For the quarterly period ended January 31, 2024 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 or FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Address of principal executive offices) (Zip Code) (833) 373-3228 ☐ 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: 000-31587 Red Cat Holdings, Inc. (Exact name of r ...

March 18, 2024 Exhibit 99.1 Red Cat Holdings Reports Financial Results for Fiscal Third Quarter 2024 and Provides Corporate Update Red Cat reports record revenue for the company in Fiscal Third Quarter 2024, the third consecutive quarter of double-digit sequential growth SAN JUAN, Puerto Rico, Mar. 18, 2024 (GLOBE NEWSWIRE) -- Red Cat Holdings, Inc. (Nasdaq: RCAT) ("Red Cat" or "Company"), a drone technology company integrating robotic hardware and software for military, government, and commercial operation ...

Financial Data and Key Metrics Changes - The company reported Q2 2024 revenue of $3.9 million, exceeding guidance by 30% and showing a 123% sequential growth from Q1 [6][19] - Gross margins improved significantly to 30%, tripling from the previous quarter's 10% [10][19] - The operating loss for Q2 was $3.4 million, a 17% improvement compared to $4.1 million in Q1 [43] Business Line Data and Key Metrics Changes - The backlog grew to $7.4 million, indicating strong demand for the Teal 2 drone [6][11] - The company achieved record revenues and gross margins, reflecting successful market penetration of the Teal 2 [9][41] Market Data and Key Metrics Changes - The passage of the American Securities Drone Act is expected to significantly increase the total addressable market for Teal drones in the U.S. [4][5] - The company is positioned to benefit from the Department of Defense's focus on small form drones, particularly in light of the ongoing Ukraine conflict [44][58] Company Strategy and Development Direction - The company aims to reach gross margins of 50% as production capacity scales [10] - The completion of a state-of-the-art manufacturing facility in Salt Lake City is expected to enhance production capabilities and competitive advantage [27] - The company is focused on controlling costs while driving revenue growth and improving gross margins [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the Q3 revenue guidance of $5 million based on signed purchase orders [6][24] - The company anticipates continued growth in revenues and margins, with a focus on reaching breakeven [12][43] - Management highlighted the importance of the SRR program and the potential impact on market capitalization and stock price [28] Other Important Information - The company has been awarded a $3 million contract related to the SRR program, positioning it as a finalist among competitors [26][28] - The company is not currently pursuing foreign military sales approvals but is focused on domestic contracts [34] Q&A Session Summary Question: Update on the Replicator initiative and margin expectations for Q3 - Management refrained from discussing specifics about the Replicator initiative but acknowledged its significance [30] - Margin expansion is expected to continue, with a goal of reaching 50% as production scales [14] Question: Need for foreign military sales approval - The company has not applied for foreign military sales currently, focusing instead on domestic opportunities [34] Question: Capital adequacy for reaching breakeven - Management believes the recent capital raise provides sufficient runway to reach breakeven, contingent on upcoming contracts [37][50]

PART I. FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201%2E%20Financial%20Statements%20%28unaudited%29) Unaudited Q2 FY2024 financial statements reveal increased revenue from continuing operations, driven by the Enterprise segment, alongside significant net losses, cash outflow, and a decrease in total assets, with the Consumer segment now classified as discontinued operations [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of October 31, 2023, total assets decreased to $50.6 million from $60.2 million, primarily due to reduced cash and marketable securities, resulting in a decline in total stockholders' equity to $45.9 million Consolidated Balance Sheet Highlights (Unaudited) | Account | October 31, 2023 | April 30, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $1,408,977 | $3,173,649 | | Marketable securities | $2,615,289 | $12,814,038 | | Total current assets | $23,262,672 | $32,175,012 | | Goodwill | $17,012,832 | $17,012,832 | | **Total Assets** | **$50,606,644** | **$60,193,090** | | **Liabilities & Equity** | | | | Total current liabilities | $4,405,265 | $4,760,616 | | Total liabilities | $4,731,769 | $5,583,465 | | **Total stockholders' equity** | **$45,874,875** | **$54,609,625** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Revenues