~~	3	Financial Statements	4
	Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024	3
			Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (Unaudited)	4
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 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 Six Months Ended June 30, 2025 and 2024 (Unaudited)	5
			Condensed Consolidated Statements Stockholders’ Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (Unaudited)	6
			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~~	7	Notes to Unaudited Condensed Consolidated Financial Statements	9
ITEM 2.	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	23	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
ITEM 3.	~~Quantitative and Qualitative Disclosures About Market Risk~~	28	Quantitative and Qualitative Disclosures About Market Risk	30
ITEM 4.	~~Controls and Procedures~~	28	Controls and Procedures	30
PART II - OTHER INFORMATION
ITEM 1.	~~Legal Proceedings~~	30	Legal Proceedings	32
ITEM 1A.	~~Risk Factors~~	30	Risk Factors	32
ITEM 2.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	33	Unregistered Sales of Equity Securities and Use of Proceeds	32
ITEM 3.	~~Defaults Upon Senior Securities~~	34	Defaults Upon Senior Securities	32
ITEM 4.	~~Mine Safety Disclosures~~	34	Mine Safety Disclosures	32
ITEM 5.	~~Other Information~~	34	Other Information	32
ITEM 6.	~~Exhibits~~	34	Exhibits	33
SIGNATURES		35		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 ~~(the “Securities Act”)~~, 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; and ● fluctuations in customer demand in response to broader economic conditions;

•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.

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”), and UAVPatent Corp.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RED CAT HOLDINGS, INC.

Condensed Consolidated Balance Sheets

	June 30, 2025			December 31, 2024
		(Unaudited)
ASSETS
Current assets
Cash	$	65,930,475		$	9,154,297
Accounts receivable, net		1,012,475			489,316
Inventory		16,169,713			12,950,941
Prepaid inventory		4,827,223			641,959
Prepaid expenses and other		3,633,747			2,561,744
Total current assets		91,573,633			25,798,257
Goodwill		17,671,065			17,671,065
Intangible assets, net		7,671,091			8,453,068
Property and equipment, net		2,130,921			1,880,709
Other long-term assets		363,054			309,823
Operating lease right-of-use assets		1,958,087			1,491,345
Total long-term assets		29,794,218			29,806,010
TOTAL ASSETS	$	121,367,851		$	55,604,267
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,481,166		$	2,049,519
Accrued expenses		1,839,670			1,240,115
Debt obligations		350,000			350,000
Contract liabilities and deposits		565,537			227,484
Operating lease liabilities – short term		459,139			311,532
Convertible notes payable		19,434,004			—
Total current liabilities		24,129,516			4,178,650
Operating lease liabilities		1,673,213			1,306,064
Total long-term liabilities		1,673,213			1,306,064
Total liabilities		25,802,729			5,484,714
Commitments and contingencies (Note 18)		-			-
Stockholders’ equity
Series B preferred stock - shares authorized 4,300,000; issued and outstanding 4,676 and 4,676		47			47
Common stock - shares authorized 500,000,000; issued and outstanding 98,510,343 and 85,215,136		98,510			85,215
Additional paid-in capital		256,613,579			174,778,994
Accumulated deficit		(161,147,014	)		(124,744,703	)
Total stockholders’ equity		95,565,122			50,119,553
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	121,367,851		$	55,604,267

(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)

	2025			2024				2025			2024
		Three months ended September 30,										Nine months ended September 30,
	Three months ended June 30,							Six months ended June 30,
		2025					2024					2025		2024
	2025			2024				2025			2024
Revenues		$	9,646,392				$	1,292,447				$	14,494,631	$	14,326,145
Revenues	$	3,218,577		$	6,419,669			$	4,848,239		$	13,033,698
Cost of goods sold		9,008,890					1,684,410					14,332,485		13,329,100
Cost of goods sold		2,843,523			6,151,865				5,323,595			11,644,690
Gross profit (loss)		637,502					(391,963)					162,146		997,045
Gross profit (loss)		375,054			267,804				(475,356	)		1,389,008
Operating Expenses
Operating Expenses
Research and development		5,968,131					1,879,486					12,998,991		4,838,004
Research and development		3,598,267			289,016				7,030,860			2,958,518
Sales and marketing		2,984,677					1,968,441					9,487,010		5,582,469
Sales and marketing		3,187,585			2,203,522				6,502,333			3,614,028
General and administrative		9,215,783					4,108,844					20,331,980		9,931,624
General and administrative		6,235,749			2,738,285				11,116,197			5,822,780
Impairment loss		—					93,050					—		506,049
Impairment loss		—			412,999				—			412,999
Total operating expenses		18,168,591					8,049,821					42,817,981		20,858,146
Total operating expenses		13,021,601			5,643,822				24,649,390			12,808,325
Operating loss		(17,531,089)					(8,441,784)					(42,655,835)		(19,861,101)
Operating loss		(12,646,547	)		(5,376,018	)			(25,124,746	)		(11,419,317	)
Other (income) expense
Other (income) expense
Convertible notes payable fair value adjustment		1,451,996					—					12,939,387		—
Convertible notes payable fair value adjustment		(3,835,621	)		—				6,864,056			—
Gain on extinguishment of convertible notes payable		(2,448,328)					—					(2,448,328)		—
Loss on extinguishment of convertible notes payable		4,623,335			—				4,623,335			—
Interest (income) expense, net		(771,101)					17,166					(980,927)		39,292
Interest (income) expense, net		(155,301	)		9,638				(209,826	)		22,126
Loss on sale of equity method investment		—					4,008,357					—		4,008,357
Gain on divestiture of consumer segment		—			—		—		—			~~(9,642,428~~—	)	(9,642,428)
Impairment on equity method investment		—			~~2,295,000~~		—		—			~~11,353,875~~—		11,353,875
Equity method loss		—			~~734,143~~		—		—			~~1,237,768~~—		1,237,768
Investment income, net		—			(47,576	)			—			(124,830	)
Other income, net		(441,770)					(33,589)					(441,770)		(856,605)
Other, net		—			(207,204	)			—			(698,186	)
Total other (income) expense		(2,209,203)					3,991,934					9,068,362		6,140,259
Other expense		632,413			2,784,001				11,277,565			2,148,325
Loss from continuing operations before provision for income taxes		(15,321,886)					(12,433,718)					(51,724,197)		(26,001,360)
Net loss from continuing operations		(13,278,960	)		(8,160,019	)			(36,402,311	)		(13,567,642	)
Provision for income taxes		694,562					—					694,562		—
Loss from discontinued operations		—			—				—			(1,373,457	)
Net loss from continuing operations		(16,016,448)					(12,433,718)					(52,418,759)		(26,001,360)
Net loss	$	(13,278,960	)		(8,160,019	)		$	(36,402,311	)	$	(14,941,099	)
Loss from discontinued operations		—					—					—		(1,373,457)
Loss per share - basic and diluted
Net loss		$	(16,016,448)				$	(12,433,718)				$	(52,418,759)	$	(27,374,817)
Continuing operations	$	(0.15	)	$	(0.11	)		$	(0.41	)	$	(0.18	)
Loss per share - basic and diluted
Discontinued operations		—			—				—			(0.02	)
Continuing operations		$	(0.16)				$	(0.16)				$	(0.57)	$	(0.35)
Loss per share - basic and diluted	$	(0.15	)	$	(0.11	)		$	(0.41	)	$	(0.20	)
Discontinued operations		—					—					—		(0.02)
Weighted average shares outstanding - basic and diluted		91,295,342			74,247,575				88,400,431			74,226,099
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)

	Shares		Amount			Shares			Amount			Capital				Deficit			Income (Loss)			Equity
		Series BPreferred Stock								Common Stock										AdditionalPaid-inCapital					AccumulatedDeficit		Accumulated OtherComprehensiveIncome (Loss)		Total Equity
	Series B											Additional							Accumulated Other
		Shares			Amount					Shares					Amount
	Preferred Stock					Common Stock						Paid-in				Accumulated			Comprehensive			Total
Balances, December 31, 2023		4,676			$	47				74,166,262					$	74,166				$	123,125,007				$	(71,434,754)	$	4,621	$	51,769,087
	Shares		Amount			Shares			Amount			Capital				Deficit			Income (Loss)			Equity
Stock based compensation		—			—					—					—					805,634					—		—		805,634
Balances, December 31, 2023		4,676	$	47			74,166,262		$	74,166		$	123,125,007			$	(71,434,754	)	$	4,621		$	51,769,087
Vesting of restricted stock units		—			—					116,247					116					(9,767)					—		—		(9,651)
Stock based compensation		—		—			—			—			805,634				—			—			805,634
Net loss		—			—					—					—					—					(6,781,080)		—		(6,781,080)
Vesting of restricted stock units		—		—			116,247			116			(9,767	)			—			—			(9,651	)
Balances, March 31, 2024		4,676			$	47				74,282,509					$	74,282				$	123,920,874				$	(78,215,834)	$	4,621	$	45,783,990
Net loss		—		—			—			—			—				(6,781,080	)		—			(6,781,080	)
Stock based compensation		—			—					—					—					958,406					—		—		958,406
Balances, March 31, 2024		4,676	$	47			74,282,509		$	74,282		$	123,920,874			$	(78,215,834	)	$	4,621		$	45,783,990
Vesting of restricted stock units		—			—					298,144					298					(163,777)					—		—		(163,479)
Stock based compensation		—		—			—			—			958,406				—			—			958,406
Net loss		—			—					—					—					—					(8,160,019)		—		(8,160,019)
Vesting of restricted stock units		—		—			298,144			298			(163,777	)			—			—			(163,479	)
Balances, June 30, 2024		4,676			$	47				74,580,653					$	74,580				$	124,715,503				$	(86,375,853)	$	4,621	$	38,418,898
Net loss		—		—			—			—			—				(8,160,019	)		—			(8,160,019	)
Stock based compensation		—			—					—					—					1,277,178					—		—		1,277,178
Balances, June 30, 2024		4,676	$	47			74,580,653		$	74,580		$	124,715,503			$	(86,375,853	)	$	4,621		$	38,418,898
Vesting of restricted stock units		—			—					308,735					309					(412,203)					—		—		(411,894)
Balances, December 31, 2024		4,676	$	47			85,215,136		$	85,215		$	174,778,994			$	(124,744,703	)	$	—		$	50,119,553
Exercise of warrants		—			—					530,578					531					(531)					—		—		—
Stock based compensation		—		—			—			—			1,598,972				—			—			1,598,972
Exercise of stock options		—			—					26,904					27					4,040					—		—		4,067
Exercise of warrants		—		—			49,843			50			(50	)			—			—			—
Acquisition of FlightWave		—			—					2,544,991					2,545					6,997,455					—		—		7,000,000
Exercise of stock options		—		—			488,969			489			315,585				—			—			316,074
Currency translation adjustments		—			—					—					—					—					—		(4,621)		(4,621)
Retirement of common shares		—		—			(106,330	)		(106	)		106				—			—			—
Net loss		—			—					—					—					—					(12,433,718)		—		(12,433,718)
Net loss		—		—			—			—			—				(23,123,351	)		—			(23,123,351	)
Balances, September 30, 2024		4,676			$	47				77,991,861					$	77,992				$	132,581,442				$	(98,809,571)	$	—	$	33,849,910
Balances, March 31, 2025		4,676	$	47			85,647,618		$	85,648		$	176,693,607			$	(147,868,054	)	$	—		$	28,911,248
Balances, December 31, 2024		4,676			$	47				85,215,136					$	85,215				$	174,778,994				$	(124,744,703)	$	—	$	50,119,553
Balances		4,676	$	47			85,647,618		$	85,648		$	176,693,607			$	(147,868,054	)	$	—		$	28,911,248
Stock based compensation		—			—					—					—					1,598,972					—		—		1,598,972
Stock based compensation		—		—			—			—			2,035,061				—			—			2,035,061
Exercise of warrants		—			—					49,843					50					(50)					—		—		—
Exercise of warrants		—		—			200,000			200			299,800				—			—			300,000
Exercise of stock options		—			—					488,969					489					315,585					—		—		316,074
Exercise of stock options		—		—			907,099			907			992,556				—			—			993,463
Retirement of common shares		—			—					(106,330)					(106)					106					—		—		—
Public offerings, net of $4,981,972 of issuance costs		—		—			11,172,688			11,173			71,756,871				—			—			71,768,044
Net loss		—			—					—					—					—					(23,123,351)		—		(23,123,351)
Conversion of convertible notes into common stock		—		—			704,451			704			4,835,562				—			—			4,836,266
Balances, March 31, 2025		4,676			$	47				85,647,618					$	85,648				$	176,693,607				$	(147,868,054)	$	—	$	28,911,248
Acquisition adjustment		—		—			(121,513	)		(122	)		122				—			—			—
Stock based compensation		—			—					—					—					2,035,061					—		—		2,035,061
Net loss		—		—			—			—			—				(13,278,960	)		—			(13,278,960	)
Exercise of warrants		—			—					200,000					200					299,800					—		—		300,000
Balances, June 30, 2025		4,676	$	47			98,510,343		$	98,510		$	256,613,579			$	(161,147,014	)	$	—		$	95,565,122
Exercise of stock options		—			—					907,099					907					992,556					—		—		993,463
Balances		4,676	$	47			98,510,343		$	98,510		$	256,613,579			$	(161,147,014	)	$	—		$	95,565,122
Public offerings, net of $4,981,972 of issuance costs		—			—					11,172,688					11,173					71,756,871					—		—		71,768,044
Conversion of convertible notes into common stock		—			—					704,451					704					4,835,562					—		—		4,836,266
Acquisition adjustment		—			—					(121,513)					(122)					122					—		—		—
Net loss		—			—					—					—					—					(13,278,960)		—		(13,278,960)
Balances, June 30, 2025		4,676			$	47				98,510,343					$	98,510				$	256,613,579				$	(161,147,014)	$	—	$	95,565,122
Stock based compensation		—			—					—					—					3,621,387					—		—		3,621,387
Vesting of restricted stock units		—			—					30,000					30					(30)					—		—		—
Exercise of warrants		—			—					309,737					310					2,285,690					—		—		2,286,000
Exercise of stock options		—			—					601,282					601					150,073					—		—		150,674
Public offerings, net of $9,918,430 of issuance costs		—			—					17,968,750					17,969					162,562,493					—		—		162,580,462
Conversion of convertible notes into common stock		—			—					742,158					742					5,085,930					—		—		5,086,672
Net loss		—			—					—					—					—					(16,016,448)		—		(16,016,448)
Balances, September 30, 2025		4,676			$	47				118,162,270					$	118,162				$	430,319,122				$	(177,163,462)	$	—	$	253,273,869

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 Cash Flows

(Unaudited)

