Red Cat (RCAT) 10-Q 21 Dec 20 2021 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Oct. 31, 2020	Dec. 18, 2020
Document And Entity Information
Entity Registrant Name	Red Cat Holdings, Inc.
Entity Central Index Key	0000748268
Document Type	10-Q
Document Period End Date	Oct. 31, 2020
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		20,721,535
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Entity Shell Company	false

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Oct. 31, 2020	Apr. 30, 2020
Current Assets
Cash	$ 480,065	$ 236,668
Inventory	170,486	78,650
Other		3,020
Total Current Assets	650,551	318,338
Goodwill	2,466,073	2,466,073
Trademark	20,000	20,000
Other	3,853	3,853
TOTAL ASSETS	3,140,477	2,808,264
Current Liabilities
Accounts payable	355,092	249,050
Accrued Expenses	71,465	89,342
Notes Payable	354,527	118,771
Due to Related Party	329,777	333,684
Customer deposits	66,205	38,419
Derivative liability	812,390
Total Current Liabilities	1,989,456	829,266
Convertible debentures, net of discount of $581,599	18,401	450,000
Commitments and contingencies
Stockholders' Equity
Series A Preferred Stock - shares authorized 2,200,000; outstanding 208,704; Series B Preferred Stock - shares authorized 4,300,000; outstanding 3,681,623	38,903	38,903
Common stock - shares authorized 500,000,000; outstanding 20,721,535 and 20,011,091	20,722	20,011
Additional paid-in capital	4,752,273	4,043,837
Accumulated deficit	(3,679,278)	(2,573,753)
Total Stockholders' Equity	1,132,620	1,528,998
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 3,140,477	$ 2,808,264

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($)	Oct. 31, 2020	Apr. 30, 2020
Discount on convertible debentures	$ 581,599
Preferred stock, shares authorized	6,500,000	6,500,000
Preferred stock, shares issued	3,890,327	3,890,327
Preferred stock, shares outstanding	3,890,327	3,890,327
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	20,721,535	20,011,091
Common stock, shares outstanding	20,721,535	20,011,091
Series A Preferred Stock
Preferred stock, shares authorized	2,200,000	2,200,000
Preferred stock, shares issued	208,704	208,704
Preferred stock, shares outstanding	208,704	208,704
Series B Preferred Stock
Preferred stock, shares authorized	4,300,000	4,300,000
Preferred stock, shares issued	3,681,623	3,681,623
Preferred stock, shares outstanding	3,681,623	3,681,623

Consolidated Operations Stateme

Consolidated Operations Statements - USD ($)	3 Months Ended		6 Months Ended
	Oct. 31, 2020	Oct. 31, 2019	Oct. 31, 2020	Oct. 31, 2019
Income Statement [Abstract]
Revenues	$ 427,807		$ 976,089
Cost of goods sold	328,756		774,888
Gross Margin	99,051		201,201
Operating Expenses
Operations	122,697		211,730
Research and development	96,559	76,724	193,814	262,419
Sales and marketing	24,679		48,815
General and administrative expenses	345,007	139,397	619,977	275,204
Total operating expenses	588,942	216,121	1,074,336	537,623
Operating loss	(489,891)	(216,121)	(873,135)	(537,623)
Other expense
Derivative expense	148,587		148,587
Change in fair value of derivative	83,803		83,803
Provision for income taxes
Other expense	232,390		232,390
Net loss	$ (722,281)	$ (216,121)	$ (1,105,525)	$ (537,623)
Loss per share - basic and diluted	$ 0.04	$ 0.01	$ 0.05	$ 0.06
Weighted average shares outstanding - basic and diluted	20,241,390	16,929,048	20,126,241	8,644,382

