Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jul. 31, 2019 | Sep. 13, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Red Cat Holdings, Inc. | |
Entity Central Index Key | 0000748268 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 31, 2019 | |
Entity Incorporation, State or Country Code | NV | |
Amendment Flag | false | |
Current Fiscal Year End Date | --04-30 | |
Entity File Number | 000-31587 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Interactive Data Current | Yes | |
Is Entity Emerging Growth Company? | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 16,929,048 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) | Jul. 31, 2019 | Apr. 30, 2019 |
Current Assets | ||
Cash | $ 330,227 | $ 503,438 |
Prepaid expenses | 70,539 | 100,000 |
Total Current Assets | 400,766 | 603,438 |
Property and Equipment | 3,000 | |
Goodwill | 132,636 | |
TOTAL ASSETS | 536,402 | 603,438 |
Current Liabilities | ||
Accounts payable | 60,926 | 20,894 |
Payroll liabilities | 20,801 | 13,316 |
Accrued Expense | 89,196 | |
Common shares to be issued | 754,700 | |
Capital to be returned | 1,800 | 1,800 |
Total Current Liabilities | 172,723 | 790,710 |
Total Liabilities | 172,723 | 790,710 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Series A Preferred Stock - shares authorized 2,200,000; outstanding 208,704 and 0; Series B Preferred Stock - shares authorized 4,300,000; outstanding 3,972,645 and 0 | 41,813 | |
Common stock - shares authorized 500,000,000; outstanding 16,929,048 and 179,293 | 16,929 | 179 |
Additional paid-in capital | 1,598,261 | 784,371 |
Accumulated deficit | (1,293,324) | (971,822) |
Total Stockholders' Equity | 363,679 | (187,272) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 536,402 | $ 603,438 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 31, 2019 | Apr. 30, 2019 |
Preferred stock, shares authorized | 6,500,000 | 6,500,000 |
Preferred stock, shares issued | 4,181,349 | |
Preferred stock, shares outstanding | 4,181,349 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 16,929,048 | 179,293 |
Common stock, shares outstanding | 16,929,048 | 179,293 |
Series A Preferred Stock | ||
Preferred stock, shares authorized | 2,200,000 | 2,200,000 |
Preferred stock, shares issued | 208,704 | |
Preferred stock, shares outstanding | 208,704 | |
Series B Preferred Stock | ||
Preferred stock, shares authorized | 4,300,000 | 4,300,000 |
Preferred stock, shares issued | 3,972,645 | |
Preferred stock, shares outstanding | 3,972,645 |
Condensed Consolidated Operatio
Condensed Consolidated Operations Statements (unaudited) - USD ($) | 3 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
REVENUES | ||
Revenue | ||
Total Revenue | ||
EXPENSES | ||
Research and development | 185,695 | 107,668 |
Payroll expense | 7,137 | 33,546 |
Professional fees | 105,696 | 3,973 |
General and administrative expenses | 22,974 | 1,264 |
Loss before income taxes | (321,502) | (146,450) |
Provision for income taxes | ||
NET LOSS | $ (321,502) | $ (146,450) |
LOSS PER SHARE - basic and diluted | $ (0.89) | $ (0.82) |
Weighted average shares outstanding - basic and diluted | 359,715 | 179,110 |
Condensed Consolidated Stockhol
Condensed Consolidated Stockholders' Equity Statements (unaudited) - USD ($) | Series A Preferred Stock | Series B Preferred Stock | Common stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning balance, shares at Apr. 30, 2018 | 177,611 | |||||
Beginning balance, amount at Apr. 30, 2018 | $ 178 | $ 734,372 | $ (220,490) | $ 514,060 | ||
Issuance of common stock, shares | 1,682 | |||||
Issuance of common stock, amount | $ 2 | 49,998 | $ 50,000 | |||
Shares Issued for Services, shares | ||||||
Shares Issued for Services, amount | ||||||
Share Exchange with Red Cat Propware, amount | ||||||
Net loss | (146,450) | (146,450) | ||||
Ending balance, shares at Jul. 31, 2018 | 179,293 | |||||
Ending balance, amount at Jul. 31, 2018 | $ 179 | 784,371 | (366,940) | 417,610 | ||
Beginning balance, shares at Apr. 30, 2019 | 179,292 | |||||
Beginning balance, amount at Apr. 30, 2019 | $ 179 | 784,371 | (971,822) | (187,272) | ||
Issuance of common stock, shares | 15,355 | |||||
Issuance of common stock, amount | $ 15 | 684,685 | $ 684,700 | |||
Shares Issued for Services, shares | 1,570 | 1,570 | ||||
Shares Issued for Services, amount | $ 2 | 69,998 | $ 70,000 | |||
Share Exchange with Red Cat Propware, shares | 2,169,068 | 4,212,645 | 196,667 | |||
Share Exchange with Red Cat Propware, amount | $ 21,691 | $ 42,126 | $ 197 | 53,740 | 117,754 | |