	2025			2024
		Nine months ended September 30,
	Six months ended June 30,
		2025					2024
	2025			2024
Cash Flows from Operating Activities
Cash Flows from Operating Activities
Net loss		$	(52,418,759)				$	(27,374,817)
Net loss	$	(36,402,311	)	$	(14,941,099	)
Net loss from discontinued operations		—					(1,373,457)
Net loss from discontinued operations		—			(1,373,457	)
Net loss from continuing operations		(52,418,759)					(26,001,360)
Net loss from continuing operations		(36,402,311	)		(13,567,642	)
Adjustments to reconcile net loss to net cash used in operations:
Adjustments to reconcile net loss to net cash used in operations:
Stock based compensation		7,255,420					3,041,217
Stock based compensation - options		1,958,711			1,561,978
Amortization of intangible assets		1,158,270					571,099
Stock based compensation - restricted stock units		1,675,322			202,062
Depreciation		495,440					640,342
Amortization of intangible assets		781,977			393,771
Deferred income taxes		694,562					—
Depreciation		329,414			466,720
Payments of taxes related to equity transactions		—					(580,955)
Payments of taxes related to equity transactions		—			(173,130	)
Gain on divestiture of consumer segment		—					(9,642,428)
Gain on divestiture of consumer segment		—			(9,642,428	)
Impairment on equity method investment		—					11,353,875
Impairment on equity method investment		—			11,353,875
Equity method loss		—					1,237,768
Equity method loss		—			1,237,768
Impairment on goodwill and intangible assets		—					506,049
Impairment on goodwill and intangible assets		—			412,999
Loss on sale of equity method investment and note receivable		—					4,008,357
Convertible notes payable fair value adjustment		612,~~864~~939,~~056~~387			—		—
Loss on extinguishment of convertible notes payable		4,623,335			—
Gain on extinguishment of convertible notes payable		(2,448,328)					—
Changes in operating assets and liabilities
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable		(~~523~~5,~~159~~617,635)	)		~~(916,864~~	)	167,487
Inventory		(39,~~218~~691,~~772~~110)	)		~~2,104,581~~		548,769
Prepaid inventory		(47,~~185~~311,~~264~~657)	)		~~928,874~~		1,243,974
Prepaid expenses and other		(1,125,234	)		(868,119	)
Prepaid expenses and other current and long-term assets		(3,988,130)					(1,165,521)
Operating lease right-of-use assets and liabilities		48157,~~014~~430			~~9,083~~		(64,480)
Contract liabilities and deposits		~~338~~240,~~053~~430			~~5,389~~		(19,746)
Accounts payable		~~(568~~925,~~353~~317	)		~~(324,405~~	)	(840,865)
Accrued expenses		~~599~~4,~~555~~952,683			~~245,978~~		303,652
Net cash used in operating activities of continuing operations		(2852,~~804,~~656,680)	)		~~(6,569,510~~	)	(14,692,766)
Cash Flows from Investing Activities
Proceeds from divestiture of consumer segment		—			~~1,000,000~~		1,000,000
Purchases of property and equipment		(579,626	)		(87,063	)
Proceeds from sale of equity method investment and note receivable		—					4,400,000
Net cash (used in) provided by investing activities of continuing operations		(579,626	)		912,937
Purchases of property and equipment		(1,249,217)					(149,686)
Cash Flows from Financing Activities
Net cash (used in) provided by investing activities of continuing operations		(1,249,217)					5,250,314
Proceeds from issuance of common stock through public offerings, net		71,768,044			—
Cash Flows from Financing Activities
Proceeds from issuance of convertible notes payable, net of issuance costs		14,432,879			—
Proceeds from issuance of common stock through public offerings		249,248,908					—
Payments of convertible notes payable		(1,650,000	)		—
Payment of costs related to public offerings		(14,900,402)					—
Proceeds from exercise of stock options		1,309,537			—
Proceeds from issuance of convertible notes payable		15,000,000					—
Proceeds from exercise of warrants		300,000			—
Debt issuance costs		(567,121)					—
Payments under debt obligations		—			(297,819	)
Payments of convertible notes payable		(1,650,000)					—
Net cash provided by (used in) financing activities of continuing operations		86,160,460			(297,819	)
Proceeds from exercise of stock options		1,460,211					—
Discontinued operations
Proceeds from exercise of warrants		2,586,000					—
Operating activities		—			(74,556	)
Payments under debt obligations		—					(588,003)
Investing activities		—			—
Net cash provided by (used in) financing activities of continuing operations		251,177,596					(588,003)
Financing activities		—			(120,413	)
Discontinued operations
Net cash used in discontinued operations		—			(194,969	)
Operating activities		—					(74,556)
Net increase (decrease) in Cash		56,776,178			(6,149,361	)
Investing activities		—					—
Cash, beginning of period		9,154,297			10,245,064
Financing activities		—					(120,413)
Cash, end of period	$	65,930,475		$	4,095,703
Net cash used in discontinued operations		—					(194,969)
Cash paid for interest	$	—		$	23,339
Net increase (decrease) in Cash		197,271,699					(10,225,424)
Cash paid for income taxes	$	—		$	—
Cash, beginning of period		9,154,297					10,245,064
Non-cash transactions
Cash, end of period		$	206,425,996				$	19,640
Conversion of convertible notes into common stock	$	3,300,000		$	—
Cash paid for interest		$	—				$	29,498
Equity method investment from divestiture of consumer segment	$	—		$	17,000,000
Cash paid for income taxes		$	—				$	—
Note receivable from divestiture of consumer segment	$	—		$	4,000,000
Non-cash transactions
Conversion of convertible notes into common stock		$	12,371,266				$	—
Equity method investment from divestiture of consumer segment		$	—				$	17,000,000
Fair value of shares issued in acquisition		$	—				$	7,000,000
Acquisition consideration payable		$	—				$	7,000,000
Note receivable from divestiture of consumer segment		$	—				$	4,000,000
Net assets assumed in acquisition		$	—				$	31,435

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

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RED CAT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – The Business

Red Cat Holdings, Inc. (the “Company”) was originally incorporated in February 1984. The Company is a drone technology company integrating robotic hardware and software for military, government and commercial operation. Since April 2016, the Company’s primary business has been to provide products, services, and solutions to the drone industry.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included. The results of operations for the ~~six~~nine months ended ~~June~~ September 30, 2025 are not necessarily indicative of the results for the full year. For further information, refer to the consolidated financial statements and footnotes thereto for the eight month transition period ended December 31, 2024, included in the Company’s Transition Report on Form 10-KT.

Principles of Consolidation – Our condensed consolidated financial statements include the accounts of our wholly owned subsidiaries which include Teal, FlightWave (beginning on September 5, 2024), Skypersonic, and Blue Ops (beginning on July 1, 2025), as well as Rotor Riot LLC (“Rotor Riot”) and Fat Shark Holdings, Ltd. (“Fat Shark”) through the sale date of February 16, 2024. Non-majority owned investments, including the formerly wholly owned subsidiaries Rotor Riot and Fat Shark, were accounted for using the equity method when the Company was able to significantly influence the operating policies of the investee. Intercompany transactions and balances have been eliminated.

The Consumer segment businesses are characterized as discontinued operations in these financial statements. The operating results and cash flows of discontinued operations are separately stated in those respective financial statements. See Note 4.

Segments – The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker ("CODM"), who is the Company's Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company's CODM evaluates the Company's financial information and resources, and assesses the performance of the resources, on a consolidated net income basis. The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets. The Company's significant segment expenses, which are included in operating loss as well as other expense are included in the Company's condensed consolidated statements of operations. Additionally, further components of the Company's measure of profit or loss, which is net loss, are included throughout the Company's financial statements.

Use of Estimates – The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates reflected in these financial statements include those used to (i) complete purchase price accounting for acquisitions, (ii) the evaluation of long-term assets, including goodwill, for impairment, (iii) the evaluation of other-than-temporary-impairment of equity method investments, and (iv) valuations of convertible notes payable.

Concentration of Credit Risk – Financial instruments, which potentially subject the Company to concentrations of credit risk, include trade receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers, generally does not require collateral and considers the credit risk profile of the customer from which the receivable is due in further evaluating collection risk. ~~Customers that accounted for 10% or greater of accounts receivable, net as of June 30, 2025 and December 31, 2024 were as follows:~~

~~Schedules of Concentration of Credit Risk~~ 9

	June 30, 2025			December 31, 2024
Customer A		52	%		-*
Customer B		46	%		-*
Customer C		-*			36	%
Customer D		-*			17	%
Customer E		-*			15	%
Concentration risk percentage		-*			15	%

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*Customers ~~Accounts~~that ~~Receivable~~accounted ~~was~~for ~~less than~~ 10% or greater of accounts receivable, net as of September 30, 2025 and December 31, 2024 were as follows:


	September 30, 2025		December 31, 2024
Customer A	62	%	*
Customer B	*		36	%
Customer C	*		17	%
Customer D	*		15	%

~~During the~~*Accounts ~~six~~Receivable ~~months~~was ~~ended~~less ~~June 30, 2025, three customers accounted for equal to or greater~~ than 10% of total revenue, totaling 26%, 16%, and 12%, respectively. During the six months ended June 30, 2024, three customers accounted for equal to or greater than 10% of total revenue, totaling 25%, 21%, and 13%, respectively. The Company does not believe the loss of one or more of these customers would be significant to operations.

During the nine months ended September 30, 2025, two customers accounted for equal to or greater than 10% of total revenue, totaling 45%, and 13%, respectively. During the nine months ended September 30, 2024, four customers accounted for equal to or greater than 10% of total revenue, totaling 22%, 19%, 12%, and 10%, respectively.

Fair Values, Inputs and Valuation Techniques for Financial Assets and Liabilities, and Related Disclosures – The fair value measurements and disclosure guidance defines fair value and establishes a framework for measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. In accordance with this guidance, the Company has categorized its recurring basis financial assets and liabilities into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique.

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The guidance establishes three levels of the fair value hierarchy as follows:

Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2: Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3: Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company’s financial instruments mainly consist of cash, accounts receivable, current assets, investment in equity securities, accounts payable, accrued expenses, ~~notes~~ ~~payable~~debt obligations, and convertible notes payable. The recorded carrying amounts of cash, accounts receivable, current assets, accounts payable, accrued expenses, and ~~notes~~debt ~~payable~~obligations are considered to approximate their estimated fair values due to their short-term nature. Liabilities recognized at fair value on a recurring basis in the consolidated balance sheets consist of convertible notes payable. These items are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date.

810

~~The following~~Table ~~table summarizes the Company’s financial instruments at fair value based on the fair value hierarchy for each class~~ of ~~instrument~~ ~~as of June 30, 2025:~~contents

~~Schedules~~The offollowing ~~Financial~~table ~~Instruments~~summarizes ~~Fair~~the Company’s financial instruments at fair value ~~Hierarchy~~ based on the fair value hierarchy for each class of instrument as of September 30, 2025:

	~~Level 1~~	Level 1		~~Level 2~~		Level 2	~~Level 3~~		~~Total~~	Level 3		Total
Convertible notes payable	$	—$	—	$	—	$	$—	~~19,434,004~~	$	~~19,434,004~~$	13,351,000	$	13,351,000
Investment in equity securities		—				—				691,770		691,770
Total		$	—			$	—			$	14,042,770	$	14,042,770

Convertible Notes Payable

The Company measures its convertible notes payable at fair value based on significant inputs not observable in the market, which caused them to be classified as Level 3 measurements within the fair value hierarchy. Changes in the fair value of the convertible notes payable related to updated assumptions and estimates were recognized as a convertible notes payable fair value adjustment within the consolidated statements of operations ~~and comprehensive loss~~.

In determining the fair value of the convertible notes payable as of ~~June~~ September 30, 2025, the Company used a market-based approach. The valuation method utilized a negotiated discount rate and a market yield rate which are unobservable inputs.

An increase or decrease in any of the unobservable inputs in isolation could result in a material increase or decrease in the estimated fair value. In the future, depending on the weight of evidence and valuation approaches used, these or other inputs may have a more significant impact on the estimated fair value.

The Company calculated the estimated fair value of the convertible notes payable during the ~~six~~nine months ended ~~June~~ September 30, 2025 using the following assumptions:

Schedules of Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation


Issuance date			2/10/2025
Maturity date			5/10/2026
Stock price			5.88 - 10.35
Expected volatility factor			124.8% - 137.2%
Risk-free interest rate			3.70% - 4.25%

Issuance date	2/10/2025
Maturity date	5/10/2026
Stock price		5.88 - 7.45
Expected volatility factor		124.8 - 128.3	%
Risk-free interest rate		4.02 - 4.25	%

The following table presents changes in the Level 3 convertible notes payable measured at fair value for the nine months ended September 30, 2025:

The following table presents changes in the Level 3 convertible notes payable measured at fair value for the six months ended June 30, 2025:


Balance, January 1, 2025	$	—
Additions	14,432,879
Fair value measurement adjustments	12,939,387
Redemption	(1,650,000)
Conversion into common stock	(12,371,266)
Balance, September 30, 2025	$	13,351,000

Schedules of Changes in Convertible Notes Payable Measured at Fair Value

Balance, January 1, 2025	$	—
Balance	$	—
Additions		14,432,879
Fair value measurement adjustments		6,864,056
Loss on extinguishment		4,623,335
Redemption		(1,650,000	)
Conversion into common stock		(4,836,266	)
Balance, June 30, 2025	$	19,434,004
Balance	$	19,434,004

Warrants

The fair value of the warrants issued during the ~~six~~nine months ended ~~June~~ September 30, 2025 was estimated using a Monte Carlo simulation model. The significant unobservable inputs for the Monte Carlo model include the stock price, exercise price, risk-free rate of return, time to expiration, and the volatility. An increase or decrease in the unobservable inputs in isolation could result in a material increase or decrease in the estimated fair value. In the future, depending on the weight of evidence and valuation approaches used, these or other inputs may have a more significant impact on the estimated fair value. Additionally, if certain provisions are triggered, reset adjustments may be required in the future. For the ~~six~~nine months ended ~~June~~ September 30, 2025, no value was assigned to the warrants due to the fair market value of the convertible note payable being in excess of the proceeds received.

Revenue Recognition – The Company recognizes revenue in accordance with ASC Topic 606 - Revenue from Contracts with Customers, issued by the Financial Accounting Standards Board. This standard includes a comprehensive evaluation of factors to be considered regarding revenue recognition including (i) identifying the promised goods, (ii) evaluating performance obligations, (iii) measuring the transaction price, (iv) allocating the transaction price to the performance obligations if there are multiple components, and (v) recognizing revenue as each obligation is satisfied. The Company’s revenue transactions include the shipment of goods to customers as orders are fulfilled, completion of non-recurring engineering, completion of training, and customer support services. The Company recognizes revenue upon shipment of product or prototypes unless otherwise specified in the purchase order or contract. Customer deposits totaled $230,288 and $227,484 at June 30, 2025 and December 31, 2024, respectively. From time to time, non-recurring engineering contracts may involve the capitalization of engineering prototypes, classified as contract assets. Contract assets totaled $488,149 and $0 at June 30, 2025 and December 31, 2024, respectively, and were included in prepaid expenses and other. Contract liabilities totaled $335,249 and $0 at June 30, 2025 and December 31, 2024, respectively.11

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Investment in Equity Securities

The Company holds an investment in equity securities of a private company without a readily determinable fair value. The Company has elected to measure this investment at fair value based on significant inputs not observable in the market, which caused them to be classified as Level 3 measurements within the fair value hierarchy. Changes in the fair value are recognized in other (income) loss, net within the consolidated statements of operations.