Consolidated Statements of Chan

Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Series A Preferred Stock	Series B Preferred Stock	Common stock	Additional Paid in Capital	Accumulated Deficit	Total
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		684,699
Share Exchange Agreement, shares	2,169,068	4,212,645	196,667
Share Exchange Agreement, amount	$ 21,691	$ 42,126	$ 197	53,740		117,754
Conversion of Preferred Stock, shares	(1,960,364)	(240,000)	16,536,164
Conversion of Preferred Stock, amount	$ (19,604)	$ (2,400)	$ 16,536	5,467
Shares Issued for Services, shares			1,570
Shares Issued for Services, amount			$ 2	69,998		70,000
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
Beginning balance, shares at Apr. 30, 2019			179,292
Beginning balance, amount at Apr. 30, 2019			$ 179	784,371	(971,822)	(187,272)
Stock based compensation						12,067
Net Loss						(537,623)
Ending balance, shares at Oct. 31, 2019	208,704	3,972,645	16,929,048
Ending balance, amount at Oct. 31, 2019	$ 2,087	$ 39,726	$ 16,929	1,610,328	(1,509,445)	159,625
Beginning balance, shares at Jul. 31, 2019	208,704	3,972,645	16,929,048
Beginning balance, amount at Jul. 31, 2019	$ 2,087	$ 39,726	$ 16,929	1,598,261	(1,293,324)	363,679
Stock based compensation				12,067		12,067
Net Loss					(216,121)	(216,121)
Ending balance, shares at Oct. 31, 2019	208,704	3,972,645	16,929,048
Ending balance, amount at Oct. 31, 2019	$ 2,087	$ 39,726	$ 16,929	1,610,328	(1,509,445)	159,625
Beginning balance, shares at Apr. 30, 2020	208,704	3,681,623	20,011,091
Beginning balance, amount at Apr. 30, 2020	$ 2,087	$ 36,816	$ 20,011	4,043,837	(2,573,753)	1,528,998
Stock based compensation				107,061		107,061
Net Loss					(383,244)	(383,244)
Ending balance, shares at Jul. 31, 2020	208,704	3,681,623	20,011,091
Ending balance, amount at Jul. 31, 2020	$ 2,087	$ 36,816	$ 20,011	4,150,898	(2,956,997)	1,252,815
Beginning balance, shares at Apr. 30, 2020	208,704	3,681,623	20,011,091
Beginning balance, amount at Apr. 30, 2020	$ 2,087	$ 36,816	$ 20,011	4,043,837	(2,573,753)	1,528,998
Stock based compensation						214,122
Net Loss						(1,105,525)
Ending balance, shares at Oct. 31, 2020	208,704	3,681,623	20,721,535
Ending balance, amount at Oct. 31, 2020	$ 2,087	$ 36,816	$ 20,722	4,752,273	(3,679,278)	1,132,620
Beginning balance, shares at Jul. 31, 2020	208,704	3,681,623	20,011,091
Beginning balance, amount at Jul. 31, 2020	$ 2,087	$ 36,816	$ 20,011	4,150,898	(2,956,997)	1,252,815
Conversion of Debt, shares			710,444
Conversion of Debt, amount			$ 711	494,314		495,025
Stock based compensation				107,061		107,061
Net Loss					(722,281)	(722,281)
Ending balance, shares at Oct. 31, 2020	208,704	3,681,623	20,721,535
Ending balance, amount at Oct. 31, 2020	$ 2,087	$ 36,816	$ 20,722	$ 4,752,273	$ (3,679,278)	$ 1,132,620

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Oct. 31, 2020	Oct. 31, 2019
Cash Flows from Operating Activities
Net loss	$ (1,105,525)	$ (537,623)
Stock based compensation	214,122	12,067
Amortization of debt discount	18,401
Derivative expense	148,587
Change in fair value of derivative	83,803
Changes in operating assets and liabilities
Prepaid expenses		75,000
Inventory	(91,836)
Other current assets	3,020
Customer deposits	27,786
Accounts payable	106,042	40,001
Accrued expenses	27,148	(5,293)
Net cash used in operating activities	(568,452)	(415,848)
Cash Flows from Investing Activities
Acquired through acquisitions		24,704
Net cash provided by investing activities		24,704
Cash Flows from Financing Activities
Payments under related party obligations	(3,907)
Proceeds from notes payable	419,050
Payments under notes payable	(183,294)
Proceeds from convertible debentures	580,000
Common stock to be issued		152,239
Net cash provided by financing activities	811,849	152,239
Net use of Cash	243,397	(238,905)
Cash, beginning of period	236,668	503,438
Cash, end of period	480,065	264,533
Supplemental disclosure of cash flow information:
Cash paid for interest
Cash paid for taxes
Noncash transactions
Common stock issued for services		70,000
Fair value of shares exchanged in acquisitions		117,754
Conversion of Notes into common stock	450,000
Conversion of accrued interest into common stock	$ 45,024