from continuing operations significantly increased for the three and six months ended October 31, 2023, driven by the Enterprise segment, despite the company continuing to report substantial operating and net losses Three Months Ended October 31, 2023 vs 2022 (Continuing Operations) | Metric | Q2 FY2024 (ended Oct 31, 2023) | Q2 FY2023 (ended Oct 31, 2022) | Change | | :--- | :--- | :--- | :--- | | Revenues | $3,930,868 | $747,612 | +425.8% | | Gross Margin | $1,200,582 | $123,851 | +869.4% | | Operating Loss | ($4,559,641) | ($6,350,789) | -28.2% | | Net Loss from Continuing Operations | ($5,081,817) | ($5,830,982) | -12.8% | | Loss per Share (Continuing) | ($0.09) | ($0.11) | N/A | Six Months Ended October 31, 2023 vs 2022 (Continuing Operations) | Metric | H1 FY2024 (ended Oct 31, 2023) | H1 FY2023 (ended Oct 31, 2022) | Change | | :--- | :--- | :--- | :--- | | Revenues | $5,678,997 | $1,874,163 | +203.0% | | Gross Margin | $1,375,247 | $205,971 | +567.7% | | Operating Loss | ($9,572,676) | ($9,829,764) | -2.6% | | Net Loss from Continuing Operations | ($10,649,592) | ($9,423,184) | +13.0% | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in continuing operations increased to $11.2 million for the six months ended October 31, 2023, partially offset by $10.1 million from investing activities, leading to an overall $1.8 million decrease in cash Cash Flow Summary (Six Months Ended October 31) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities (continuing) | ($11,240,359) | ($9,527,472) | | Net cash provided by investing activities (continuing) | $10,065,641 | $11,960,901 | | Net cash used in financing activities (continuing) | ($286,206) | ($928,826) | | Net cash used in discontinued operations | ($384,094) | ($4,006,667) | | **Net decrease in Cash** | **($1,845,018)** | **($2,502,064)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's business structure, the Consumer segment's classification as discontinued operations, capital raises, and a goodwill impairment, with management concluding recent financing alleviates going concern doubts - The company is organized into Enterprise and Consumer segments, with the Enterprise segment focused on military and government agencies, and the Consumer segment, which is being sold, catering to hobbyists[18](index=18&type=chunk)[53](index=53&type=chunk) - In November 2022, the company agreed to sell its Consumer segment (Rotor Riot and Fat Shark) to Unusual Machines, Inc. for **$20 million**, consisting of cash and securities, with the transaction pending the buyer's successful IPO[20](index=20&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - The company recognized a goodwill impairment charge of **$2,826,918** in April 2023 related to the Skypersonic acquisition, as its technology was refocused for military applications and consolidated into Teal Drones[63](index=63&type=chunk) - Subsequent to the quarter end, on December 11, 2023, the company closed a common stock offering, generating net proceeds of approximately **$8.4 million**[111](index=111&type=chunk) - Management concluded that recent positive developments, including accelerated revenues and the December 2023 equity offering, alleviate substantial doubt about the company's ability to continue as a going concern for the next twelve months[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue growth to the Teal 2 drone launch and improved gross margins, while increased R&D expenses persist; recent capital raises, including an $8.4 million stock offering, are crucial for liquidity and addressing prior going concern doubts - The company's strategic plan involves focusing efforts and capital on the military and defense sector through its Enterprise segment, leading to the decision to sell the Consumer segment[120](index=120&type=chunk) - The company has identified substantial doubt about its ability to continue as a going concern due to historical unprofitability and increasing net losses[156](index=156&type=chunk) - A stock offering on December 11, 2023, generated net proceeds of approximately **$8.4 million**, which is a key factor in addressing liquidity concerns[118](index=118&type=chunk) [Results of Operations - Continuing Operations](index=31&type=section&id=Results%20of%20Operations%20-%20Continuing%20Operations) Continuing operations saw over four-fold revenue growth to $3.9 million for the quarter, driven by Teal 2 drone sales, with improved gross margins and reduced operating loss, though the six-month net loss increased due to higher R&D and sales expenses Continuing Operations Performance (Three Months Ended Oct 31) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Revenues | $3,930,868 | $747,612 | +425.8% | | Gross