Form: 8-K/A

Current report filing

December 4, 2020

8-K/A 5 rcat1119form8ka1exh99_3.htm PRO FORMA FINANCIAL INFORMATION

Exhibit 99.3

 

Red Cat Holdings, Inc.
Pro Forma Balance Sheet
As of September 30, 2020
(unaudited)
                 
    Red Cat     Fat Shark     Adjustments     Pro-Forma  
ASSETS                                
Current Assets                                
Cash and equivalents   $ 446,912     $ 237,560     $ 0     $ 684,472  
Accounts receivable   $ 0     $ 185,656     $ 0     $ 185,656  
Inventory   $ 168,181     $ 276,297     $ 0     $ 444,478  
Goodwill   $ 2,466,073     $ 0     $ 7,226,941     $ 9,693,014  
Other     0       416,863             $ 416,863  
Total Current Assets     3,081,166       1,116,376       7,226,941     $ 11,424,483  
                                 
Other     23,853       105,000     $ 0     $ 128,853  
                                 
TOTAL ASSETS   $ 3,105,019     $ 1,221,376     $ 7,226,941     $ 11,553,336  
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY                                
Current Liabilities                                
Accounts payable   $ 295,300     $ 258,514     $ 0     $ 553,814  
Accrued Expenses     163,661       48,478       0     $ 212,139  
Customer deposits     77,053       40,249     $ 0     $ 117,302  
      536,014       347,241       0     $ 883,255  
                                 
Notes Payable     1,533,467       936,271     $ 563,729     $ 3,033,467  
                                 
Stockholders' Equity                                
Preferred Stock     38,903       35,000     ($ 35,000 )   $ 38,903  
Common stock     20,011       0       5,227     $ 25,238  
Additional paid-in capital     4,246,412       1,200       6,848,399     $ 11,096,011  
Accumulated deficit     (3,269,788 )     (98,336 )     (155,414 )   $ (3,523,538 )
Total Stockholders' Equity     1,035,538       (62,136 )     6,663,212     $ 7,636,614  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 3,105,019     $ 1,221,376     $ 7,226,941     $ 11,553,336  
                                 
                                 
See accompanying notes.

 

Adjustments:            
1. The transaction included (a) the issuance of 5,227,223 shares of common stock with a fair value of $6,351,076, (b) a cash payment of $250,000, and (c ) the issuance of a promissory note in the amount of $1,500,000.
2. The sole shareholder of Fat Shark forgave a Promissory Note in the amount of $936,271 prior to the closing of the transaction.
3. The Company has not yet completed an allocation of the purchase price, and therefore has reported the excess of the purchase price over the net tangible assets acquired as Intangible assets.  The Company expects to complete a formal valuation of the intangible assets acquired, including Customer Relationships and Brand Name.

 

     
 
 

 

Red Cat Holdings, Inc.
Pro Forma Statement of Operations
Year ended December 31, 2019
(Unaudited)
                 
    Red Cat     Fat Shark     Adjustments     Pro-Forma  
Revenues   $ —       $ 7,298,640     $ —       $ 7,298,640  
                                 
Cost of goods sold   $ —         5,799,156     $ —       $ 5,799,156  
                                 
Gross Margin   $ —         1,499,484     $ —       $ 1,499,484  
                                 
Operating Expenses                                
Research and development     519,467       391,741     $ —       $ 911,208  
Sales and marketing   $ —         180,496     $ —       $ 180,496  
General and administrative     531,964       677,005       100,000     $ 1,308,969  
Total operating expenses     1,051,431       1,249,242       100,000     $ 2,400,673  
Operating income (loss)     (1,051,431 )     250,242       (100,000 )   $ (901,189 )
                                 
Interest expense   $ —         0     $ 45,000     $ 45,000  
Provision for income taxes   $ —       $ —       $ —            
Other expense, net   $ —       $ —       $ 45,000     $ 45,000  
                                 
Net income (loss)   $ (1,051,431 )   $ 250,242     $ (145,000 )   $ (946,189 )
                                 
                                 
See accompanying notes.

