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Item 3. Legal Proceedings

2023-07-27 compared with 2022-07-27 · 28 added, 11 removed, 4 unchanged (91% of the section changed)

LEGAL PROCEEDINGS

On March 15, 2022, Robert Stang filed an action against

On March 15, 2022, Robert Stang

filed an action against Teal Drones, Inc.

and George Matus in the United States District Court for the Northern District of California,

Robert Stang v.

Teal Drones, Inc.

and George Matus in the United States District Court for the Northern District of California, Robert Stang v.

and George Matus (No.

22-cv-01586-JSC).

The complaint asserts claims for breach of contract and unlawful conversion and sale of shares

of common stock that plaintiff alleges to have purchased from Teal Drones, Inc.

prior to the acquisition by the Company.

The Complaint

also alleges breach of fiduciary duty against Mr.

Matus and seeks in excess of $1 million in damages.

The Company has not been formally

served and expects to seek dismissal of such action.

22-cv-01586-JSC) and on September 15, 2022 filed a First Amended Complaint naming

Teal’s former director Benjamin Lambert and the Company as additional defendants.

The complaint asserts claims for breach of contract

and unlawful conversion and sale of shares of common stock that plaintiff alleges to have purchased.

The Complaint also alleges breach

of fiduciary duty and seeks in excess of $1 million in damages.

The Company believes it has a right to indemnification under the Teal

acquisition agreements and has notified the sellers of its intention to pursue indemnification claims under the Teal acquisition agreement

and set off claims against escrowed shares of the Company for such purpose.

On September 29, 2022, we, and our wholly-owned subsidiary

Teal Drones, Inc., initiated a legal proceeding (the “Lawsuit”) against Autonodyne LLC (“Autonodyne”) and its

principal equity owner Daniel Schwinn (“Schwinn”), in Delaware Chancery Court.

The case is captioned as Red Cat Holdings,

Autonodyne LLC, et al., C.A.

The case arises from Autonodyne’s unilateral purported termination

of a software licensing agreement entered between Teal Drones and Autonodyne in May 2022.

The Lawsuit alleges causes of action for Breach

of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, Tortious Interference with Contractual Relations and Prospective

Contractual Relations, Declaratory Judgment, and Injunctive Relief, and seeks both actual damages and injunctive relief.

Before the defendants

answered, we filed a First Amended Complaint on December 5, 2022, which the defendants have moved to dismiss.

The hearing on the motion

to dismiss is presently scheduled for October 23, 2023.

No discovery or other significant developments in the Lawsuit have occurred.

MINE SAFETY DISCLOSURES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings