Red Cat Holdings Inc (RCAT)

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Red Cat Holdings Reports Financial Results for Fiscal Third Quarter 2022 and Provides Corporate Update

HUMACAO, Puerto Rico, March 17, 2022 /PRNewswire/ -- Red Cat Holdings, Inc. (Nasdaq: RCAT) ("Red Cat" or "Company"), a hardware-enabled software provider to the drone industry, reports its financial results for the fiscal third quarter ended January 31, 2022 and provides a business update.

Recent Corporate Highlights:

Teal Drones ("Teal") Selected by U.S. Army for Short Range Reconnaissance Tranche 2 Drone Program
Teal Awarded Customs and Border Protection Contract Worth up to $90 Million over Five Years
Teal Manufacturing Facility Doubled in Size
Skypersonic collaborating with NASA to deploy remotely piloted drones in a variety of vehicles and environments
Appointed Venture Capitalist and Cargo Drone Entrepreneur Christopher R. Moe to Board of Directors

Third Quarter 2022 Financial Highlights:

Revenue for the fiscal third quarter ended January 31, 2022 decreased 13% compared to the same period in fiscal 2021 as the Company focused its efforts on doubling the manufacturing capacity for its Teal subsidiary. Revenue for the nine months ended January 31, 2022 increased 64% compared to the nine months ended January 31, 2021
Operating Expenses for the quarter ended January 31, 2022 increased to $3.2 million compared to $1.1 million for the same period in fiscal 2021, reflecting the acquisitions of Skypersonic and Teal. Headcount at Teal has doubled with the addition of skilled engineering talent required to design an expanded manufacturing facility and incorporate technical product enhancements requested by customers
Cash and marketable securities were approximately $56 million as of January 31, 2022

"All our business divisions are well-positioned to benefit from current tailwinds in the drone industry. The current conflict in Ukraine is leading to many inquiries for Teal's Golden Eagle drone and we are optimistic that many of these will be converted into material contracts," commented Red Cat CEO Jeff Thompson. "Over the longer term, our selection as one of just two companies awarded the Short Range Reconnaissance Tranche 2 $1.5 million prototype contract, which may lead to a production contract award. The production award for Tranche 1 was $100 million. Ultimately, there is the Tranche 3 prototype and production awards that Teal will also be competing for. We are committed to increasing Teal's production capacity to meet the strong demand we see from current contracts and in our pipeline.

"Skypersonic and its unique drone inspection service platform is ideally positioned to benefit from the federal Infrastructure Bill that was passed in 2021. We would expect increased commercial activity related to this opportunity later in 2022 and into 2023.

"With our strong balance sheet and numerous opportunities ahead, we look forward to keeping investors informed of our commercial progress and thank investors for their continued support," concluded Mr. Thompson.

"We invested significantly in hiring the engineering talent required to support our expanded manufacturing facility at Teal including the technical enhancements that our military customers are seeking," stated Joseph Hernon, Chief Financial Officer. "Our financial position remains strong with almost $56 million of cash and marketable securities and debt obligations less than $3 million."



RED CAT HOLDINGS

Condensed Consolidated Balance Sheets

(Unaudited)




January 31,



April 30,



2022



2021

ASSETS




Cash and marketable securities


$ 55,557,829



$ 277,347

Inventory, including deposits


3,879,159



841,011

Intangible assets, including goodwill


28,012,942



10,049,502

Other


2,934,752



525,505

TOTAL ASSETS


90,384,682



11,693,365









LIABILITIES AND STOCKHOLDERS' EQUITY




Accounts payable and accrued expenses


2,351,451



1,202,049

Debt obligations


2,466,728



269,045

Warrant derivative liability


1,350,099



2,812,767

Other


876,156



2,143,209

Total Liabilities


7,044,434



6,427,070





Stockholders' Equity




Stockholders' capital


106,011,208



21,076,223

Accumulated deficit


(22,670,960)



(15,809,928)

Total Stockholders' Equity


83,340,248



5,266,295

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$ 90,384,682



$ 11,693,365



RED CAT HOLDINGS

Condensed Consolidated Statements of Operations

(Unaudited)





