Lawsuit filed for Investors who lost money with shares in Red Cat Holdings, Inc. (NASDAQ: RCAT)

An investor, who purchased shares of Red Cat Holdings, Inc. (NASDAQ: RCAT), filed a lawsuit over alleged violations of Federal Securities Laws by Red Cat Holdings, Inc. in connection with certain allegedly false and misleading statements.

Investors who purchased shares of Red Cat Holdings, Inc. (NASDAQ: RCAT) have certain options and for certain investors are short and strict deadlines running. Deadline: July 22, 2025. NASDAQ: RCAT investors should contact the Shareholders Foundation at mail@shareholdersfoundation.com or call +1(858) 779 - 1554.

San Juan, PR based Red Cat Holdings, Inc., together with its subsidiaries, provides products and solutions to drone industry in the United States. Red Cat Holdings, Inc at manufactures its drones through its subsidiary Teal Drones, Inc. ("Teal") at a facility located in Salt Lake City, Utah (the "Salt Lake City Facility").
In March 2022, Red Cat Holdings, Inc announced that Teal had been selected by the U.S. Department of Defense's Defense Innovation Unit and the U.S. Army to compete in Tranche 2 of the U.S. Army's Short Range Reconnaissance Program of Record (the "SRR Program"). The SRR Program is a U.S. Army initiative to provide a small, rucksack-portable sUAS to U.S. Army platoons.

In March 2023, Company management confirmed that "[t]he Salt Lake City factory is complete and ready to go" and "[w]e now have the capacity to produce thousands of drones per month."

Then on July 27, 2023, Red Cat Holdings, Inc. hosted a conference call with investors and analysts to discuss its financial and operating results for its fiscal year 2023. During the call, Defendants revealed that the Salt Lake City Facility could only currently produce 100 drones per month, and that the facility was still being built, refined, and expanded. Red Cat filed an annual report on Form 10-K with the U.S. Securities and Exchange Commission the same day, which likewise reported that construction of the facility was only "substantially completed" and potentially could reach a production capacity of one thousand drones per month over the next 2 to 3 years, but only with additional capital investments and manufacturing efficiencies realized.

On September 23, 2024, Red Cat Holdings, Inc announced its financial and operating results for the first quarter of its fiscal year 2025. Among other results, the Company reported losses per share of $0.17, missing consensus estimates by $0.09, and revenue of $2.8 million, missing consensus estimates by $1.07 million. On a subsequent conference call that Red Cat hosted with investors and analysts the same day to discuss these results, Company management disclosed that Red Cat had spent "the past four months . . . retooling [the Salt Lake City Facility] and preparing for high volume production[,]" while admitting that a "pause in manufacturing of Teal 2 and building our Army prototypes impacted Teal 2 sales" because, inter alia, Red Cat "couldn't produce and sell Teal 2 units[] while retooling [its] factory."

On November 19, 2024, Red Cat Holdings, Inc announced that it had won the SRR Contract. On a subsequent conference call that Red Cat hosted with investors and analysts the same day to discuss the contract win, Defendants continued to assert that the SRR Contract was worth potentially hundreds of millions of dollars, while expressing their confidence that Red Cat could realize up to $50 million to $79.5 million in revenue from the SRR Contract during it fiscal year 2025 alone.

Then, on January 16, 2025, Kerrisdale Capital ("Kerrisdale") published a report (the "Kerrisdale Report") alleging, inter alia, that Red Cat Holdings, Inc had overstated the value of the SRR Contract, which Kerrisdale found was only worth approximately $20 million to $25 million based on U.S. Army budget documents. The Kerrisdale Report also alleged that Defendants had been misleading investors about the Salt Lake City Facility's production capacity for years, while also raising concerns about the timing of executive departures and insider transactions that took place shortly after Red Cat Holdings, Inc announced it had won the SRR Contract.

Shares of Red Cat Holdings, Inc. (NASDAQ: RCAT) declined from $15.27 per share on January 06, 2025, to $4.60 per share on April 21, 2025.

The plaintiff claims that between March 18, 2022 and January 15, 2025, the Defendants made false and/or misleading statements and/or failed to disclose that the Salt Lake City Facility's production capacity, and Defendants' progress in developing the same, was overstated, that the overall value of the SRR Contract was overstated, and that as a result, Defendants' public statements were materially false and misleading at all relevant times.

Those who purchased shares of Red Cat Holdings, Inc. (NASDAQ: RCAT) have certain options and should contact the Shareholders Foundation.

Contact:
Michael Daniels
Shareholders Foundation, Inc.
3111 Camino Del Rio North
Suite 423
San Diego, CA 92108
Tel: +1-(858)-779-1554
E-Mail: mail@shareholdersfoundation.com

About Shareholders Foundation, Inc.
The Shareholders Foundation, Inc. is a professional portfolio monitoring and settlement claim filing service, and an investor advocacy group, which does research related to shareholder issues and informs investors of securities lawsuits, settlements, judgments, and other legal related news to the stock/financial market. Shareholders Foundation, Inc. is in contact with a large number of shareholders and offers help, support, and assistance for every shareholder. The Shareholders Foundation, Inc. is not a law firm. Referenced cases, investigations, and/or settlements are not filed/initiated/reached and/or are not related to Shareholders Foundation. The information is provided as a public service. It is not intended as legal advice and should not be relied upon.

This release was published on openPR.