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

Quarterly report pursuant to Section 13 or 15(d)

Note 18 ??? Share Based Awards

Note 18 – Share Based Awards

3 Months Ended

Jul. 31, 2023

Share-Based Payment Arrangement [Abstract]

Note 18 – Share Based Awards

The 2019 Equity Incentive Plan (the "Plan") 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.

Options

The range of assumptions used to calculate the fair value of options granted during the three months ended July 31 was:

		2023		2022
Exercise Price	$	1.06 – 1.12	$	—
Stock price on date of grant		1.06 – 1.12		—
Risk-free interest rate		3.47 – 4.07%		—
Dividend yield		—		—
Expected term (years)		6.00 – 6.25		—
Volatility		257.25 – 260.22%		—

A summary of options activity under the Plan since April 30, 2022 was:

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding as of April 30, 2022		3,694,142		$	2.17		8.56		1,407,545
Granted		1,503,500			1.40
Exercised		—			—
Forfeited or expired		(412,833	)		2.67
Outstanding as of April 30, 2023		4,784,809			1.88		8.72		74,586
Granted		2,401,042			1.07
Exercised		—			—
Forfeited or expired		(301,834	)		2.55
Outstanding as of July 31, 2023		6,884,017			1.57		8.58		298,615
Exercisable as of July 31, 2023		3,157,975		$	2.00		6.63	$	241,274

The aggregate intrinsic value of outstanding options represents the excess of the stock price at the indicated date over the exercise price of each option. As of July 31, 2023 and July 31, 2022, there was $5,918,668 and $2,760,989 of unrecognized stock-based compensation expense related to unvested stock options which is expected to be recognized over the weighted average periods of 2.24 and 2.1 years, respectively.

Restricted Stock

A summary of restricted stock activity under the Plan since April 30, 2022 was:

	Shares			Weighted Average Grant-Date Fair Value Per Share
Unvested and outstanding as of April 30, 2022		1,083,675		$	2.59
Granted		780,884			2.14
Vested		(1,062,372	)		2.42
Forfeited		(21,127	)		2.13
Unvested and outstanding as of April 30, 2023		781,060			2.44
Granted		298,643			1.06
Vested		(166,346	)		1.70
Forfeited		(70,656	)		1.25
Unvested and outstanding as of July 31, 2023		842,701		$	2.14

Stock Compensation

Stock compensation expense for the three months ended July 31 was as follows:

	2023		2022
General and administrative	$	427,781	$	345,168
Research and development		127,417		144,798
Operations		191,099		158,431
Sales and marketing		165,309		107,074
Total	$	911,606	$	755,471

Stock compensation expense pertaining to options totaled $629,426 and $458,023 for the three months ended July 31, 2023 and 2022, respectively. Stock compensation expense pertaining to restricted stock units totaled $282,180 and $297,448 for the three months ended July 31, 2023 and 2022, respectively.