Item 9A. Controls and Procedures
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures.
Our management, with the participation of our CEO
(principal executive officer) and CFO (principal financial officer), has evaluated the effectiveness of the Company’s disclosure
controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act, as of April 30, 2024.
The term “disclosure controls and procedures”
as defined in Rules 13a-15(e) and 15d-15(e) means controls and other procedures of the Company that are designed to ensure that information
required to be disclosed by the Company in reports, such as this report, that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its
principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
Based on that evaluation,
our CEO and CFO concluded that our disclosure controls and procedures were effective as of April 30, 2024.
Management's annual report on internal control
over financial reporting.
Our management is responsible for establishing and
maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable
assurances regarding the reliability of financial reporting and the preparation of our consolidated financial statements in accordance
with GAAP. Our accounting policies and internal controls over financial reporting, established and maintained by management, are under
the general oversight of the Board’s audit committee.
Our internal control over financial reporting includes
those policies and procedures that:
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the
policies or procedures may deteriorate.
Management assessed our internal control over financial
reporting as of April 30, 2024. The standard measures adopted by management in making its evaluation are the measures in the Internal-Control
Integrated Framework published by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission.
60
Based on management’s assessment using the
COSO criteria, our CEO and CFO concluded that our internal control over financial reporting was not effective, specifically
pertaining to the year ended April 30, 2023 for which we restated items related to right of use assets and liabilities as well as
the removal of the derivative liabilities. The Company is currently in the process of formalizing narratives and processes which are
expected to mitigate these weaknesses, and has hired additional personnel to strengthen the internal control environment.
Attestation Report of the Registered Public Accounting
Firm.
Because the Company is a non-accelerated filer, this
annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the
SEC where registrants that are non-accelerated filers are not required to provide the auditor attestation report.
Changes In Controls Over Financial Reporting.
There were no changes
in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the year ended
April 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
ITEM 9B.
OTHER INFORMATION
During the fiscal
quarter ended April 30, 2024, none of our directors or executive officers adopted or terminated any contract, instruction
or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule
10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS
Not applicable .
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required
by this Item 10 will be included under the captions “Board of Directors and Corporate Governance,” “Executive Officers,”
and “Delinquent Section 16(a) Reports” in our definitive Proxy Statement for the 2024 Annual Meeting of Stockholders to be
filed with the SEC within 120 days after the end of our fiscal year (the “Proxy Statement”) and is incorporated herein by
reference.
We have adopted a Corporate
Code of Conduct and Ethics applicable to our directors, officers and employees which is designed to deter wrongdoing and to promote:
honest and ethical conduct;
full, fair, accurate, timely and understandable disclosure in reports and
documents that we file with the SEC and in our other public communications;
compliance with applicable laws, rules and regulations, including insider
trading compliance; and
accountability for adherence to the code and prompt internal reporting of
violations of the code, including illegal or unethical behavior regarding accounting or auditing practices.
You may obtain a copy of
our Corporate Code of Conduct and Ethics on our website at www.redcat.red under Company — Investor Relations — Governance
— Governance Documents. The Compliance Committee, which is composed of our Chief Executive Officer and Chief Financial Officer,
is responsible for reviewing the Corporate Code of Conduct and Ethics and amending as necessary. Any amendments will be disclosed on our
website.
61
ITEM 11. EXECUTIVE COMPENSATION
The information required
by this Item 11 will be included under the captions “Director Compensation Table,” “Non-Employee Director Compensation
Arrangements,” and "Executive Compensation" in the Proxy Statement and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information
required by this Item 12 will be included under the captions “Security Ownership of Certain Beneficial Owners and Management”
and “2019 Equity Incentive Plan” in the Proxy Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
The information
required by this Item 13 will be included under the captions “Certain Relationships and Related Transactions, and Director Independence,”
“Director Compensation Table,” “Non-Employee Director Compensation Arrangements,” and “Executive
Compensation” in the Proxy Statement and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this
Item 14 will be included under the caption “Fees Paid to Auditors” in the Proxy Statement and is incorporated herein by reference.
PART
IV
ITEM 15 .
EXHIBITS, FINANCIAL STATEMENTS SCHEDULES.
Exhibit
No.