Conversion of Preferred Stock Upon Reverse Stock Split, shares | (1,960,364) | (240,000) | 16,536,164 | |||
Conversion of Preferred Stock Upon Reverse Stock Split, amount | $ (19,604) | $ (2,400) | $ 16,536 | 5,467 | ||
Net loss | (321,502) | (321,502) | ||||
Ending balance, shares at Jul. 31, 2019 | 208,704 | 3,972,645 | 16,929,048 | |||
Ending balance, amount at Jul. 31, 2019 | $ 2,087 | $ 39,726 | $ 16,929 | $ 1,598,261 | $ (1,293,324) | $ 363,679 |
Condensed Consolidated Cash Flo
Condensed Consolidated Cash Flows Statements (unaudited) - USD ($) | 3 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
OPERATIONS | ||
Net loss | $ (321,502) | $ (146,450) |
Adjustments to reconcile net loss to net cash from operations: | ||
Prepaid expenses | 29,461 | |
Accounts payable | 40,032 | (1,788) |
Accrued expense | 89,195 | |
Payroll liabilities | 7,485 | 7,260 |
Net cash from operations | (155,329) | (140,978) |
FINANCING | ||
Common stock to be issued | (754,700) | |
Common stock issued | 872,454 | 50,000 |
Net cash from financing | 117,754 | 50,000 |
INVESTING | ||
Property & Equipment | (3,000) | |
Goodwill | (132,636) | |
Net Cash from investing | (135,636) | |
Net increase (use) of cash | (173,211) | (90,978) |
Cash, beginning of period | 503,438 | 570,326 |
Cash, end of period | 330,227 | 479,348 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | ||
Cash paid for taxes | ||
NONCASH | ||
Common stock issued for services | 70,000 | |
Shares exchanged in acquisition | $ 117,754 |
The Business
The Business | 3 Months Ended |
Jul. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Business | Note 1 - The Business Our Operations Red Cat Propware, Inc., (“Red Cat”), offers secure, cloud-based analytics, storage, and services for drones. Red Cat was incorporated in April 2016 in the State of Nevada. Our primary products are Black Box by Red Cat. Black Box by Red Cat analysis drone flight data and performs detailed flight reply and analytics. This data is also encrypted using our proprietary systems utilizing blockchain architecture. We are based in Puerto Rico, a location which offers important tax incentives, certain cost advantages, and access to the top blockchain companies in the world. The Share Exchange Agreement Effective May 15, 2019, we closed a Share Exchange Agreement (the “SEA”) with TimeFireVR, Inc., (“TimeFire”), a Nevada corporation. Under the SEA, we acquired approximately 83.33% of TimeFire’s outstanding share capital on a fully-diluted basis. We issued: (i) 196,667 shares of our common stock, (ii) 2,169,068 shares of our newly-designated Series A Preferred Stock, and (iii) 4,212,645 shares of our newly-designated Series B Preferred Stock. Our new Series A Preferred Stock is convertible to common stock at a ratio of 8.33 shares of common stock for each share of preferred stock held, and votes together with the common stock on an as-converted basis. The new Series A Preferred Stock will convert automatically to common stock upon the effectiveness of any future reverse split of our common stock. This common stock and Series A Preferred Stock issued under the SEA will constitute approximately 83.33% of our issued an outstanding share capital on a fully-diluted basis. Our new Series B Preferred Stock is convertible to common stock at a ratio of 0.83 shares of common stock for each share of preferred stock held, and votes together with the common stock on an as-converted basis. This Series B Preferred Stock issued under the SEA will constitute approximately 15.64% of our issued an outstanding share capital on a fully-diluted basis. In total, the common stock, Series A Preferred Stock, and Series B Preferred Stock issued under the SEA are valued at $117,754. Red Cat Propware, Inc. On May 15, 2019, we acquired TimeFireVR, Inc., in a $117,754 stock transaction classified as a reverse-merger transaction. The acquisition is expected to provide access to the public markets to assist our rapid growth through acquisitions and continued development of our Saas platform. In this reverse merger, the financial results of Red Cat Propware, Inc., (the accounting acquirer), have been presented as the continuing operations of the Company since inception. The purchase price allocation as of the date of the acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows: Cash $ 24,704 Prepaid expenses 14,470 Equipment 3,000 Goodwill 132,636 Accounts payable (57,056 ) Total 117,754 The goodwill recognized in connection with the acquisition is primarily attributable to anticipated synergies from future growth and is expected to be deductible for tax purposes. Reverse Stock Split On August 1, 2019, the Company effected a reverse stock split of its outstanding shares of common stock at a ratio of one-for-twelve hundred (1 for 1,200). All references in this report to shares of the Company’s common stock, including prices per share of its common stock, reflect the Reverse Stock Split. |