The Business

The Business	6 Months Ended
	Oct. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
The Business	Note 1 - The Business The Company was originally incorporated in February 1984. The Company’s primary business is to provide products, services and solutions to the drone industry. It operates in two sectors of the drone industry. Rotor Riot, LLC, an Ohio limited liability company and a wholly owned subsidiary (“Rotor Riot”), designs and sells drones and related components. Rotor Riot is focused on the consumer market and sells its products through its e-commerce platform operated at www.rotorriot.com. The Company is also developing software solutions to provide secure cloud-based analytics, storage and services for the drone industry. Its initial product candidate is Dronebox, a blockchain technology that records, stores and analyzes flight data and information from a drone, much like the “black box” utilized by the airline industry. The Company plans to offer Dronebox as a Software-as-a-Service platform. The Company closed the acquisition of Fat Shark Holdings (“Fat Shark”) on November 6, 2020. Fat Shark is a leading provider of headsets and goggles for professional FPV (First Person View) racers and drone pilots and has an estimated 85% share of its market. The Company expects that Fat Shark will generate a majority of its revenue over the next 12 months. This acquisition continues the Company’s efforts to become a fully-integrated drone business with a strong supply chain, as well as a provider of software solutions for the drone industry. Recent corporate developments include: A. 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. In total, the common stock, Series A Preferred Stock, and Series B Preferred Stock issued under the SEA were valued at $117,754. The transaction was accounted for as a “reverse acquisition” as the stockholders of Red Cat possessed majority voting control of the company immediately following the acquisition. 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 transaction was accounted for as follows: Cash $ 24,704 Goodwill 93,050 Total $ 117,754 The goodwill recognized in connection with the acquisition is primarily attributable to anticipated synergies and benefits from the combination of the two companies, including access to the public markets to raise capital, and is expected to be deductible for tax purposes. 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 converted automatically to common stock upon the effectiveness of the reverse split of our common stock in August 2019. This common stock and Series A Preferred Stock issued under the SEA constituted approximately 83.33% of our issued and outstanding share capital on a fully-diluted basis on the date of issuance. 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. The Series B Preferred Stock issued under the SEA constituted approximately 15.64% of our issued and outstanding share capital on a fully-diluted basis on the date of issuance. B. Organizational In July 2019, we changed our name from TimeFire VR Inc. to Red Cat Holdings, Inc. In August 2019, we changed our fiscal year to April 30 which was the historical fiscal year of Red Cat Propware, Inc. In August 2019, we effected a reverse stock split (the “Reverse Stock Split”) of our 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. C. Merger Agreement with Rotor Riot, LLC On December 31, 2019, the Company entered into an Agreement of Merger (the “Merger Agreement”) with Rotor Riot and the three members of Rotor Riot. On January 23, 2020, the Merger was consummated under which Rotor Riot Acquisition Corp, a wholly owned Delaware subsidiary of the Company, merged with and into Rotor Riot, with Rotor Riot continuing as the surviving entity and a wholly owned subsidiary of the Company. Under the Merger Agreement, each member of Rotor Riot received its pro rata portion of the total number of shares of the Company’s common stock issued based on (A)(i) $3,700,000 minus (ii) $915,563 (which included certain debt and other obligations of Rotor Riot and its Chief Executive Officer that the Company agreed to assume (the “Assumed Obligations”) divided by (B) the VWAP of the Company’s common stock for the twenty trading days prior to the closing of the Merger. Based on a share issuance value of $2,784,437 and a VWAP of $1.25445, the Company issued an aggregate of 2,219,650 shares of common stock to the members of Rotor Riot. Following the closing of the Merger Agreement, the former members of Rotor Riot owned approximately 10.4% of the Company. In addition, the Company’s management controls the operating decisions of the combined company. Accordingly, we have accounted for the transaction as an acquisition of Rotor Riot by the Company. Based on purchase price accounting, we have recognized the assets and liabilities of Rotor Riot at fair value with the excess of the purchase price over the net assets acquired recognized as goodwill. The table below reflects the Company’s estimates of the acquisition date values of the purchase consideration, assets acquired, and liabilities assumed. The shares issued were valued at $1,820,113 (2,219,650 shares issued times $0.82 per share which equaled the closing price of the Company’s common stock on the date that the merger agreement was consummated). I. Purchase Price Shares issued $ 1,820,114 Promissory note issued $ 175,000 Total Purchase Price $ 1,995,114 II. Purchase Price Allocation Assets Acquired Cash $ 21,623 Accounts receivable 28,500 Other assets 3,853 Inventory 127,411 Trademark 20,000 Goodwill 2,373,023 Total assets acquired 2,574,410 Liabilities Assumed Accounts Payable and accrued expenses $ 171,651 Notes payable $ 209,799 Due to Related Party $ 197,846 Total liabilities assumed $ 579,296 Net assets acquired $ 1,995,114 The foregoing amounts reflect our current estimates of fair value as of the January 23, 2020 acquisition date. The Company expects to recognize fair values associated with the customer relationships acquired, as well as the Rotor Riot brand name, but has not yet accumulated sufficient information to assign such values. As additional information becomes known regarding the acquired assets and assumed liabilities, management may make adjustments to the opening balance sheet of the acquired company up to the end of the measurement period, which is a one-year period following the acquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of estimated lives of depreciable tangible and intangible assets) requires significant judgement. Fat Shark Acquisition On September 30, 2020, the Company entered into a share purchase agreement (“Share Purchase Agreement”) with Greg French (“French”), the founder and sole shareholder of Fat Shark Holdings (“Fat Shark”), to acquire all of the issued and outstanding shares of Fat Shark and its subsidiaries for a purchase price of $7,000,000. The transaction closed on November 6, 2020 and was paid through (i) the issuance of 5,227,223 shares of common stock with an agreed value of $5,750,000 (ii) a senior secured promissory note in the original principal amount of $1,000,000 which matures on November 1, 2023, and (iii) a cash payment of $250,000 in cash. The Share Purchase Agreement includes indemnification provisions, a two year non-compete agreement, and registration rights for the shares issued in the transaction. Convertible Note Offering On October 5, 2020, the Company closed a private offering of convertible promissory notes (the “2020 Notes”) in the aggregate principal amount of $600,000 which included the issuance of five-year warrants to purchase an aggregate of 399,996 shares of common stock. The 2020 Notes accrue interest at the rate of 12% per annum and are payable two years from the date of issuance. The 2020 Notes are convertible into common stock at a conversion price equal to the lower of (i) $1.00 per share or, (ii) at a price equal to 75% of the price of an offering of common stock that results in the listing for trading on certain stock exchanges (a “Qualified Offering”). The 2020 Notes also contain protection from dilution which would lower the conversion price in the event of a lower priced issuance. An event of default could also result in a reduction of the conversion price. The Company may prepay any portion of the 2020 Notes, without penalty or premium, upon ten business days’ notice. No conversion will be completed if it would result in the noteholder, including its affiliates, owning more than 9.99% of the Company’s outstanding common stock immediately after completing such conversion. The Warrants are exercisable at $1.50 per share. The exercise price will be reduced to a price equal to 75% of the price per share of the common stock offered in a Qualified Offering.