Revenue Recognition – The Company recognizes revenue in accordance with ASC Topic 606 - Revenue from Contracts with Customers, issued by the Financial Accounting Standards Board. This standard includes a comprehensive evaluation of factors to be considered regarding revenue recognition including (i) identifying the promised goods, (ii) evaluating performance obligations, (iii) measuring the transaction price, (iv) allocating the transaction price to the performance obligations if there are multiple components, and (v) recognizing revenue as each obligation is satisfied. The Company’s revenue transactions include the shipment of goods to customers as orders are fulfilled, completion of non-recurring engineering, completion of training, and customer support services. The Company recognizes revenue upon shipment of product or prototypes unless otherwise specified in the purchase order or contract. Customer deposits totaled $467,644 and $227,484 at September 30, 2025 and December 31, 2024, respectively. From time to time, non-recurring engineering contracts may involve the capitalization of engineering prototypes, classified as contract assets. Contract assets totaled $2,484,324 and $0 at September 30, 2025 and December 31, 2024, respectively, and were included in prepaid expenses and other current assets. Contract liabilities totaled $270 and $0 at September 30, 2025 and December 31, 2024, respectively.

The following table presents the Company’s revenue disaggregated by revenue type:

Schedules of Revenue Disaggregated by Revenue Type


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Product related	$	8,471,548	$	1,292,447	$	12,191,488	$	11,115,346
Contract related	1,174,844		—		2,303,143		3,210,799
Total	$	9,646,392	$	1,292,447	$	14,494,631	$	14,326,145

					2025		2024
	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Product related	$	2,090,278	$	3,208,870	$	3,719,940	$	9,822,899
Contract related		1,128,299		3,210,799		1,128,299		3,210,799
Total	$	3,218,577	$	6,419,669	$	4,848,239	$	13,033,698

Product Warranty – The Company accrues an estimate of its exposure to warranty claims based upon both current and historical product sales data and warranty costs incurred. Product warranty reserves are recorded in current liabilities under accrued expenses. Warranty liability was $483,052 and $661,357 as of September 30, 2025 and December 31, 2024, respectively.

~~Product Warranty~~Income -Taxes ~~The~~– ~~Company~~Deferred ~~accrues~~taxes anare ~~estimate~~provided ofon ~~its~~the ~~exposure~~asset toand ~~warranty~~liability ~~claims~~method ~~based~~whereby ~~upon~~deferred ~~both~~tax ~~current~~assets ~~and~~are ~~historical~~recognized ~~product~~for ~~sales data~~deductible temporary differences and ~~warranty~~deferred ~~costs~~tax ~~incurred.~~liabilities ~~Product~~are ~~warranty~~recognized ~~reserves~~for taxable temporary differences. Temporary differences are ~~recorded~~the indifferences ~~current~~between the reported amounts of assets and liabilities ~~under~~and ~~accrued~~their ~~expenses~~tax bases. ~~Warranty~~Deferred ~~liability was~~tax ~~$415,722~~assets and ~~$661,357~~liabilities asare adjusted for the effects of ~~June~~changes ~~30,~~in ~~2025~~tax laws and ~~December~~rates ~~31,~~on ~~2024,~~the ~~respectively~~date of enactment. Deferred tax assets are recognized to the extent that these assets are more likely than not to be realized.

Recent Accounting Pronouncements – In ~~November~~December ~~2024~~2023, the FASB issued ~~guidance~~ASU ~~expanding~~2023-09 ~~disclosure~~requiring ~~requirements~~enhanced ~~related~~annual todisclosures ~~certain~~regarding ~~income~~the ~~statement~~rate ~~expenses.~~reconciliation ~~The~~and ~~amendments~~income ~~require~~taxes ~~tabular disclosure~~paid, ~~of certain operating expenses~~ disaggregated ~~into~~by ~~categories, such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization~~jurisdiction. ~~The~~This ~~amendments~~standard ~~are~~is effective for ~~our~~annual ~~fiscal~~periods ~~year~~beginning ~~ending~~after December 3115, ~~2027~~2024, ~~and~~with ~~may~~early beadoption ~~applied retrospectively~~permitted. ~~While~~ ~~the~~The Company is ~~still~~currently evaluating the ~~specific~~impact ~~impacts~~of ~~and~~ASU ~~adoption~~2023-09 ~~method, the Company anticipates this guidance will have a significant impact~~ on ~~our~~its consolidated financial ~~statement~~statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03 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.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

Basic and Diluted Net Loss per Share – Basic and diluted net loss per share has been calculated by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Common stock equivalents were excluded from the computation of diluted net loss per share of common stock because they were anti-dilutive. The conversion or exercise of these common stock equivalents would dilute earnings per share if we become profitable in the future. Outstanding securities not included in the computation of diluted net loss per share because their effect would have been anti-dilutive include:

~~Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share~~12

	June 30, 2025		December 31, 2024
Series B Preferred Stock, as converted		3,896		3,896
Stock options		5,317,060		5,242,308
Warrants		1,631,433		914,056
Restricted stock		2,009,841		1,544,027
Total		8,962,230		7,704,287

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excluded from the computation of diluted net loss per share of common stock because they were anti-dilutive. The conversion or exercise of these common stock equivalents would dilute earnings per share if we become profitable in the future. Outstanding securities not included in the computation of diluted net loss per share because their effect would have been anti-dilutive include:


	September 30, 2025	December 31, 2024
Series B Preferred Stock, as converted	3,896	3,896
Stock options	4,787,364	5,242,308
Warrants	1,313,833	914,056
Restricted stock	2,030,408	1,544,027
Total	8,135,501	7,704,287

Related Parties – Parties are considered to be related to us if they have control or significant influence, directly or indirectly, over us, including key management personnel and members of the Board of Directors or are direct relatives of key management personnel of members of the Board of Directors. Related Party transactions are disclosed in Note 17.

Liquidity and Going Concern – During the past quarter, the Company increased its working capital to $67224,~~444~~915,~~117~~ 930 through ~~two~~a ~~capital~~shelf ~~raises~~offering in September 2025. The ~~Company~~capital ~~also~~raise ~~obtained~~involved a ~~much~~common ~~anticipated~~stock ~~Short~~equity ~~Range~~offering ~~Reconnaissance~~which ~~(“SRR”)~~raised ~~contract~~gross ~~with the~~proceeds Uof $172,498,892 and net proceeds of $162,580,462.S. ~~Army~~This ~~during~~new ~~this~~capital ~~period~~raise is intended to be used for general corporate and working capital purposes, including but not limited to operating expenditures and capital investments related to the Company's new naval unmanned surface vessel division. Because of the significant increase in working capital ~~and the contract~~, the Company no longer has substantial doubt of its ability to continue as a going concern.

Note 3 – Business Combination

On September 4, 2024, the Company entered into an Asset Purchase Agreement (“APA”) with FlightWave Aerospace Systems Corporation (the “Seller”) to broaden the Company’s range of drone products. The Seller sold certain assets used in designing, developing, manufacturing, and selling long range, AI-powered UAVs for commercial use. Pursuant to the APA, the Company has acquired substantially all of the assets owned, controlled or used by the Seller for an aggregate purchase price of $14,000,000 worth of shares of the Company’s common stock, and as such, the asset purchase will be treated as a business combination. The purchase price was payable as follows:

	●	$7 million worth of the Company’s common stock issued on September 30, 2024, totaling 2,544,991 shares, equal to the VWAP on such date.
	●	$7 million worth of the Company’s common stock issued on December 31, 2024, totaling 698,317 shares, equal to the VWAP on such date.

•$7 million worth of the Company’s common stock issued on September 30, 2024, totaling 2,544,991 shares, equal to the VWAP on such date.

•$7 million worth of the Company’s common stock issued on December 31, 2024, totaling 698,317 shares, equal to the VWAP on such date.

Goodwill for FlightWave is ascribed to existing relationships with several U.S. government agencies including classification as approved vendors. The Company has reported net losses since its inception and is presently unable to determine when and if the tax benefit of this deduction will be realized.

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The summary of the purchase price and its related allocation at fair market value is as follows:

Schedule of Business Acquisitions of Purchase Price at Fair Market Value


Shares issued	$	14,000,000
Total Purchase Price	$	14,000,000
Assets acquired
Inventory	$	297,630
Operating lease right-of-use assets	128,433
Other assets	69,480
Brand name	567,000
Backlog	276,000
Customer relationships	900,000
Proprietary technology	3,705,000
Goodwill	8,675,565
Total assets acquired	14,619,108
Liabilities assumed
Accounts payable and accrued expenses	264,493
Customer deposits	196,476
Operating lease liabilities	158,139
Total liabilities assumed	619,108
Total fair value of net assets acquired	$	14,000,000

Brand name, backlog, customer relationships and proprietary technology are included in intangible assets on the consolidated balance sheets. The carrying value of brand name is not being amortized but is reviewed quarterly and formally evaluated at year end for impairment. Customer relationships and proprietary technology are being amortized over seven years. Backlog is being amortized over two years. The excess of the purchase price above the net assets acquired was recorded as goodwill which is reviewed quarterly and formally evaluated at year end.

Supplemental Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information summarizes the results of operations for the Company as though the business combination with Seller had occurred on January 1, 2024. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company.

Schedule of Business Acquisitions of Pro Forma Information


	Three months ended September 30, 2024		Nine months ended September 30, 2024
	Consolidated		Consolidated
Revenues	$	1,798,984	$	15,273,294

Net Loss	(12,707,287)		(28,920,491)

Loss per share – basic and diluted	(0.17)		(0.39)

		Three months ended June 30,2024		Six months ended June 30, 2024
		Consolidated			Consolidated
Revenues	$	6,738,131		$	13,474,310
Net Loss		(8,808,325	)		(16,213,204	)
Loss per share – basic and diluted		(0.12	)		(0.22	)

Note 4 – Divestiture of Consumer Segment

On ~~February~~ February 16, 2024, the Company closed the sale of Rotor Riot and Fat Shark to Unusual Machines, Inc (“UMAC”). The sale was conducted pursuant to a Share Purchase Agreement dated November 21, 2022, as amended on April 13, 2023, July 10, 2023, and December 11, 2023 (the “SPA”). The transaction closed concurrently with UMAC’s initial public ~~offering and listing on the NYSE American exchange (“IPO”) under the symbol “UMAC.”~~

The total consideration received by the Company was valued at $20 million and consisted of i) $1 million in cash, ii) $2 million in a secured promissory note (“Promissory Note”), iii) $17 million in securities of UMAC, and iv) a post-closing adjustment for excess working capital.14

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offering and listing on the NYSE American exchange (“IPO”) under the symbol “UMAC.” The sale resulted in a gain that was recorded in the consolidated statements of operations.

The total consideration received by the Company was valued at $22 million and consisted of i) $1 million in cash, ii) $4 million in a secured promissory note (“Promissory Note”) including a post-closing adjustment for excess working capital of $2 million, iii) $17 million in securities of UMAC.

Secured Promissory Note

The Promissory Note from UMAC bore interest at a rate of 8% per year, was due 18 months from the date of issue, and required monthly payments of interest due in arrears on the 15th day of each month.

UMAC Securities

The $17 million worth of UMAC common stock was valued at the IPO price for UMAC’s common stock of $4.00 per share, resulting in 4,250,000 shares of UMAC common stock being issued to the Company (representing approximately 49% of UMAC’s issued and outstanding common stock after giving effect to the IPO and to the issuance of common stock to the Company upon closing of the IPO). Refer to Note 7 for further information.

Working Capital

The purchase price was adjusted for working capital as of the closing date. Actual working capital excess amounts increased the principal amount of the Promissory Note dollar for dollar. Working capital as of closing was finalized at $2 million in July 2024. As a result, UMAC issued the Company $4,000,000 of its 8% Promissory Notes due November 30, 2025 reflecting (i) satisfaction and settlement of working capital adjustments and (ii) a maturity date extension to November 30, 2025.

The Consumer segment has been classified as Discontinued Operations and reported in accordance with the applicable accounting standards. Set forth below are the results of operations for the Consumer segment for:

Schedule of Discontinued Operations of Consumer Segment


	Nine months ended September 30,
	2025		2024
Revenues	$	—	$	494,737

Cost of goods sold	—		1,407,760

Gross loss	—		(913,023)

Operating Expenses
Research and development	—		13,389
Sales and marketing	—		278,078
General and administrative	—		168,967
Total operating expenses	—		460,434
Operating loss	—		(1,373,457)

Net loss from discontinued operations	$	—	$	(1,373,457)

	2025		2024
	Six months ended June 30,
	2025		2024
Revenues	$	—	$	494,737
Cost of goods sold		—		1,407,760
Gross loss		—		(913,023	)
Operating Expenses
Research and development		—		13,389
Sales and marketing		—		278,078
General and administrative		—		168,967
Total operating expenses		—		460,434
Operating loss		—		(1,373,457	)
Net loss from discontinued operations	$	—	$	(1,373,457	)

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Note 5 – Inventories

Inventories consisted of the following:

Schedule of Inventories


	September 30, 2025		December 31, 2024
Raw materials	$	16,114,230	$	8,421,036
Work-in-process	4,003,267		898,635
Finished goods	2,524,554		3,631,270
Total	$	22,642,051	$	12,950,941

	June 30, 2025		December 31, 2024
Raw materials	$	12,679,864	$	8,421,036
Work-in-process		1,232,244		898,635
Finished goods		2,257,605		3,631,270
Total	$	16,169,713	$	12,950,941

Note 6 – Intangible Assets

Intangible assets relate to acquisitions completed by the Company, including those described in Note 13, and were as follows:

Schedule of Intangible Assets


	September 30, 2025						December 31, 2024
	Gross Value		Accumulated Amortization		Net Value		Gross Value		Accumulated Amortization		Net Value
Proprietary technology	$	7,987,001	$	(3,569,274)	$	4,417,727	$	7,987,001	$	(2,640,323)	$	5,346,678
Backlog	276,000		(149,501)		126,499		276,000		(16,610)		259,390
Customer relationships	900,000		(146,428)		753,572		900,000		(50,000)		850,000
Non-compete agreements	65,000		(65,000)		—		65,000		(65,000)		—
Total finite-lived assets	9,228,001		(3,930,203)		5,297,798		9,228,001		(2,771,933)		6,456,068
Brand name	1,997,000		—		1,997,000		1,997,000		—		1,997,000
Total indefinite-lived assets	1,997,000		—		1,997,000		1,997,000		—		1,997,000
Total intangible assets, net	$	11,225,001	$	(3,930,203)	$	7,294,798	$	11,225,001	$	(2,771,933)	$	8,453,068

	June 30, 2025							December 31, 2024
	Gross Value		Accumulated Amortization			Net Value		Gross Value		Accumulated Amortization			Net Value
Proprietary technology	$	7,987,001	$	(3,259,623	)	$	4,727,378	$	7,987,001	$	(2,640,323	)	$	5,346,678
Backlog		276,000		(115,001	)		160,999		276,000		(16,610	)		259,390
Customer relationships		900,000		(114,286	)		785,714		900,000		(50,000	)		850,000
Non-compete agreements		65,000		(65,000	)		—		65,000		(65,000	)		—
Total finite-lived assets		9,228,001		(3,553,910	)		5,674,091		9,228,001		(2,771,933	)		6,456,068
Brand name		1,997,000		—			1,997,000		1,997,000		—			1,997,000
Total indefinite-lived assets		1,997,000		—			1,997,000		1,997,000		—			1,997,000
Total intangible assets, net	$	11,225,001	$	(3,553,910	)	$	7,671,091	$	11,225,001	$	(2,771,933	)	$	8,453,068

Proprietary technology and customer relationships are being amortized over seven years. Non-compete agreements are being amortized over three years. Backlog is being amortized over two years. Brand name is not amortized but reviewed for impairment on a quarterly basis and formally evaluated at year end.

