Red Cat Holdings Reports Financial Results for Fiscal Third Quarter 2023 and Provides Corporate Update

SAN JUAN, Puerto Rico, March 07, 2023 (GLOBE NEWSWIRE) -- Red Cat Holdings, Inc. (Nasdaq: RCAT) (“Red Cat” or “Company”), a military technology company integrating robotic hardware and software to protect and support the warfighter, reports its financial results for the fiscal quarter ended January 31, 2023 and provides a business update.

Operational Highlights:

• Red Cat partners with Athena AI for artificial intelligence and computer vision on new Teal 2 military drone
  
  
• Red Cat Holdings CEO to Visit NATO Countries for Talks on Military Drone Support for Ukraine
  
  
• Utah Governor Visits Red Cat Holdings Subsidiary Teal Drones to Discuss State Support for Local Defense Industry
  
  
• Teal Drones Enhances Low-Light Navigation Through New Partnership With Immervision
  
  
• Skypersonic Delivers Drones, Rover, and Piloting Platform to NASA’s Simulated Mars Missions
  
  
• Red Cat Holdings Signs Agreement to Divest Consumer Business
  
  
• Mary Beth Long, Former U.S. Assistant Secretary of Defense, Joins Red Cat Holdings Board of Directors
  
  
• U.S. Border Patrol Purchases over $1 Million of Teal Drones
  
  

Third Quarter 2023 Financial Highlights:

• Revenues for the nine months ended January 31, 2023 were approximately $7.7 million, compared to approximately $5.1 million for the same period in fiscal 2022, representing an increase of more than 50% percent
  
  
• Nearly 25% of fiscal 2023 revenues to date were generated from sales to U.S. government agencies
  
  
• Cash and investments were approximately $25 million as of January 31, 2023
  
  

“The Teal 2 sUAS, with its new best-in-class thermal camera, is getting a great response from U.S. Customs and Border Protection, multiple NATO militaries, and federal law enforcement agencies,” said Red Cat CEO Jeff Thompson. “Our sales pipeline is growing rapidly, and the first program of record for quad copters – U.S. Army SRR Tranche 2 – is on track.”

"We are pleased to report year-to-date revenue growth of more than 50%," stated Joseph Hernon, Chief Financial Officer. "Orders from U.S. government agencies continue to increase and represented almost 25% of fiscal 2023 revenues to date. Notably, the government procurement process can be lengthy and challenging, but the U.S. government is often a long-term, recurring customer once these relationships are established."

Conference Call

CEO Jeff Thompson and CFO Joseph Hernon will host an earnings conference call at 8:30 a.m. ET on Tuesday, March 7, 2023 to review financial results and provide an update on corporate developments. Following management’s formal remarks, there will be a question- and-answer session.

Interested parties can listen to the conference call by dialing 1-866-777-2509 (within the U.S.) or 1-412-317-5413 (international). Callers should dial in approximately ten minutes prior to the start time and ask to be connected to the Red Cat conference call. Participants can also pre-register for the call using the following link: https://dpregister.com/sreg/10176273/f61708f938

The conference call will also be available through a live webcast that can be accessed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=mDUwADqI

A replay of the webcast will be available until June 7, 2023 and can be accessed through the above link or at www.redcatholdings.com. A telephonic replay will be available until March 21, 2023 by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using access code 2893615.

About Red Cat Holdings, Inc.
Red Cat (Nasdaq: RCAT) is a military technology company that integrates robotic hardware and software to provide critical situational awareness and actionable intelligence to on-the-ground warfighters and battlefield commanders. Its mission is to enhance the effectiveness and safety of military operations domestically and globally – and to “Dominate the Night.” Red Cat’s suite of solutions includes Teal Drones, developer of the Golden Eagle, a small unmanned system with the highest resolution imaging for nighttime operations, and Skypersonic, a leading provider of unmanned aircraft for interior spaces and other dangerous environments. 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
Condensed Consolidated Balance Sheets
(Unaudited)
			January 31,						April 30,
			2023					2022
ASSETS
Cash and marketable securities		$	24,623,195			$		48,875,184
Intangible assets including goodwill, net			27,400,124					27,837,281
Inventory, including deposits			12,602,568					5,602,955
Accounts receivable, net			2,063,872					495,506
Other			4,402,829					2,267,699
TOTAL ASSETS		$	71,092,588			$		85,078,625
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses		$	3,056,567			$		2,541,171
Debt obligations			1,458,681					1,970,661
Warrant derivative liability			856,100					1,607,497
Other			828,273					1,043,624
Total liabilities			6,199,621					7,162,953
Stockholders’ capital			109,256,147					106,885,000
Accumulated deficit/comprehensive loss			(44,363,180	)				(28,969,328					)
Total stockholders' equity			64,892,967					77,915,672
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	71,092,588			$		85,078,625

Condensed Consolidated Statements of Operations  (Unaudited)
		Three months ended January 31,								Nine months ended January 31,
			2023				2022				2023						2022
Revenues		$	3,106,644			$	1,856,751			$	7,706,377					$	5,116,741
Cost of goods sold			3,004,032				1,516,970				7,012,483						4,521,974
Gross Margin			102,612				339,781				693,894						594,767
Operating Expenses
Operations			815,170				334,278				3,616,129						794,390
Research and development			1,302,008				811,288				3,189,692						1,548,983
Sales and marketing			1,208,037				238,624				2,542,037						524,642
General and administrative			1,514,504				1,337,183				4,551,706						3,264,071
Stock based compensation			788,691				782,123				2,790,958						2,066,146
Total operating expenses			5,628,410				3,503,496				16,690,522						8,198,232
Operating loss			(5,525,798	)			(3,163,715	)			(15,996,628	)					(7,603,465	)
Other Expense (Income)
Change in fair value of derivative liability			(157,575	)			(1,026,466	)			(751,397	)					(1,299,527	)
Other, net			297,779				427,568				476,847						559,252
Other Expense (Income)		$	140,204			$	(598,898	)		$	(274,550	)				$	(740,275	)
Net loss		$	(5,666,002	)		$	(2,564,817	)		$	(15,722,078	)				$	(6,863,190	)
Loss per share - basic and diluted		$	(0.10	)		$	(0.05	)		$	(0.29	)				$	(0.15	)
Weighted average shares outstanding - basic and diluted			54,294,116				53,592,927				54,050,127						46,604,898

Condensed Consolidated Statements of Cash Flows (Unaudited)
			Nine months ended January 31,
			2023				2022
Cash Flows from Operating Activities
Net loss		$	(15,722,078	)		$	(6,863,190	)
Non-cash expenses			2,752,691				1,083,885
Changes in operating assets and liabilities			(8,425,471	)			(6,259,810	)
Net cash used in operating activities			(21,394,858	)			(12,039,115	)
Cash Flows from Investing Activities
Proceeds from (purchases of) maturity of marketable securities, net			24,282,117				(48,446,302	)
Other, net			(1,985,882	)			(67,715	)
Net cash provided by (used in) investing activities			22,296,235				(48,514,017	)
Cash Flows from Financing Activities
Payments of debt obligations			(498,576	)			(2,663,931	)
Proceeds from issuance of equity, net			—				70,165,202
Payments from employee equity transactions			(594,454	)			(113,959	)
Net cash (used in) provided by financing activities			(1,093,030	)			67,387,312
Net (decrease) increase in Cash			(191,653	)			6,834,180
Cash, beginning of period			4,084,815				277,347
Cash, end of period			3,893,162				7,111,527
Marketable securities			20,730,033				48,446,302
Cash and marketable securities		$	24,623,195			$	55,557,829