Going Concern

Going Concern	6 Months Ended
	Oct. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Going Concern	Note 2 - Going Concern The 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, we have negative working capital of $1,338,905 at October 31, 2020 and have accumulated losses totaling approximately $3.7 million through October 31, 2020. Management recognizes that these operating results and our financial position raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and the classification of liabilities that might be necessary should we be unable to continue as a going concern. We are presently seeking to address these going concern doubts through a number of actions including efforts to (a) raise capital through the public markets, (b) release additional commercial products and (c) pursue acquisitions of complementary, revenue generating companies which are accretive to our operating results. We can provide no assurance that any of these efforts will be successful or, that even if successful, that they will alleviate doubts about our ability to continue as a going concern.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Oct. 31, 2020
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 Leases – Leases at October 31, 2020 are short term in nature and do not require accounting under the lease accounting standards. Goodwill We perform an impairment test at the end of each fiscal year, or more frequently if indications of impairment arise. We have a single reporting unit, and consequently, evaluate goodwill for impairment based on an evaluation of the fair value of the Company as a whole. Fair Value of Financial instruments ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 2. Convertible Securities and Derivatives – When the convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds from the convertible host instruments are first allocated to the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, resulting in those instruments being recorded at a discount from their face value. Revenue Recognition – Research and Development Income Taxes Recent Accounting Pronouncements Comprehensive Loss – Stock-Based Compensation – Basic and Diluted Net Loss per Share Related Parties

Notes Payable, Due to Related P

Notes Payable, Due to Related Party and Convertible Debentures	6 Months Ended
	Oct. 31, 2020
Debt Disclosure [Abstract]
Notes Payable, Due to Related Party and Convertible Debentures	Note 4 - Notes Payable In connection with the merger agreement with Rotor Riot, the Company agreed to assume certain financial obligations of Rotor Riot totaling $216,099 in the aggregate. A summary of these obligations is as follows: A. Note Payable to PayPal In November 2019, Rotor Riot entered into an agreement with PayPal under which it borrowed $100,000. PayPal is an electronic commerce company that facilitates payments between parties through online funds transfers. The Company processes certain customer payments ordered on its e-commerce site through PayPal. The note is being repaid through 52 weekly payments of $2,056. The balance outstanding at October 31, 2020 was $26,254. B. Note Payable to Shopify Capital In August 2019, Rotor Riot entered into an agreement with Shopify Capital under which it sold $176,000 of “Purchased Receivables” for total consideration of $160,000. Shopify Capital is an affiliate of Shopify, Inc. which provides sales software and services to the Company. The Company processes customer transactions ordered on its e-commerce site through Shopify which retained 14% of daily receipts until a total of $176,000 was retained. This note was repaid in May 2020. In May 2020, Rotor Riot entered into a new agreement with Shopify Capital under which it sold $158,200 of Purchased Receivables for total consideration of $140,000. Shopify retained 17% of daily receipts until a total of $158,200 was retained. This note was repaid in October 2020. In September 2020, Rotor Riot entered into a new agreement with Shopify Capital under which it sold $209,050 of Purchased Receivables for total consideration of $185,000. Shopify will retain 17% of daily receipts until a total of $209,050 is retained. Shopify did not begin withholding amounts under this Note until November 2020 as the prior Note was not repaid until the end of October 2020. The balance outstanding at October 31, 2020 was $209,050. C. Note Payable to Race Day Quads During 2019, Rotor Riot purchased inventory from Race Day Quads (“RDQ”), an online retailer of drone racing parts . D. Payable to Aerocarve During the three months ended October 31, 2020, the Company received advances totaling $70,000 from Aerocarve, which is controlled by the Company’s Chief Executive Officer. The parties agreed that the funds would bear interest at 5% annually until repaid. Note 5 - Due to Related Party BRIT, LLC, formally known as Brains Riding in Tanks, LLC, was the largest shareholder of Rotor Riot. Following the Merger, BRIT is a significant shareholder in the Company. The controlling shareholder of BRIT is now employed in a management role with the Company. A. Note Payable to BRIT, LLC Under the terms of the Merger Agreement, the Company issued a promissory note to BRIT, LLC in the principal amount of $175,000. The promissory note bears interest at 4.75% annually and provides for monthly principal payments of $3,500. The outstanding principal amount and all accrued interest is due on the earlier of (a) January 23, 2021 or (b) the closing of an equity offering by the Company of at least $3,500,000. The balance outstanding at October 31, 2020 totaled $161,547. In addition, accrued interest on the note totaled $6,422 at October 31, 2020. B. Obligations of BRIT, LLC BRIT incurred certain financial obligations in support of the operations of Rotor Riot which the Company assumed responsibility to pay. These obligations bear interest at annual rates ranging from 7.5% to 21.74%. The outstanding balance totaled $168,229 at October, 2020. Note 6 - Convertible Debentures In November 2019 we issued a convertible note in the principal amount of $300,000 to one accredited investor and in December 2019 we issued a convertible note in the principal amount of $125,000 to a director and a convertible note in the principal amount of $25,000 to our chief executive officer (collectively, the “2019 Notes”). In September and October 2020, the entire $450,000 of 2019 Notes, plus accrued interest totaling $45,204, was converted into 710,445 shares of common stock. The Notes had a term of 2 years and accrued interest at an annual rate of 12% through the date of conversion. In October 2020, we closed a Convertible Note financing which generated gross proceeds of $600,000. The Notes have a term of 2 years and bear interest at a rate of 12% which accrues and is payable in full when the Notes mature. Interest on the Notes may be paid in cash or in shares of common stock of the Company at the Conversion Price (as defined below).The Notes are convertible into shares of common stock at the holder’s sole discretion as follows: (A) prior to consummating an equity financing which generates gross proceeds of not less than $3,000,000 (a “Qualified Offering”), then at the 30 day VWAP of a share of our common stock as listed or quoted on the market in which the shares are then traded or listed, or (B) after we have consummated a Qualified Offering, at 40% of the price per share of common stock sold in the Qualified Offering (the “Conversion Price”). We may, upon 10 business days advance notice, elect to pre-pay the Note, including all accrued interest, in whole or in part, provided that any such prepayment prior to the one-year anniversary of the Note issuance shall be at a price equal to 112% of the then outstanding original principal amount. Upon an event of default, as described in the Notes, the outstanding principal and interest shall become immediately due and payable. Additionally, under the Note, unless waived by the holder, the holder shall not be entitled to convert the Note if such conversion would result in beneficial ownership by the holder and its affiliates of more than 9.99% of the outstanding shares of common stock of the Company on such date. Based on the Company’s results since inception, both on an operating and capital raising basis, we believe that it is more likely than not that the Company will not be able to complete an equity financing of at least $3,000,000 during the term of the Notes. In addition, we do not believe that the Company will be able to pre-pay the Notes prior to the one-year anniversary of their issuance. Based on these conclusions, the Company has not recognized a beneficial conversion feature or a derivative liability in connection with the convertible debentures.