 

Adjustments:                
1. $145,000 adjustment reflects (a) full year of interest totaling $45,000 on promissory note for $1,500,000 bearing interest at 3% which was issued in connection with the acquisition and (b) $100,000 of additional payroll costs associated with additional personnel required.
2. An adjustment for the amortization of intangible assets acquired in connection with the transaction have not been included as a purchase price allocation has not been completed and an estimate of the value of amortizable intangible assets is not determinable at this time.

 

 

     
 
 

 

Red Cat Holdings, Inc.
Pro Forma Statement of Operations
Nine months ended September 30, 2020
(Unaudited)
                 
    Red Cat     Fat Shark     Adjustments     Pro-Forma  
Revenues   $ 1,216,986     $ 4,436,439     $ —       $ 5,653,425  
                                 
Cost of goods sold   $ 794,871       3,463,995     $ —       $ 4,258,866  
                                 
Gross Margin     422,115       972,444     $ —       $ 1,394,559  
                                 
Operating Expenses                                
Operations     84,876       119,063       0     $ 203,939  
Research and development     141,401       207,514       0     $ 348,915  
Sales and marketing     26,917       57,678       0     $ 84,595  
General and administrative     1,482,670       280,562       75,000     $ 1,838,232  
Total operating expenses     1,735,864       664,817       75,000     $ 2,475,681  
Operating income (loss)     (1,313,749 )     307,627       (75,000 )   $ (1,081,122 )
                                 
Interest expense   $ 93,811       0     $ 33,750     $ 127,561  
Provision for income taxes   $ —       $ —       $ —       $ —    
Other expense, net   $ 93,811     $ —       $ 33,750     $ 127,561  
                                 
Net income (loss)   $ (1,407,560 )   $ 307,627     $ (108,750 )   $ (1,208,683 )
                                 
                                 
See accompanying notes.

 

Adjustments:                
1. $108,750 adjustment reflects (a) nine months of interest totaling $33,750 on promissory note for $1,500,000 bearing interest at 3% which was issued in connection with the acquisition and (b) $75,000 of additional payroll costs associated with additional personnel required.
2. An adjustment for the amortization of intangible assets acquired in connection with the transaction have not been included as a purchase price allocation has not been completed and an estimate of the value of amortizable intangible assets is not determinable at this time.

  

 

     
 
 

Red Cat Holdings, Inc.

Notes to the Unaudited Pro Forma Combined Financial Statements

 

On November 2, 2020, Red Cat Holdings, Inc. (the “Company” or “Red Cat”) completed the acquisition (the “Acquisition”) of Fat Shark Holdings (“Fat Shark”).

 

1. Basis of Presentation

 

The unaudited pro forma condensed combined Balance Sheet and Statement of Operations of Red Cat and Fat Shark have been derived from the historical accounting records of each entity. The historical financial information has been evaluated to determine whether there should be any pro-forma adjustments recorded to reflect events that are directly attributable to the Acquisition, factually supportable, and expected to have a continuing effect on the Company’s results of operations. The pro-forma Balance Sheet and Statement of Operations present the Acquisition as if it had been consummated as of January 1, 2018.

 

The unaudited pro forma combined financial information is for illustrative purposes only. The combined company may have reported different operating results if they had actually been combined for the periods presented. These pro-forma combined financial statements should not be relied upon as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined companies may realize after the Acquisition.

 

2. Accounting Periods Presented

 

The unaudited pro forma combined Balance Sheet is being reported based upon September 30, 2020 because the Balance Sheet of Fat Shark was audited as of such date. The unaudited pro forma combined Statements of Operation are being reported for the twelve months ended December 31, 2019 and for the nine months ended September 30, 2020 because the Statements of Operations for Fat Shark were audited for such periods. The Balance Sheet and Statements of Operations for Red Cat are based on these dates and reporting periods.