13As of September 30, 2025, expected amortization expense for finite-lived intangible assets for the next five years is as follows:


Fiscal Year Ended:
2025	$	376,293
2026	1,459,173
2027	1,130,736
2028	657,857
2029	657,857
Thereafter	1,015,882
Total	$	5,297,798

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Note 7 – Equity Method Investment

On July 22, 2024, the Company sold all of its securities in UMAC to two unaffiliated third-party purchasers (the “Purchasers”). As part of the transaction, on July 22, 2024, the Company entered into an Exchange Agreement with UMAC pursuant to which the Company exchanged 4,250,000 shares of UMAC’s common stock, par value $0.001 per share, for 4,250 shares of UMAC’s newly designated Series A Convertible Preferred Stock (the “Series A”). The Company sold the Series A ownership interest ($4,408,357 at time of sale) and the Note Receivable of $4,000,000 to the Purchasers for $4.4 million in cash pursuant to a Purchase Agreement in a transaction that closed on July 22, 2024.

~~As of~~Prior ~~June~~to ~~30,~~the ~~2024~~sale, the Company had owned approximately a 46% interest in UMAC. The primary business operations included selling first-person-view video goggles for drone pilots, drones, parts and related equipment to the consumer marketplace. UMAC’s financial statements are prepared in accordance with GAAP. See Note 4 for additional information.

Financial information for UMAC prior to the sale of the Company’s equity interest was derived from UMAC’s Quarterly Report to the U.S. Securities and Exchange Commission on Form 10-Q for the six months ended June 30, 2024 and was as follows:

Schedule of Quarterly Financial Information


Current assets	$	5,116,963
Long-term assets	20,083,390
Current liabilities	931,200
Long-term liabilities	4,297,332
Revenues	2,030,039
Gross profit	592,607
Net loss	$	(2,718,240)

Current assets	$	5,116,963
Long-term assets		20,083,390
Current liabilities		931,200
Long-term liabilities		4,297,332
Revenues		2,030,039
Gross profit		592,607
Net loss	$	(2,718,240	)

The Company’s investments in UMAC have been impacted by the following:

Schedule of Investments


Initial investment, February 16, 2024	$	17,000,000
Equity method loss	(1,237,768)
Impairment	(11,353,875)
Investment balance, June 30, 2024	$	4,408,357
Sale of ownership interest	(4,408,357)
Investment balance, July 22, 2024	$	—

Initial investment, February 16, 2024	$	17,000,000
Equity method loss		(1,237,768	)
Impairment		(11,353,875	)
Investment balance, June 30, 2024	$	4,408,357
Investment balance, beginning	$	4,408,357
Sale of ownership interest		(4,408,357	)
Investment balance, July 22, 2024	$	—
Investment balance, ending	$	—

The computation of both the initial investment as of February 16, 2024 and investment balance prior to the sale were based on the fair market value of UMAC’s common stock.

The computation of both the initial investment as of February 16, 2024 and investment balance as of June 30, 2024, was based on the fair market value of UMAC’s common stock.

Note 8 – Property and Equipment

Property and equipment consist of assets with an estimated useful life greater than one year and are reported net of accumulated depreciation. The reported values are periodically assessed for impairment, and were as follows:

Schedule of Property and Equipment


	September 30, 2025		December 31, 2024
Equipment and related	$	2,228,685	$	1,633,105
Leasehold improvements	1,646,525		1,556,139
Furniture and fixtures	669,863		226,465
Accumulated depreciation	(1,910,587)		(1,535,000)
Net carrying value	$	2,634,486	$	1,880,709

	June 30, 2025			December 31, 2024
Equipment and related	$	1,851,817		$	1,633,105
Leasehold improvements		1,573,034			1,556,139
Furniture and fixtures		570,484			226,465
Accumulated depreciation		(1,864,414	)		(1,535,000	)
Net carrying value	$	2,130,921		$	1,880,709

Depreciation expense totaled $495,440 and $640,342 for the nine months ended September 30, 2025 and 2024, respectively.

~~Depreciation expense totaled $329,414 and $466,720 for the six months ended June 30, 2025 and 2024, respectively.~~17

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Note 9 – Other Long-Term Assets

Other long-term assets included:

Schedule of Other Long Term Assets


	September 30, 2025		December 31, 2024
Investment in equity securities	$	691,770	$	250,000
Security deposits	494,043		59,823
Total	$	1,185,813	$	309,823

	June 30, 2025		December 31, 2024
SAFE agreement	$	250,000	$	250,000
Security deposits		113,054		59,823
Total	$	363,054	$	309,823

In November 2022, the Company entered into a SAFE (Simple Agreement for Future Equity) agreement with Firestorm Labs, Inc. (“Firestorm”) under which it made a payment of $250,000 to Firestorm in exchange for the right to certain shares of Firestorm stock. The SAFE provided that the Company's investment would convert into shares of Firestorm's Preferred Stock upon the occurrence of a qualified equity financing. In July 2025, Firestorm completed a Series A Preferred Stock financing, and the Company's SAFE investment converted into shares of Firestorm's Series A Preferred Stock. The Company's investment has been recorded at fair value. Changes in the fair value of the investment are recognized in other income on the condensed consolidated statements of operations.

In November 2022, the Company entered into a SAFE (Simple Agreement for Future Equity) agreement with Firestorm Labs, Inc. (“Firestorm”) under which it made a payment of $250,000 to Firestorm in exchange for the right to certain shares of Firestorm stock. The SAFE permits the Company to participate in a future equity financing of Firestorm by converting the $250,000 into shares of Preferred Stock of Firestorm. If there is a change in control of Firestorm or a public offering of shares of its stock, then the Company shall have the right to receive cash payments, or shares of stock, whichever has greater value. The Company’s investment in the SAFE agreement has been recorded on the cost method of accounting. The Company evaluates the investment for any indications of impairment in value on a quarterly basis. No factors indicative of impairment were identified during the six months ended June 30, 2025.

Note 10 – Right of Use Assets and Liabilities

As of ~~June~~ September 30, 2025, the Company had operating type leases for real estate and no finance type leases. The Company’s leases have remaining lease terms of up to 58.5083 years, including options to extend certain leases for up to ~~six~~ten years. Operating lease expense totaled $~~392~~698,~~257~~ 756 and $~~177~~286,~~964~~428 for the ~~six~~nine months ended ~~June~~ September 30, 2025 and 2024, respectively.

~~Leases on~~During ~~which~~the nine months ended September 30, 2025, the Company ~~made~~entered ~~rent~~into ~~payments~~two ~~during~~new ~~the~~operating ~~reporting~~leases, ~~period~~which ~~included:~~resulted in right-of-use assets and lease liabilities of $5,276,592. The Company also amended an existing lease to expand its office space, which increased right-of-use assets and lease liabilities by $2,004,011. These transactions represent non-cash additions to right-of-use assets and lease liabilities.

~~Schedule~~Supplemental ofinformation ~~Leases~~related ~~Rent~~to ~~Payments~~operating leases for the nine months ended September 30, 2025 was:

Location	Monthly Rent				Expiration
Operating cash paid for leased facilities		$	708,929
South Salt Lake, Utah	$	24,040				December 2030
Weighted average remaining lease term (in years)		6.28
Santa Monica, California	$	16,697				June 2025
Weighted average discount rate		12		%
San Juan, Puerto Rico	$	6,186				June 2027
Grantsville, Utah	$	1,250				December 2026
Carson, California	$	22,655				April 2028
South Salt Lake, Utah	$	1,642				January 2027

~~Supplemental information~~Future ~~related~~lease topayments ~~operating~~at ~~leases~~September ~~for the six months ended June~~ 30, 2025 ~~was~~were as follows:

Schedule of Operating Leases Supplemental Information


Fiscal Year Ended:
2025	$	293,288
2026	1,564,559
2027	1,508,511
2028	1,306,843
2029	1,236,884
Thereafter	10,967,448
Total	16,877,533
Imputed interest	(8,158,146)
Total liability	$	8,719,387

Operating cash paid for leased facilities	$	344,245
Weighted average remaining lease term (in years)		4.35
Weighted average discount rate		12	%

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Note 11 – Debt Obligations

A. Decathlon Capital

On August 31, 2021, Teal entered into an Amended and Restated Loan and Security Agreement with Decathlon Alpha IV, L.P. (“DA4”) in the amount of $1,670,294 (the “Loan”), representing the outstanding principal amount previously due and owing by Teal to DA4. Interest on the Loan accrued at a rate of ten (10%) percent per annum. Principal and interest were payable in monthly installments of $49,275. The balance was paid off in September 2024.

B. Pelion Note

In May 2021, Teal entered into a note agreement totaling $350,000 which is payable upon demand. The Note bears interest at the applicable Federal Rate as of the date of the Note which was 0.13% on the date of issuance. The balance outstanding at September 30, 2025 and December 31, 2024 was $350,000, respectively. Accrued interest at ~~June~~ September 30, 2025 and December 31, 2024 totaled $1,~~865~~980 and $1,639, respectively.

C. Corporate Equity

Beginning in October 2021, and amended in January 2022, Teal financed a total of $120,000 of leasehold improvements with Corporate Equity, LLC. The loan bore interest at 8.25% annually and required monthly payments of $3,595. The balance was paid off in December 2024.

16D.Ascentium Capital

D. Ascentium Capital

In September 2021, Teal entered into a financing agreement with Ascentium Capital to fund the purchase of a fixed asset totaling $24,383 with monthly payments of $656. The balance was paid off in October 2024.

E. Summary

Future annual principal payments at ~~June~~ September 30, 2025 ~~were~~are as follows:

Schedule of Debt Payments Due


Fiscal Year Ended:
2025	$	350,000
Thereafter	—
Total	$	350,000

Note 12 – Convertible Notes Payable

A. September 2024 Securities Purchase Agreement

In September 2024, the Company entered into a Securities Purchase Agreement (the “September 2024 SPA”) with Lind Global Asset Management X LLC (“Lind X”). Under the September 2024 SPA, the Company received approximately $8,000,000 in funding from Lind X in exchange for a Senior Secured Convertible Promissory Note in the amount of $9,600,000 (the “September 2024 Note”) and a Common Stock Purchase Warrant for the purchase of 750,000 shares of our common stock at a price of $6.50 per share, exercisable for five years (the “September 2024 Warrant”). The September 2024 Note was secured by substantially all assets of the Company. As additional consideration to Lind X, the Company paid a commitment fee in the amount of $280,000. The September 2024 Note, which did not accrue interest, would have been repaid in eighteen consecutive monthly installments in the amount of $533,334 beginning six months from the issuance date. At the Company’s option, monthly payments could have been increased up to $1,000,000 so long as the Company’s market capitalization was at least $50 million. In addition, if the Repayment Share Price (as defined below) was equal to or greater than $2.00, Lind X could have at its option, increased the monthly payment amount up to $1,300,000 for up to two months. The monthly payments due under the September 2024 Note could have been made by the issuance of common stock valued at the Repayment Share Price, cash in an amount equal to 1.025 times the required payment amount, or a combination thereof. The Repayment Share Price was defined in the September 2024 Note as ninety percent of the average of the five consecutive lowest daily VWAPs for our common stock during the twenty trading days prior to the payment date, subject to a floor price of $0.75 per share. The fair value of the convertible note and related warrants were estimated using a Monte Carlo simulation model. No value was assigned to the warrant ~~liability~~ due to the fair market value of the convertible note payable being in excess of the proceeds received. In December 2024, Lind converted the entire $9,600,000 note payable into 1,476,923 shares of the Company’s common stock at a conversion price of $6.50 per share.

Amendment: In November 2024, the Company entered into a First Amendment (the “November 2024 SPA Amendment”) to the September 2024 SPA with Lind. The November 2024 SPA Amendment amends the terms of the September 2024 SPA with Lind. Upon closing of the November 2024 SPA Amendment, the Company received approximately $6,000,000 in funding from Lind in exchange for issuance of a Senior Secured Convertible Promissory Note in the amount of $7,200,000 (the “November 2024 Note”) and a Common Stock Purchase Warrant for the purchase of 326,000 shares of Common Stock at a price of $9.20 per share, exercisable for 5 years (the “November 2024 Warrant”). As additional consideration to Lind, the Company paid a commitment fee in the amount of $210,000. The November 2024 Note, which did not accrue interest, would have been repaid in eighteen consecutive monthly installments in the amount of $400,000 beginning six months from the issuance date. At our option, monthly payments could have been increased up to $750,000 so long as our market capitalization was at least $50 million. In addition, if the Repayment Share Price was equal to or greater than $2.00, Lind could have at its option, increased the monthly payment amount up to $975,000 for up to two months. The monthly payments due under the November 2024 Note could have been made by the issuance of common stock valued at the Repayment Share Price, cash in an amount equal to 1.025 times the required payment amount, or a combination thereof. The Repayment Share Price was defined in the November 2024 Note as ninety percent of the average of the five consecutive lowest daily VWAPs for our common stock during the twenty trading days prior to the payment date, subject to a floor price of $0.75 per share. The fair value of the convertible note and related warrants were estimated using a Monte Carlo simulation model. No value was assigned to the warrant liability due to the fair market value of the convertible note payable being in excess of the proceeds received. In December 2024, Lind converted the entire $7,200,000 note payable into 782,607 shares of the Company’s common stock at a conversion price of $9.20 per share.19

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Bmarket value of the convertible note payable being in excess of the proceeds received. ~~February~~In ~~2025~~December ~~Securities~~2024, ~~Purchase~~Lind ~~Agreement~~X converted the entire $9,600,000 note payable into 1,476,923 shares of the Company’s common stock at a conversion price of $6.50 per share.