Income Taxes

Income Taxes	6 Months Ended
	Oct. 31, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Note 7 - Income Taxes Our operating subsidiary is incorporated and based in Puerto Rico which is a commonwealth of the United States. We are not subject to taxation by the United States as Puerto Rico has its own taxing authority which passed the Export Services Act, also known as Act 20, in 2012. Under Act 20, eligible businesses are subject to a special corporate tax rate of 4%. Since inception, we have incurred net losses in each year of operations. Our current provision for the reporting periods presented in these financial statements consisted of a tax benefit against which we applied a full valuation allowance, resulting in no current provision for income taxes. In addition, there was no deferred provision for any of these reporting periods. At October 31, 2020 and April 30, 2020, we had accumulated deficits of approximately $3,500,000 and $2,600,000, respectively. Deferred tax assets related to the future benefit of these net operating losses for tax purposes totaled approximately $140,000 and $104,000, respectively, based on the Act 20 rate of 4%. Currently, we focus on projected future taxable income in evaluating whether it is more likely than not that these deferred assets will be realized. Based on the fact that we have not generated an operating profit since inception, we have applied a full valuation allowance against our deferred tax assets at October 31, 2020 and April 30, 2020.

Common Stock, Preferred Stock a

Common Stock, Preferred Stock and Warrants	6 Months Ended
	Oct. 31, 2020
Stockholders' Equity Note [Abstract]
Common Stock, Preferred Stock and Warrants	Note 8 - Common Stock Our common stock has a par value of $0.001 per share. We are authorized to issue 500,000,000 shares of common stock. Each share of common stock is entitled to one vote. Note 9 - Preferred Stock Our Series A Preferred Stock (“Series A Stock”) is convertible to common stock at a ratio of 8.33 shares of common stock for each share of Series A Stock, and votes together with the common stock on an as-converted basis. The Series A Preferred Stock was originally issued under the Securities Exchange Agreement, as further described in Note 1. The Series A Stock was automatically converted into shares of common stock upon the effectiveness of our reverse stock split in August 2019, except for 208,704 shares which were subject to a limitation on the number of shares of common stock that can be held by the holder of those shares of Series A Stock. Our Series B Preferred Stock (“Series B Stock”) is convertible into common stock at a ratio of 0.8334 shares of common stock for each share of Series B Stock held and votes together with the common stock on an as-converted basis. The Series B Preferred Stock was originally issued under the Exchange Agreement, as further described in Note 1. Conversions of Series B Stock into Common Stock are as follows: Date Series B Common Stock July 2019 240,000 200,000 November 2019 60,000 50,000 December 2019 231,022 192,519 Note 10 - Warrants In September 2019, we received $152,239 in connection with the exercise of 469,874 warrants which had been issued in May 2019 as part of the Share Exchange Agreement. We also assumed a fully vested, restricted stock unit agreement requiring the issuance of 41,667 shares of common stock in May 2021, as well as a warrant to purchase 5,556 shares of common stock at an exercise price of $60.00 per share. This warrant expires in March 2021. In October 2020, the Company issued five-year warrants to purchase a total of . The warrants were valued at $267,999 using the multinomial lattice model and are considered derivative liabilities under ASC 815-40. The following table presents the assumptions used to estimate the fair values of the warrants: October 31, 2020 Expected volatility 89-95 % Expected dividends 0 % Expected term 4.92-5 Years Risk-free interest rate 0.27-0.29 % The following table summarizes the changes in warrants outstanding issued to non-employees of the Company during the six months ended October 31, 2020. Number of Warrants Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Balance as of April 30, 2020 — — — — $ — Granted 399,998 1.50 0.67 5.00 599,997 Exercised — — — — — Cancelled/Expired — — — — — Outstanding as of October 31, 2020 399,998 $ 1.50 $ 0.67 4.92 $ 599,997

