Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jan. 31, 2021 | Mar. 22, 2021 | |
Document And Entity Information | ||
Entity Registrant Name | Red Cat Holdings, Inc. | |
Entity Central Index Key | 0000748268 | |
Document Type | 10-Q | |
Document Period End Date | Jan. 31, 2021 | |
Entity Incorporation, State or Country Code | NV | |
Amendment Flag | false | |
Current Fiscal Year End Date | --04-30 | |
Entity File Number | 000-31587 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Interactive Data Current | Yes | |
Is Entity Emerging Growth Company? | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 27,460,926 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Entity Shell Company | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jan. 31, 2021 | Apr. 30, 2020 |
Current Assets | ||
Cash | $ 471,652 | $ 236,668 |
Accounts Receivable, net | 312,414 | |
Inventory | 708,017 | 78,650 |
Other | 505,865 | 3,020 |
Total Current Assets | 1,997,948 | 318,338 |
Goodwill | 9,449,333 | 2,466,073 |
Intangible assets, net | 631,429 | 20,000 |
Other | 3,853 | 3,853 |
TOTAL ASSETS | 12,082,563 | 2,808,264 |
Current Liabilities | ||
Accounts payable | 873,312 | 249,050 |
Accrued Expenses | 209,804 | 89,342 |
Notes Payable | 177,279 | 118,771 |
Due to Related Party | 395,544 | 333,684 |
Customer deposits | 96,580 | 38,419 |
Derivative liability | 9,144,226 | |
Total Current Liabilities | 10,896,745 | 829,266 |
Convertible debentures, net | 79,187 | 450,000 |
Due to Related Party | 1,753,000 | |
Total Long Term Liabilities | 1,832,187 | 450,000 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Series A Preferred Stock - shares authorized 2,200,000; outstanding 158,704 and 208,704; Series B Preferred Stock - shares authorized 4,300,000; outstanding 2,726,882 and 3,681,623 | 28,856 | 38,903 |
Common stock - shares authorized 500,000,000; outstanding 27,160,926 and 20,011,091 | 27,161 | 20,011 |
Additional paid-in capital | 11,961,152 | 4,043,837 |
Accumulated deficit | (12,663,538) | (2,573,753) |
Total Stockholders' Equity | (646,369) | 1,528,998 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 12,082,563 | $ 2,808,264 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jan. 31, 2021 | Apr. 30, 2020 |
Preferred stock, shares authorized | 6,500,000 | 6,500,000 |
Preferred stock, shares issued | 2,885,586 | 3,890,327 |
Preferred stock, shares outstanding | 2,885,586 | 3,890,327 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 27,160,926 | 20,011,091 |
Common stock, shares outstanding | 27,160,926 | 20,011,091 |
Series A Preferred Stock | ||
Preferred stock, shares authorized | 2,200,000 | 2,200,000 |
Preferred stock, shares issued | 158,704 | 208,704 |
Preferred stock, shares outstanding | 158,704 | 208,704 |
Series B Preferred Stock | ||
Preferred stock, shares authorized | 4,300,000 | 4,300,000 |
Preferred stock, shares issued | 2,726,882 | 3,681,623 |
Preferred stock, shares outstanding | 2,726,882 | 3,681,623 |
Consolidated Operations Stateme
Consolidated Operations Statements - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jan. 31, 2021 | Jan. 31, 2020 | Jan. 31, 2021 | Jan. 31, 2020 | |
Income Statement [Abstract] | ||||
Revenues | $ 2,145,988 | $ 34,538 | $ 3,122,077 | $ 34,538 |
Cost of goods sold | 1,576,265 | 16,234 | 2,351,153 | 16,234 |
Gross Margin | 569,723 | 18,304 | 770,924 | 18,304 |
Operating Expenses | ||||
Operations | 146,539 | 353,295 | ||
Research and development | 167,968 | 94,979 | 341,892 | 354,146 |
Sales and marketing | 48,719 | 97,534 | ||
General and administrative expenses | 499,155 | 212,482 | 929,874 | 478,871 |
Stock based compensation | 854,195 | 149,462 | 1,068,317 | 161,529 |
Total operating expenses | 1,716,576 | 456,923 | 2,790,912 | 994,546 |
Operating loss | (1,146,853) | (438,619) | (2,019,988) | (976,242) |
Other expense | ||||
Amortization Expense | 5,571 | 5,571 | ||
Derivative Expense | 4,481,701 | 4,630,288 | ||
Change in Fair Value of Derivative | 3,350,135 | 3,433,938 | ||
Other expense | 7,837,407 | 8,069,797 | ||
Net loss | $ (8,984,260) | $ (438,619) | $ (10,089,785) | $ (976,242) |
Loss per share - basic and diluted | $ (0.34) | $ (0.02) | $ (0.46) | $ (0.08) |
Weighted average shares outstanding - basic and diluted | 26,232,755 | 17,732,298 | 22,161,745 | 11,556,950 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Series A Preferred Stock | Series B Preferred Stock | Common stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning balance, shares at Apr. 30, 2019 | 179,292 | |||||
Beginning balance, amount at Apr. 30, 2019 | $ 179 | $ 784,371 | $ (971,822) | $ (187,272) | ||
Issuance of common stock, shares | 15,355 | |||||
Issuance of common stock, amount | $ 15 | 684,685 | 684,699 | |||
Share Exchange Agreement, shares | 2,169,068 | 4,212,645 | 196,667 | |||
Share Exchange Agreement, amount | $ 21,691 | $ 42,126 | $ 197 | 53,740 | 117,754 | |
Conversion of Preferred Stock, shares | (1,960,364) | (240,000) | 16,536,164 | |||
Conversion of Preferred Stock, amount | $ (19,604) | $ (2,400) | $ 16,536 | 5,467 | ||
Shares Issued for Services, shares | 1,570 | |||||
Shares Issued for Services, amount | $ 2 | 69,998 | 70,000 | |||
Net Loss | (321,502) | (321,502) | ||||
Ending balance, shares at Jul. 31, 2019 | 208,704 | 3,972,645 | 16,929,048 | |||
Ending balance, amount at Jul. 31, 2019 | $ 2,087 | $ 39,726 | $ 16,929 | 1,598,261 | (1,293,324) | 363,679 |
Beginning balance, shares at Apr. 30, 2019 | 179,292 | |||||
Beginning balance, amount at Apr. 30, 2019 | $ 179 | 784,371 | (971,822) | (187,272) | ||
Exercise of warrants, amount | 152,239 | |||||
Stock based compensation | 161,529 | |||||
Net Loss | (976,242) | |||||
Ending balance, shares at Jan. 31, 2020 | 208,704 | 3,681,623 | 19,861,091 | |||
Ending balance, amount at Jan. 31, 2020 | $ 2,087 | $ 36,816 | $ 19,861 | 3,732,120 | (1,948,064) | 1,842,820 |
Beginning balance, shares at Jul. 31, 2019 | 208,704 | 3,972,645 | 16,929,048 | |||
Beginning balance, amount at Jul. 31, 2019 | $ 2,087 | $ 39,726 | $ 16,929 | 1,598,261 | (1,293,324) | 363,679 |
Stock based compensation | 12,067 | 12,067 | ||||
Net Loss | (216,121) | (216,121) | ||||
Ending balance, shares at Oct. 31, 2019 | 208,704 | 3,972,645 | 16,929,048 | |||
Ending balance, amount at Oct. 31, 2019 | $ 2,087 | $ 39,726 | $ 16,929 | 1,610,328 | (1,509,445) | 159,625 |
Exercise of warrants, shares | 469,874 | |||||
Exercise of warrants, amount | $ 470 | 151,769 | 152,239 | |||
Conversion of Preferred Stock, shares | (291,022) | 242,519 | ||||
Conversion of Preferred Stock, amount | $ (2,910) | $ 243 | 2,668 | |||
Merger with Rotor Riot, shares | 2,219,650 | |||||
Merger with Rotor Riot, amount | $ 2,220 | 1,817,893 | 1,820,113 | |||
Stock based compensation | 149,462 | 149,462 | ||||
Net Loss | (438,619) | (438,619) | ||||
Ending balance, shares at Jan. 31, 2020 | 208,704 | 3,681,623 | 19,861,091 | |||
Ending balance, amount at Jan. 31, 2020 | $ 2,087 | $ 36,816 | $ 19,861 | 3,732,120 | (1,948,064) | 1,842,820 |
Beginning balance, shares at Apr. 30, 2020 | 208,704 | 3,681,623 | 20,011,091 | |||
Beginning balance, amount at Apr. 30, 2020 | $ 2,087 | $ 36,816 | $ 20,011 | 4,043,837 | (2,573,753) | 1,528,998 |
Stock based compensation | 107,061 | 107,061 | ||||
Net Loss | (383,244) | (383,244) | ||||
Ending balance, shares at Jul. 31, 2020 | 208,704 | 3,681,623 | 20,011,091 | |||
Ending balance, amount at Jul. 31, 2020 | $ 2,087 | $ 36,816 | $ 20,011 | 4,150,898 | (2,956,997) | 1,252,815 |
Beginning balance, shares at Apr. 30, 2020 | 208,704 | 3,681,623 | 20,011,091 | |||
Beginning balance, amount at Apr. 30, 2020 | $ 2,087 | $ 36,816 | $ 20,011 | 4,043,837 | (2,573,753) | 1,528,998 |
Exercise of warrants, amount | ||||||
Stock based compensation | 1,068,317 | |||||
Net Loss | (10,089,785) | |||||
Ending balance, shares at Jan. 31, 2021 | 158,704 | 2,726,882 | 27,160,926 | |||
