Red Cat Holdings, Inc. (NASDAQ:RCAT) Q3 2022 Earnings Conference Call March 17, 2022 5:00 PM ET Company Participants Scott Gordon - Investor Relations Jeff Thompson - Chief Executive Officer Joseph Hernon - Chief Financial Officer Conference Call Participants Ashok Kumar - ThinkEquity Priyanka Mahajan - ThinkEquity Kevin Dede - H.C. Wainwright Scott Michael - Private Investor Operator Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Red Cat Holdings Fiscal Third Quarter 202 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2022 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) Nevada 86-0490034 ...

Red Cat Holdings Inc. (NASDAQ:RCAT) Q2 2022 Earnings Conference Call December 20, 2021 5:00 PM ET Company Participants Scott Gordon - IR, Core IR Jeffrey Thompson - Chief Executive Officer Joseph Hernon - Chief Financial Officer Conference Call Participants Kevin Dede - H.C. Wainwright Operator Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Red Cat Holdings Fiscal Second Quarter 2022 Financial Results and Corporate Update Conference Call. At this time, all participants ar ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited financial statements for October 31, 2021, show significant asset growth and revenue increases driven by acquisitions, alongside expanded net losses and substantial financing activities [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets dramatically increased to **$93.4 million**, primarily from cash, investments, and goodwill due to acquisitions, with stockholders' equity expanding to **$85.5 million** from stock offerings Consolidated Balance Sheet Highlights (Unaudited) | Account | October 31, 2021 ($) | April 30, 2021 ($) | | :--- | :--- | :--- | | **Total Current Assets** | $64,629,199 | $1,640,010 | | Cash | $11,559,758 | $277,347 | | Investments | $48,122,657 | $— | | Goodwill | $26,029,750 | $8,017,333 | | **Total Assets** | **$93,374,141** | **$11,693,365** | | **Total Current Liabilities** | $5,848,303 | $4,674,070 | | **Total Stockholders' Equity** | **$85,534,571** | **$5,266,295** | [Consolidated Statements Of Operations](index=5&type=section&id=Consolidated%20Statements%20Of%20Operations) Revenues significantly increased for both three and six-month periods due to acquisitions, but net losses widened substantially from increased operating expenses Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Oct 31, 2021 ($) | Three Months Ended Oct 31, 2020 ($) | Six Months Ended Oct 31, 2021 ($) | Six Months Ended Oct 31, 2020 ($) | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $1,863,239 | $427,807 | $3,259,990 | $976,089 | | **Gross Margin** | $152,582 | $99,051 | $254,986 | $201,201 | | **Operating loss** | $(2,760,138) | $(489,891) | $(4,439,750) | $(873,135) | | **Net loss** | **$(2,740,601)** | **$(722,281)** | **$(4,298,373)** | **$(1,105,525)** | | **Loss per share** | $(0.05) | $(0.04) | $(0.10) | $(0.05) | [Condensed Consolidated Cash Flows Statements](index=6&type=section&id=Condensed%20Consolidated%20Cash%20Flows%20Statements) Operating cash outflow increased significantly, while financing activities, primarily from **$70.07 million** in stock issuances, provided substantial cash, resulting in a net cash increase Cash Flow Summary for Six Months Ended October 31 (Unaudited) | Cash Flow Activity | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,569,098) | $(568,452) | | Net cash provided by investing activities | $24,866 | $— | | Net cash provided by financing activities | $19,825,052 | $811,849 | | **Net increase in Cash** | **$11,282,411** | **$243,397** | - The company received net proceeds of **$70,065,203** from the issuance of common stock during the six months ended October 31, 2021[12](index=12&type=chunk) [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Financial%20Statements) Notes detail the company's drone subsidiaries, major acquisitions, accounting policies, fair value measurements, debt, and extensive equity transaction details - The company operates through five wholly-owned subsidiaries: Teal Drones, Fat Shark Holdings, Rotor Riot, Skypersonic, and Red Cat Propware, providing a range of products and services to the drone industry[18](index=18&type=chunk) - The company completed several key acquisitions to expand its business, including Skypersonic in May 2021 and Teal Drones in August 2021[26](index=26&type=chunk)[28](index=28&type=chunk) Recent Acquisition Details | Acquired Company | Closing Date | Total Purchase