Red Cat Holdings, Inc. (NASDAQ: RCAT)

This lawsuit is for anyone who acquired securities in Red Cat Holdings, Inc. (NASDAQ: RCAT) from March 18, 2022 through January 15, 2025.

The lawsuit alleges that the Company and certain of its executives violated federal law. Specifically, the lawsuit alleges that, throughout the time period mentioned above, the Company misled investors regarding its financial condition. More specifically, the lawsuit alleges that the Company misled investors by overstating the production capacity of the Company’s Salt Lake City facility for making drones, the Company’s ability to ramp up the facility, and the value of the Company’s contract with the U.S. Army even when the facility is able to run at full capacity.

On July 27, 2023, Red Cat released its fiscal year 2023 financial results and revealed that its Salt Lake City Facility could only produce 100 drones per month and that construction of the facility was only “substantially completed” and, while it could potentially reach a production capacity of one thousand drones per month over the next two to three years, it would require additional capital investments. On this news, the price of the Company’s stock dropped precipitously on unusually heavy trading volume. Then, on September 23, 2024, Red Cat released its first quarter fiscal 2025 financial results, missing consensus estimates and disclosing that it 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 it “couldn’t produce and sell Teal 2 units while retooling [its] factory.” On this news, the price of the Company’s stock dropped again precipitously on unusually heavy trading volume. Then, on November 19, 2024, Red Cat announced that it had won the SRR contract, stating that it was worth potentially hundreds of millions of dollars. However, on January 16, 2025, Kerrisdale Capital published a report alleging, among other things, that Red Cat had overstated that value of the SRR Contract and that it was worth approximately $20-25 million, based on U.S. Army budget documents. On this news, the price of the Company’s stock again dropped precipitously on unusually heavy trading volume.

The Law Offices of Howard G. Smith seeks to recover damages on behalf of class members. If you acquired securities in ed Cat Holdings, Inc. (NASDAQ: RCAT) from March 18, 2022 through January 15, 2025 you may join the lawsuit by submitting your information online, or you may call the Law Offices of Howard G. Smith and speak to Mr. Smith directly to learn how he can protect your rights.