Ending balance, amount at Jan. 31, 2021 | $ 1,587 | $ 27,269 | $ 27,161 | 11,961,152 | (12,663,538) | (646,369) |
Beginning balance, shares at Jul. 31, 2020 | 208,704 | 3,681,623 | 20,011,091 | |||
Beginning balance, amount at Jul. 31, 2020 | $ 2,087 | $ 36,816 | $ 20,011 | 4,150,898 | (2,956,997) | 1,252,815 |
Conversion of Debt, shares | 710,444 | |||||
Conversion of Debt, amount | $ 711 | 494,314 | 495,025 | |||
Stock based compensation | 107,061 | 107,061 | ||||
Net Loss | (722,281) | (722,281) | ||||
Ending balance, shares at Oct. 31, 2020 | 208,704 | 3,681,623 | 20,721,535 | |||
Ending balance, amount at Oct. 31, 2020 | $ 2,087 | $ 36,816 | $ 20,722 | 4,752,273 | (3,679,278) | 1,132,620 |
Acquisition of Fat Shark, shares | 5,227,273 | |||||
Acquisition of Fat Shark, amount | $ 5,227 | 6,345,849 | 6,351,076 | |||
Conversion of Preferred Stock, shares | (50,000) | (954,741) | 1,212,118 | |||
Conversion of Preferred Stock, amount | $ (500) | $ (9,547) | $ 1,212 | 8,835 | ||
Stock based compensation | 854,195 | 854,195 | ||||
Net Loss | (8,984,260) | (8,984,260) | ||||
Ending balance, shares at Jan. 31, 2021 | 158,704 | 2,726,882 | 27,160,926 | |||
Ending balance, amount at Jan. 31, 2021 | $ 1,587 | $ 27,269 | $ 27,161 | $ 11,961,152 | $ (12,663,538) | $ (646,369) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Jan. 31, 2021 | Jan. 31, 2020 | |
Cash Flows from Operating Activities | ||
Net loss | $ (10,089,785) | $ (976,242) |
Stock based compensation | 1,068,317 | 161,529 |
Amortization of intangible assets | 5,571 | |
Amortization of debt discount | 79,187 | |
Derivative expense | 4,630,288 | |
Change in fair value of derivative | 3,433,938 | |
Changes in operating assets and liabilities | ||
Accounts receivable | (63,255) | |
Inventory | (405,987) | 4,105 |
Other | (118,613) | 77,670 |
Customer deposits | 32,967 | |
Accounts payable | 345,227 | 38,152 |
Accrued expenses | 165,129 | (9,865) |
Net cash used in operating activities | (917,016) | (704,651) |
Cash Flows from Investing Activities | ||
Acquired through acquisitions | 46,327 | |
Payment for acquisition, net of cash acquired | (48,368) | |
Net cash provided by investing activities | (48,368) | 46,327 |
Cash Flows from Financing Activities | ||
Proceeds from exercise of warrants | 152,239 | |
Proceeds from related party obligations | 79,000 | |
Payments under related party obligations | (17,140) | |
Proceeds from notes payable | 424,419 | |
Payments under notes payable | (365,911) | (4,490) |
Proceeds from convertible debentures | 1,080,000 | 450,000 |
Net cash provided by financing activities | 1,200,368 | 597,749 |
Net increase (decrease) Cash | 234,984 | (60,575) |
Cash, beginning of period | 236,668 | 503,438 |
Cash, end of period | 471,652 | 442,863 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 10,749 | |
Cash paid for taxes | ||
Noncash transactions | ||
Common stock issued for services | 70,000 | |
Fair value of shares exchanged in acquisitions | 6,351,076 | 1,937,867 |
Issuance of Note Payable – Related Party in acquisition | 1,753,000 | |
Conversion of Notes into common stock | 450,000 | |
Conversion of accrued interest into common stock | $ 45,024 |
The Business
The Business | 9 Months Ended |
Jan. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Business | Note 1 - The Business The Company was originally incorporated in February 1984. Since April 2016, the Company’s primary business has been to provide products, services and solutions to the drone industry. It operates in two sectors of the drone industry. Rotor Riot, LLC, an Ohio limited liability company and a wholly owned subsidiary (“Rotor Riot”), designs and sells drones and related components. Rotor Riot is focused on the consumer market and sells its products through its e-commerce platform operated at www.rotorriot.com. The Company is also developing software solutions to provide secure cloud-based analytics, storage and services for the drone industry. Its initial product candidate is Dronebox, a blockchain technology that records, stores and analyzes flight data and information from a drone, much like the “black box” utilized by the airline industry. The Company plans to offer Dronebox as a Software-as-a-Service platform. The Company closed the acquisition of Fat Shark Holdings (“Fat Shark”) on November 2, 2020. Fat Shark is a leading provider of headsets and goggles for professional FPV (First Person View) racers and drone pilots and has an estimated 85% share of its market. The Company expects that Fat Shark will generate a majority of its revenue over the next 12 months. This acquisition continues the Company’s efforts to become a fully-integrated drone business with a strong supply chain, as well as a provider of software solutions for the drone industry. Recent corporate developments include: A. The Share Exchange Agreement Effective May 15, 2019, we closed a Share Exchange Agreement (the “SEA”) with TimeFireVR, Inc., (“TimeFire”), a Nevada corporation. Under the SEA, we acquired approximately 83.33% of TimeFire’s outstanding share capital on a fully-diluted basis. We issued: (i) 196,667 shares of our common stock, (ii) 2,169,068 shares of our newly-designated Series A Preferred Stock, and (iii) 4,212,645 shares of our newly-designated Series B Preferred Stock. In total, the common stock, Series A Preferred Stock, and Series B Preferred Stock issued under the SEA were valued at $117,754. The transaction was accounted for as a “reverse acquisition” as the stockholders of Red Cat possessed majority voting control of the company immediately following the acquisition. In this reverse merger, the financial results of Red Cat Propware, Inc., (the accounting acquirer), have been presented as the continuing operations of the Company since inception. The transaction was accounted for as follows: Cash $ 24,704 Goodwill 93,050 Total $ 117,754 Series A Preferred Stock is convertible to common stock at a ratio of 8.33 shares of common stock for each share of preferred stock and votes together with the common stock on an as-converted basis. The new Series A Preferred Stock converted automatically to common stock upon the effectiveness of the reverse split of our common stock in August 2019 except for shares subject to an ownership limitation. This common stock and Series A Preferred Stock issued under the SEA constituted approximately 83.33% of our issued and outstanding share capital on a fully-diluted basis on the date of issuance. Series B Preferred Stock is convertible to common stock at a ratio of 0.83 shares of common stock for each share of preferred stock and votes together with the common stock on an as-converted basis. The Series B Preferred Stock issued under the SEA constituted approximately 15.64% of our issued and outstanding share capital on a fully-diluted basis on the date of issuance. B. Organizational In July 2019, we changed our name from TimeFire VR Inc. to Red Cat Holdings, Inc. In August 2019, we changed our fiscal year to April 30 which was the historical fiscal year of Red Cat Propware, Inc. In August 2019, we effected a reverse stock split (the “Reverse Stock Split”) of our outstanding shares of common stock at a ratio of one-for-twelve hundred (1 for 1,200). All references in this report to shares of the Company’s common stock, including prices per share of its common stock, reflect the Reverse Stock Split. C. Merger Agreement with Rotor Riot, LLC On December 31, 2019, the Company entered into an Agreement of Merger (the “Merger Agreement”) with Rotor Riot and the three members of Rotor Riot. On January 23, 2020, the Merger was consummated under which Rotor Riot Acquisition Corp, a wholly owned Delaware subsidiary of the Company, merged with and into Rotor Riot, with Rotor Riot continuing as the surviving entity and a