Amendment: In ~~February~~ ~~2025~~November 2024, the Company entered into ~~another~~a ~~Securities~~First ~~Purchase~~Amendment ~~Agreement~~ (the “~~February~~November ~~2025~~2024 SPA Amendment”) to the September 2024 SPA with Lind X. ~~Under~~ The November 2024 SPA Amendment amends the ~~February~~terms ~~2025~~of the September 2024 SPA with Lind X. Upon closing of the November 2024 SPA Amendment, the Company received approximately $156,000,000 in funding from Lind X in exchange for issuance of a Senior Secured Convertible Promissory Note in the amount of $167,~~500~~200,000 (the “~~February~~November ~~2025~~2024 Note”) and a Common Stock Purchase Warrant for the purchase of 1326,000~~,000~~ shares of ~~our~~Common ~~common~~Stock ~~stock~~ at a price of $159.00 20 per share, exercisable for ~~five~~ 5 years (the “~~February~~November ~~2025~~2024 Warrant”). As additional consideration to Lind X, the Company paid a commitment fee in the amount of $210,000. The ~~February~~November ~~2025~~2024 Note, iswhich ~~secured~~did bynot ~~substantially~~accrue ~~all~~interest, ~~assets~~would have been repaid in eighteen consecutive monthly installments in the amount of $400,000 beginning six months from the ~~Company~~ issuance date. AsAt ~~additional~~our ~~consideration~~option, monthly payments could have been increased up to $750,000 so long as our market capitalization was at least $50 million. In addition, if the Repayment Share Price was equal to or greater than $2.00, Lind X could have at its option, increased the ~~Company~~monthly ~~paid~~payment aamount ~~commitment~~up ~~fee~~to $975,000 for up to two months. The monthly payments due under the November 2024 Note could have been made by the issuance of common stock valued at the Repayment Share Price, cash in an amount equal to 1.025 times the required payment amount, or a combination thereof. The Repayment Share Price was defined in the November 2024 Note as ninety percent of the average of the five consecutive lowest daily VWAPs for our common stock during the twenty trading days prior to the payment date, subject to a floor price of $~~525~~0.75 per share. The fair value of the convertible note and related warrants were estimated using a Monte Carlo simulation model. No value was assigned to the warrant due to the fair market value of the convertible note payable being in excess of the proceeds received. In December 2024, Lind X converted the entire $7,200,000 note payable into 782,607 shares of the Company’s common stock at a conversion price of $9.20 per share.

Terms: The February 2025 Note’s terms include, (i) the balance of the February 2025 Note was due and payable on February 10, 2026; (ii) the amount due under the February 2025 Note was convertible by Lind from time to time at a price equal to the lower of “Conversion Price” of $16B.15 per share, or the “Repayment Share Price,” which is defined as ninety percent (90%) of the average of the five (5) lowest daily VWAPs for the Company’s common stock during the twenty (20) trading days prior to the conversion date, subject to a floor price; (iii) conversions under the February 2025 ~~Note~~Securities ~~are~~Purchase limited to a maximum of $1,650,000 in any calendar month, subject to increase upon our optional written consent; and (iv) upon receipt of a conversion notice under the February 2025 Note, the Company could, if the applicable Repayment Share Price is below the Conversion Price, elect to pay the conversion amount, plus a 2.5% premium, in cash and in lieu of issuing common stock. In the event the Company issues or sells additional shares of common stock at an effective price per share that is less than the conversion price of the February 2025 Note as amended, the conversion price upon each such issuance will be reduced to a price equal to the consideration per share paid for additional shares of common stock. Additionally, in the event the Company issues or sells additional shares of common stock at an effective price per share that is less than the exercise price of the February 2025 Warrant as amended, the exercise price upon each such issuance will be reduced to a price equal to the consideration per share paid for additional shares of common stock.Agreement

~~Amendment 1:~~ In ~~April~~ February 2025, the Company entered into aanother ~~First~~Securities ~~Amendment~~Purchase Agreement (the “~~April~~February 9, 2025 ~~Amendment~~SPA”) towith ~~the~~Lind ~~terms~~Global ofAsset ~~the~~Management ~~February~~XI ~~2025 Note~~LLC ~~and~~("Lind ~~February~~XI," ~~2025~~and ~~Warrant.~~together ~~The~~with ~~February~~Lind ~~2025~~X, ~~Note~~"Lind"). ~~and~~Under the February 2025 SPA ~~contained certain covenants~~, ~~including: (i) in~~ the ~~event of new issuances of the~~ Company’s ~~common~~received ~~stock~~approximately ~~at a price less than the Conversion Price then in effect~~$15,000,000 ~~the Conversion Price will be adjusted to the price paid for the newly issued shares of common stock (the “Price Reset Provision”); (ii)~~ in ~~the~~funding ~~event the~~from ~~Company~~Lind ~~issues~~XI ~~new securities~~ in exchange for ~~gross~~a ~~proceeds~~Senior ofConvertible ~~greater~~Promissory ~~than~~Note ~~$15~~in ~~million,~~ the ~~Company~~amount ~~is required to pay the lower~~ of ~~20% of the proceeds of such offering~~$16, ~~or 20% of the balance of the February 2025 Note~~500,000 ~~toward repayment of~~ (the “February 2025 Note ~~(the “Offering Proceeds Provision~~”); and ~~(iii)~~a inCommon ~~the~~Stock ~~event~~Purchase ~~the~~Warrant ~~Company~~for ~~undertakes~~the apurchase ~~new offering~~ of ~~securities~~1,000,000 ~~Lind~~shares ~~has the~~of ~~right~~our tocommon ~~purchase~~stock upat toa ~~20%~~price of ~~the~~$15.00 ~~securities~~per ~~issued~~share, inexercisable ~~the~~for ~~new~~five ~~offering~~years (the “~~Participation~~February ~~Rights~~2025 Warrant”). The ~~Warrant~~February ~~contained provisions~~2025 ~~that~~Note ~~would~~is ~~adjust~~secured ~~the~~by ~~exercise~~substantially ~~price~~all assets of the ~~Warrant~~Company. inAs ~~certain circumstances,~~additional ~~including~~consideration ifto Lind XI, the Company ~~issued~~paid ~~new securities at~~ a ~~price~~commitment ~~less~~fee ~~than~~in the ~~then-current~~amount ~~exercise~~of ~~price~~$525,000.

~~Under the~~Terms: ~~April~~The 9,February 2025 ~~Amendment~~Note’s terms include, (i) the balance of the February 2025 Note was due and inpayable ~~exchange~~on ~~for~~February 10, 2026; (ii) the amount due under the February 2025 Note was convertible by Lind XI from time to time at a ~~waiver~~price equal to the lower of “Conversion Price” ~~Reset~~of ~~Provision~~$16.15 ~~and~~per ~~certain~~share, ~~other~~or ~~covenants~~the in“Repayment ~~connection~~Share ~~with~~Price,” ~~the~~which ~~proposed~~is ~~April~~defined ~~Registered~~as ~~Direct~~ninety ~~Offering,~~percent (90%) of the ~~terms~~average of the ~~February~~ ~~2025~~five ~~Note,~~(5) ~~Warrant~~lowest ~~and~~daily VWAPs for the ~~SPA~~Company’s ~~were~~common ~~amended.~~stock ~~The~~during ~~balance~~the oftwenty (20) trading days prior to the conversion date, subject to a floor price; (iii) conversions under the February 2025 Note ~~was~~are ~~increased~~limited to a maximum of $181,~~150~~650,000~~. The~~ ~~Conversion~~in ~~Price~~any calendar month, subject to increase upon our optional written consent; and (iv) upon receipt of a conversion notice under the February 2025 Note, ~~was~~the ~~lowered~~Company tocould, ~~$9.52 per~~if ~~share.~~the ~~The~~applicable ~~exercise~~Repayment ~~price~~Share ~~for~~Price is below the ~~Warrant~~Conversion ~~was~~Price, ~~lowered~~elect to $7pay the conversion amount, plus a 2.62 5% premium, in cash and in lieu of issuing common stock. In the event the Company issues or sells additional shares of common stock at an effective price per share. ~~The~~that ~~maturity~~is ~~date~~less than the conversion price of the February 2025 Note ~~was~~as ~~extended~~amended, tothe ~~May 10,~~conversion ~~2026.~~price ~~The~~upon ~~Price~~each ~~Reset~~such ~~Provision,~~issuance ~~the~~will ~~Offering~~be ~~Proceeds~~reduced ~~Provision,~~to ~~and~~a price equal to the ~~Participation~~consideration ~~Rights~~per ~~were~~share ~~waived~~paid for aadditional ~~limited time,~~shares ~~until~~of ~~April~~common 17stock. Additionally, ~~2025.~~in ~~The~~the event the Company ~~accounted~~issues ~~for~~or ~~this~~sells ~~amendment~~additional asshares of common stock at an ~~extinguishment~~effective ofprice ~~debt~~per ~~and~~share ~~recorded~~that ais ~~loss~~less than the exercise price of $4the February 2025 Warrant as amended,~~623,335 during~~ the ~~three~~exercise ~~months~~price ~~ended~~upon ~~June,~~each 30such ~~2025~~issuance will be reduced to a price equal to the consideration per share paid for additional shares of common stock.

Amendment 21: In April 2025, the Company entered into a First Amendment (i)the ~~Second~~“April 9, 2025 Amendment”) to the terms of the February 2025 Note and February 2025 Warrant;. ~~(ii)~~The ~~First~~February ~~Amendment~~2025 toNote ~~the November 2024 Warrant~~ and ~~(iii) First Amendment to~~ the February 2025 SPA ~~(collectively~~contained certain covenants, ~~the~~including: ~~“Agreement”~~(i). ~~Under~~in the ~~terms~~event of ~~the Agreement,~~new issuances of the Company’s ~~and~~common ~~Lind~~stock ~~amended~~at ~~each~~a ofprice ~~the~~less ~~February~~than ~~2025 Note,~~ the ~~February~~Conversion ~~2025~~Price ~~Warrant~~then ~~and~~in effect, the ~~November~~Conversion ~~2024~~Price ~~Warrant~~will be adjusted to ~~include~~ athe ~~cap~~price onpaid for the ~~amount~~newly ofissued shares ~~issuable~~of ~~upon~~common ~~conversion~~stock ~~and/or~~(the ~~exercise~~“Price ofReset ~~each~~Provision”); ~~aforementioned~~(ii) ~~security~~in ~~such~~the ~~that~~event the ~~shares issuable~~Company ~~under~~issues ~~each~~new ofsecurities ~~them~~in ~~shall~~exchange ~~not~~for ~~exceed~~gross ~~the~~proceeds ~~maximum~~of ~~number~~greater ofthan ~~shares~~$15 ofmillion, the Company’s ~~common~~is ~~stock~~required ~~which~~to ~~may~~pay bethe ~~issued~~lower ~~by the~~of ~~Company~~20% inof the ~~absence~~proceeds of ~~shareholder~~such ~~approval~~offering, asor ~~provided~~20% byof ~~Nasdaq~~the ~~Rule~~balance ~~5635(d).~~of Inthe ~~addition~~February 2025 Note, ~~Section~~toward ~~5.13~~repayment of the February 2025 ~~SPA~~Note ~~was amended to extend~~ (the ~~deadline~~“Offering ~~for~~Proceeds toProvision”); ~~obtain~~and ~~Stockholder Approval~~ (asiii) ~~defined~~ in the ~~February~~event ~~2025~~the ~~SPA)~~Company toundertakes ~~June~~a ~~30, 2025.~~new Inoffering ~~addition~~of securities, ~~certain~~Lind ~~stockholders~~XI ofhas the ~~Company~~right ~~entered~~to ~~into~~purchase ~~support~~up ~~agreements~~to ~~under~~20% ~~which~~of ~~they~~the ~~agreed~~securities toissued ~~vote~~ in ~~favor of~~ the ~~matter~~new ~~presented~~offering to (the ~~Company’s~~“Participation ~~stockholders~~Rights”). ~~for~~The ~~the~~Warrant ~~Stockholder~~contained ~~Approval.~~provisions that

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would adjust the exercise price of the Warrant in certain circumstances, including if the Company issued new securities at a price less than the then-current exercise price.

Under the April 9, 2025 Amendment, and in exchange for a waiver of Price Reset Provision and certain other covenants in connection with the proposed April Registered Direct Offering (as defined below), the terms of the February 2025 Note, Warrant and the SPA were amended. The balance of the February 2025 Note was increased to $18,150,000. The Conversion Price of the February 2025 Note was lowered to $9.52 per share. The exercise price for the Warrant was lowered to $7.62 per share. The maturity date of the February 2025 Note was extended to May 10, 2026. Upon receipt of a conversion notice under the February 2025 Note, we could, if the applicable Repayment Share Price was below the Conversion Price, elect to pay up to 50% of the conversion amount, plus a 2.5% premium, in cash and in lieu of issuing common stock. The Price Reset Provision, the Offering Proceeds Provision, and the Participation Rights were waived for a limited time, until April 17, 2025. The Company accounted for this amendment as an extinguishment of debt and recorded a loss of $4,623,335 during the nine months ended September 30, 2025.

Amendment 2: In April 2025, the Company entered into a (i) Second Amendment to the February 2025 Note and February 2025 Warrant; (ii) First Amendment to the November 2024 Warrant and (iii) First Amendment to the February 2025 SPA (collectively, the “Agreement”). Under the terms of the Agreement, the Company and Lind amended each of the February 2025 Note, the February 2025 Warrant and the November 2024 Warrant to include a cap on the amount of shares issuable upon conversion and/or exercise of each aforementioned security such that the shares issuable under each of them shall not exceed the maximum number of shares of the Company’s common stock which may be issued by the Company in the absence of shareholder approval as provided by Nasdaq Rule 5635(d). In addition, Section 5.13 of the February 2025 SPA was amended to extend the deadline to obtain Stockholder Approval (as defined in the February 2025 SPA) to June 30, 2025. In addition, certain stockholders of the Company entered into support agreements under which they agreed to vote in favor of the matter presented to the Company’s stockholders for the Stockholder Approval.

Drawdowns:

● •On April 15, 2025, the Company redeemed $1,650,000 of the February 2025 Note for a cash payment of $1,691,250. ● On May 1, 2025, Lind converted $1,650,000 of the February 2025 Note into 372,460 shares of the Company’s common stock at a conversion price of $4.43 per share. ● On June 2, 2025, Lind converted $1,650,000 of the February 2025 Note into 331,991 shares of the Company’s common stock at a conversion price of $4.97 per share.

