Red Cat Holdings (RCAT) reported QQ1 2026 results with Revenue of $3.22 million, marking a -48.99% year-over-year decline and a QoQ surge of 97.5% from the prior quarter in a seasonally weak Q4/holiday cycle for many hardware peers. The gross margin remained modest at approximately 11.7%, while operating expenses remained elevated (R&D $3.60m, G&A $6.24m, S&M $3.19m), driving a negative EBITDA of $12.12 million and a net loss of $13.28 million for the quarter. Management commentary, not captured in the provided transcript data, would be critical to understanding the cadence of R&D investments versus near-term revenue catalysts. From a liquidity standpoint, RCATGenerated negative operating cash flow of about $12.9 million, but the company monetized equity financing activities, delivering a net cash inflow from financing of roughly $71.4 million. As a result, RCAT ended QQ1 2026 with roughly $65.9 million in cash and equivalents and a net cash position of about -$44.0 million in net debt, reflecting a cash-rich balance sheet that could provide optionality for strategic investment, working capital normalization, or selective acquisitions as revenue growth drivers emerge. The short-term trajectory hinges on demand for drone inspection technologies, FPV hardware, and related software offerings within commercial and government segments, as well as the company’s ability to convert operating burn into scale. Overall, the stock trades with meaningful near-term execution risk but with substantial balance-sheet flexibility to support a longer-term repositioning in the drone tech ecosystem.