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 October 31, 2021

	☐	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
(State or other jurisdiction of	(I.R.S. Employer Identification Number)
incorporation or organization)
370 Harbour Drive
Humacao, Puerto Rico	00791
(Address of principal executive offices)	(Zip Code)

(833) 373-3228

(Registrant's telephone number, including area code)

__________________________________

(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

RCAT

Nasdaq Capital Market

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 ☑ No ☐

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 ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☑
Emerging growth company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of December 15, 2021, there were 53,835,579 shares of the registrant's common stock outstanding.

INDEX TO FORM 10-Q

PART I.	FINANCIAL INFORMATION	Page

Item 1.	Financial Statements:	3

	Unaudited Balance Sheet as of October 31, 2021 and Balance Sheet as of April 30, 2021	3

	Unaudited Statements of Operations for the Three and Six Months Ended October 31, 2021 and 2020	4

	Unaudited Statements of Cash Flows for the Six Months Ended October 31, 2021 and 2020	5

	Unaudited Statement of Changes in Shareholders' Equity for the Three and Six Months Ended October 31, 2021 and 2020	6

	Notes to Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

SIGNATURES		32


RED CAT HOLDINGS
Consolidated Balance Sheets
(Unaudited)

		October 31			April 30,
		2021			2021
ASSETS
Current Assets
Cash	$	11,559,758		$	277,347
Investments		48,122,657			—
Accounts receivable, net		393,738			321,693
Inventory		1,985,507			362,072
Other		2,567,539			678,898
Total Current Assets		64,629,199			1,640,010

Goodwill		26,029,750			8,017,333
Intangible assets, net		1,999,518			2,032,169
Property and equipment, net		142,126			—
Operating lease right-of-use assets		548,641			—
Other		24,907			3,853
Total Long Term Assets		28,744,942			10,053,355
TOTAL ASSETS	$	93,374,141		$	11,693,365

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	1,218,005		$	541,903
Accrued expenses		653,233			614,050
Debt obligations - short term		1,338,030			269,045
Due to related party		144,628			390,209
Customer deposits		117,842			46,096
Warrant derivative liability		2,376,565			2,812,767
Total Current Liabilities		5,848,303			4,674,070

Operating lease liabilities		559,528			—
Debt obligations - long term		1,431,739			—
Note payable to related party		—			1,753,000
Total Long Term Liabilities		1,991,267			1,753,000
Commitments and contingencies

Stockholders' Equity
Series A Preferred Stock - shares authorized 2,200,000; outstanding 0 and 158,704		—			1,587
Series B Preferred Stock - shares authorized 4,300,000; outstanding 986,676 and 1,968,676		9,867			19,687
Common stock - shares authorized 500,000,000; outstanding 53,684,910 and 29,431,264		53,685			29,431
Additional paid-in capital		105,577,729			21,025,518
Accumulated deficit		(20,108,301	)		(15,809,928	)
Accumulated other comprehensive income		1,591			—
Total Stockholders' Equity		85,534,571			5,266,295
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	93,374,141		$	11,693,365


See accompanying notes.


RED CAT HOLDINGS
Consolidated Statements Of Operations
(Unaudited)


	Three months ended October 31,				Six months ended October 31,
	2021		2020		2021		2020
Revenues	$	1,863,239	$	427,807	$	3,259,990	$	976,089

Cost of goods sold		1,710,657		328,756		3,005,004		774,888

Gross Margin		152,582		99,051		254,986		201,201

Operating Expenses
Operations		283,249		120,210		460,112		206,756
Research and development		493,441		86,614		737,695		173,924
Sales and marketing		185,385		24,679		286,018		48,815
General and administrative		1,050,708		250,378		1,926,888		430,719
Stock based compensation		899,937		107,061		1,284,023		214,122
Total operating expenses

SEC Form 10-Q filed by Red Cat Holdings Inc.