wholly owned subsidiary of the Company. Under the Merger Agreement, each member of Rotor Riot received its pro rata portion of the total number of shares of the Company’s common stock issued based on (A)(i) $3,700,000 minus (ii) $915,563 (which included certain debt and other obligations of Rotor Riot and its Chief Executive Officer that the Company agreed to assume (the “Assumed Obligations”) divided by (B) the variable weighted average price (“VWAP”) of the Company’s common stock for the twenty trading days prior to the closing of the Merger. Based on a share issuance value of $2,784,437 and a VWAP of $1.25445, the Company issued an aggregate of 2,219,650 shares of common stock to the members of Rotor Riot. Following the closing of the Merger Agreement, the former members of Rotor Riot owned approximately 10.4% of the Company. In addition, the Company’s management controls the operating decisions of the combined company. Accordingly, we have accounted for the transaction as an acquisition of Rotor Riot by the Company. Based on purchase price accounting, we have recognized the assets and liabilities of Rotor Riot at fair value with the excess of the purchase price over the net assets acquired recognized as goodwill. The table below reflects the Company’s estimates of the acquisition date values of the purchase consideration, assets acquired, and liabilities assumed. The shares issued were valued at $1,820,113 (2,219,650 shares issued times $0.82 per share which equaled the closing price of the Company’s common stock on the date that the merger agreement was consummated). I. Purchase Price Shares issued $ 1,820,114 Promissory note issued $ 175,000 Total Purchase Price $ 1,995,114 II. Purchase Price Allocation Assets Acquired Cash $ 21,623 Accounts receivable 28,500 Other assets 3,853 Inventory 127,411 Trademark 20,000 Brand Name 578,000 Customer Relationships 39,000 Goodwill 1,756,023 Total assets acquired $ 2,574,410 Liabilities Assumed Accounts Payable and accrued expenses $ 171,651 Notes payable 209,799 Due to Related Party 197,846 Total liabilities assumed 579,296 Net assets acquired $ 1,995,114 During the quarter ended January 31, 2021, the Company adjusted the initial carrying value of Goodwill to reflect the values of other intangible assets acquired as determined by an independent valuation services firm. These included Customer Relationships with a value of $39,000 and Brand Name with a value of $578,000. Customer relationships are being amortized over 7 years. The carrying value of Brand Name will be evaluated on a quarterly basis, including a formal evaluation at year end. D. Fat Shark Acquisition On September 30, 2020, the Company entered into a share purchase agreement (“Share Purchase Agreement”) with Greg French (“French”), the founder and sole shareholder of Fat Shark Holdings (“Fat Shark”), to acquire all of the issued and outstanding shares of Fat Shark and its subsidiaries. The transaction closed on November 2, 2020 and was valued at $8,354,076 based on (i) the issuance of 5,227,273 shares of common stock with a value of $6,351,076 on the date of closing (ii) a senior secured promissory note in the original principal amount of $1,753,000 which matures on November 1, 2023, and (iii) a cash payment of $250,000. The Share Purchase Agreement includes indemnification provisions, a two year non-compete agreement, and registration rights for the shares issued in the transaction. A summary of the purchase price and initial purchase price allocation is as follows: I. Purchase Price Shares issued $ 6,351,076 Promissory note issued 1,753,000 Cash 250,000 Total Purchase Price $ 8,354,076 II. Purchase Price Allocation Assets Acquired Cash $ 201,632 Accounts receivable 249,159 Other assets 384,232 Inventory 223,380 Goodwill 7,600,260 Total assets acquired $ 8,658,663 Liabilities Assumed Accounts Payable and accrued expenses $ 279,393 Customer Deposits 25,194 Total liabilities assumed 304,587 Net assets acquired $ 8,354,076 The foregoing amounts reflect our current estimates of fair value as of the November 2, 2020 acquisition date. The Company expects to recognize fair values associated with the customer relationships acquired, as well as the Fat Shark brand name, but has not yet accumulated sufficient information to assign such values. As additional information becomes known regarding the acquired assets and assumed liabilities, management may make adjustments to the opening balance sheet up to the end of the measurement period, which is a one-year period following the acquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of estimated lives of depreciable tangible and intangible assets) requires significant judgement. Convertible Note Offering On October 5, 2020, the Company closed a private offering of convertible promissory notes (the “2020 Notes”) in the aggregate principal amount of $600,000 which included the issuance of five-year warrants to purchase an aggregate of 399,998 shares of common stock. The 2020 Notes accrue interest at the rate of 12% per annum and are payable two years from the date of issuance. The 2020 Notes are convertible into common stock at a conversion price equal to the lower of (i) $1.00 per share or, (ii) at a price equal to 75% of the price of an offering of common stock that results in the listing for trading on certain stock exchanges (a “Qualified Offering”). The 2020 Notes also contain protection from dilution which would lower the conversion price in the event of a lower priced issuance. An event of default could also result in a reduction of the conversion price. The Company may prepay any portion of the 2020 Notes, without penalty or premium, upon ten business days’ notice. No conversion will be completed if it would result in the noteholder, including its affiliates, owning more than 9.99% of the Company’s outstanding common stock immediately after completing such conversion. The Warrants are exercisable at $1.50 per share. The exercise price will be reduced to a price equal to 75% of the price per share of the common stock offered in a Qualified Offering. On January 27, 2021, the Company closed a private offering of convertible promissory notes (the “2021 Notes”) in the aggregate principal amount of $500,000 which included the issuance of five-year warrants to purchase a number of shares of common stock equal to 135% of the dollar amount of the Note. The 2021 Notes accrue interest at the rate of 12% per annum and are payable two years from the date of issuance. The 2021 Notes are convertible into common stock at a conversion price equal to the lower of (i) $1.00 per share, if the conversion occurs prior a Qualified Offering, or (ii) a 25% discount of the price per share of common stock offered in the Qualified Offering, if the conversion occurs simultaneous with the Qualified Offering. The Company may prepay any portion of the 2021 Notes, without penalty or premium, upon ten business days’ notice. The Warrants are exercisable for a period of five years at a price equal to the lower of (i) $1.50 per share, or (ii) a 25% discount to the price per share of common stock offered in the Qualified Offering. |
Going Concern
Going Concern | 9 Months Ended |