Going Concern
Going Concern | 3 Months Ended |
Jul. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 2 - Going Concern These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in our accompanying financial statements, for the three months ended July 31, 2019, Red Cat had a net loss of $321,502 and used cash in operating activities of $155,329. Additionally, Red Cat had an accumulated deficit of $1,293,324 and does not yet generate revenues. Management believes that these matters raise substantial doubt about Red Cat’s ability to continue as a going concern for twelve months from the issuance date of this report. These financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes Red Cat is well positioned after two-and-a-half years of drone research and software development. Our expertise in encryption, drone flights logs, and producing easy to use analytics will differentiate our soon to be released storage and analytics product. The Company was founded in April 2016 and has operated by using funds raised from accredited investors to build our software platform. Now a public entity with the reverse merger completed in May 2019, investors have gained public market liquidity which should allow us to raise additional funds. We believe that the going concern previously mentioned will be alleviated with the following steps listed: · We are currently working with investment banks to raise our first institutional financing. · We are working on acquisitions that will expedite our software platform revenue · We believe the acquisitions we are pursuing will be accretive once closed · We believe we will complete 2 or 3 acquisitions by our year end · Our commercial software product is launching in fourth quarter of calendar 2019 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Jul. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3 - Summary of Significant Accounting Policies Basis of Accounting Principles of Consolidation - Use of Estimates Cash Prepaid Expenses Goodwill Capital to be Returned Common Stock Warrants Research and Development Income Taxes Related Parties Parties are considered to be related to Red Cat if the party, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with Red Cat. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of Red Cat and its management and other parties with which Red Cat may deal with if one party controls or can Recent Accounting Pronouncements |
Warrants
Warrants | 3 Months Ended |
Jul. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Warrants | Note 4 - Warrants On May 15, 2019, as part of the Share Exchange Agreement, Red Cat issued 469,874 five-year warrants to purchase 469,874 shares of common stock at $0.324 per share. The value of these warrants were considered to be a nominal amount at the time of issuance. |
Income Taxes
Income Taxes | 3 Months Ended |
Jul. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 5 - Income Taxes At July 31, 2019 and 2018, income tax benefits consisted of the following: 2019 2018 Current Provision: Federal $ (67,515 ) $ (30,755 ) State (64,300 ) (29,290 ) (131,816 ) (60,045 ) Valuation Allowance 131,816 60,045 — — 2019 2018 Deferred Provision: Federal — — State — — $ — $ — The deferred tax asset comprises of the recognition of net operating losses for tax purposes. July 31, 2019 April 30, 2019 Deferred Tax Asset $ 530,263 $ 398,447 Valuation Allowance (530,263 ) (398,447 ) $ — $ — The valuation allowance at July 31, 2019, is $530,263. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to assess the application of a valuation allowance as of July 31, 2019, and December 31, 2018. Red Cat, Inc., has not filed corporate income tax returns for Federal or state purposes. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Jul. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 6 - Related-Party Transactions Shares Issued for Services Office Space Rental |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jul. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7 - Commitments and Contingencies Office Lease |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jul. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 8 - Subsequent Events Letter of Intent |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jul. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting |
Principles of Consolidation | Principles of Consolidation - |
Use of Estimates | Use of Estimates |
Cash | Cash |
Prepaid Expenses | Prepaid Expenses |
Goodwill | Goodwill |
Capital to be Returned | Capital to be Returned |
Common Stock | Common Stock |
Warrants | Warrants |
Research and Development | Research and Development |
Income Taxes | Income Taxes |
Related Parties | Related Parties Parties are considered to be related to Red Cat if the party, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with Red Cat. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of Red Cat and its management and other parties with which Red Cat may deal with if one party controls or can |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
The Business (Tables)
The Business (Tables) | 3 Months Ended |
Jul. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Major classes of assets and liabilities allocated to purchase price of acquisition | Cash $ 24,704 Prepaid expenses 14,470 Equipment 3,000 Goodwill 132,636 Accounts payable (57,056 ) Total 117,754 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Jul. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income tax benefits | 2019 2018 Current Provision: Federal $ (67,515 ) $ (30,755 ) State (64,300 ) (29,290 ) (131,816 ) (60,045 ) Valuation Allowance 131,816 60,045 — — 2019 2018 Deferred Provision: Federal — — State — — $ — $ — |
Deferred tax asset | July 31, 2019 April 30, 2019 Deferred Tax Asset $ 530,263 $ 398,447 Valuation Allowance (530,263 ) (398,447 ) $ — $ — |
The Business - Major classes of
The Business - Major classes of assets and liabilities allocated to purchase price of acquisition (Details) | Jul. 31, 2019USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Cash | $ 24,704 |
Prepaid expenses | 14,470 |
Equipment | 3,000 |
Goodwill | 132,636 |
Accounts payable | (57,056) |
Total | $ 117,754 |
The Business (Details Narrative
The Business (Details Narrative) - USD ($) | Aug. 02, 2019 | Jul. 31, 2019 | May 15, 2019 |
Percentage of TimeFire's outstanding share capital acquired in Share Exchange Agreement | 83.33% | ||
Total value of stock issued under Share Exchange Agreement | $ 117,754 | ||
Reverse stock split | 1:1,200 | ||
Common Stock issued | |||
Stock issued in Share Exchange Agreement | 196,667 | ||
Series A Preferred Stock issued | |||
Stock issued in Share Exchange Agreement | 2,169,068 | ||
Series B Preferred Stock issued | |||
Stock issued in Share Exchange Agreement | 4,212,645 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 3 Months Ended | ||
Jul. 31, 2019 | Jul. 31, 2018 | Apr. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net loss | $ (321,502) | $ (146,450) | |
Cash used in operating activities | (155,329) | $ (140,978) | |
Accumulated deficit | $ (1,293,324) | $ (971,822) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended |
Jul. 31, 2019USD ($) | |
Accounting Policies [Abstract] | |
Amount received in excess of shares issued to one investor | $ 1,800 |
Warrants (Details Narrative)
Warrants (Details Narrative) | May 15, 2019$ / sharesshares |
Stockholders' Equity Note [Abstract] | |
Warrants issued, number issued | 469,874 |
Warrants issued, shares of common stock available for purchase | 469,874 |
Warrants issued, price per share | $ / shares | $ 0.324 |
Income Taxes - Income tax benef
Income Taxes - Income tax benefits (Details) - USD ($) | 3 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Current Provision: | ||
Federal | $ (67,515) | $ (30,755) |
State | (64,300) | (29,290) |
Subtotal | (131,816) | (60,045) |
Valuation Allowance | 131,816 | 60,045 |
Total | ||
Deferred Provision: | ||
Federal | ||
State | ||
Total |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax asset (Details) - USD ($) | Jul. 31, 2019 | Apr. 30, 2019 |
Income Tax Disclosure [Abstract] | ||
Deferred Tax Asset | $ 530,263 | $ 398,447 |
Valuation Allowance | (530,263) | (398,447) |
Deferred Tax Asset, net |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Related Party Transactions [Abstract] | ||
Shares Issued for Services, shares | 1,570 | |
Shares Issued for Services, amount | $ 70,000 | |
Rent expense | $ 8,100 | $ 7,200 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 3 Months Ended |
Jul. 31, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease agreement, annual amount | $ 26,638 |