Price ($) | Goodwill Recognized ($) | | :--- | :--- | :--- | :--- | | Skypersonic, Inc. | May 7, 2021 | $2,791,013 | $3,717,919 | | Teal Drones Inc. | August 31, 2021 | $10,011,279 | $14,294,499 | - The company's investments, classified as available-for-sale securities, totaled **$48.1 million** at fair value as of October 31, 2021, primarily consisting of corporate bonds and asset-backed securities[36](index=36&type=chunk)[63](index=63&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue growth from acquisitions was offset by a gross margin decline to **8%** and increased operating expenses, while liquidity improved significantly from **$70.1 million** in public offerings - The company closed two significant public offerings in 2021: an S-1 offering in May raising approximately **$14.6 million** net, and an S-3 offering in July raising approximately **$55.5 million** net[123](index=123&type=chunk)[124](index=124&type=chunk) - The acquisition of Teal Drones on August 31, 2021, is a key strategic development, adding the Golden Eagle drone, approved by the US Department of Defense, to its portfolio[126](index=126&type=chunk) YoY Revenue Comparison (Three Months Ended Oct 31) | Period | Revenue ($) | YoY Increase | Key Drivers | | :--- | :--- | :--- | :--- | | 2021 | $1,863,239 | >100% | Fat Shark ($0.899 million) and Teal ($0.402 million) acquisitions | | 2020 | $427,807 | - | - | - Gross margin percentage decreased from 23% to **8%** for the three months ended October 31, 2021, compared to the prior year, attributed to higher product and shipping costs from COVID-19 impacts[134](index=134&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the company is exempt from providing quantitative and qualitative market risk disclosures - As a smaller reporting company, Red Cat Holdings, Inc. is not required to provide quantitative and qualitative disclosures about market risk[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management found disclosure controls ineffective due to untimely financial reporting of certain corporate banking accounts, with no other material changes to internal controls reported - Management identified a weakness in disclosure controls, citing a failure to maintain effective controls for the timely financial reporting of certain corporate banking accounts[167](index=167&type=chunk) - There were no changes in internal controls over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[168](index=168&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) There are no pending legal proceedings involving the company, its directors, officers, or major shareholders - There are no pending legal proceedings involving the Company[171](index=171&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Red Cat Holdings, Inc. is not required to provide risk factor disclosures in this Form 10-Q - The company is a smaller reporting company and is not required to provide risk factor disclosures in this report[172](index=172&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period that were not previously disclosed - No unregistered sales of equity securities occurred during the reporting period that were not previously reported[173](index=173&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[174](index=174&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No other information is reported in this section - None[175](index=175&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including officer certifications required by Sarbanes-Oxley and XBRL data files - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002, along with XBRL instance documents[176](index=176&type=chunk)

Red Cat Holdings Inc. (NASDAQ:RCAT) Q1 2022 Earnings Conference Call September 20, 2021 5:00 PM ET Company Participants Scott Gordon - IR, Core IR Jeffrey Thompson - Chief Executive Officer Joseph Hernon - Chief Financial Officer Conference Call Participants Ashok Kumar - ThinkEquity Spencer Kirschman - H.C. Wainwright Operator Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Red Cat Holdings Fiscal First Quarter 2022 Financial Results and Corporate Update Conference Call. ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2021 Commission File Number: 000-31587 Red Cat Holdings, Inc. (Exact name of Registrant as specified in its charter) incorporation or organization) Nevada 86-0490034 (State or other jurisdiction of (I.R.S. Employer Identification Number) 370 Harbour Drive Humacao, Puerto Rico 00791 (Addre ...

Red Cat Holdings Inc. (NASDAQ:RCAT) Q4 2021 Earnings Conference Call August 12, 2021 5:00 PM ET Company Participants Jules Abraham - Investor Relations Jeffrey Thompson - Chief Executive Officer Joseph Hernon - Chief Financial Officer Conference Call Participants Mike Marinac - NECS Operator Welcome to the Red Cat Holdings 2021 Year-End Financial Results and Corporate Update Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an op ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) The company provides drone products and solutions, focusing on FPV systems, expanding via acquisitions and a SaaS platform - The company's business is centered on providing products, services, and solutions to the drone industry, with a particular emphasis on drones piloted with wearable display devices (FPV)[26](index=26&type=chunk) - Red Cat has expanded its operations through several key acquisitions: Rotor Riot (January 2020), Fat Shark (November 2020), Skypersonic (May 2021), and has a pending merger agreement with Teal Drones (July 2021)[18](index=18&type=chunk)[19](index=19&type=chunk)[21](index=21&type=chunk)[23](index=23&type=chunk) - The company sells FPV flight systems, cameras, transmitters, and goggles through its subsidiaries Rotor Riot and Fat Shark. Prior to the Fat Shark acquisition, approximately **50% of revenue was from reselling** and **50% from its own branded products**[28](index=28&type=chunk) - A key part of the business strategy is the development of "Dronebox," a blockchain-based SaaS platform for secure drone data storage, analytics, and reporting, targeting fleet operators, insurance companies, and government entities[32](index=32&type=chunk)[33](index=33&type=chunk) - The company faces significant competition from market leader DJI, which holds over **70% of the global civilian drone market share**. Red Cat competes by leveraging its strong brand presence on social media, including a Rotor Riot YouTube channel with over **192,000 subscribers**[36](index=36&type=chunk) - The company is heavily reliant on Chinese suppliers, with **68% of Rotor Riot's inventory purchased directly from China**. These imports are subject to U.S. tariffs ranging from **2% to 25%**, which increases costs and reduces profit margins[38](index=38&type=chunk) Research and Development Expenses | Fiscal Year Ended April 30 | R&D Costs (excluding stock-based compensation) ($) | | :--- | :--- | | 2021 | $516,084 | | 2020 | $488,990 | [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces multiple risks including capital needs, competition, supply chain issues, and regulatory compliance - The company has a history of net losses, accumulating approximately **$15.8 million in losses** as of April 30, 2021, and will require additional capital to fund its expanding operations[47](index=47&type=chunk)[50](index=50&type=chunk) - The drone industry is highly competitive, with major players like DJI, and the company faces competition from larger entities with greater financial, marketing, and R&D resources[58](index=58&type=chunk)[59](index=59&type=chunk) - Significant reliance on Chinese suppliers for components exposes the company to supply chain disruptions, long lead times, and the financial impact of U.S. tariffs on Chinese imports[67](index=67&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - The business is subject to extensive and evolving government regulations from bodies like the FAA and FCC, which could increase compliance costs or force product changes[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) - Management holds significant voting control, with the CEO owning approximately **26%** and all officers and directors collectively owning about **32% of the outstanding common stock**, which could influence corporate actions[134](index=134&type=chunk) - The COVID-19 pandemic has adversely impacted operations, sales, and supply chains, causing disruptions, delays, and increased prices for supplies[147](index=147&type=chunk) [Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments - There are no unresolved staff comments as of the report date[150](index=150&type=chunk) [Properties](index=29&type=section&id=Item%202.%20Properties) The company leases its office and warehouse facilities in Puerto Rico, Florida, and Grand Cayman, which are deemed adequate - The company leases its corporate headquarters in Puerto Rico for **$2,000/month**, office/warehouse space in Orlando, FL for **$4,268/month**, and office space in Grand Cayman for **$3,450/month**[151](index=151&type=chunk) [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company reports that it is not a party to any pending legal proceedings - There are no pending legal proceedings to which the company is a party[152](index=152&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204%20Mine%20Safety%20Disclosures) The company reports that there are no mine safety disclosures - Not applicable[153](index=153&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity) The company's common stock trades on Nasdaq, has 587 stockholders, has never paid dividends, and details its equity plan - Common stock began trading on the Nasdaq Capital Market under the symbol **"RCAT"** on April 30, 2021[156](index=156&type=chunk) - As of August 9, 2021, there were **587 stockholders of record**[157](index=157&type=chunk) - The company has never paid dividends and does not plan to in the foreseeable future[158](index=158&type=chunk) Equity Compensation Plan Information as of April 30, 2021 | Plan category | Number of securities to be issued upon exercise (shares) | Weighted-average exercise price ($) | Number of securities remaining available for future issuance (shares) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 3,197,475 | $1.79 | 5,552,525 | [Selected Financial