~~Amendment 3:~~ •On ~~June 17~~May 1, 2025, ~~the Company entered into a Third Amendment to Senior Secured Convertible Promissory Note and Warrant Issued February 10, 2025 with~~ Lind ~~and~~converted ~~Second Amendment to Warrant Issued November 26~~$1, ~~2024 between the Company and Lind (collectively~~650,000 ~~the “June 17, 2025 Amendment”). Under the terms~~ of the ~~June 17, 2025 Amendment, and in exchange for Lind waiving its right to purchase up to twenty percent of the securities issued in an equity financing, the Company and Lind amended the~~ February 2025 Note, ~~November~~into ~~2024 Warrant~~372,460 ~~and~~shares ~~the February 2025 Warrant to (1) exempt any adjustments from the offering contemplated at that time to the conversion price~~ of the ~~February 2025 Note and exercise price of the November 2024 Warrant and February 2025 Warrant; (2) remove the~~ Company’s ~~election~~common tostock ~~pay,~~at ina ~~certain~~conversion ~~circumstances,~~price ~~up to fifty percent~~ of ~~the~~$4.43 ~~conversion~~per ~~amount under the February 2025 Note in cash; and (3) remove the Company’s right to prepay the February 2025 Note~~share.

~~The~~•On ~~fair~~June 2, ~~value~~2025, ofLind ~~the~~converted ~~convertible~~$1,650,000 ~~note~~of ~~and related warrants were estimated using a Monte Carlo simulation model. No value was assigned to~~ the ~~warrant~~February ~~liability~~2025 ~~due~~Note tointo ~~the~~331,991 ~~fair~~shares ~~market value~~ of the ~~convertible note payable being in excess of the proceeds received. See Note 2 for further information. The~~ Company’s ~~convertible~~common ~~notes~~stock ~~payable balance~~ at ~~June~~a ~~30,~~conversion ~~2025~~price ~~was~~of $~~19,434,004~~4.97 per share.

•On July 1, 2025, Lind converted $1,650,000 of the February 2025 Note into 265,273 shares of the Company’s common stock at a conversion price of $6.22 per share.

•On August 1, 2025, Lind converted $1,650,000 of the February 2025 Note into 262,321 shares of the Company’s common stock at a conversion price of $6.29 per share.

•On September 8, 2025, Lind converted $1,650,000 of the February 2025 Note into 214,564 shares of the Company's common stock at a conversion price of $7.69 per share.

Each of the drawdowns listed above occurred at a variable conversion rate below the Conversion Price. Consequentially, the drawdown represented the exercise of a share settled redemption feature for accounting purposes. The Company applied extinguishment accounting which resulted in a $2,448,328 gain on extinguishment of convertible notes payable for the three and nine months ended September 30, 2025.

Amendment 3: On June 17, 2025, the Company entered into a Third Amendment to Senior Secured Convertible Promissory Note and Warrant Issued February 10, 2025 with Lind XI and Second Amendment to Warrant Issued November 26, 2024 between the Company and Lind X (collectively, the “June 17, 2025 Amendment”). Under the terms of the June 17, 2025 Amendment, and in exchange for Lind waiving its right to purchase up to twenty percent of the securities issued in an equity financing, the Company and Lind amended the February 2025 Note, November 2024 Warrant, and the February 2025 Warrant to (1) exempt any adjustments from the offering contemplated at that time to the conversion price of the February 2025 Note and exercise price of the November 2024 Warrant and February 2025 Warrant; (2) remove the

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Company’s election to pay, in certain circumstances, up to fifty percent of the conversion amount under the February 2025 Note in cash; and (3) remove the Company’s right to prepay the February 2025 Note.

The fair value of the convertible note and related warrants were estimated using a Monte Carlo simulation model. No value was assigned to the warrant due to the fair market value of the convertible note payable being in excess of the proceeds received. See Note 2 for further information. The Company’s convertible notes payable balance at September 30, 2025 was $13,351,000.

Note 13 – Common Stock

Our common stock has a par value of $0.001 per share. We are authorized to issue 500,000,000 shares of common stock. Each share of common stock is entitled to one vote. A summary of shares of common stock issued by the Company since December 31, 2024 is as follows:

Schedule of Common Stock Outstanding


Description of Shares						Shares Issued
Shares outstanding as of December 31, 2024						85,215,136
Exercise of stock options						1,997,350
Exercise of warrants						559,580
Vesting of restricted stock to employees						30,000
Acquisition adjustment						(121,513)
Issuance of common stock through public offerings						29,141,438
Conversion of convertible notes into common stock						1,446,609
Retirement of common shares						(106,330)
Shares outstanding as of September 30, 2025						118,162,270

Description of Shares	Shares Issued
Shares outstanding as of December 31, 2024		85,215,136
Shares outstanding balance		85,215,136
Exercise of stock options		1,396,068
Exercise of warrants		249,843
Acquisition adjustment		(121,513	)
Issuance of common stock through public offerings		11,172,688
Conversion of convertible notes into common stock		704,451
Retirement of common shares		(106,330	)
Shares outstanding as of June 30, 2025		98,510,343
Shares outstanding balance		98,510,343

In February 2025, the Company retired 106,330 shares of common stock that were previously held in escrow for payment as consideration for the Teal acquisition. Subsequent to the acquisition’s modification period and prior to the settlement of escrowed shares, the Company paid cash for certain seller responsible expenditures which were then settled through the refund of these escrowed shares. This was treated as an equity transaction and goodwill was not affected.

Public Offerings

In April 2025, the Company entered into a securities purchase agreement with certain institutional investors pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “April Registered Direct Offering”), an aggregate of 4,724,412 shares of the Company’s common stock, par value $0.001 per share, at a price of $6.35 per share. The gross proceeds to the Company from the April Registered Direct Offering were approximately $30 million, before deducting the placement agents’ fees and other offering expenses payable by the Company.

In June 2025, the Company entered into a securities purchase agreement with certain institutional investors pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “June Registered Direct Offering”), an aggregate of 6,448,276 shares of the Company’s common stock, par value $0.001 per share, at a price of $7.25 per share. The gross proceeds to the Company from the June Registered Direct Offering were approximately $46.75 million, before deducting the placement agents’ fees and other offering expenses payable by the Company.

In September 2025, the Company entered into an underwriting agreement with a certain institutional investor pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “September Registered Direct Offering”), an aggregate of 15,625,000 shares of the Company’s common stock, par value $0.001 per share, at a price of $9.60 per share. The Company also granted the underwriters a thirty day option to purchase up to an additional 2,343,750 shares of common stock at the public offering price, which the underwriters exercised in full at closing. The gross proceeds to the Company from the September Registered Direct Offering were approximately $172.50 million, before deducting the underwriters’ fees and other offering expenses payable by the Company.

Note 14 – Preferred Stock

Our preferred stock has a par value of $0.001 per share. Series B Preferred Stock (“Series B Stock”) is convertible into common stock at a ratio of 0.8334 shares of common stock for each share of Series B Stock held and votes together with the common stock on an as-if-converted basis. 982,000 shares of Series B Stock were converted into 818,334 shares of common stock in June 2023. Shares outstanding at June 30, 2025 totaled 4,676 which are convertible into 3,896 shares of common stock.

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the common stock on an as-if-converted basis. Shares outstanding at September 30, 2025 totaled 4,676 which are convertible into 3,896 shares of common stock.

Note 15 – Warrants

In September 2024, the Company issued warrants to purchase 750,000 shares of common stock to Lind, as further described in Note 12. The warrants have a five-~~year5~~ year term and an exercise price of $6.50. No value was assigned to the warrants under the Monte Carlo simulation model due to the fair market value of the convertible note payable being in excess of the proceeds received.

In November 2024, the Company issued warrants to purchase 326,000 shares of common stock to Lind, as further described in Note 12. The warrants have a five-year ~~term5~~term and an exercise price of $9.20. No value was assigned to the warrants under the Monte Carlo simulation model due to the fair market value of the convertible note payable being in excess of the proceeds received.

In February 2025, the Company issued warrants to purchase 1,000,000 shares of common stock to Lind, as further described in Note 12. The warrants have a five-~~year5~~year term and an exercise price of $15.00 which was amended to $7.52 on the First Amendment to the agreement on ~~April~~ April 9, 2025. No value was assigned to the warrants under the Monte Carlo simulation model due to the fair market value of the convertible note payable being in excess of the proceeds received.

The following table summarizes the changes in warrants outstanding since December 31, 2024.

Schedule of Changes in Warrants Outstanding


	Number of Shares	Weighted-average Exercise Price per Share		Weighted-average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2024	914,056	$	4.76	2.40	$	7,397,542
Granted	1,000,000	7.62		4.37	—
Exercised	(600,223)	5.22		—	—
Outstanding at September 30, 2025	1,313,833	$	6.02	3.42	$	5,691,323

	Number of Shares			Weighted-average Exercise Price per Share		Weighted-average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2024		914,056		$	4.76		2.40	$	7,397,542
Granted		1,000,000			7.62		4.87		—
Exercised		(282,623	)		2.65		—		—
Outstanding at June 30, 2025		1,631,433		$	6.88		3.82	$	1,624,804

Note 16 – Share Based Awards

The 2019 Equity Incentive Plan (the “2019 Plan”) and the 2024 Omnibus Equity Incentive Plan (the “2024 Plan”) (collectively, the “Plans”) allow us to incentivize key employees, consultants, and directors with long term compensation awards such as stock options, restricted stock, and restricted stock units (collectively, the “Awards”). The number of shares issuable in connection with Awards under the 2019 Plan were not to exceed 11,750,000. However, no shares are issuable under the 2019 Plan after the 2024 Plan became effective on October 15, 2024. The number of shares issuable in connection with Awards under the 2024 Plan may not exceed 24,603,000 plus any underlying forfeited 2019 Plan awards.

A. Options

The range of assumptions used to calculate the fair value of options granted during the ~~six~~nine months ended ~~June~~ September 30, 2025 was:

Schedule of Assumptions Used to Calculate the Fair Value of Options Granted


Exercise Price			$6.73 – 9.74
Stock price on date of grant			6.73 – 9.74
Risk-free interest rate			3.86 – 4.44%
Dividend yield			—
Expected term (years)			5.00 – 6.00
Volatility			135.54 – 191.15%

Exercise Price	$6.73 – 8.56
Stock price on date of grant	6.73 – 8.46
Risk-free interest rate	3.94 – 4.44	%
Dividend yield	—
Expected term (years)	5.87 – 5.97
Volatility	177.58 – 191.15	%

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A summary of options activity under the Plan since December 31, 2024 was:

Schedule of Options Activity


	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of December 31, 2024	5,645,325	$	1.54	7.90	$	59,779,836
Granted	1,930,850	7.50
Exercised	(2,532,848)	1.26
Forfeited or expired	(255,963)	2.16
Outstanding as of September 30, 2025	4,787,364	3.93		8.24	30,745,797
Exercisable as of September 30, 2025	1,117,144	$	1.62	5.80	$	9,756,919

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding as of December 31, 2024		5,645,325		$	1.54		7.90	$	59,779,836
Granted		1,760,850			7.22
Exercised		(1,875,862	)		1.29
Forfeited or expired		(213,253	)		1.90
Outstanding as of June 30, 2025		5,317,060			3.38		8.26		21,216,913
Exercisable as of June 30, 2025		1,553,548		$	1.33		5.54	$	9,245,793

The aggregate intrinsic value of outstanding options represents the excess of the stock price at the indicated date over the exercise price of each option. As of September 30, 2025, there was $12,374,099 of unrecognized stock-based compensation expense related to unvested stock options which is expected to be recognized over the weighted average periods of 1.50 years.

~~The aggregate intrinsic value of outstanding options represents the excess of the stock price at the indicated date over the exercise price of each option~~B.Restricted As of June 30, 2025, there was $14,303,166 of unrecognized stock-based compensation expense related to unvested stock options which is expected to be recognized over the weighted average periods of 1.62 years.Stock

B. Restricted Stock

A summary of restricted stock activity under the Plan since December 31, 2024 was:

Schedule of Restricted Stock Activity


	Shares	Weighted Average Grant-Date Fair Value Per Share
Unvested and outstanding as of December 31, 2024	1,544,027	$	3.84
Granted	817,242	7.03
Forfeited	(330,861)	1.06
Unvested and outstanding as of September 30, 2025	2,030,408	$	5.58

	Shares			Weighted Average Grant-Date Fair Value Per Share
Unvested and outstanding as of December 31, 2024		1,544,027		$	3.84
Granted		787,242			6.93
Vested		—			—
Forfeited		(321,428	)		0.89
Unvested and outstanding as of June 30, 2025		2,009,841		$	5.53

As of September 30, 2025, there was $7,397,640 of unrecognized stock-based compensation expense related to unvested restricted stock units which is expected to be recognized over the weighted average periods of 1.49 years.

As of June 30, 2025, there was $8,798,089 of unrecognized stock-based compensation expense related to unvested restricted stock units which is expected to be recognized over the weighted average periods of 1C.~~56 years.~~Stock Compensation

C. Stock ~~Compensation~~compensation expense for the nine months ended September 30 by functional operating expense was:

Stock compensation expense for the six months ended June 30 by functional operating expense was:


	2025		2024
Research and development	$	747,363	$	338,752
Sales and marketing	2,036,318		311,164
General and administrative	4,471,739		2,391,303
Total	$	7,255,420	$	3,041,219

~~Schedule of~~Stock compensation expense pertaining to options totaled $3,926,868 for the nine months ended September 30, 2025. Stock ~~Compensation~~compensation ~~Expense~~expense bypertaining ~~Functional~~to ~~Operating~~restricted ~~Expense~~stock totaled $3,328,552 for the nine months ended September 30, 2025. Stock compensation expense pertaining to options totaled $2,739,388 for the nine months ended September 30, 2024. Stock compensation expense pertaining to restricted stock totaled $301,831 for the three months ended September 30, 2024.

	2025		2024
Research and development	$	321,018	$	267,459
Sales and marketing		1,731,973		175,478
General and administrative		1,581,042		1,321,105
Total	$	3,634,033	$	1,764,042

~~Stock compensation~~Table ~~expense~~of pertaining to options totaled $1,958,711 for the six months ended June 30, 2025. Stock compensation expense pertaining to restricted stock totaled $1,675,322 for the six months ended June 30, 2025. Stock compensation expense pertaining to options totaled $1,561,978 for the six months ended June 30, 2024. Stock compensation expense pertaining to restricted stock totaled $202,062 for the three months ended June 30, 2024.contents

Note 17 - Related-Party Transactions

In February 2024, the Company sold Rotor Riot and Fat Shark to UMAC, as further described in Note 4 and Note 7. UMAC’s Chief Executive Officer is a direct relative of a former member of the Company’s management.

Note 18 – Commitments and Contingencies

Legal Proceedings

In the ordinary course of business, we may be involved, at times, in various legal proceedings involving a variety of matters. We do not believe there are any pending legal proceedings that will have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. We have not recorded any litigation reserves as of ~~June~~ September 30, 2025.

One pending legal matter is an action filed against Teal in a U.S. District Court in Delaware by Autonodyne, LLC. The complaint asserts claims for breach of contract which management denies. We are asserting vigorous defenses to the complaint. ~~Additionally,~~A ~~the~~motion ~~Company~~for ~~has~~summary judgment was filed aby ~~lawsuit against~~Autonodyne, ~~the~~LLC ~~complainant~~that ~~for~~will ~~Tortious~~be ~~Interference~~heard ~~with~~in ~~Contractual~~Delaware ~~Relations~~Superior ~~and~~Court ~~Prospective~~on ~~Contractual~~December ~~Relations~~11 2025. No discovery ~~or other significant developments~~ in ~~the~~this ~~lawsuit~~matter ~~have~~has occurred yet.