Share Based Awards

Share Based Awards	6 Months Ended
	Oct. 31, 2020
Share-based Payment Arrangement [Abstract]
Share Based Awards	Note 11 - Share Based Awards Effective August 2019, shareholders approved the 2019 Equity Incentive Plan (the “Plan”) which allows us to incentivize key employees, consultants, and directors with long term compensation awards such as stock options, restricted stock, and restricted stock units (collectively, the “Awards”). The number of shares issuable in connection with Awards under the Plan may not exceed 8,750,000. A. October 2019 Issuances In October 2019, we issued options to purchase 350,000 shares of common stock valued at $477,500. Options to purchase 200,000 shares vest ratably over a two-year period and expire in October 2029. Options to purchase 150,000 shares vest ratably over a three-year period and expire in October 2024. All of the options were issued at an exercise price of $2.10 which equaled the stock price on the date of issuance. We used the Black-Scholes Model to estimate the fair value of the stock options issued using the following assumptions: (i) expected volatility – 75%, (ii) risk free interest rate – 1.59% or 1.74%, (iii) expected life – 5 or 10 years, and (iv) expected dividend yield of 0%. B. January 2020 Issuances In January 2020, we issued options to purchase 1,100,000 shares of common stock exercisable at $0.82 vesting quarterly over a three-year period. These options were valued at $707,300. We also issued options to purchase 147,475 shares of common stock exercisable at $0.82. These options were valued at $94,826 and were vested in full upon issuance. All of these options were issued at an exercise price which equaled the stock price on the date of issuance. We used the Black-Scholes Model to estimate the fair value of the stock options issued using the following assumptions: (i) expected volatility – 75%, (ii) risk free interest rate – 1.74%, (iii) expected life – 10 years, and (iv) expected dividend yield of zero. C. Summary Stock compensation expense for the three and six months ended October 31, 2020 was as follows: 3 months 6 months General and administrative $ 94,629 $ 189,258 Research and development 9,945 19,890 Operations 2,487 4,974 $ 107,061 $ 214,122 There was no compensation expense recognized in the three months ended October 31, 2019. Options exercisable as of October 31, 2020 totaled 572,476. The remaining weighted average contractual term of the options outstanding at October 31, 2020 was 8.73 years. The aggregate intrinsic value of outstanding options, representing the excess of the stock price at October 31, 2020 of $1.21 over the exercise price of each option, was $492,753.

Financial Instruments

Financial Instruments	6 Months Ended
	Oct. 31, 2020
Investments, All Other Investments [Abstract]
Financial Instruments	Note 12 - Financial Instruments The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting related to 4 convertible notes issued totaling $600,000 which included a ratchet provision in the conversion price of the lower of 1.00 or 25% discount of the price per share of Common Stock offered in the Qualified offering and also include a ratchet provision. Attached to these notes as additional consideration was 399,998 5-year warrants with a conversion price of the lower of 1.50 or 25% discount of the price per share of Common Stock offered in the Qualified offering and also include a ratchet provision. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has estimated the fair value of these embedded derivatives for convertible debentures and associated warrants using a multinomial lattice model as of October 31, 2020. The fair values of the derivative instruments are measured each quarter, which resulted in a loss of $83,803 and derivative expense of $148,587 during the six and months ended October 31, 2020. As of October 31, 2020, the fair market value of the derivatives aggregated $812,390, using the following assumptions: estimated 2.00-5.00-year term, estimated volatility of 88.80-95.11%, and a discount rate of 0.13-0.33%. Financial instruments measured at fair value on a recurring basis at October 31, 2020, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of derivatives $ — $ 812,390 $ — $ 812,390

Related Party Transactions

Related Party Transactions	6 Months Ended
	Oct. 31, 2020
Related Party Transactions [Abstract]
Related Party Transactions	Note 13 - Related-Party Transactions Shares Issued for Services – In May 2019, we issued 1,570 shares of common stock valued at $70,000 to a shareholder for legal services provided to us. In April 2020, we issued 150,000 shares of common stock with a fair market value of $204,000 to a different law firm for services provided to us. Convertible Note Financing – In December 2019, we completed a convertible note financing with a member of the Board of Directors for $125,000 and with our Chief Executive Officer for $25,000. The same Board member invested $300,000 in the convertible note financing completed in October 2020. See Note 6 for details on the terms of the transaction. Payable to Aerocarve – During the three months ended October 31, 2020, the Company received advances totaling $70,000 from Aerocarve, which is controlled by the Company’s Chief Executive Officer. The parties agreed that the funds would bear interest at 5% annually until repaid.

Subsequent Events

Subsequent Events	6 Months Ended
	Oct. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	Note 14 - Subsequent Events Subsequent events have been evaluated through the date of this filing and there are no subsequent events which require disclosure except as set forth below: On November 6, 2020, the Company completed the acquisition of Fat Shark Holdings which was paid through (i) the issuance of 5,227,223 shares of common stock with an agreed value of $5,750,000 (ii) a senior secured promissory note in the original principal amount of $1,000,000 which matures on November 1, 2023, and (iii) a cash payment of $250,000 in cash. The Share Purchase Agreement includes indemnification provisions, a two year non-compete agreement, and registration rights for the shares issued in the transaction.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Oct. 31, 2020
Accounting Policies [Abstract]
Basis of Accounting	Basis of Accounting
Principles of Consolidation	Principles of Consolidation –
Use of Estimates	Use of Estimates
Cash	Cash
Leases	Leases
Goodwill	Goodwill We perform an impairment test at the end of each fiscal year, or more frequently if indications of impairment arise. We have a single reporting unit, and consequently, evaluate goodwill for impairment based on an evaluation of the fair value of the Company as a whole.
Fair Value of Financial Instruments	Fair Value of Financial instruments ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 2.
Convertible Securities and Derivatives	Convertible Securities and Derivatives – When the convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds from the convertible host instruments are first allocated to the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, resulting in those instruments being recorded at a discount from their face value.
Revenue Recognition	Revenue Recognition –
Research and Development	Research and Development
Income Taxes	Income Taxes
Recent Accounting Pronouncements	Recent Accounting Pronouncements
Comprehensive Loss	Comprehensive Loss –
Stock-Based Compensation	Stock-Based Compensation –
Basic and Diluted Net Loss per Share	Basic and Diluted Net Loss per Share
Related Parties	Related Parties

