Red Cat Holdings Reports Financial Results from Fiscal Second Quarter 2022 and Provides Corporate Update

Rhea-AI Summary

Red Cat Holdings, Inc. (Nasdaq: RCAT) reported significant financial growth for the fiscal quarter ending October 31, 2021. Revenues surged over 300% year-over-year to approximately $1.9 million, with a cash reserve of $60 million. However, adjusted net losses rose to about $3 million, up from $640,000 the previous year. The company highlighted the acquisition of Teal Drones, which is expected to enhance revenue through military contracts and new manufacturing capabilities. The federal infrastructure bill further presents growth opportunities.

Positive

• Revenues increased over 300% year-over-year to approximately $1.9 million.
• Cash and investments stand at approximately $60 million.
• Successful acquisition of Teal Drones enhances military segment opportunities.
• Expect to generate at least $1 million in monthly revenue from Teal starting January.

Negative

• Adjusted net loss rose to approximately $3 million compared to $640,000 in the same quarter last year.

HUMACAO, Puerto Rico, Dec. 20, 2021 /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 quarter ended October 31, 2021 and provides a business update.

Second Quarter 2022 Financial Highlights:

• Revenues for the fiscal quarter ended October 31, 2021 were approximately $1.9 million, compared to approximately $428,000 for the same period in 2020, representing an increase of more than 300%
   
• Adjusted Net loss for the quarter ended October 31, 2021, which excludes non-cash expenses, primarily related to stock-based compensation, was approximately $3 million, as compared to an adjusted net loss of approximately $640,000 for the fiscal quarter ended October 31, 2020
   
• Cash and investments were approximately $60 million as of October 31, 2021

Recent Corporate Highlights:

• Closed the acquisitions of Teal Drones
   
• Passage of Infrastructure Bill Should Benefit Drone Industry
   
• Teal Opens new Manufacturing Facility in Salt Lake City, Utah
   
• Skypersonic awarded contract with NASA (National Aeronautics and Space Administration)

"We made significant corporate progress on several fronts in our fiscal second quarter and saw record revenue that grew 336% year-over-year and 33% quarter-over-quarter.  Closing the acquisition of Teal Drones was a critical milestone for the Company and allows for expansion into the military segment," commented Red Cat CEO Jeff Thompson. "The successful integration of Teal Drones and its recent move into a larger manufacturing facility will be instrumental in our success going forward and allow us to execute on a number of larger Department of Defense contracts we are pursuing in our expanding sales funnel.  Moreover, beginning in January, we expect to generate at least $1 million in monthly revenue from drone production at Teal to satisfy existing orders and envision revenue growth accelerating in the first half of calendar 2022 based on our current contracts alone. Any additionally announced contracts would be additive to our current outlook.

"We believe the recently passed federal infrastructure bill, which has $280 billion in earmarked funds to provide inspection services on railways, roads, bridges, and electrical grid maintenance will also provide opportunities for U.S.-based drone manufacturers like Red Cat. Our Skypersonic segment is well-positioned to provide efficient and reliable inspection and surveillance services that are needed in identifying weak links in our country's infrastructure," added Mr. Thompson.

"The second quarter represents our sixth consecutive quarter of revenue growth and we are confident in our ability to continue that trend going forward," stated Joseph Hernon, Chief Financial Officer. "Our increased cash burn during the second quarter primarily related to investments in inventory and manufacturing capacity at Teal Drones which we expect to drive revenue growth during calendar year 2022."

Conference Call Today
Jeff Thompson, CEO and Joseph Hernon, CFO will also host a conference call at 5:00 p.m. ET on Monday, December 20 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/10162620/f045cd851c

The conference call will also be available through a live webcast that can be accessed at https://dpregister.com/sreg/10162620/f045cd851c.

The webcast replay will be available until March 20, 2022 and can be accessed through the above link or on the Company's website.  A telephonic replay will be available until January 3, 2022, by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using access code 2436462. 

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.  Red Cat Propware is developing a Software-as-a-Solution ("SaaS") platform to provide drone flight data analytics and storage, as well as diagnostic products and services. 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: (516) 222-2560
E-mail: Investors@redcat.red
Website: https://www.redcatholdings.com/

 