Note 19 – Subsequent Events

Subsequent events have been evaluated through the date of this filing and there are no subsequent events which require disclosure, except as follows:

On ~~July~~October 1, 2025, Lind converted $1,650,000 of the February 2025 Note into ~~265~~213,~~273~~178 shares of the Company’s common stock at a conversion price of $67.2274 per share.

On ~~July~~ 17October 6, 2025, Lind exercised ~~200~~100,000 of the November 2024 Warrants at a price of $6.35 per share, resulting in proceeds of $635,000. Also on October 6, 2025, Lind exercised 135,000 of the February 2025 Warrants at a price of $7.62 per share, resulting in proceeds of $1,~~524~~028,~~000~~700.

On ~~August~~ 1October 9, 2025, Lind ~~converted~~exercised $1100,~~650,~~000 of ~~the~~ ~~February 2025 Note into 262,321 shares of~~ the ~~Company’s~~November ~~common~~2024 ~~stock~~Warrants at a ~~conversion~~ price of $6.2935 per share, resulting in proceeds of $635,000.

On InOctober ~~July~~15, 2025, ~~the Company~~Lind ~~obtained~~exercised ~~the~~126,000 ~~TD3~~of ~~LRP~~the ~~contract~~November ~~with~~2024 ~~the~~Warrants ~~U.S.~~at ~~Army~~a toprice ~~deliver~~of up$6.35 toper ~~690~~share, ~~SRR~~resulting ~~Black~~in ~~Widow~~proceeds ~~systems~~of $800,100.

InOn ~~July~~October 22, 2025, ~~Firestorm~~the ~~raised~~U.S. ~~approximately $47~~Army's ~~million~~SRR ~~through~~UAS aTranche ~~Series~~2 A(T2) ~~preferred~~Program's ~~stock~~Limited ~~financing.~~Rate ~~The~~Production ~~Company~~(LRIP) iscontract, ~~currently~~signed ~~assessing~~in ~~the~~July ~~value~~2025, ofwas ~~the~~expanded ~~Firestorm SAFE investment~~ and ~~will~~is ~~record a~~now ~~gain~~valued ~~during~~at ~~the~~approximately ~~three~~$35 ~~month period ending September 30, 2025~~million.

2225

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Transition Report on Form 10-KT for the Transition Period ended December 31, 2024 as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.

Overview

We are a drone technology company integrating robotic hardware and software for military, government and commercial operations. We were originally incorporated under the laws of the State of Colorado in 1984 under the name “Oravest International, Inc.” In November 2016, we changed our name to “TimefireVR, Inc.” and re-incorporated in Nevada. In May 2019, we completed a share exchange agreement with Propware which resulted in the Propware shareholders acquiring an 83% ownership interest, and management control, of the Company. In connection with the share exchange agreement, we changed our name to “Red Cat Holdings, Inc.”, and our operating focus to the drone industry.

Prior to the share exchange agreement, Propware was focused on the research and development of software solutions that could provide secure cloud-based analytics, storage and services for the drone industry. Following the share exchange agreement and name change, we have completed a series of acquisitions and financings which have broadened the scope of our activities in the drone industry.

Plan of Operations

Since April 2016, the Company’s primary business has been to provide products, services, and solutions to the drone industry which it presently does through its wholly owned consolidated subsidiaries.

23Discussion and Analysis of the Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

Discussion and Analysis of the Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

Revenues

Consolidated revenues totaled $39,~~218~~646,~~577~~392 during the three months ended ~~June~~September 30, 2025 (or the “2025 period”) compared to $61,~~419~~292,~~669~~447 during the three months ended ~~June~~September 30, 2024 (or the “2024 period”) representing aan ~~decrease~~increase of $38,~~201~~353,~~092~~945, or 50646%. The ~~decrease~~increase related to ~~lower~~higher product revenue as the Company ~~has~~started ~~begun~~delivering ~~shifting~~drones ~~manufacturing~~to ~~focus from~~ the ~~Teal~~US 2Army tounder the ~~Black~~SRR ~~Widow~~program.

Gross Profit

Consolidated gross profit totaled $~~375~~637,~~054~~502 during the 2025 period compared to a gross ~~profit~~loss of $~~267~~391,~~804~~963 during the 2024 period representing an increase of $~~107~~1,~~250~~029, ~~or 40%~~465. On a percentage basis, gross profit was 127% during the 2025 period compared to a gross ~~profit~~loss of 430% during the 2024 period. The gross profit increase was primarily due to higher revenue and lower warranty ~~expenses~~expense for the Company's product mix in the 2025 period compared to the 2024 period.

Operating Expenses

Research and development expenses totaled $35,~~598~~968,~~267~~131 during the 2025 period compared to $~~289~~1,~~016~~879,486 during the 2024 period, representing an increase of $34,~~309~~088,~~251,~~645 or ~~more than 11 times~~218%. The increase was primarily due to aan increase in professional fees for continued product development and higher ~~headcount,~~payroll ~~including~~expenses ~~the~~due ~~addition~~to ofhigher ~~employees~~headcount ~~from the~~across ~~FlightWave~~all ~~acquisition~~entities.

Sales and marketing costs totaled $32,~~187~~984,~~585~~677 during the 2025 period compared to $21,~~203~~968,~~522~~441 during the 2024 period, representing an increase of $~~984~~1,~~063~~016,236 or 4552%. The increase was driven by higher payroll and stock based compensation expenses due to an increased headcount.

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.26

~~During the~~Table ~~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%.~~contents

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.

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%.

Other Expense

Other ~~expense~~ income totaled $~~632~~2,~~413~~209,203 during the 2025 period compared to other expense of $23,~~784~~991,~~001~~934 during the 2024 period, representing a decrease of $26,~~151~~201,~~588~~ 137 or 77155%. This decrease is primarily related to a loss of $24,~~295~~008,~~000~~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.

Net Loss from Continuing Operations

Net loss from continuing operations totaled $1316,~~278~~016,~~960~~448 for the 2025 period compared to $812,~~160~~433,~~019~~718 for the 2024 period, resulting in an increase of $53,~~118~~582,~~941~~730 or 6329%.

24Discussion and Analysis of the Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

Discussion and Analysis of the Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

Revenues

Consolidated revenues totaled $414,~~848~~494,~~239~~631 during the ~~six~~nine months ended ~~June~~September 30, 2025 (or the “2025 period”) compared to $1314,~~033~~326,~~698~~145 during the ~~six~~nine months ended ~~June~~September 30, 2024 (or the “2024 period”) representing aan ~~decrease~~increase of $8168,~~185~~486,~~459,~~ or 631%. The ~~decrease~~increase related to ~~lower~~higher product revenue as the Company ~~has~~started ~~begun~~delivering ~~shifting~~drones ~~manufacturing~~to ~~focus from~~ the ~~Teal~~US 2Army tounder the ~~Black~~SRR ~~Widow~~program.

Gross Profit

Consolidated gross ~~loss~~profit totaled $~~475~~162,~~356~~146 during the 2025 period compared to a gross profit of $1997,~~389,008~~045 during the 2024 period representing a decrease of $1834,~~864~~899,~~364,~~ or ~~134~~84%. On a percentage basis, gross ~~loss~~profit was 101% during the 2025 period compared to a gross profit of 117% 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.

Operating Expenses

Research and development expenses totaled $712,~~030~~998,~~860~~991 during the 2025 period compared to $24,~~958~~838,~~518~~004 during the 2024 period, representing an increase of $48,~~072~~160,~~342~~987, or ~~138~~169%. The increase was primarily due to aan increase in professional fees for continued product development and higher ~~headcount,~~payroll ~~including~~expenses ~~the~~due ~~addition~~to ofhigher ~~employees~~headcount ~~from~~across ~~the~~all ~~FlightWave acquisition~~entities.

Sales and marketing costs totaled $69,~~502~~487,~~333~~010 during the 2025 period compared to $35,~~614~~582,~~028~~469 during the 2024 period, representing an increase of $23,~~888~~904,~~305~~541 or 8070%. The increase was driven by higher payroll ~~expenses due to an increased headcount~~ and anstock ~~increase~~based incompensation ~~tradeshow~~expenses ~~attendance in~~due ~~efforts~~ to ~~spread~~an ~~awareness~~increased ~~of new products and the Red Cat Futures Initiative~~headcount.

General and administrative expenses totaled $1120,~~116~~331,~~197~~980 during the 2025 period compared to $59,~~822~~931,~~780~~624 during the 2024 period, representing an increase of $510,~~293~~400,~~417~~356 or 91105%. The increase was mainly due to apayroll ~~higher~~expenses ~~headcount,~~and ~~including~~stock ~~the~~based ~~addition~~compensation ofas ~~employees~~a ~~from~~result ~~the FlightWave acquisition. In anticipation~~ of ~~winning~~a ~~the~~higher ~~production~~headcount ~~contract~~across ~~under~~all ~~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~~entities.

During the 2025 period, we incurred stock-based compensation costs of $37,~~634~~255,~~033~~420 compared to $13,~~764~~041,~~042~~219 in the 2024 period, resulting in an increase of $14,~~869~~214,~~991~~201 or ~~106~~139%.

Other Expense

Other expense totaled $119,~~277~~068,~~565~~362 during the 2025 period compared to other expense of $26,~~148~~140,~~325~~259 during the 2024 period, representing an increase of $92,~~129~~928,~~240~~103 or ~~more than 4 times~~48%. 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.~~

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$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.

Net Loss from Continuing Operations

Net loss from continuing operations totaled $3652,~~402~~418,~~311~~759 for the 2025 period compared to $1326,~~567~~001,~~642~~360 for the 2024 period, resulting in an increase of $2226,~~834~~417,~~669~~399 or ~~168~~102%.

Cash Flows

Operating Activities

Net cash used in operating activities was $2852,~~804,~~656,680 during the ~~six~~nine months ended ~~June~~September 30, 2025 (or the “2025 period”) compared to net cash used in operating activities of $614,~~569~~692,~~510~~766 during the ~~six~~nine months ended ~~June~~September 30, 2024 (or the “2024 period”), representing an increase of $2237,~~235~~963,~~146~~914 or ~~338~~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 $1620,~~232~~094,~~815~~751 during the 2025 period, compared to $511,~~813~~135,~~615~~324 during the 2024 period, resulting in an increase of $108,~~419~~959,~~200~~427, or ~~179~~80%. Net cash used related to changes in operating assets and liabilities totaled $820,~~635~~332,~~160~~672 during the 2025 period, compared to net cash provided of $1173,~~184,517~~270 during the 2024 period, representing aan ~~decrease~~increase of $920,~~819~~505,~~677~~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.

Investing Activities

Net cash used by investing activities was $~~579~~1,~~626~~249,217 during the 2025 period compared to net cash provided by investing activities of $~~912~~5,~~937~~ 250,314 during the 2024 period, resulting in a decrease of $16,~~492~~499,~~563 or 163%~~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.

Financing Activities

Net cash provided by financing activities totaled $86251,~~160~~177,~~460~~596 during the 2025 period compared to net cash used in financing activities of $~~297~~588,~~819~~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.

Liquidity and Capital Resources

At ~~June~~ September 30, 2025, we reported current assets totaling $91248,~~573~~802,~~633~~498, current liabilities totaling $2423,~~129~~886,~~516~~568 and net working capital of $67224,~~444~~915,~~117~~930. Cash totaled $65206,~~930~~425,~~475~~996 at ~~June~~September 30, 2025. Inventory related balances, including ~~pre-paid~~prepaid inventory, totaled $2030,~~996~~595,~~936~~667.

Critical Accounting Policies and Estimates

Our financial statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Significant estimates reflected in these financial statements include those used to (i) complete purchase price accounting for acquisitions, (ii) evaluate long-term assets, including goodwill, for impairment, (iii) evaluate inventory reserves for excess and obsolescence and (iv) determine valuations of convertible notes payable and warrants.

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Purchase Price Accounting – We record our acquisitions under the acquisition method of accounting, under which most of the assets acquired and liabilities assumed are initially recorded at their respective fair values and any excess purchase price is reflected as goodwill. We utilize management estimates and, in some instances, independent third-party valuation firms to assist in determining the fair values of assets acquired, liabilities assumed and contingent consideration, if any. Such estimates and valuations require us to make significant assumptions, including projections of future events and operating performance.

The fair value of brand name, backlog, customer relationships and proprietary technology acquired in our acquisitions are determined using various valuation methods, based on a number of significant assumptions. We determine which assets have finite lives and then determine the estimated useful life of finite assets. The carrying value of brand name is not being amortized but is reviewed quarterly and formally evaluated at year end for impairment. Backlog, customer relationships and proprietary technology are being amortized over seven years.

The estimated fair values are subject to change during the measurement period, which is limited to one year subsequent to the acquisition date.

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.

The estimate of fair value of a reporting unit is computed using either an income approach, a market approach, or a combination of both. Under the income approach, we utilize the discounted cash flow method to estimate the fair value of a reporting unit. Significant assumptions inherent in estimating the fair values include the estimated future cash flows, growth assumptions for future revenues (including gross profit, operating expenses, and capital expenditures), and a rate used to discount estimated future cash flow projections to their present value based on estimated weighted average cost of capital (i.e., the selected discount rate). Our assumptions are based on historical data, supplemented by current and anticipated market conditions, estimated growth rates, and management’s plans. Under the market approach, fair value is derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting units operate and consider risk profiles, size, geography, and diversity of products and services.

Inventories – We measure inventory at the lower of cost or net realizable value considering judgments and estimates related to future customer demand and other market conditions. Although we believe these estimates are reasonable, any significant changes in customer demand that are less favorable than our previous estimates may require additional inventory write-downs and would be reflected in cost of sales resulting in a negative impact to our gross margin in that period.

Convertible Notes Payable –We measure convertible notes payable at fair value based on significant inputs not observable in the market, which causes them to be classified as Level 3 measurements within the fair value hierarchy. Changes in the fair value of the convertible notes payable relate to updated assumptions and estimates are recognized as a convertible notes payable fair value adjustment within the consolidated statements of operations and comprehensive loss.

In determining the fair value of the convertible notes payable, we use a market-based approach. The valuation method utilizes a negotiated discount rate and a market yield rate which are unobservable inputs.

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Warrants – The fair value of the warrants issued is estimated using a Monte Carlo simulation model. The significant unobservable inputs for the Monte Carlo model include the stock price, exercise price, risk-free rate of return, time to expiration, and the volatility. An increase or decrease in the unobservable inputs in isolation could result in a material increase or decrease in the estimated fair value. In the future, depending on the weight of evidence and valuation approaches used, these or other inputs may have a more significant impact on the estimated fair value.