Description
3.1
Amended
and Restated Articles of Incorporation, dated July 17, 2019 (incorporated by reference to Exhibit B to the Company’s Schedule
14C Information Statement filed with the SEC on July 2, 2019)
3.2
Bylaws
(incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed with the SEC on February
8, 2017)
3.3
Certification
of Designation of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form
8-K filed with the SEC on December 12, 2018)
3.4
Certification
of Designation of Series E Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report
on Form 8-K filed with the SEC on December 12, 2018)
3.5
Amendment
No. 1 to Certification of Designation of Series E Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Company’s
Current Report on Form 8-K filed with the SEC on December 12, 2018)
3.6
Certificate
of Withdrawal, dated May 13, 2019 of Certification of Designation of the Series A Preferred Stock, dated December 6, 2018, Series
E Convertible Preferred Stock, dated January 3, 2018 and the Amendment to the Certification of Designation of the Series E Convertible
Preferred Stock, dated January 3, 2018 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
filed with the SEC on May 16, 2019)
3.7
Certification
of Designation of Series A Preferred Stock, dated May 10, 2019 (incorporated by reference to Exhibit 3.2 to the Company’s Current
Report on Form 8-K filed with the SEC on May 16, 2019)
3.8
Certification
of Designation of Series B Preferred Stock, dated May 10, 2019 (incorporated by reference to Exhibit 3.3 to the Company’s Current
Report on Form 8-K filed with the SEC on May 16, 2019)
4.1
Description
of Capital Stock (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K filed with the SEC on
August 13, 2020)
4.2#*
Form
of Stock Option Agreement
4.3#*
Form
of Restricted Share Unit Award Agreement
10.1#*
2019
Equity Incentive Plan
10.2#
First
Amendment to Executive Employment Agreement with Jeffrey Thompson (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed with the SEC on May 22, 2023).
10.3#
First
Amendment to Executive Employment Agreement with Allan Evans (incorporated by reference to Exhibit 10.2 to the Company’s Current
Report on Form 8-K filed with the SEC on May 22, 2023).
10.4
Amendment
No. 2 to Share Purchase Agreement Amendment dated March 31, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed with the SEC on July 14, 2023).
10.5
Form
of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed
with the SEC on July 14, 2023).
62
10.6
ATM
Sales Agreement with ThinkEquity LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed with the SEC on August 8, 2023).
10.7
Underwriting
Agreement (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed with the SEC on December
8, 2023).
10.8
Amendment
No. 3 to Share Purchase Agreement dated September 18, 2023 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly
Report on Form 10-Q filed with the SEC on December 15, 2023)
10.9
Amendment
No. 4 to Share Purchase Agreement with Unusual Machines, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed with the SEC on December 15, 2023)
10.10
Form
of 8% Promissory Note from Unusual Machines, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report
on Form 8-K filed with the SEC on December 15, 2023)
10.11
8%
Promissory Note from Unusual Machines, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form
8-K filed with the SEC on February 22, 2024)
10.12
Form
of Registration Rights Agreement with Unusual Machines, Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Current
Report on Form 8-K filed with the SEC on December 15, 2023)
10.13
Registration
Rights Agreement with Unusual Machines, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K filed with the SEC on February 22, 2024)
10.14
Non-Competition
Agreement with Unusual Machines, Inc., Rotor Riot, LLC, and Fat Shark Holdings, Ltd. (incorporated by reference to Exhibit 10.3 to
the Company’s Current Report on Form 8-K filed with the SEC on February 22, 2024)
10.15
Non-Compete
agreement with Allan Evans (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with
the SEC on February 22, 2024)
10.16#
Addendum
to Executive Employment Agreement with Joseph Hernon (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly
Report on Form 10-Q filed with the SEC on March 18, 2024)
10.17#
Addendum
#2 to Executive Employment Agreement, between Joseph Hernon and the Company, dated March 15, 2024 (incorporated by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 18, 2024)
10.18#
Consulting
Services Agreement, between Joseph Hernon and the Company, dated March 15, 2024 (incorporated by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K filed with the SEC on March 18, 2024)
21.1*
List
of Subsidiaries
23.1
Consent
of The Crone Law Group, P.C. (incorporated by reference to Exhibit 23.1 to the Company’s Current Report on Form 8-K filed with
the SEC on August 8, 2023)
23.2*
Consent
of dbbmckennon
31.1*
Certification
of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2*
Certification
of Principal Financial and Accounting Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
32.1**
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1*
Clawback
Policy
101.INS*
Inline
XBRL Instance Document
101.SCH*
Inline
XBRL Schema Document
101.CAL*
Inline
XBRL Calculation Linkbase Document
101.LAB*
Inline
XBRL Label Linkbase Document
101.PRE*
Inline
XBRL Presentation Linkbase Document
101.DEF*
Inline
XBRL Definition Linkbase Document
104*
Cover
Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith.
** Furnished
herewith.
# Indicates
management contract or compensatory plan.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
63
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunder
duly authorized.
Red Cat Holdings, Inc.
Dated: August 8, 2024
By:
/ s/ Jeffrey Thompson
Jeffrey Thompson
Chief Executive Officer and President
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
Name
Title
Date
/s/ Jeffrey M. Thompson
Chief Executive Officer, President and Director
August 8, 2024
Jeffrey M. Thompson
(Principal Executive Officer)
/s/ Leah Lunger
Chief Financial Officer, Treasurer and Secretary
August 8, 2024
Leah Lunger
(Principal Financial and Accounting Officer)
/s/ Nicholas Liuzza, Jr.
Director
August 8, 2024
Nicolas Liuzza, Jr.
/s/ Christopher Moe
Director
August 8, 2024
Christopher Moe
/s/ Joseph Freedman
Director
August 8, 2024
Joseph Freedman
/s/ Paul Edward Funk II
Director
August 8, 2024
Paul Edward Funk II
64