RED CAT HOLDINGS
Consolidated Balance Sheets
(Unaudited)
	October 31,		April 30,
	2021		2021
ASSETS
Cash and cash equivalents	$ 11,559,758		$ 277,347
Investments	48,122,657		-
Inventory, including deposits	3,817,913		841,011
Intangible assets, including goodwill	28,029,268		10,049,502
Operating lease right-of-use assets	548,641		-
Other	1,295,904		525,505
TOTAL ASSETS	93,374,141		11,693,365
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses	1,989,080		1,202,049
Debt obligations	2,769,769		269,045
Due to related party	144,628		2,143,209
Operating lease liabilities	559,528		-
Warrant derivative liability	2,376,565		2,812,767
Total Liabilities	7,839,570		6,427,070
Stockholders' Equity
Stockholders' capital	105,641,281		21,076,223
Accumulated deficit	(20,106,710)		(15,809,928)
Total Stockholders' Equity	85,534,571		5,266,295
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 93,374,141		$ 11,693,365

 

RED CAT HOLDINGS
Condensed 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		2,912,720		588,942		4,694,736		1,074,336
Operating loss		(2,760,138)		(489,891)		(4,439,750)		(873,135)
Other Expense (Income)		(19,537)		232,390		(141,377)		232,390
Net loss		($2,740,601)		($722,281)		($4,298,373)		($1,105,525)
Loss per share - basic and diluted		$ (0.05)		$ (0.04)		$ (0.10)		$ (0.05)
Weighted average shares outstanding -
basic and diluted		52,147,541		20,241,390		43,110,884		20,126,241

 

RED CAT HOLDINGS
Condensed Consolidated Cash Flows Statements
(Unaudited)
	Six months ended October 31,
	2021		2020
Cash Flows from Operating Activities
Net loss	$ (4,298,373)		$ (1,105,525)
Non-cash expenses	1,299,468		464,913
Changes in operating assets and liabilities	(5,570,193)		72,160
Net cash used in operating activities	(8,569,098)		(568,452)
Net cash provided by investing activities	24,866		-
Cash Flows from Financing Activities
Purchases of investments, net	(48,122,657)		-
Purchases of property and equipment	(30,147)		-
(Payments) proceeds of debt obligations	(2,187,346)		231,849
Proceeds from convertible debentures	-		580,000
Proceeds from issuance of common stock, net	70,165,202		-
Net cash provided by financing activities	19,825,052		811,849
Effect of foreign exchange rate changes on cash	1,591		-
Net increase in cash and cash equivalents	11,282,411		243,397
Cash and cash equivalents, beginning of period	277,347		236,668
Cash and cash equivalents, end of period	11,559,758		480,065
Investments	48,122,657		-
Total cash and investments	$ 59,682,415		$ 480,065

 

Non-GAAP Financial Measures

We have presented a supplemental non-GAAP financial measure in this earnings release.  We believe that this supplemental information is useful to investors because it allows for an evaluation of the company with a focus on the performance of its core operations, including more meaningful comparisons of financial results to historical periods.  Adjusted Net Loss is a non-GAAP financial measure which excludes non-cash expenses, primarily related to derivatives and stock-based compensation.  Our executive management team uses these same non-GAAP measures internally to assess the ongoing performance of the company.

Below is a reconciliation of Adjusted Net Loss to GAAP net loss for the 6 months ended October 31, 2021 and 2020:

RED CAT HOLDINGS
Reconciliation of Adjusted Net Loss
(Unaudited)
		Six months ended October 31,
		2021		2020
Net loss		$ (4,298,373)		$ (1,105,525)
Adjustments for non-cash expenses:
Stock based compensation		1,284,023		214,122
Common stock issued for services		250,400		-
Amortization of intangible assets		32,651		-
Depreciation		5,455		-
Change in fair value of derivative liability		(273,061)		83,803
Amortization of debt discount		-		18,401
Derivative expense		-		148,587
Adjusted Net loss		$ (2,998,905)		$ (640,612)

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/red-cat-holdings-reports-financial-results-from-fiscal-second-quarter-2022-and-provides-corporate-update-301448452.html

SOURCE Red Cat Holdings, Inc.

FAQ

What were the Q2 2022 financial results for Red Cat Holdings (RCAT)?

Red Cat Holdings reported revenues of approximately $1.9 million for the fiscal quarter ended October 31, 2021, marking a 300% increase from the previous year.

How did the acquisition of Teal Drones impact Red Cat Holdings (RCAT)?

The acquisition of Teal Drones is expected to expand Red Cat's presence in the military segment and enhance revenue through existing contracts.

What is the cash position of Red Cat Holdings (RCAT) as of October 31, 2021?

As of October 31, 2021, Red Cat Holdings had approximately $60 million in cash and investments.

What are the future revenue expectations for Red Cat Holdings (RCAT)?

Red Cat anticipates generating at least $1 million in monthly revenue from Teal Drones starting in January 2022, with additional growth expected.

How has the federal infrastructure bill affected Red Cat Holdings (RCAT)?

The federal infrastructure bill is expected to create opportunities for Red Cat, particularly in providing inspection services through its Skypersonic segment.