Red Cat Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 20 - Segment Reporting

Note 20 - Segment Reporting

6 Months Ended

Oct. 31, 2022

Note 20 - Segment Reporting

We define our segments as those operations whose results are regularly reviewed by our CODM to analyze performance and allocate resources. Therefore, segment information is prepared on the same basis that management reviews financial information for operational decision-making purposes. Our CODM is a committee comprised of our CEO, COO, and CFO.

The Enterprise segment is focused on opportunities in the commercial sector, including military. Enterprise is building the infrastructure to manage drone fleets, fly and provide services remotely, and navigate confined industrial interior spaces and dangerous military environments.

The Consumer segment is focused on enthusiasts and hobbyists which are expected to increase as drones become more visible in our daily lives.

Our CODM allocates resources to and assesses the performance of our two operating segments based on the operating segments’ net sales and gross profit. The following table sets forth information by reportable segment for the three and six months ended October 31, 2022, respectively.


	For the three months ended October 31, 2022
	Enterprise			Consumer			Corporate			Total
Revenues	$	747,612		$	782,850		$	—		$	1,530,462
Cost of goods sold		623,761			673,046			—			1,296,807
Gross margin		123,851			109,804			—			233,655

Operating expenses		3,615,614			531,349			2,859,026			7,005,989
Operating loss		(3,491,763	)		(421,545	)		(2,859,026	)		(6,772,334	)

Other expenses, net		96,015			(8,050	)		(615,822	)		(527,857	)
Net loss	$	(3,587,778	)	$	(413,495	)	$	(2,243,204	)	$	(6,244,477	)


	For the six months ended October 31, 2022
	Enterprise			Consumer			Corporate			Total
Revenues	$	1,874,163		$	2,725,570		$	—		$	4,599,733
Cost of goods sold		1,668,192			2,340,259			—			4,008,451
Gross margin		205,971			385,311			—			591,282

Operating expenses		5,276,977			1,026,377			4,758,758			11,062,112
Operating loss		(5,071,006	)		(641,066	)		(4,758,758	)		(10,470,830	)

Other expenses, net		159,244			(8,174	)		(565,824	)		(414,754	)
Net loss	$	(5,230,250	)	$	(632,892	)	$	(4,192,934	)	$	(10,056,076	)

The following table sets forth specific asset categories which are reviewed by our CODM in the evaluation of operating segments:


	As of October 31, 2022
	Enterprise		Consumer		Corporate		Total
Accounts receivable, net	$	874,439	$	43,363	$	—	$	917,802
Inventory, net		4,332,532		2,227,560		—		6,560,092
Inventory deposits	$	1,164,884	$	2,540,969	$	—	$	3,705,853