SAN JUAN, PR – Red Cat Holdings, Inc. (NASDAQ:RCAT), a Nevada-based software services company, announced on Monday that it has amended its Securities Purchase Agreement with Lind Global Asset Management X LLC, securing an additional $6 million in funding.
Under the amended agreement, Red Cat will issue a Senior Secured Convertible Promissory Note for $7.2 million and a Common Stock Purchase Warrant for 326,000 shares at a price of $9.20 per share, exercisable for five years. The company will also pay a commitment fee of $210,000 to Lind, which may be deducted from the funding received.
The convertible note does not bear interest and is repayable over 18 months with monthly installments of $400,000 starting six months after issuance. Red Cat has the option to increase these payments to $750,000 per month, provided its market capitalization remains above $50 million. Moreover, Lind may opt to raise the monthly payment to $975,000 for up to two months if the share price is equal to or greater than $2.00.
Payments can be made in common stock valued at 90% of the average of the five lowest daily volume-weighted average prices in the 20 trading days before the payment date, with a floor price of $0.75 per share, or in cash at 1.025 times the payment amount, or a combination of both. The note also provides for conversion by Lind at $9.20 per share.
The transaction, which involves the sale of equity securities, was conducted under Rule 506(b) of Regulation D of the Securities Act, with Lind being an accredited investor. No general solicitation or advertising was used in connection with the offering.
This strategic financial move is aimed at bolstering Red Cat's growth initiatives and enhancing its position in the prepackaged software services sector. The additional capital is expected to provide the company with the necessary resources to pursue its business objectives effectively.
The information in this article is based on a press release statement from Red Cat Holdings, Inc.
In other recent news, Red Cat Holdings has seen significant advancements, particularly in its financial performance and strategic contracts. The drone technology company reported a 59% increase in Q1 revenue, amounting to roughly $2.8 million.
Red Cat Holdings has successfully secured multiple contracts, including a $1 million contract for the supply of Edge 130 Blue drones to the U.S. Army, and a $1.6 million contract for the same drones to the U.S. Customs & Border Protection.
The company's recent acquisition of FlightWave Aerospace Systems Corporation has expanded its portfolio in the Unmanned Aerial Vehicles market. The company's board has also seen the election of five directors and ratified plans, including the appointment of dbbmckennon as the independent registered public accounting firm for the fiscal year ending April 30, 2025.
Moreover, Red Cat Holdings hosted a town hall meeting, showcasing its commitment to transparency and direct communication with stakeholders. The company has also shifted its fiscal year-end from April 30 to December 31, aligning it with the calendar year for a more intuitive timeframe for financial analysis. These are just a few of the recent developments at Red Cat Holdings.
InvestingPro Insights
Red Cat Holdings' recent financial move aligns with its growth trajectory, as evidenced by InvestingPro data. The company's revenue growth is impressive, with a 259.85% increase over the last twelve months as of Q1 2023. This robust growth supports the InvestingPro Tip that analysts anticipate sales growth in the current year.
The market has responded positively to Red Cat's performance and potential, with the stock showing a strong return of 210.78% over the last month and an exceptional 849.78% over the past year. This aligns with the InvestingPro Tip highlighting the stock's significant return over the last week and its strong performance over various time frames.
However, investors should note that Red Cat operates with a moderate level of debt and is not currently profitable, with an operating income margin of -104.78% in the last twelve months. This context makes the recent $6 million funding particularly crucial for the company's growth initiatives.
For those seeking a more comprehensive analysis, InvestingPro offers 18 additional tips for Red Cat Holdings, providing a deeper understanding of the company's financial health and market position.
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