Jan. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 2 - Going Concern The financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in our accompanying financial statements, we have negative working capital of $8,898,797 at January 31, 2021 and have accumulated losses totaling approximately $12.7 million through January 31, 2021. Management recognizes that these operating results and our financial position raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and the classification of liabilities that might be necessary should we be unable to continue as a going concern. We are presently seeking to address these going concern doubts through a number of actions including efforts to (a) raise capital through the public markets, (b) release additional commercial products and (c) pursue acquisitions of complementary, revenue generating companies which are accretive to our operating results. We can provide no assurance that any of these efforts will be successful or, that even if successful, that they will alleviate doubts about our ability to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Jan. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3 - Summary of Significant Accounting Policies Basis of Accounting Principles of Consolidation – Use of Estimates Cash Other Assets Leases – Leases at January 31, 2021 are short term in nature and do not require accounting under the lease accounting standards. Goodwill We perform an impairment test at the end of each fiscal year, or more frequently if indications of impairment arise. We have a single reporting unit, and consequently, evaluate goodwill for impairment based on an evaluation of the fair value of the Company as a whole. Fair Value of Financial instruments ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 2. Convertible Securities and Derivatives – When the convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds from the convertible host instruments are first allocated to the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, resulting in those instruments being recorded at a discount from their face value. Revenue Recognition – Research and Development Income Taxes Recent Accounting Pronouncements Comprehensive Loss – Stock-Based Compensation – Basic and Diluted Net Loss per Share Related Parties |
Notes Payable, Due to Related P
Notes Payable, Due to Related Party and Convertible Debentures | 9 Months Ended |
Jan. 31, 2021 | |
Debt Disclosure [Abstract] | |
Notes Payable, Due to Related Party and Convertible Debentures | Note 4 - Notes Payable A. PayPal PayPal is an electronic commerce company that facilitates payments between parties through online funds transfers. The Company processes certain customer payments ordered on its e-commerce site through PayPal. In November 2019, Rotor Riot entered into an agreement with PayPal under which it borrowed $100,000. The note was repaid in January 2021. In January 2021, Rotor Riot borrowed $75,444 from PayPal which is being repaid through daily payments equal to 20% of the net amount of each customer payment. The balance outstanding at January 31, 2021 was $75,369. B. Shopify Capital Shopify Capital is an affiliate of Shopify, Inc. which provides sales software and services to the Company. The Company processes customer transactions ordered on the e-commerce site for Rotor Riot through Shopify. Shopify Capital has entered into multiple agreements with the Company in which it has “purchased receivables” at a discount. Shopify retains a portion of the Company’s daily receipts until the purchased receivables have been paid. The Company recognizes the discount as a finance charge, in full, in the month in which the agreement is executed. The Company assumed an existing agreement when it acquired Rotor Riot in January 2020. This agreement was repaid in May 2020. Since then, the Company has entered into the following agreements with Shopify: Date of Transaction Purchased Receivables Payment to Company Withholding Rate Status at January 31, 2021 May 2020 $158,200 $140,000 17% Completed – October 2020 September 2020 $209,050 $185,000 17% $101,910 Outstanding Note 5 - Due to Related Party A. Short Term I. Note Payable to BRIT, LLC BRIT, LLC, formally known as Brains Riding in Tanks, LLC, was the largest shareholder of Rotor Riot. Following the Merger, BRIT is a significant shareholder in the Company. The controlling shareholder of BRIT is now employed in a management role with the Company. Under the terms of the Merger Agreement, the Company issued a promissory note to BRIT, LLC in the principal amount of $175,000. The promissory note bears interest at 4.75% annually and provides for monthly principal payments of $3,500. The outstanding principal amount and all accrued interest is due on the earlier of (a) January 23, 2021 or (b) the closing of an equity offering by the Company of at least $3,500,000. The principal balance and accrued interest on the note totaled $153,814 and $8,517 at January 31, 2021, respectively. II. Obligations of BRIT, LLC BRIT incurred certain financial obligations in support of the operations of Rotor Riot which the Company assumed responsibility to pay at the effective time of the Merger. These obligations bear interest at annual rates ranging from 7.5% to 21.74%. The outstanding balance totaled $167,730 at January 31, 2021. III. Payable to Aerocarve In August 2020 and December 2020, the Company received advances totaling $79,000 from Aerocarve, which is controlled by the Company’s Chief Executive Officer. The parties agreed that the funds would bear interest at 5% annually until repaid. The balance owed at January 31, 2021 was $74,000. B. Long Term I. Payable to Greg French In connection with the acquisition of Fat Shark as of November 2, 2020, the Company issued a secured promissory note in the amount of One Million Seven Hundred Fifty-Three Thousand Dollars ($1,753,000) to the seller, Greg French, which matures on November 1, 2023. The note bears interest at 3% annually . Note 6 - Convertible Debentures In November 2019, we issued a convertible note in the principal amount of $300,000 to one accredited investor and in December 2019, we issued a convertible note in the principal amount of $125,000 to a director and a convertible note in the principal amount of $25,000 to our chief executive officer (collectively, the “2019 Notes”). In September and October 2020, the entire $450,000 of 2019 Notes, plus accrued interest totaling $45,204, was converted into 710,444 shares of common stock. The Notes had a term of 2 years and accrued interest at an annual rate of 12% through the date of conversion. In October 2020, we closed a private offering in which we sold $600,000 of convertible promissory notes (“Promissory Notes”) and issued warrants to purchase 399,998 shares of common stock. The Promissory Notes accrue interest at 12% annually, and the principal and accrued interest is due two (2) years from the date of issuance. The Promissory Notes are convertible into shares of our common stock at a price equal to the lower of $1.00, or (b) at a price equal to 75% of the price of securities sold in a Qualified Offering. The terms of a Promissory Note will be amended if a holder believes that a security issued, or amended, after the issuance of the Promissory Note includes any term or provision more favorable than those provided in the Notes. The warrants are exercisable for five (5) years and entitle the holder to purchase common shares at a price equal to the lower of (i) $1.50, or (ii) a 25% discount to the price per share of common stock offered in a Qualified Offering. In March 2021, the Company received notice from 100% of the holders of their intent to convert the entire amount of their Notes, plus accrued interest, into shares of common stock. The conversion and issuance had not yet been processed and completed at the date of the filing of this report on Form 10-Q. In January 2021, we closed a private offering, resulting in gross proceeds of $500,000, of Units consisting of (i) a convertible note and (ii) a warrant to purchase the number of shares of common stock equal to 135% of the dollar amount of the Note. The convertible notes (the “Notes”) accrue interest at 12% annually, and the principal and accrued interest is due two (2) years from the date of issuance. The Notes are convertible into shares of our common stock at a price equal to the lower of (a) $1.00, if the conversion occurs prior to a “Qualified Offering”, or (b) a 25% discount of the price per share of common stock offered in a Qualified Offering. The Notes may be converted at any time by the holder but will automatically convert upon the closing of a Qualified Offering. The terms of a Note will be amended if a holder believes that a security issued, or amended, after the issuance of the Note includes any term or provision more favorable than those provided in the Notes. The conversion price of the Notes will be reduced if the Company issues any security at an effective price lower than the conversion price of the Notes. The warrants are exercisable for five (5) years and entitle the holder to purchase common shares at a price equal to the lower of (i) $1.50, or (ii) a 25% discount to the price per share of common stock offered in a Qualified Offering. In March 2021, the Company received notice from 100% of the holders of their intent to convert the entire amount of their Notes, plus accrued interest, into shares of common stock. The conversion and issuance had not yet been processed and completed at the date of the filing of this report on Form 10-Q. |