Data](index=31&type=section&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company, Red Cat Holdings, Inc. is not required to provide this information - The company is not required to provide selected financial data as it qualifies as a smaller reporting company[164](index=164&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Acquisitions significantly shaped the company's FY2021 financials, boosting revenue but widening net loss, with subsequent capital raises addressing liquidity and going concern [Results of Operations](index=32&type=section&id=Results%20of%20Operations) FY2021 revenues surged due to acquisitions, but net loss significantly expanded from operating costs and non-cash derivative expenses Comparison of Operations for Fiscal Years Ended April 30 | Metric | 2021 ($) | 2020 ($) | Change (%) | | :--- | :--- | :--- | :--- | | **Revenues** | $4,999,517 | $403,940 | +1137.7% | | **Cost of Goods Sold** | $3,929,832 | $325,379 | +1107.8% | | **Gross Margin** | $1,069,685 | $78,561 | +1261.6% | | **Operating Expenses** | $5,946,295 | $1,708,521 | +248.0% | | **Operating Loss** | ($4,876,610) | ($1,629,960) | +199.2% | | **Other Expense (Income)** | $8,359,565 | ($28,029) | N/A | | **Net Loss** | ($13,236,175) | ($1,601,931) | +726.2% | - The significant increase in revenue for FY 2021 is attributed to the acquisitions of Rotor Riot (January 2020) and Fat Shark (November 2020). Rotor Riot and Fat Shark contributed approximately **44%** and **56% of revenues**, respectively[173](index=173&type=chunk) - Other Expense for FY 2021 was **$8.36 million**, a stark contrast to Other Income of **$28,029** in FY 2020. This expense was primarily driven by derivative liability charges related to convertible debentures and warrants issued in October 2020 and January 2021[180](index=180&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company had a working capital deficit, but significantly improved liquidity post-year-end through public offerings Working Capital as of April 30, 2021 | Component | Amount ($) | | :--- | :--- | | Current Assets | $1,640,010 | | Current Liabilities | $4,674,070 | | **Working Capital** | **($3,034,060)** | - The company has a history of net losses and has funded operations through private offerings. It has raised significant capital post-fiscal year end[186](index=186&type=chunk) - In May 2021, a common stock offering raised gross proceeds of **$16 million**[186](index=186&type=chunk)[198](index=198&type=chunk) - In July 2021, a common stock offering raised gross proceeds of **$60 million**[186](index=186&type=chunk)[200](index=200&type=chunk) [Going Concern](index=36&type=section&id=Going%20Concern) Auditors expressed substantial doubt about the company's going concern due to recurring losses, which management plans to address with capital raises - The independent auditor's report for the fiscal year ended April 30, 2021, includes an explanatory paragraph raising substantial doubt about the company's ability to continue as a going concern[202](index=202&type=chunk)[224](index=224&type=chunk) - Key factors contributing to the going concern doubt are recurring net losses, negative operating cash flows, and an accumulated deficit of approximately **$15.8 million** as of April 30, 2021[202](index=202&type=chunk)[203](index=203&type=chunk) - Management is addressing these concerns through capital raised in public offerings in May 2021 (**$16M gross**) and July 2021 (**$60M gross**), which are intended to fund operations and growth initiatives[204](index=204&type=chunk)[257](index=257&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) FY2021 consolidated financial statements reflect significant changes from acquisitions, resulting in increased assets, liabilities, a substantial net loss, and a going concern qualification Consolidated Balance Sheet Highlights (as of April 30) | Account | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Cash | $277,347 | $236,668 | | Total Current Assets | $1,640,010 | $318,338 | | Goodwill | $8,017,333 | $2,466,073 | | **Total Assets** | **$11,693,365** | **$2,808,264** | | Total Current Liabilities | $4,674,070 | $829,266 | | Warrant derivative liability | $2,812,767 | $0 | | **Total Liabilities** | **$6,427,070** | **$1,279,266** | | **Total Stockholders' Equity** | **$5,266,295** | **$1,528,998** | Consolidated Statement of Operations Highlights (for the year ended April 30) | Account | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Revenues | $4,999,517 | $403,940 | | Gross Margin | $1,069,685 | $78,561 | | Operating Loss | ($4,876,610) | ($1,629,960) | | Derivative expense | $4,630,288 | $0 | | **Net Loss** | **($13,236,175)** | **($1,601,931)** | | **Loss per share** | **($0.56)** | **($0.12)** | Consolidated Cash Flow Highlights (for the year ended April 30) | Account | 2021 ($) | 2020 ($) | | :--- | :--- | | Net cash used in operating activities | ($1,399,001) | ($811,584) | | Net cash (used in) provided by investing activities | ($48,368) | $46,327 | | Net cash provided by financing activities | $1,488,048 | $498,487 | - The auditor's report contains a paragraph expressing substantial doubt about the company's ability to continue as a going concern due to recurring losses and negative cash flows from operations[224](index=224&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=59&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports that there were no changes in or disagreements with its accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure - There were no disagreements with accountants on accounting and financial disclosure[325](index=325&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%209A.%20Controls%20and%20Procedures) This section addresses the company's disclosure controls and procedures [Other Information](index=59&type=section&id=Item%209B.