Is RCAT (Red Cat Holdings, Inc.) Halal or Haram?

Based on our AAOIFI-standard shariah screening, RCAT is Halal and considered permissible for Muslim investors. It passed all 4 of 4 compliance screens including business activity review, debt-to-market-cap ratio (0.29% vs ≤33% threshold), interest income ratio (1.17% vs ≤5% threshold), and cash & securities ratio (0.82% vs ≤33% threshold).

Red Cat Holdings is a specialized player in the unmanned aerial vehicle (UAV) sector, focusing on providing drone technology for reconnaissance, public safety, and infrastructure inspection. Beyond just the drones themselves, the company is known for its subsidiary Fat Shark, which manufactures First Person View ( FPV) video goggles used by pilots for immersive flight control. They also develop specific software solutions that allow drones to operate effectively in GPS -denied environments, catering to both government contracts and commercial needs. For Muslim investors seeking exposure to the growing drone technology market, Red Cat Holdings is currently considered Halal and fully shariah-compliant under AAOIFI standards. The company successfully passed all four financial screens, meaning its core business activities are permissible and its financial ratios fall within acceptable Islamic limits . This makes it a viable option for those building a diversified, ethical portfolio focused on emerging hardware technologies. Fin ancially, RCAT is particularly attractive due to its low leverage; the company's interest-bearing debt is only 0. 3% of its market cap, which is significantly below the 33% maximum threshold allowed. Additionally, its cash and interest-bearing securities sit at just 0.8% of market cap, indicating that the company is not hoarding excessive cash in interest-based accounts. Investors can take comfort in the fact that non-operating interest income accounts for only 1.1 7% of revenue, requiring very minimal purification. Going forward, investors should monitor the nature of Red Cat' s government contracts to ensure they remain focused on surveillance, inspection, and public safety rather than shifting into offensive weaponry, which could complicate its ethical standing. As with any small-cap technology stock, financial ratios can fluctuate rapidly, so quarterly re-screening is recommended to ensure the debt and income levels remain compliant. Red Cat Holdings, Inc. operates in the Technology sector under the Computer Hardware industry and is headquartered in San Juan, PR, US. The company is led by CEO Jeffrey Thompson and employs approximately 115 people.

RCAT was screened using AAOIFI-based shariah compliance criteria. Four tests are applied: (1) Business Activity — the company's core business must not derive primary income from haram (prohibited) activities such as alcohol, gambling, tobacco, or interest-based finance. (2) Debt-to-Market-Cap — total debt must not exceed 33% of market capitalization. (3) Interest Income — interest income must not exceed 5% of total revenue. (4) Cash & Securities — cash and interest-bearing securities must not exceed 33% of market cap. RCAT passed 4 of these 4 screens.

Although RCAT passes all shariah screens, it does earn $84,942 in interest income (1.17% of revenue). Many scholars recommend purifying this portion by donating the equivalent percentage of any dividends received to charity. For example, if you receive $100 in dividends, you would donate approximately $1.17 to purify the income.

RCAT was last screened on 2026-02-25. Shariah compliance status can change as companies report new financial data, acquire new businesses, or shift revenue streams. We recommend checking back periodically for the most up-to-date screening results.