Income Taxes
Income Taxes | 9 Months Ended |
Jan. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7 - Income Taxes Our operating subsidiary, Red Cat Propware, Inc., is incorporated and based in Puerto Rico which is a commonwealth of the United States. We are not subject to taxation by the United States as Puerto Rico has its own taxing authority which passed the Export Services Act, also known as Act 20, in 2012. Under Act 20, eligible businesses are subject to a special corporate tax rate of 4%. Since inception, we have incurred net losses in each year of operations. Our current provision for the reporting periods presented in these financial statements consisted of a tax benefit against which we applied a full valuation allowance, resulting in no current provision for income taxes. In addition, there was no deferred provision for any of these reporting periods. At January 31, 2021 and April 30, 2020, we had accumulated deficits of approximately $12,700,000 and $2,600,000, respectively. Deferred tax assets related to the future benefit of these net operating losses for tax purposes totaled approximately $508,000 and $104,000, respectively, based on the Act 20 rate of 4%. Currently, we focus on projected future taxable income in evaluating whether it is more likely than not that these deferred assets will be realized. Based on the fact that we have not generated an operating profit since inception, we have applied a full valuation allowance against our deferred tax assets at January 31, 2021 and April 30, 2020. |
Common Stock, Preferred Stock a
Common Stock, Preferred Stock and Warrants | 9 Months Ended |
Jan. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Common Stock, Preferred Stock and Warrants | Note 8 - Common Stock Our common stock has a par value of $0.001 per share. We are authorized to issue 500,000,000 shares of common stock. Each share of common stock is entitled to one vote. Note 9 - Preferred Stock Our Series A Preferred Stock (“Series A Stock”) is convertible to common stock at a ratio of 8.33 shares of common stock for each share of Series A Stock, and votes together with the common stock on an as-converted basis. The Series A Preferred Stock was originally issued under the Securities Exchange Agreement, as further described in Note 1. The Series A Stock was automatically converted into shares of common stock upon the effectiveness of our reverse stock split in August 2019, except for 208,704 shares which were subject to a limitation on the number of shares of common stock that can be held by the holder of those shares of Series A Stock. Conversions of Series A Stock into Common Stock since August 2019 are as follows: Date Series A Common Stock November 2020 50,000 416,500 Our Series B Preferred Stock (“Series B Stock”) is convertible into common stock at a ratio of 0.8334 shares of common stock for each share of Series B Stock held and votes together with the common stock on an as-converted basis. The Series B Preferred Stock was originally issued under the Exchange Agreement, as further described in Note 1. Conversions of Series B Stock into Common Stock are as follows: Date Series B Common Stock July 2019 240,000 200,000 November 2019 60,000 50,000 December 2019 January 2021 231,022 954,741 192,519 795,618 Note 10 - Warrants In September 2019, we received $152,239 in connection with the exercise of 469,874 warrants which had been issued in May 2019 as part of the Share Exchange Agreement. We also assumed a fully vested, restricted stock unit agreement requiring the issuance of 41,667 shares of common stock in May 2021, as well as a warrant to purchase 5,556 shares of common stock at an exercise price of $60.00 per share. This warrant expires in March 2021. In October 2020, the Company issued five-year warrants to purchase a total of . The warrants were valued at $267,999 using the multinomial lattice model and are considered derivative liabilities under ASC 815-40. In January 2021, the Company issued five-year warrants to purchase a total of . The warrants were valued at $2,870,666 using the multinomial lattice model and are considered derivative liabilities under ASC 815-40. The following table presents the assumptions used to estimate the fair values of the warrants: January 31, 2021 Expected volatility 86-104 % Expected dividends 0 % Expected term 4.67-5 Years Risk-free interest rate 0.10-0.41 % The following table summarizes the changes in warrants outstanding issued to non-employees of the Company during the nine months ended January 31, 2021. Number of Warrants Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Balance as of April 30, 2020 - - - - $ - Granted 1,074,998 1.50 4.17 5.00 1,612,497 Exercised - - - - - Cancelled/Expired - - - - - Outstanding as of January 31, 2021 1,074,998 $ 1.50 $ 4.17 4.87 $ 1,612,497 |
Share Based Awards
Share Based Awards | 9 Months Ended |
Jan. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share Based Awards | Note 11 - Share Based Awards Effective August 2019, shareholders approved the 2019 Equity Incentive Plan (the “Plan”) which allows us to incentivize key employees, consultants, and directors with long term compensation awards such as stock options, restricted stock, and restricted stock units (collectively, the “Awards”). The number of shares issuable in connection with Awards under the Plan may not exceed 8,750,000. A. October 2019 Issuances In October 2019, we issued options to purchase 350,000 shares of common stock valued at $477,500. Options to purchase 200,000 shares vest ratably over a two-year period and expire in October 2029. Options to purchase 150,000 shares vest ratably over a three-year period and expire in October 2024. All of the options were issued at an exercise price of $2.10 which equaled the stock price on the date of issuance. We used the Black-Scholes Model to estimate the fair value of the stock options issued using the following assumptions: (i) expected volatility – 75%, (ii) risk free interest rate – 1.59% or 1.74%, (iii) expected life – 5 or 10 years, and (iv) expected dividend yield of 0%. B. January 2020 Issuances In January 2020, we issued options to purchase 1,100,000 shares of common stock exercisable at $0.82 vesting quarterly over a three-year period. These options were valued at $707,300. We also issued options to purchase 147,475 shares of common stock exercisable at $0.82. These options were valued at $94,826 and were vested in full upon issuance. All of these options were issued at an exercise price which equaled the stock price on the date of issuance. We used the Black-Scholes Model to estimate the fair value of the stock options issued using the following assumptions: (i) expected volatility – 75%, (ii) risk free interest rate – 1.74%, (iii) expected life – 10 years, and (iv) expected dividend yield of zero. C. January 2021 Issuances In January 2021, we issued 1,000,000 shares of restricted common stock which was valued at $2,690,000 based on our stock price of $2.69 on the date of issuance. 