The Business (Tables)

The Business (Tables)	6 Months Ended
	Oct. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Values of purchase consideration, assets acquired, and liabilities assumed from reverse-merger and merger	I. Purchase Price Shares issued $ 1,820,114 Promissory note issued $ 175,000 Total Purchase Price $ 1,995,114 II. Purchase Price Allocation Assets Acquired Cash $ 21,623 Accounts receivable 28,500 Other assets 3,853 Inventory 127,411 Trademark 20,000 Goodwill 2,373,023 Total assets acquired 2,574,410 Liabilities Assumed Accounts Payable and accrued expenses $ 171,651 Notes payable $ 209,799 Due to Related Party $ 197,846 Total liabilities assumed $ 579,296 Net assets acquired $ 1,995,114

Common Stock, Preferred Stock_2

Common Stock, Preferred Stock and Warrants (Tables)	6 Months Ended
	Oct. 31, 2020
Stockholders' Equity Note [Abstract]
Assumptions used to estimate fair value of warrants	October 31, 2020 Expected volatility 89-95 % Expected dividends 0 % Expected term 4.92-5 Years Risk-free interest rate 0.27-0.29 %
Changes in warrants outstanding issued to non-employees of the Company	Number of Warrants Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Balance as of April 30, 2020 — — — — $ — Granted 399,998 1.50 0.67 5.00 599,997 Exercised — — — — — Cancelled/Expired — — — — — Outstanding as of October 31, 2020 399,998 $ 1.50 $ 0.67 4.92 $ 599,997

Share Based Awards (Tables)

Share Based Awards (Tables)	6 Months Ended
	Oct. 31, 2020
Share-based Payment Arrangement [Abstract]
Stock compensation expense	3 months 6 months General and administrative $ 94,629 $ 189,258 Research and development 9,945 19,890 Operations 2,487 4,974 $ 107,061 $ 214,122

Financial Instruments (Tables)

Financial Instruments (Tables)	6 Months Ended
	Oct. 31, 2020
Investments, All Other Investments [Abstract]
Financial instruments measured at fair value on a recurring basis	Level 1 Level 2 Level 3 Total Fair value of derivatives $ — $ 812,390 $ — $ 812,390

The Business - Values of purcha

The Business - Values of purchase consideration, assets acquired, and liabilities assumed from reverse-merger and merger (Details)	6 Months Ended
	Oct. 31, 2020USD ($)shares
Red Cat Propware, Inc.
Cash	$ 24,704
Goodwill	93,050
Total	$ 117,754
Merger Agreement with Rotor Riot, LLC
Purchase Price
Shares issued | shares	1,820,114
Promissory note issued	$ 175,000
Total Purchase Price	1,995,114
Assets Acquired
Cash	21,623
Accounts receivable	28,500
Other assets	3,853
Inventory	127,411
Trademark	20,000
Goodwill	2,373,023
Total assets acquired	2,574,410
Liabilities Assumed
Accounts Payable and accrued expenses	171,651
Notes payable	209,799
Due to Related Party	197,846
Total liabilities assumed	579,296
Net assets acquired	$ 1,995,114

The Business (Details Narrative

The Business (Details Narrative) - USD ($)	Aug. 02, 2019	Oct. 31, 2020	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 ($)	Oct. 31, 2020	Apr. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Negative working capital	$ (1,338,905)
Accumulated deficit	$ (3,679,278)	$ (2,573,753)

Disclosure - Notes Payable, Due

Disclosure - Notes Payable, Due to Related Party and Convertible Debentures (Details Narrative)	6 Months Ended
	Oct. 31, 2020USD ($)
Note Payable to PayPal
Notes Payable
Notes payable assumed in connection with merger agreement, balance outstanding	$ 26,254
Note Payable to Shopify Capital
Notes Payable
Notes payable assumed in connection with merger agreement, balance outstanding	209,050
Note Payable to Race Day Quads
Notes Payable
Notes payable assumed in connection with merger agreement, balance outstanding	49,223
Note Payable to BRIT, LLC
Due to Related Party
Due to related party, Merger Agreement, outstanding balance	161,547
Obligations of BRIT, LLC
Due to Related Party
Due to related party, Merger Agreement, outstanding balance	168,229
Convertible Note issued to accredited investor
Convertible Debentures
Convertible note, principal amount	$ 300,000
Convertible note, term	2 years
Convertible note, interest rate	12.00%
Convertible Note issued to director
Convertible Debentures
Convertible note, principal amount	$ 125,000
Convertible note, term	2 years
Convertible note, interest rate	12.00%
Convertible Note issued to chief executive officer
Convertible Debentures
Convertible note, principal amount	$ 25,000
Convertible note, term	2 years
Convertible note, interest rate	12.00%