Margin % | 30.5% | 16.6% | +13.9 pts | | Operating Loss | ($4,559,641) | ($6,350,789) | -28.2% | - The increase in revenue is primarily related to higher product sales following the launch of the **Teal 2 drone** in April 2023[123](index=123&type=chunk)[137](index=137&type=chunk) - Research and development expenses increased by **57%** for the quarter and **82%** for the six-month period, reflecting increased efforts in developing new products[126](index=126&type=chunk)[140](index=140&type=chunk) [Results of Discontinued Operations](index=33&type=section&id=Results%20of%20Discontinued%20Operations) The discontinued Consumer segment reported increased revenues but negative gross margins for the quarter due to a significant inventory write-off, leading to a wider net loss for both the three and six-month periods - Fat Shark's gross margin was severely impacted by a **$317,155** charge to write-off excess inventory of its Dominator product due to declining sales volumes[134](index=134&type=chunk)[148](index=148&type=chunk) Discontinued Operations Performance (Three Months Ended Oct 31) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Revenues | $1,056,932 | $782,850 | +35.0% | | Gross Margin | ($97,268) | $109,804 | -188.6% | | Net Loss | ($599,511) | ($413,495) | +45.0% | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of October 31, 2023, the company held $4.0 million in cash and marketable securities, but recurring losses led to substantial doubt about going concern, which management believes is mitigated by an $8.4 million equity offering in December 2023 - The company held **$4,024,266** in cash and marketable securities as of October 31, 2023[154](index=154&type=chunk) - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern due to its history of unprofitability and increasing net losses[156](index=156&type=chunk) - The company will require additional liquidity to continue its operations and meet its financial obligations for the next twelve months[156](index=156&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Red Cat Holdings, Inc. is not required to provide this information - The company is a smaller reporting company and is not required to provide information for this item[173](index=173&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of October 31, 2023, and concluded that these controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of October 31, 2023[176](index=176&type=chunk) - No material changes to the internal control over financial reporting occurred during the six months ended October 31, 2023[177](index=177&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=40&type=section&id=Item%201%2E%20Legal%20Proceedings) The company reports no material adverse legal proceedings, though a pending action against Teal Drones seeks over $1 million for alleged breach of contract, which the company is vigorously defending - A pending legal action has been filed against Teal Drones and the Company, with the plaintiff seeking over **$1 million** in damages for claims including breach of contract and unlawful conversion of shares[110](index=110&type=chunk) - The company does not believe there are any pending legal proceedings that will have a material adverse effect on its business[108](index=108&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A%2E%20Risk%20Factors) As a smaller reporting company, Red Cat Holdings, Inc. is not required to provide the information for this item, and refers to its Annual Report on Form 10-K for the year ended April 30, 2023, for its most recent risk factor disclosures - The company is a smaller reporting company and is not required to provide information for this item[181](index=181&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=40&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities for the period - None reported for the period[182](index=182&type=chunk) [Other Information](index=40&type=section&id=Item%205%2E%20Other%20Information) During the six months ended October 31, 2023, none of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or any non-Rule 10b5-1 trading arrangements - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the period[184](index=184&type=chunk) [Exhibits](index=41&type=section&id=Item%206%2E%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the ATM Sales Agreement, amendments to agreements, and officer certifications as required by the Sarbanes-Oxley Act