%20Other%20Information) This section provides additional information not covered elsewhere in the report Part III [Directors, Executive Officers, and Corporate Governance](index=59&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) The company's leadership includes key executives and a five-member Board with independent members and established committees - The executive team includes **Jeffrey M. Thompson (CEO)**, **Allan Evans (COO)**, and **Joseph Hernon (CFO)**[326](index=326&type=chunk) - The Board of Directors has five members: **Jeffrey M. Thompson**, **Nicolas Liuzza, Jr.**, **Patrick T. Mitchell**, **Jonathan Read**, and **Joseph Freedman**[326](index=326&type=chunk) - The Board has determined that all directors are independent except for **CEO Jeffrey M. Thompson**[338](index=338&type=chunk) - The Board has three standing committees: **Audit** (Nicholas Liuzza, Jonathan Read), **Compensation** (Joseph Freedman, Nicholas Liuzza), and **Governance and Nominating** (Joseph Freedman, Nicholas Liuzza)[340](index=340&type=chunk)[344](index=344&type=chunk)[348](index=348&type=chunk) - Several late Section 16(a) filings were reported for the fiscal year, involving multiple directors and officers including **Allan Evans**, **Jeffrey Thompson**, and **Joseph Freedman**[361](index=361&type=chunk) [Executive Compensation](index=64&type=section&id=Item%2011.%20Executive%20Compensation) FY2021 executive compensation included significant stock option awards and employment agreements for key executives Summary Compensation Table (Fiscal Year 2021) | Name and Principal Position | Salary ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Jeffrey Thompson, CEO | $167,334 | $2,038,368 | $2,205,702 | | Joseph Hernon, CFO | $125,500 | $0 | $125,500 | - CEO Jeffrey Thompson's employment agreement provides for a base salary of **$248,000**, an annual bonus up to **200% of base salary**, and includes clawback provisions[377](index=377&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk) - CFO Joseph Hernon's employment agreement provides for a base salary equal to **75% of the CEO's salary** and an annual bonus up to **150% of his base salary**[369](index=369&type=chunk) - Fat Shark CEO Allan Evans' employment agreement includes a base salary equal to **70% of the Red Cat CEO's salary** and a grant of **1,000,000 shares of common stock** with performance and time-based vesting conditions[383](index=383&type=chunk)[384](index=384&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=68&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Executive officers and directors collectively owned **32.3%** of common stock, with the CEO holding **26.0%** Security Ownership of Beneficial Owners (as of August 9, 2021) | Name of Beneficial Owner | Percentage of Beneficial Ownership (%) | | :--- | :--- | | **Officers & Directors** | | | Jeffrey Thompson (CEO) | 26.0% | | All executive officers and directors as a group (7 persons) | 32.3% | | **Other 5% Holders** | | | Gregory French | 10.0% | | Empery Asset Management, LP | 6.2% | | CVI Investments, Inc. | 5.2% | | Sabby Volatility Warrant Master Fund, Ltd | 5.3% | [Certain Relationships and Related Transactions, and Director Independence](index=70&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company engaged in related-party transactions, primarily convertible note financings with directors and the CEO - Director Nicholas Liuzza, Jr. participated in convertible note financings in December 2019 (**$125,000**), October 2020 (**$300,000**), and January 2021 (**$100,000**). All notes were subsequently converted to common stock[409](index=409&type=chunk)[411](index=411&type=chunk)[415](index=415&type=chunk)[416](index=416&type=chunk) - CEO Jeffrey Thompson participated in a convertible note financing in December 2019 for **$25,000**, which was later converted to common stock[409](index=409&type=chunk)[410](index=410&type=chunk) - Director Joseph Freedman participated in a convertible note financing in January 2021 for **$50,000**, which was converted to common stock in March 2021[417](index=417&type=chunk)[418](index=418&type=chunk) - Upon his appointment as a director on January 11, 2021, Joseph Freedman was granted a ten-year option to purchase **100,000 shares of common stock**[413](index=413&type=chunk) [Principal Accounting Fees and Services](index=72&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) For FY2021, the company incurred **$116,500** in total fees from its principal accountant, including **$86,400** for audit services, all pre-approved Accountant Fees Billed | Fee Type | April 30, 2021 ($) | April 30, 2020 ($) | | :--- | :--- | :--- | | Audit Fees | $86,400 | $94,800 | | Audit-Related Fees | — | — | | Tax Fees | — | — | | All Other Fees | $30,100 | — | - The Audit Committee pre-approves all services provided by the principal accountant, BF Borgers, CPA P.C.[425](index=425&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=73&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including underwriting, merger, acquisition, and employment agreements, along with corporate governance documents - Key exhibits filed include underwriting agreements from the April and July 2021 offerings[428](index=428&type=chunk) - Acquisition and merger agreements for Rotor Riot, Skypersonic, and Teal Drones are included as exhibits[428](index=428&type=chunk) - Employment agreements for CEO Jeffrey Thompson, CFO Joseph Hernon, and a consulting agreement for Director Joseph Freedman are filed as exhibits[429](index=429&type=chunk) [Form 10-K Summary](index=74&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section is not applicable - Not applicable[430](index=430&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: January 31, 2021 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) Nevada 86-049003 ...