Recently Issued Accounting Pronouncements

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:

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are not required to provide the information required by this Item as we are a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our principal executive officer and principal financial officer evaluated the effectiveness of our “disclosure controls and procedures” as of ~~June~~September 30, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of ~~June~~September 30, 2025, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective, specifically pertaining to the disclosed and restated financials noted in our report on internal control over financial reporting below. However, the Company continues to address ways to become more effective in managing internal financial reporting controls. This includes increasing headcount to strengthen segregation of duties and implementing better tracking and management protocols.

Management’s quarterly report on internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of our consolidated financial statements in accordance with GAAP. Our accounting policies and internal controls over financial reporting, established and maintained by management, are under the general oversight of the Board’s audit committee.

Our internal control over financial reporting includes those policies and procedures that:

● •pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Management assessed our internal control over financial reporting as of ~~June~~September 30, 2025. The standard measures adopted by management in making its evaluation are the measures in the Internal-Control Integrated Framework published by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission.

~~Based on management’s assessment using the COSO criteria, our CEO and CFO concluded that our internal control over financial reporting was not effective as of June~~ 30, 2025, which was identified during the year ended April 30, 2023 and continues through June 30, 2025. Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties. Therefore, management concluded that we did not have a comprehensive and formalized accounting and financial reporting policies and procedures manual which details the information needed for our financial reporting process and that we did not have a robust review process by which management could monitor for potential errors or technical accounting requirements, which have resulted in material weaknesses in internal control over financial reporting as of June 30, 2025. Management is reviewing internal control procedures and will work to implement enhanced procedures to address the identified material weakness.

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Based on management’s assessment using the COSO criteria, our CEO and CFO concluded that our internal control over financial reporting was not effective as of September 30, 2025, which was identified during the year ended April 30, 2023 and continues through September 30, 2025. Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties. Therefore, management concluded that we did not have a comprehensive and formalized accounting and financial reporting policies and procedures manual which details the information needed for our financial reporting process and that we did not have a robust review process by which management could monitor for potential errors or technical accounting requirements, which have resulted in material weaknesses in internal control over financial reporting as of September 30, 2025. Management is reviewing internal control procedures and will work to implement enhanced procedures to address the identified material weakness.

Changes In Controls Over Financial Reporting

We are in the process of implementing controls to identify, assess and review the accounting and reporting of non-recurring and complex transactions. As the implementation of these controls occurs, certain changes will be made to our processes and procedures which, in turn, result in changes to our internal control over financial reporting. Management will continue to evaluate and monitor our internal controls as processes and procedures in each of the affected areas evolve. Except for the changes in connection with this implementation of controls around non-recurring and complex transactions, there have been no other changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended ~~June~~September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business, some of which may be material. We do not believe that the outcome of any of our current legal proceedings will have a material adverse impact on our business, financial condition and results of operations.

ITEM 1A. RISK FACTORS

Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Transition Report on Form 10-KT for the transition period ended December 31, 2024, as filed with the SEC on March 31, 2025 (“Transition Report”)., ~~Except~~as ~~for~~supplemented ~~those~~by ~~risks~~our ~~disclosed~~Quarterly ~~below,~~Reports ~~there~~on Form 10-Q. There have been no material changes in our risk factors from those previously disclosed in our Transition Report. You should carefully consider the risks described in ~~our~~such ~~Transition~~reports ~~Report~~ which could materially affect our business, financial condition or future results. The risks described in ~~our~~such ~~Transition~~reports ~~Report~~ are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

Our obligations to certain of our creditors are secured by security interests in our assets, so if we default on those obligations, our creditors could foreclose on some or all of our assets.

Our obligations to Lind under the Senior Secured Convertible Promissory Notes are secured by security interests in our assets. As of the date of this quarterly report, approximately $9.9 million was owed to Lind. Each of our subsidiaries has guaranteed such our obligations to Lind as well. If we default on our obligations to Lind such Senior Secured Convertible Promissory Note, Lind could foreclose on their security interests (including their interest in our subsidiaries) and liquidate some or all of these assets, which would harm our financial condition and results of operations and would require us to reduce or cease operations and possibly seek bankruptcy protection.

Changes to United States tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.

The United States has recently enacted and proposed to enact significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, financial condition and results of operations,

We are currently listed on The Nasdaq Capital Market. If we are unable to maintain listing of our securities on Nasdaq or any stock exchange, our stock price could be adversely affected and the liquidity of our stock and our ability to obtain financing could be impaired and it may be more difficult for our shareholders to sell their securities.

Although our common stock is currently listed on The Nasdaq Capital Market, we may not be able to continue to meet the exchange’s minimum listing requirements or those of any other national exchange. The Listing Rules of Nasdaq require listing issuers to comply with certain standards in order to remain listed on its exchange. If, for any reason, we should fail to maintain compliance with these listing standards and Nasdaq should delist our securities from trading on its exchange and we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our shareholders:

● the liquidity of our common stock; ● the market price of our common stock; ● our ability to obtain financing for the continuation of our operations; ● the number of investors that will consider investing in our common stock; ● the number of market makers in our common stock; ● the availability of information concerning the trading prices and volume of our common stock; and ● the number of broker-dealers willing to execute trades in shares of our common stock.

Our stock price may be negatively affected by fluctuations in our financial results.

The market price of our common stock may be subject to fluctuations due not only to general economic and stock market conditions but also to a change in sentiment in the market regarding our operations, business prospects, liquidity or this offering. Our operating results, revenues and expenses may also fluctuate for many other reasons, many of which are outside of our control, such as: competition; our ability to control expenses; loss of revenues; changes or consolidation in the industries in which we operate; our investments in geographic expansion and to increase our presence in existing markets; interest rate fluctuations; successful execution of our strategic growth plans; managerial execution; employee retention; growing risks associated with international operations; foreign currency and exchange rate fluctuations; inflation; litigation; acquisitions of other companies or assets; or our investments in other corporate resources. In addition, changes in accounting policies or practices may affect our level of net income. Fluctuations in our financial results, revenues and expenses may cause the market price of our common stock to decline.

If securities or industry press or analysts cease covering our common stock, publish negative research or reports about our business, or if they change their recommendations regarding our common stock adversely, the share price and trading volume of our common stock could decline.

The trading market for shares of our common stock may be influenced by the articles, research and reports that industry or securities analysts and press publish about us or our business. If one or more of the analysts who cover us downgrade our common stock, or if industry press publishes negative articles about our Company, the share price of our common stock would likely decline. If one or more of these analysts ceased coverage of our Company or failed to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.

Our financial success is dependent on contracts awarded through a lengthy, uncertain and competitive process

Certain federal government, as well as commercial contracts, are awarded through a lengthy, uncertain and competitive process that could be a year or more from the initial solicitation to final contract award. We expect that certain business we seek in the foreseeable future will be awarded through lengthy and competitive procedures. Competitive contractual processes impose substantial upfront costs and present a number of risks and uncertainties, including:

● the substantial cost and managerial time and effort that we spend to prepare bids and proposals for contracts that may not be awarded to us; ● potential requirements to prove a performance guarantee as part of a bid submission; ● the expense and delay that we may face if our competitors protest or challenge contract awards made to us pursuant to competitive procedures; ● that any such process requires resubmission of offers, or termination, reduction, or modification of the awarded contract; and ● failure to obtain certain such contracts or awards upon which our business is dependent.

The risks we face in the process to secure contracts may be substantial and, to the extent we participate in such processes and are unable to win particular contracts, there may be a negative effect on our operating results and substantial impact on our realized revenues.

We identified a material weaknesses in internal control over financial reporting, and may in the future identify additional material weaknesses. Until we remediate the identified material weakness or if we identify additional material weaknesses, we may not be able to accurately and timely report our financial results, in which case our business may be harmed and investors may lose confidence in the accuracy and completeness of our financial reports.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP.

In connection with the Company’s evaluation of internal control over financial reporting, we identified instances in which we were unable to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties. Therefore, management concluded that we did not have a comprehensive and formalized accounting and financial reporting policies and procedures manual by which management could monitor potential errors or technical accounting requirements. While this material weakness did not result in a material misstatement to the consolidated financial statements presented in our Transition Report on Form 10-KT filed on March 31, 2025, our Quarterly Report on Form 10-Q filed on May 14, 2025, nor in any restatements of consolidated financial statements previously reported by us, it could in the future result in misstatements or restatements of our financial statements.

We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the deficiencies that led to the material weaknesses, including training, designing and implementing new control activities, and enhancing existing control activities.

We are working to remediate the material weaknesses as efficiently and effectively as possible and expect full remediation. At this time, we cannot provide an estimate of costs expected to be incurred or precise timing in connection with implementing this remediation plan; however, these remediation measures will be time consuming, will result in the Company incurring additional costs, and will place additional demands on our financial and operational resources.

If we are unable to successfully remediate existing or any future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, investors may lose confidence in our financial reporting, and/or we could become subject to litigation or investigations by The Nasdaq Capital Market, the SEC or other regulatory authorities.

Our Reliance on U.S. Government Contracts Exposes Us to Significant Risks

Revenues derived from the U.S. Government represent a significant percentage of our potential revenues. Therefore, any significant disruption or deterioration of our relationship with the U.S. Government could significantly reduce our revenue potential. U.S. Government business exposes us to various risks, including:

● changes in governmental procurement legislation and regulations and other policies, which may reflect military and political developments; ● unexpected contract or project terminations or suspensions, and unpredictable order placements, reductions or cancellations; ● reductions or delays in government funds available for our projects due to policy changes, budget cuts or delays, changes in available funding, reductions in defense expenditures and contract adjustments; ● the ability of competitors to protest contractual awards; ● penalties arising from post-award contract audits; ● the reduction in the value of our contracts as a result of the routine audit and investigation of our costs by U.S. Government agencies; ● higher-than-expected final costs, particularly relating to software and hardware development, for work performed under contracts where we commit to specified deliveries for a fixed price; ● limited profitability from cost-reimbursement contracts; ● unpredictable cash collections of unbilled receivables that may be subject to acceptance of deliverables by the customer and contract close-out procedures, including government approval of final indirect rates; ● competition with programs managed by other government contractors for limited resources and for uncertain levels of funding; ● significant changes in contract scheduling or program structure, which generally result in delays or reductions in deliveries; and ● intense competition for available U.S. Government business necessitating increases in time and investment for design and development.

We must comply with and are affected by laws and regulations relating to the award, administration and performance of U.S. Government contracts. Government contract laws and regulations affect how we do business with our customers and, in some instances, impose added costs on our business, including the establishment of compliance procedures. A violation of specific laws and regulations could result in the imposition of fines and penalties, the termination of our contracts or debarment from bidding on contracts.

Substantially all of our U.S. Government backlog scheduled for delivery can be terminated at the convenience of the U.S. Government because our contracts with the U.S. Government typically provide that orders may be terminated with limited or no penalties. If we are unable to address any of the risks described above, or if we were to lose all or a substantial portion of our sales to the U.S. Government, it could materially harm our business and impair the value of our common stock.

The funding of U.S. Government programs is subject to congressional appropriations. Congress generally appropriates funds on a fiscal year basis even though a program may extend over several fiscal years. Consequently, programs are often only partially funded initially and additional funds are committed only as Congress makes further appropriations. In the event that appropriations for one of our programs become unavailable, or are reduced or delayed, our contract or subcontract under such program may be terminated or adjusted by the government, which could have a negative impact on our future sales and results of operations. Budget cuts to defense spending can exacerbate these problems. From time to time, when a formal appropriation bill has not been signed into law before the end of the U.S. Government’s fiscal year, Congress may pass a continuing resolution that authorizes agencies of the U.S. Government to continue to operate, generally at the same funding levels from the prior year, but does not authorize new spending initiatives, during a certain period. During such period (or until the regular appropriation bills are passed), delays can occur in procurement of products and services due to lack of funding, and such delays can affect our results of operations during the period of delay.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None~~On July 1, 2025, Lind converted $1,650,000 of the February 2025 Note into 265,273 shares of the Company’s common stock at a conversion price of $6.22 per share.

33On August 1, 2025, Lind converted $1,650,000 of the February 2025 Note into 262,321 shares of the Company’s common stock at a conversion price of $6.29 per share.

On September 8, 2025, Lind converted $1,650,000 of the February 2025 Note into 214,564 shares of the Company's common stock at a conversion price of $7.69 per share.

The issuances of the shares to Lind, as described above, were made pursuant to the exemption provided by Rule 506(b) under Regulation D of the Securities Act. Lind is an “accredited investor” as defined in Rule 501(a) under Regulation D, and we did not engage in any general solicitation or advertising in connection with the transaction.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the three months ended ~~June~~September 30, 2025, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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ITEM 6. EXHIBITS

Exhibit No.	~~Description~~	Description
4.1	2024 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-8 filed on May 20, 2025)
10.1		Underwriting Agreement dated September 17, 2025 between Northland Securities, Inc. and Red Cat Holdings, Inc. (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed on September 19, 2025)
10.1	First Amendment to Senior Secured Convertible Promissory Note and Warrant (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 10, 2025)
10.2*		Industrial Lease Renewal Agreement (Addendum 2), dated July 7, 2025
10.2	Second Amendment To Senior Secured Convertible Promissory Note And Warrant Issued February 10, 2025, First Amendment To Warrant Issued November 26, 2024 and First Amendment to Securities Purchase Agreement dated February 10, 2025 (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed on April 11, 2025)
10.3*		Sublease Agreement, dated August 1, 2025
10.3	Form of Support Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on April 11, 2025)
10.4*		Lease Agreement, dated August 14, 2025
10.4	Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 11, 2025)
23.1		Consent of dbbmckennon, Independent Registered Public Accounting Firm (incorporated by reference to Exhibit 23.1 to the Registration Statement on Form S-3 filed on September 15, 2025)
10.5	Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 18, 2025)
23.2		Consent of Sheppard Mullin Richter & Hampton, LLP (incorporated by reference to Exhibit 23.2 and Exhibit 5.1 to the Registration Statement on Form S-3 filed on September 15, 2025)
10.6	Third Amendment to Senior Secured Convertible Promissory Note and Warrant Issued February 10, 2025, Second Amendment to Warrant Issued November 26, 2024 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on June 18, 2025)
31.1*		Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.1*	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial and Accounting Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial and Accounting Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document
101.INS*	Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)
104*	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

**Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~RED CAT HOLDINGS, INC.~~		RED CAT HOLDINGS, INC.
Date: August 14, 2025	By:	/s/ Jeffrey Thompson
Date: November 13, 2025			By:	/s/ Jeffrey Thompson
		Jeffrey Thompson
				Jeffrey ThompsonChief Executive Officer(Principal Executive Officer)
		Chief Executive Officer (Principal Executive Officer)
Date: November 13, 2025			By:	/s/ Christian Ericson
Date: August 14, 2025	By:	/s/ Christian Ericson
				Christian EricsonChief Financial Officer(Principal Financial and Accounting Officer)
		Christian Ericson
		Chief Financial Officer (Principal Financial and Accounting Officer)

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