Income Taxes (Details Narrative

Income Taxes (Details Narrative) - USD ($)	Oct. 31, 2020	Apr. 30, 2020
Income Tax Disclosure [Abstract]
Accumulated deficit	$ (3,679,278)	$ (2,573,753)
Approximate deferred tax assets related to future benefit of net operating losses	$ 140,000	$ 104,000

Common Stock, Preferred Stock_3

Common Stock, Preferred Stock and Warrants - Assumptions used to estimate fair value of warrants (Details) - Warrants	6 Months Ended
	Oct. 31, 2020
Expected volatility, minimum	89.00%
Expected volatility, maximum	95.00%
Expected dividends	0.00%
Expected term, minimum	4 years 11 months 1 day
Expected term, maximum	5 years
Risk-free interest rate, minimum	0.27%
Risk-free interest rate, maximum	0.29%

Common Stock, Preferred Stock_4

Common Stock, Preferred Stock and Warrants - Changes in warrants outstanding issued to non-employees of the Company (Details)	6 Months Ended
	Oct. 31, 2020USD ($)$ / sharesshares
Balance at start of period
Number of warrants | shares
Weighted average exercise price
Weighted average grant date fair value
Value if exercised | $
Granted
Number of warrants | shares	399,998
Weighted average exercise price	$ 1.50
Weighted average grant date fair value	$ 0.67
Expiration Date	5 years
Value if exercised | $	$ 599,997
Exercised
Number of warrants | shares
Weighted average exercise price
Weighted average grant date fair value
Value if exercised | $
Cancelled/Expired
Number of warrants | shares
Weighted average exercise price
Weighted average grant date fair value
Value if exercised | $
Outstanding at end of period
Number of warrants | shares	399,998
Weighted average exercise price	$ 1.50
Weighted average grant date fair value	$ 0.67
Expiration Date	4 years 11 months 1 day
Value if exercised | $	$ 599,997

Common Stock, Preferred Stock_5

Common Stock, Preferred Stock and Warrants (Details Narrative) - USD ($)	1 Months Ended
	Sep. 30, 2019	May 15, 2019
Stockholders' Equity Note [Abstract]
Warrants issued, number issued		469,874
Warrants issued, price per share		$ 0.324
Proceeds received in connection with exercise of warrants	$ 152,239

Share Based Awards - Stock comp

Share Based Awards - Stock compensation expense (Details) - USD ($)	3 Months Ended	6 Months Ended
	Oct. 31, 2020	Oct. 31, 2020
Share-based Payment Arrangement [Abstract]
General and administrative	$ 94,629	$ 189,258
Research and development	9,945	19,890
Operations	2,487	4,974
Total	$ 107,061	$ 214,122

Share Based Awards (Details Nar

Share Based Awards (Details Narrative)	6 Months Ended
	Oct. 31, 2020USD ($)shares
Number of shares issuable in connection with Awards under the Plan, maximum | shares	8,750,000
Options exercisable, amount	$ 572,476
Remaining weighted average contractural term of options outstanding	8 years 8 months 23 days
Aggregate intrinsic value of outstanding options	$ 492,753
October 2019 Issuances
Options issued, number of common stock shares available for purchase | shares	350,000
Options issued, value	$ 477,500
Assumptions used, expected volatility	75.00%
Assumptions used, risk free interest rate, minimum	1.59%
Assumptions used, risk free interest rate, maximum	1.74%
Assumptions used, expected life, minimum	5 years
Assumptions used, expected life, maximum	10 years
Assumptions used, expected dividend yield	0.00%
January 2020 Issuances (1)
Options issued, number of common stock shares available for purchase | shares	1,100,000
Options issued, value	$ 707,300
Assumptions used, expected volatility	75.00%
Assumptions used, risk free interest rate, maximum	1.74%
Assumptions used, expected life, maximum	10 years
Assumptions used, expected dividend yield	0.00%
January 2020 Issuances (2)
Options issued, number of common stock shares available for purchase | shares	147,475
Options issued, value	$ 94,826
Assumptions used, expected volatility	75.00%
Assumptions used, risk free interest rate, maximum	1.74%
Assumptions used, expected life, maximum	10 years
Assumptions used, expected dividend yield	0.00%

Financial Instruments - Financi

Financial Instruments - Financial instruments measured at fair value on a recurring basis (Details)	Oct. 31, 2020USD ($)
Fair value of derivatives	$ 812,390
Level 1
Fair value of derivatives
Level 2
Fair value of derivatives	812,390
Level 3
Fair value of derivatives

Financial Instruments (Details

Financial Instruments (Details Narrative)	6 Months Ended
	Oct. 31, 2020USD ($)
Investments, All Other Investments [Abstract]
Loss from measurements of fair value of derivative instruments	$ (83,803)
Derivative expense	148,587
Fair market value of derivatives	$ 812,390

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($)	1 Months Ended			3 Months Ended
	Apr. 30, 2020	Dec. 20, 2019	May 31, 2019	Jul. 31, 2019
Shares Issued for Services, shares	150,000		1,570
Shares Issued for Services, amount	$ 204,000		$ 70,000	$ 70,000
Member of Board of Directors
Convertible note financing with related parties		$ 125,000
Chief Executive Officer
Convertible note financing with related parties		$ 25,000