250,000 of shares vested immediately with the remaining 750,000 vesting in thirty-six monthly installments subject to acceleration if certain performance milestones are attained. In January 2021, we issued options to purchase 100,000 shares of common stock at an exercise price of $2.69 which equaled the stock price on the date of issuance. 50,000 options vested immediately with the remaining 50,000 vesting ratably on the first and second anniversary dates. The options were valued at $147,581 using the Black Scholes model and the following assumptions: (i) expected volatility – 88.37%, (ii) risk free interest rate – 0.38%, (iii) expected life – 5.87 years, and (iv) expected dividend yield of 0%. D. Summary Stock compensation expense for the three and nine months ended January 31, 2021 was as follows: 3 months 9 months General and administrative $ 336,301 $ 525,559 Research and development 179,157 199,047 Operations 170,612 175,586 Sales and marketing 168,125 168,125 $ 854,195 $ 1,068,317 Stock compensation expense for the three months and nine months ended January 31, 2020 was $149,462 and $161,529, respectively. Options exercisable as of January 31, 2021 totaled 964,143. The remaining weighted average contractual term of the options outstanding at January 31, 2021 was 6.63 years. The aggregate intrinsic value of outstanding options, representing the excess of the stock price at January 31, 2021 of $5.00 over the exercise price of each option, was $7,062,446. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Jan. 31, 2021 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | Note 12 - Financial Instruments The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting related to 10 convertible notes issued totaling $1,100,000 which included a ratchet provision in the conversion price of the lower of $1.00 or 25% discount of the price per share of Common Stock offered in a future “Qualified Offering”. Attached to these notes as additional consideration was 1,074,998 5-year warrants with a conversion price of the lower of 1.50 or 25% discount of the price per share of Common Stock offered in the Qualified Offering and also include a ratchet provision. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has estimated the fair value of these embedded derivatives for convertible debentures and associated warrants using a multinomial lattice model as of January 31, 2021. The fair values of the derivative instruments are measured each quarter, which resulted in a loss of $3,433,938 and derivative expense of $4,630,288 during the nine months ended January 31, 2021. As of January 31, 2021, the fair market value of the derivatives aggregated $9,144,226, using the following assumptions: estimated 1.67-5.00-year term, estimated volatility of 86.74-104.01%, and a discount rate of 0.10-0.41%. Financial instruments measured at fair value on a recurring basis at January 31, 2021, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of derivatives $ - $ 9,144,226 $ - $ 9,144,226 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Jan. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13 - Related-Party Transactions Shares Issued for Services – In May 2019, we issued 1,570 shares of common stock valued at $70,000 to a shareholder for legal services provided to us. In April 2020, we issued 150,000 shares of common stock with a fair market value of $204,000 to a different law firm for services provided to us. Convertible Note Financing – In December 2019, we completed a convertible note financing with a member of the Board of Directors for $125,000 and with our Chief Executive Officer for $25,000. The same Board member invested $300,000 and $100,000 in the convertible note financings completed in October 2020 and January 2021, respectively. Another board member invested $50,000 in the convertible note financing completed in January 2021. See Note 6 for details on the terms of the transaction. Payable to Aerocarve – In August 2020 and December 2020, the Company received advances totaling $79,000 from Aerocarve, which is controlled by the Company’s Chief Executive Officer. The parties agreed that the funds would bear interest at 5% annually until repaid. During the three months ended January 31, 2021, the Company made principal repayments of this note totaling $5,000. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Jan. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 - Subsequent Events Subsequent events have been evaluated through the date of this filing and there are no subsequent events which require disclosure except as set forth below: On February 11, 2021, the Company and Red Cat Skypersonic, Inc., a Nevada corporation (“Acquisition Sub”), entered into Share Purchase and Liquidity Event Agreements (the “Skypersonic Agreements”) with Giuseppe Santangelo the founder and majority shareholder of Skypersonic, Inc., a Michigan corporation (“Skypersonic”) and the holders of common stock and SAFE agreements representing 97.46% of Skypersonic (the “Sellers”), pursuant to which, subject to the satisfaction of certain closing conditions, Acquisition Sub will acquire all of the issued and outstanding share capital of Skypersonic in consideration for an aggregate of $3,000,000 in shares (the “Share Consideration”) of the Company’s common stock, based upon the VWAP of the Company’s common stock at closing of the transaction (the “Skypersonic Transaction”). Fifty (50%) percent of the Share Consideration (the “Escrow Shares”) is required to be deposited in an escrow account pursuant to the Skypersonic Agreements for a period of twelve (12) months as security for indemnification obligations and any purchase price adjustments due to working capital deficiencies and any other claims or expenses arising under the Skypersonic Agreements. Under the Skypersonic Agreements, closing date working capital deficits in excess of $300,000 shall result in a reduction of the Share Consideration on a dollar of dollar basis. The Company agreed that in the event that within 12 months following closing of the Acquisition, the Company issues common stock for a price per share less than $2.50 per share in a public offering of equity or convertible securities in which the Company raises a minimum of $2,000,000 (“Qualified Offering”), the Company shall issue Sellers additional shares of common stock equal to the difference between the number of shares issued and the quotient of the purchase price divided by the price of securities sold in the Qualified Offering. Mr. Santangelo and certain principal shareholders have agreed to indemnification obligations, on a pro-rata basis, subject to certain limitations, which shall survive for a period of eighteen (18) months following closing, and which include a basket amount of $25,000 before any claim can be asserted and a cap equal to the value of the Escrow Shares or the Share Consideration. For a period of three (3) years following closing, Mr. Santangelo shall not engage in a business competing with or providing products, services or solutions to the drone industry, first person view (“FPV”) business, navigation and software solutions that provide analytics, storage or services for or in conjunction with the drone industry. The closing of the Skypersonic Transaction is subject to customary closing conditions and is expected to close on or before May 14, 2021. The Company does not deem the Skypersonic financial condition and results of operations to be material to the overall financial condition and results of operations of the Company on a consolidated basis. On February 15, 2021, the Company’s Fat Shark subsidiary agreed to provide a short-term bridge loan to Skypersonic in the amount of $75,000 under a Senior Secured Promissory Note, due May 14, 2021 (the “Bridge Loan”). Advances under the Bridge Loan accrue interest at a rate of six (6%) percent per annum. The Bridge Loan is secured by shares of Skypersonic common stock pledged as collateral. In March 2021, holders of $1,100,000 of Convertible debentures converted their debentures, plus $47,491 of accrued interest into 1,147,491 shares of common stock. These conversions represented 100% of the convertible debentures issued in October 2020 and January 2021, as described in Note 6. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Jan. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting |
Principles of Consolidation | Principles of Consolidation – |
Use of Estimates | Use of Estimates |
Cash | Cash |
Other Assets | Other Assets |
Leases | Leases – Leases at January 31, 2021 are short term in nature and do not require accounting under the lease accounting standards. |
Goodwill | Goodwill We perform an impairment test at the end of each fiscal year, or more frequently if indications of impairment arise. We have a single reporting unit, and consequently, evaluate goodwill for impairment based on an evaluation of the fair value of the Company as a whole. |
Fair Value of Financial Instruments | Fair Value of Financial instruments ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 2. |
Convertible Securities and Derivatives | Convertible Securities and Derivatives – When the convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds from the convertible host instruments are first allocated to the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, resulting in those instruments being recorded at a discount from their face value. |
Revenue Recognition | Revenue Recognition – |
Research and Development | Research and Development |
Income Taxes | Income Taxes |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
Comprehensive Loss | Comprehensive Loss – |
Stock-Based Compensation | Stock-Based Compensation – |
Basic and Diluted Net Loss per Share | Basic and Diluted Net Loss per Share |
Related Parties | Related Parties |
The Business (Tables)
The Business (Tables) | 9 Months Ended |
Jan. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Values of purchase consideration, assets acquired, and liabilities assumed from reverse-merger and merger | A. The Share Exchange Agreement Cash $ 24,704 Goodwill 93,050 Total $ 117,754 C. Merger Agreement with Rotor Riot, LLC I. Purchase Price Shares issued $ 1,820,114 Promissory note issued $ 175,000 Total Purchase Price $ 1,995,114 II. Purchase Price Allocation Assets Acquired Cash $ 21,623 Accounts receivable 28,500 Other assets 3,853 Inventory 127,411 Trademark 20,000 Brand Name 578,000 Customer Relationships 39,000 Goodwill 1,756,023 Total assets acquired $ 2,574,410 Liabilities Assumed Accounts Payable and accrued expenses $ 171,651 Notes payable 209,799 Due to Related Party 197,846 Total liabilities assumed 579,296 Net assets acquired $ 1,995,114 D. Fat Shark Acquisition I. Purchase Price Shares issued $ 6,351,076 Promissory note issued 1,753,000 Cash 250,000 Total Purchase Price $ 8,354,076 II. Purchase Price Allocation Assets Acquired Cash $ 201,632 Accounts receivable 249,159 Other assets 384,232 Inventory 223,380 Goodwill 7,600,260 Total assets acquired $ 8,658,663 Liabilities Assumed Accounts Payable and accrued expenses $ 279,393 Customer Deposits 25,194 Total liabilities assumed 304,587 Net assets acquired $ 8,354,076 |
Common Stock, Preferred Stock_2
Common Stock, Preferred Stock and Warrants (Tables) | 9 Months Ended |
Jan. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Assumptions used to estimate fair value of warrants | January 31, 2021 Expected volatility 86-104 % Expected dividends 0 % Expected term 4.67-5 Years Risk-free interest rate 0.10-0.41 % |
Changes in warrants outstanding issued to non-employees of the Company | Number of Warrants Weighted Average Exercise Price Weighted Average Grant Date Fair Value Expiration Date (yrs) Value if Exercised Balance as of April 30, 2020 - - - - $ - Granted 1,074,998 1.50 4.17 5.00 1,612,497 Exercised - - - - - Cancelled/Expired - - - - - Outstanding as of January 31, 2021 1,074,998 $ 1.50 $ 4.17 4.87 $ 1,612,497 |
Share Based Awards (Tables)
Share Based Awards (Tables) | 9 Months Ended |
Jan. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock compensation expense | 3 months 9 months General and administrative $ 336,301 $ 525,559 Research and development 179,157 199,047 Operations 170,612 175,586 Sales and marketing 168,125 168,125 $ 854,195 $ 1,068,317 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Jan. 31, 2021 | |
Investments, All Other Investments [Abstract] | |
Financial instruments measured at fair value on a recurring basis | Level 1 Level 2 Level 3 Total Fair value of derivatives $ - $ 9,144,226 $ - $ 9,144,226 |
The Business - Values of purcha
The Business - Values of purchase consideration, assets acquired, and liabilities assumed from reverse-merger and merger (Details) - USD ($) | 9 Months Ended | |
Jan. 31, 2021 | Jan. 31, 2020 | |
Share Exchange Agreement | ||
Cash | $ 24,704 | |
Goodwill | 93,050 | |
Total | $ 117,754 | |
Merger Agreement with Rotor Riot, LLC | ||
Purchase Price | ||
Shares issued | 1,820,114 | |
Promissory note issued | $ 175,000 | |
Total Purchase Price | 1,995,114 | |
Assets Acquired | ||
Cash | 21,623 | |
Accounts receivable | 28,500 | |
Other assets | 3,853 | |
Inventory | 127,411 | |
Trademark | 20,000 | |
Goodwill | 2,373,023 | |
Total assets acquired | 2,574,410 | |
Liabilities Assumed | ||
Accounts Payable and accrued expenses | 171,651 | |
Notes payable | 209,799 | |
Due to Related Party | 197,846 | |
Total liabilities assumed | 579,296 | |
Net assets acquired | $ 1,995,114 | |
Fat Shark Acquisition | ||
Purchase Price | ||
Shares issued | 6,351,076 | |
Promissory note issued | $ 1,753,000 | |
Cash | 250,000 | |
Total Purchase Price | 8,354,076 | |
Assets Acquired | ||
Cash | 201,632 | |
Accounts receivable | 249,159 | |
Other assets | 384,232 | |
Inventory | 223,380 | |
Goodwill | 7,600,260 | |
Total assets acquired | 8,658,663 | |
Liabilities Assumed | ||
Accounts Payable and accrued expenses | 279,393 | |
Customer Deposits | 25,194 | |
Total liabilities assumed | 304,587 | |
Net assets acquired | $ 8,354,076 |
The Business (Details Narrative
The Business (Details Narrative) - USD ($) | Aug. 02, 2019 | Jan. 31, 2020 | May 15, 2019 |
Percentage of TimeFire's outstanding share capital acquired in Share Exchange Agreement | 83.33% | ||
Total value of stock issued under Share Exchange Agreement | $ 117,754 | ||
Reverse stock split | 1:1,200 | ||
Common Stock issued | |||
Stock issued in Share Exchange Agreement | 196,667 | ||
Series A Preferred Stock issued | |||
Stock issued in Share Exchange Agreement | 2,169,068 | ||
Series B Preferred Stock issued | |||
Stock issued in Share Exchange Agreement | 4,212,645 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | Jan. 31, 2021 | Apr. 30, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Negative working capital | $ (8,898,797) | |
Accumulated losses | $ (12,663,538) | $ (2,573,753) |
Disclosure - Notes Payable, Due
Disclosure - Notes Payable, Due to Related Party and Convertible Debentures (Details Narrative) | 9 Months Ended |
Jan. 31, 2021USD ($) | |
Note Payable to PayPal | |
Notes Payable | |
Notes payable assumed in connection with merger agreement, balance outstanding | $ 75,369 |
Note Payable to Shopify Capital | |
Notes Payable | |
Notes payable assumed in connection with merger agreement, balance outstanding | 101,910 |
Note Payable to BRIT, LLC | |
Due to Related Party | |