Three months ended January 31,



Nine months ended January 31,




2022



2021



2022



2021










Revenues



$ 1,856,751



$ 2,145,988



$ 5,116,741



$ 3,122,077










Cost of goods sold



1,516,970



1,576,265



4,521,974



2,351,153










Gross Margin



339,781



569,723



594,767



770,924










Operating Expenses









Operations



334,278



146,539



794,390



353,295

Research and development



811,288



167,968



1,548,983



341,892

Sales and marketing



238,624



48,719



524,642



97,534

General and administrative



1,337,183



499,155



3,264,071



929,874

Stock based compensation



782,123



854,195



2,066,146



1,068,317

Total operating expenses



3,503,496



1,716,576



8,198,232



2,790,912

Operating loss



(3,163,715)



(1,146,853)



(7,603,465)



(2,019,988)










Other Expense (Income)



(598,898)



7,837,407



(740,275)



8,069,797










Net loss



($2,564,817)



($8,984,260)



($6,863,190)



($10,089,785)










Loss per share - basic and diluted



$ (0.05)



$ (0.34)



$ (0.15)



$ (0.46)










Weighted average shares outstanding - basic and diluted



53,592,927



26,232,755



46,604,898



22,161,745



RED CAT HOLDINGS

Condensed Consolidated Cash Flows Statements

(Unaudited)




Nine months ended January 31,



2022



2021

Cash Flows from Operating Activities




Net loss


$ (6,863,190)



$ (10,089,785)

Non-cash expenses


1,083,885



9,217,301

Changes in operating assets and liabilities


(6,259,810)



(44,532)

Net cash used in operating activities


(12,039,115)



(917,016)





Cash Flows from Investing Activities




Purchases of marketable securities, net


(48,446,302)



-

Other, net


(67,715)



(48,368)

Net cash used in investing activities


(48,514,017)



(48,368)





Cash Flows from Financing Activities




(Payments) proceeds of debt obligations


(2,663,931)



1,200,368

Proceeds from issuance of equity, net


70,051,243



-

Net cash provided by financing activities


67,387,312



1,200,368





Net increase in cash and cash equivalents


6,834,180



234,984

Cash and cash equivalents, beginning of period


277,347



236,668

Cash and cash equivalents, end of period


7,111,527



471,652

Marketable securities


48,446,302



-

Cash and marketable securities


$ 55,557,829



$ 471,652



Conference Call Today
Jeff Thompson, CEO and Joseph Hernon, CFO will also host a conference call at 5:00 p.m. ET on Thursday, March 17 to review financial results and provide an update on corporate developments. Following management's formal remarks, there will be a question-and-answer session.

To listen to the conference call, interested parties within the U.S. should dial 1-866-777-2509 (domestic) or 1-412-317-5413 (international). All callers should dial in approximately 10 minutes prior to the scheduled start time and ask to be joined into the Red Cat Holdings, Inc. conference call. Participants can also pre-register for this event using the following link: https://dpregister.com/sreg/10164315/f1ca1b35e3.

The conference call will also be available through a live webcast that can be accessed at https://dpregister.com/sreg/10164315/f1ca1b35e3.

The webcast replay will be available until June 17, 2022 and can be accessed through the above link or on the Company's website. A telephonic replay will be available until March 31, 2022, by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using access code 5639695.

About Red Cat Holdings, Inc.
Red Cat provides drone-based products, services, and solutions through its five subsidiaries and services the enterprise, military, and consumer markets. Teal Drones is a leader in unmanned aircraft systems (UAS), and its Golden Eagle is one of only five drones approved by the Department of Defense for reconnaissance, public safety, and inspection applications. Skypersonic's technology enables drones to complete inspection services in locations where GPS is not available, yet still record and transmit data even while being operated from thousands of miles away. Fat Shark is a leading provider of First Person View (FPV) video goggles. Rotor Riot, LLC is a reseller of FPV drones and equipment, primarily to the consumer marketplace. Learn more at https://www.redcatholdings.com/.

Forward Looking Statements
This press release contains "forward-looking statements" that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "seek," "may," "might," "plan," "potential," "predict," "project," "target," "aim," "should," "will" "would," or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are based on Red Cat Holdings, Inc.'s current expectations and are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. These and other risks and uncertainties are described more fully in the section titled "Risk Factors" in the final prospectus related to the public offering filed with the Securities and Exchange Commission. Forward-looking statements contained in this announcement are made as of this date, and Red Cat Holdings, Inc. undertakes no duty to update such information except as required under applicable law.

For Investor Relations Inquiries:

CORE IR
Phone: [phone]
E-mail: [e-mail]
Website: https://www.redcatholdings.com/

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SOURCE Red Cat Holdings, Inc.

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