Financial Data and Key Metrics - Q1 revenue for Teal Drones was $1.75 million, with Q2 guidance of $3 million (71% sequential growth) and Q3 guidance of $5 million (67% sequential growth) [8][16] - The company expects to convert $11 million of inventory into 1,200 drones, generating $18 million in revenue and $15 million in net cash proceeds [36] - The consumer segment reported an operating loss of less than $300,000 in Q1, with revenues near record levels driven by strong growth at Rotor Riot [32] Business Line Performance - The Teal 2 drone, launched in late April, has seen immediate market response, with record sales in Q1 and a backlog of approximately $6 million [34][35] - The consumer segment (Fat Shark and Rotor Riot) is being sold to Unusual Machines for $3 million in cash and $17 million in shares, with an additional $4 million expected from a working capital adjustment [28][29] Market and Regulatory Developments - Regulatory tailwinds, including DJI's placement on the US entity list and the passage of the American Securities Drone Act, have created a significant market opportunity for US-based drone manufacturers [11][13] - The Teal 2 received Remote ID certification from the FAA, a difficult achievement that positions the company as one of the few US manufacturers capable of meeting federal requirements [12] Strategic Direction and Industry Competition - The company is well-positioned for mid-term revenue opportunities through the DoD's Replicator Initiative, which aims to deliver thousands of drones within 18-24 months [17][20] - Long-term revenue opportunities include the Short Range Reconnaissance (SRR) program, which could involve significant contracts for up to 12,000 drones [24][25] - The company's manufacturing facility in Salt Lake City is fully operational and provides a competitive advantage in an industry poised for long-term growth [38][40] Management Commentary on Operating Environment and Future Outlook - Management highlighted the importance of the Teal 2's success and the company's ability to capitalize on regulatory and market opportunities [8][14] - The company expects to achieve higher gross margins as production scales and unit costs decrease, with potential gross margins reaching up to 70% at full capacity [39][45] Other Important Information - The company is exploring non-dilutive capital options, including inventory conversion, government contracts, and small debt offerings, to fund operations and growth [48] - The sale of the consumer segment is contingent on Unusual Machines completing an IPO, which is expected during the fiscal second quarter [29][30] Q&A Session Summary Question: Will Q3 revenue of $5 million bring the company close to cash flow positive, and is there a need to raise capital? [43] - The company expects $7.4 million to $14.4 million in non-dilutive capital over the next six months, which should be sufficient to reach cash flow positive [48] Question: What are the competitive dynamics in the SRR program and the Border Patrol Program? [43] - The company is competing with Skydio and Vantage Robotics for both the SRR program and the Border Patrol Program, with no new updates at this time [44] Question: What gross margins can be expected at full capacity utilization? [51] - Gross margins could reach up to 70% at full capacity utilization, compared to current margins of around 22% due to underutilized factory capacity [45][53] Question: Are the SRR and Replicator contracts fixed-price or time-and-materials? [55] - Both the SRR and Replicator contracts are fixed-price, allowing for margin improvements as manufacturing efficiency increases [56] Question: Is the $5 million in OpEx a good run rate going forward? [57] - The $5 million in OpEx is expected to remain stable, with potential for leveraging as revenues increase [58]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Exact name of Registrant as specified in its charter) Nevada 88-0490034 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) For the transition period from ___________ to ___________ FORM 10-Q Commission File Number: 000-31587 Red Cat Holdings, Inc. ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15( ...

Red Cat Holdings, Inc. (NASDAQ:RCAT) Q4 2023 Earnings Conference Call July 27, 2023 4:30 PM ET Company Participants Joseph Delahoussaye - Vice President of Investor Relations, CORE IR Jeffrey Thompson - President and Chief Executive Officer Joseph Hernon - Chief Financial Officer Conference Call Participants Ashok Kumar - ThinkEquity LLC Carlo Corzine - Dawson James Securities, Inc. Operator Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Red Cat Holdings Fiscal 2023 Year- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from ________ to _________ Commission File Number: 000-55585 Red Cat Holdings, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2023 or ☐ 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: 000-31587 Red Cat Holdings, Inc. (Exact name of Registrant as specified in its charter) (833) 373-3228 (Registrant's ...

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