Due to related party, outstanding principal balance | 153,814 |
Due to related party, outstanding accrued interest | 8,517 |
Obligations of BRIT, LLC | |
Due to Related Party | |
Due to related party, outstanding principal balance | 167,730 |
Payable to Aerocarve | |
Due to Related Party | |
Due to related party, outstanding principal balance | 74,000 |
Long Term - Payable to Greg French | |
Due to Related Party | |
Due to related party, long term, outstanding balance | 1,753,000 |
Convertible Note issued to accredited investor | |
Convertible Debentures | |
Convertible note, principal amount | $ 300,000 |
Convertible note, term | 2 years |
Convertible note, interest rate | 12.00% |
Convertible Note issued to director | |
Convertible Debentures | |
Convertible note, principal amount | $ 125,000 |
Convertible note, term | 2 years |
Convertible note, interest rate | 12.00% |
Convertible Note issued to chief executive officer | |
Convertible Debentures | |
Convertible note, principal amount | $ 25,000 |
Convertible note, term | 2 years |
Convertible note, interest rate | 12.00% |
Convertible Note financing (1) | |
Convertible Debentures | |
Proceeds from Convertible Note financing | $ 600,000 |
Convertible Note financing (2) | |
Convertible Debentures | |
Proceeds from Convertible Note financing | $ 500,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Jan. 31, 2021 | Apr. 30, 2020 |
Income Tax Disclosure [Abstract] | ||
Accumulated deficit | $ (12,663,538) | $ (2,573,753) |
Approximate deferred tax assets related to future benefit of net operating losses | $ 508,000 | $ 104,000 |
Common Stock, Preferred Stock_3
Common Stock, Preferred Stock and Warrants - Assumptions used to estimate fair value of warrants (Details) - Warrants | 9 Months Ended |
Jan. 31, 2021 | |
Expected volatility, minimum | 86.00% |
Expected volatility, maximum | 104.00% |
Expected dividends | 0.00% |
Expected term, minimum | 4 years 8 months 1 day |
Expected term, maximum | 5 years |
Risk-free interest rate, minimum | 0.10% |
Risk-free interest rate, maximum | 0.41% |
Common Stock, Preferred Stock_4
Common Stock, Preferred Stock and Warrants - Changes in warrants outstanding issued to non-employees of the Company (Details) | 9 Months Ended |
Jan. 31, 2021USD ($)$ / sharesshares | |
Balance at start of period | |
Number of warrants | shares | |
Weighted average exercise price | |
Weighted average grant date fair value | |
Value if exercised | $ | |
Granted | |
Number of warrants | shares | 1,074,998 |
Weighted average exercise price | $ 1.50 |
Weighted average grant date fair value | $ 4.17 |
Expiration Date | 5 years |
Value if exercised | $ | $ 1,612,497 |
Exercised | |
Number of warrants | shares | |
Weighted average exercise price | |
Weighted average grant date fair value | |
Value if exercised | $ | |
Cancelled/Expired | |
Number of warrants | shares | |
Weighted average exercise price | |
Weighted average grant date fair value | |
Value if exercised | $ | |
Outstanding at end of period | |
Number of warrants | shares | 1,074,998 |
Weighted average exercise price | $ 1.50 |
Weighted average grant date fair value | $ 4.17 |
Expiration Date | 4 years 10 months 13 days |
Value if exercised | $ | $ 1,612,497 |
Common Stock, Preferred Stock_5
Common Stock, Preferred Stock and Warrants (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Jan. 31, 2020 | Jan. 31, 2021 | Jan. 31, 2020 | May 15, 2019 | |
Stockholders' Equity Note [Abstract] | |||||
Warrants issued, number issued | 469,874 | ||||
Proceeds received in connection with exercise of warrants | $ 152,239 | $ 152,239 | $ 152,239 |
Share Based Awards - Stock comp
Share Based Awards - Stock compensation expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Jan. 31, 2021 | Jan. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | ||
General and administrative | $ 336,301 | $ 525,559 |
Research and development | 179,157 | 199,047 |
Operations | 170,612 | 175,586 |
Sales and marketing | 168,125 | 168,125 |
Total | $ 854,195 | $ 1,068,317 |
Share Based Awards (Details Nar
Share Based Awards (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jan. 31, 2021 | Jan. 31, 2020 | |
Number of shares issuable in connection with Awards under the Plan, maximum | 8,750,000 | ||||||
Stock compensation expense | $ 854,195 | $ 107,061 | $ 107,061 | $ 149,462 | $ 12,067 | $ 1,068,317 | $ 161,529 |
Options exercisable | 964,143 | 964,143 | |||||
Remaining weighted average contractural term of options outstanding | 6 years 7 months 17 days | ||||||
Aggregate intrinsic value of outstanding options | $ 7,062,446 | $ 7,062,446 | |||||
October 2019 Issuances | |||||||
Options issued, number of common stock shares available for purchase | 350,000 | ||||||
Options issued, value | $ 477,500 | ||||||
Assumptions used, expected volatility | 75.00% | ||||||
Assumptions used, risk free interest rate, minimum | 1.59% | ||||||
Assumptions used, risk free interest rate, maximum | 1.74% | ||||||
Assumptions used, expected life, minimum | 5 years | ||||||
Assumptions used, expected life, maximum | 10 years | ||||||
Assumptions used, expected dividend yield | 0.00% | ||||||
January 2020 Issuances (1) | |||||||
Options issued, number of common stock shares available for purchase | 1,100,000 | ||||||
Options issued, value | $ 707,300 | ||||||
Assumptions used, expected volatility | 75.00% | ||||||
Assumptions used, risk free interest rate, maximum | 1.74% | ||||||
Assumptions used, expected life, maximum | 10 years | ||||||
Assumptions used, expected dividend yield | 0.00% | ||||||
January 2020 Issuances (2) | |||||||
Options issued, number of common stock shares available for purchase | 147,475 | ||||||
Options issued, value | $ 94,826 | ||||||
Assumptions used, expected volatility | 75.00% | ||||||
Assumptions used, risk free interest rate, maximum | 1.74% | ||||||
Assumptions used, expected life, maximum | 10 years | ||||||
Assumptions used, expected dividend yield | 0.00% | ||||||
January 2021 Issuances | |||||||
Restricted stock issued, shares | 1,000,000 | ||||||
Restricted stock issued, value | $ 2,690,000 | ||||||
Options issued, number of common stock shares available for purchase | 100,000 | ||||||
Options issued, value | $ 147,581 | ||||||
Assumptions used, expected volatility | 88.37% | ||||||
Assumptions used, risk free interest rate, maximum | 0.38% | ||||||
Assumptions used, expected life, maximum | 5 years 10 months 13 days | ||||||
Assumptions used, expected dividend yield | 0.00% |
Financial Instruments - Financi
Financial Instruments - Financial instruments measured at fair value on a recurring basis (Details) | Jan. 31, 2021USD ($) |
Fair value of derivatives | $ 9,144,226 |
Level 1 | |
Fair value of derivatives | |
Level 2 | |
Fair value of derivatives | 9,144,226 |
Level 3 | |
Fair value of derivatives |
Financial Instruments (Details
Financial Instruments (Details Narrative) | 9 Months Ended |
Jan. 31, 2021USD ($) | |
Investments, All Other Investments [Abstract] | |
Loss from measurements of fair value of derivative instruments | $ (3,433,938) |
Derivative expense | 4,630,288 |
Fair market value of derivatives | $ 9,144,226 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Apr. 30, 2020 | Dec. 20, 2019 | May 31, 2019 | Jul. 31, 2019 | Jan. 31, 2021 | Jan. 31, 2020 | |
Shares Issued for Services, shares | 150,000 | 1,570 | ||||
Shares Issued for Services, amount | $ 204,000 | $ 70,000 | $ 70,000 | |||
Convertible note financing with related parties | $ 79,000 | |||||
Member of Board of Directors | ||||||
Convertible note financing with related parties | $ 125,000 | |||||
Chief Executive Officer | ||||||
Convertible note financing with related parties | $ 25,000 | |||||
Aerocarve | ||||||
Advances from related party | 79,000 | |||||
Repayments of principal on related party note payable | $ 5,000 |