The Law Offices of Frank R. Cruz announces an investigation of Red Cat Holdings, Inc. (“Red Cat” or the “Company”) (NASDAQ: RCAT) on behalf of investors concerning the Company’s possible violations of federal securities laws.
IF YOU ARE AN INVESTOR WHO LOST MONEY ON RED CAT HOLDINGS, INC. (RCAT), CLICK HERE TO INQUIRE ABOUT POTENTIALLY PURSUING A CLAIM TO RECOVER YOUR LOSS.
What Is The Investigation About?
In March 2022, Red Cat announced that its subsidiary Teal Drones, Inc. (“Teal”) had been selected to compete in Tranche 2 of the U.S. Army’s Short Range Reconnaissance Program of Record (the “SRR Program”).
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, Red Cat’s stock price fell $0.10, or 8.9%, to close at $1.02 per share on July 28, 2023, thereby injuring investors.
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, Red Cat’s stock price fell $0.80, or 25.3%, over two consecutive trading days to close at $2.36 per share on September 25, 2024.
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, Red Cat’s stock price fell $2.35, or 21.5%, over two consecutive trading days to close at $8.56 per share on January 17, 2025, thereby injuring investors further.
Contact Us to Participate or Learn More:
If you purchased Red Cat securities, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact us:
The Law Offices of Frank R. Cruz
2121 Avenue of the Stars, Suite 800
Century City, California 90067
Call us at: 310-914-5007
Email us at: info@frankcruzlaw.com
Visit our website at: www.frankcruzlaw.com.
Follow us for updates on Twitter at twitter.com/FRC_LAW.
If you inquire by email, please include your mailing address, telephone number, and number of shares purchased.
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View source version on businesswire.com: https://www.businesswire.com/news/home/20250528460546/en/
Contacts
The Law Offices of Frank R. Cruz, Los Angeles
Frank R. Cruz
310-914-5007
fcruz@frankcruzlaw.com
www.frankcruzlaw.com
