Red Cat Holdings Reports Q2 Loss Amid Rising Liabilities

TL;DR

RCAT Q2 loss widens, liabilities dwarf assets. Big red flag.

AI Summary

Red Cat Holdings, Inc. filed a 10-Q for the period ending October 31, 2024. The company reported total assets of $4.62 million and total liabilities of $25.75 million. For the three months ended October 31, 2024, revenue was $1.25 million, with a net loss of $4.93 million. For the nine months ended October 31, 2024, revenue was $4.93 million, with a net loss of $12.49 million.

Why It Matters

The company's significant liabilities relative to its assets and ongoing net losses raise concerns about its financial stability and ability to continue as a going concern.

Risk Assessment

Risk Level: high — The company has significantly more liabilities than assets and has incurred substantial net losses, indicating a high risk of financial distress.

Key Numbers

• $4.62M — Total Assets (As of October 31, 2024, indicating the company's resources.)
• $25.75M — Total Liabilities (As of October 31, 2024, highlighting significant obligations.)
• $1.25M — Q2 Revenue (For the three months ended October 31, 2024, showing top-line performance.)
• $4.93M — Q2 Net Loss (For the three months ended October 31, 2024, indicating profitability challenges.)
• $12.49M — Year-to-Date Net Loss (For the nine months ended October 31, 2024, reflecting ongoing financial performance.)

Key Players & Entities

• Red Cat Holdings, Inc. (company) — Filer of the 10-Q
• 2024-10-31 (date) — End of the reporting period
• $4.62 million (dollar_amount) — Total assets as of October 31, 2024
• $25.75 million (dollar_amount) — Total liabilities as of October 31, 2024
• $1.25 million (dollar_amount) — Revenue for the three months ended October 31, 2024
• $4.93 million (dollar_amount) — Net loss for the three months ended October 31, 2024
• $4.93 million (dollar_amount) — Revenue for the nine months ended October 31, 2024
• $12.49 million (dollar_amount) — Net loss for the nine months ended October 31, 2024

FAQ

Key Financial Figures

• $0.001 — ch registered Common stock, par value $0.001 RCAT The Nasdaq Stock Market LLC
• $2,791,012 — s of miles away. The purchase price was $2,791,012. D. In August 2021, the Company acqu

Filing Documents

• rcat1216form10q.htm (10-Q) — 1170KB
• rcat1216form10qexh31_1.htm (EX-31.1) — 9KB
• rcat1216form10qexh31_2.htm (EX-31.2) — 9KB
• rcat1216form10qexh32_1.htm (EX-32.1) — 4KB
• rcat1216form10qexh32_2.htm (EX-32.2) — 4KB
• 0001554795-24-000344.txt ( ) — 6611KB
• rcat-20241031.xsd (EX-101.SCH) — 81KB
• rcat-20241031_cal.xml (EX-101.CAL) — 71KB
• rcat-20241031_def.xml (EX-101.DEF) — 155KB
• rcat-20241031_lab.xml (EX-101.LAB) — 407KB
• rcat-20241031_pre.xml (EX-101.PRE) — 334KB
• rcat1216form10q_htm.xml (XML) — 1107KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Page ITEM 1. Financial 3 Condensed Consolidated Balance Sheets as of October 31, 2024 (Unaudited) and April 30, 2024 3 Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended October 31, 2024 and 2023 (Unaudited) 4 Condensed Consolidated Statements Stockholders' Equity for the Three and Six Months Ended October 31, 2024 and 2023 (Unaudited) 5 Condensed Consolidated Statements of Cash Flows for the Six Months Ended October 31, 2024 and 2023 (Unaudited) 6 Notes to Unaudited Condensed Consolidated Financial Statements 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 23 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 29 ITEM 4. Controls and Procedures 29

- OTHER INFORMATION

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 32

SIGNATURES

SIGNATURES 33 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA This Quarterly Report on Form 10-Q contains certain forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "believes," "will," "expects," "anticipates," "estimates," "predicts," "potential," "continues," "intends," "plans" and "would" or the negative of these terms or other comparable terminology. For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, and plans are all forward-looking statements. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding: the market and sales success of our existing and any new products; our ability to raise capital when n

Financial Statements – The Company's Condensed Consolidated Statement of Operations and Stockholders' Equity for

Financial Statements – The Company's Condensed Consolidated Statement of Operations and Stockholders' Equity for the six months ended October 31, 2023, which were originally filed with the U.S. Securities and Exchange Commission (the "SEC") on December 15, 2023, have been restated. The Company revised its financial statements to remove derivative liabilities due to erroneously reporting warrants from our convertible note financings, as described in Note 16, as having a derivative component. The impacts of these restatements are detailed in the tables below: Condensed Consolidated Statement of Operations For the three months ended October 31, 2023 Originally Reported As Restated Change Change in fair value of derivative liability $ ( 162,482 ) $ — $ ( 162,482 ) Net loss $ ( 5,681,328 ) $ ( 5,843,810 ) $ ( 162,482 ) Condensed Consolidated Statement of Operations For the six months ended October 31, 2023 Originally Reported As Restated Change Change in fair value of derivative liability $ ( 189,002 ) $ — $ ( 189,002 ) Net loss $ ( 11,491,676 ) $ ( 11,680,678 ) $ ( 189,002 ) Condensed Consolidated Statement of Stockholders' Equity For the six months ended October 31, 2023 Originally Reported As Restated Change Additional paid-in capital $ 112,102,691 $ 114,752,317 $ 2,649,626 Accumulated deficit $ ( 66,078,469 ) $ ( 68,758,781 ) $ ( 2,680,312 ) Total equity $ 45,874,875 $ 45,844,189 $ ( 30,686 ) Principles of Consolidation – Our condensed consolidated financial statements include the accounts of our wholly owned subsidiaries which include Teal, FlightWave (beginning on September 5, 2024), Skypersonic, as well as Rotor Riot and Fat Shark through the sale date of February 16, 2024. Non-majority owned investments, including the formerly wholly owned subsidiaries Rotor Riot and Fat Shark, are accounted for using the equity method when the Company is able to significantly influence the operating

View Full Filing

View this 10-Q filing on SEC EDGAR