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"2026-05-02 20:44:39.681+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "pageNumber": 24, "frameworkName": "fraud-exposure" }, { "matchId": "923677dc-2a3c-4f81-91ff-797ffe139467", "evidence": "The slide explicitly questions management's honesty and competence regarding operational guidance.", "framework": null, "confidence": 0.9, "extraction": { "at": "2026-05-02 20:44:38.194+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "pageNumber": 25, "frameworkName": "fraud-exposure" } ], "patterns": [] }, "storymakers": null, "score": null, "review": null, "activistThesis": { "tone": "mixed", "notes": "Classic Kerrisdale short report: prose-heavy, no slide deck format, but with strong narrative architecture. Centerpiece rhetorical device is a chronological wall of contradictory CEO/management quotes from earnings calls 2022-2024 (pp. 10-11 on SRR program size, pp. 17-19 on manufacturing capacity, p. 24 on NATO sales) — a textbook 'CEO promised X, never delivered' pattern. Smoking-gun visual is the embedded screenshot of the US Army's FY2025 Aircraft Procurement Justification Book on p. 12, used to debunk management's $79.5M NDAA reading line by line. Title 'Flying Blind' is the only deck-style flourish. No author signature on cover; only firm-credited (typical Kerrisdale practice — Sahm Adrangi runs the firm but is not named in the document). Publication day inferred as ~Jan 9, 2025 from filename 'YYYY-MM' convention; cover reads only 'January 2025'.", "kpisCited": [ { "detail": "~$23.5M total (incl. $21.07M procurement, spares, RDT&E) vs. Red Cat's $80M guidance", "metric": "SRR FY2025 Army procurement budget" }, { "detail": "265-300 systems/year at $20-25M annually 2026-2029, vs. Red Cat's implied $260-350M over 5 years", "metric": "SRR multi-year program scale" }, { "detail": "$3.1M total over 3 years — most of it before end of 2022", "metric": "Cumulative capex 2022-2024" }, { "detail": "~$17M since April 2024 release", "metric": "Teal 2 lifetime sales" }, { "detail": "$48M used over ~2.5 years against a $100M 5-year ceiling", "metric": "Skydio Tranche 1 actual draw vs ceiling" }, { "detail": "$900M+ over ~9 months, $600M since Nov 19, 2024", "metric": "Market cap added since SRR announcement" }, { "detail": "~12x revenue at face-value $50-55M guide", "metric": "Trading multiple on 2025 ex-SRR guidance" }, { "detail": "Matus sold 800,000 shares at avg $11.75; ~1.6M total shares sold by management/board", "metric": "Insider stock sales post-SRR" }, { "detail": "$990M market cap, $980M EV at $10.91 share price", "metric": "Fully diluted market cap / EV" }, { "detail": "FY23 $(25)M, FY24 $(18)M, TTM $(24)M on $16.5M TTM revenue", "metric": "Operating losses" } ], "closingAsk": "Don't be fooled — Red Cat's future is going to look very similar to its past: high hopes grounded by reality.", "extraction": { "at": "2026-04-22 20:38:20+00", "model": "unknown-legacy", "runId": null, "seconds": 170.75858, "promptVersion": null }, "scqaReward": "No explicit price target, but Kerrisdale notes the company has added over $600M in market cap since November 19th and trades at roughly 12x optimistic 2025 revenue, implying material downside as expectations reset toward the ~$23M Army budget reality.", "thesisTypes": [ "fraud_exposure", "other" ], "top3Reasons": [ "SRR program is funded at ~$23M annually, not the $80M Red Cat guides for 2025", "Three years of 'thousands of drones per month' promises on just $3M of cumulative capex", "Insiders including SRR architect Matus and CFO Lunger resigned and dumped stock post-win" ], "scqaSituation": "Red Cat Holdings is a $1bn-market-cap drone manufacturer whose stock has nearly quadrupled since November 2024 on its announced win of the US Army's Short Range Reconnaissance (SRR) sUAS contract.", "thesisSummary": "Kerrisdale is short Red Cat Holdings, a $1 billion drone manufacturer that has nearly quadrupled on hype around its November 2024 win of the Army's Short Range Reconnaissance (SRR) contract. Army budget documents show SRR is funded at only ~$23 million for FY2025 and $20-25 million annually thereafter — a fraction of management's claimed $80 million in 2025 and $260-350 million over five years — and the Army intends to refresh the platform every 2-3 years, undermining the 'sole-source' narrative. The supposed follow-on markets at the Air Force, Marines, DHS and NATO allies are essentially nonexistent or already locked up by competitors like Lockheed, FLIR, Skydio and Parrot. Red Cat has also promised 'thousands of drones per month' for three straight years on just $3 million of cumulative capex, and key executives — including SRR architect George Matus and the CFO — resigned and dumped stock immediately after the contract announcement.", "primaryDemands": [ "Sell or short Red Cat shares ahead of guidance reset", "Discount management's SRR revenue and follow-on market claims to Army budget reality" ], "scqaResolution": "Investors should short or sell the stock; Kerrisdale discloses a short position and argues the market should fade management's revenue claims and the post-SRR rally before the contract terms and 2025 guidance miss become apparent.", "thesisOneLiner": "Red Cat's $1bn valuation rests on inflating a $23M/year Army drone contract into a $350M sole-source bonanza, with a factory that can't scale and insiders heading for the exits.", "precedentsCited": [ "Skydio SRR Tranche 1 contract — $100M ceiling but only $48M actually spent over 2.5 years", 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INVESTMENT HIGHLIGHTS...3\nII. THE DRONE DREAM...7\nIII. THE SRR CONTRACT TERMS ARE MUCH LESS FAVORABLE THAN RED CAT'S MANAGEMENT ASSERTS...9\nIV. RED CAT HAS A LONG HISTORY OF SETTING MISLEADING AND UNREALISTIC EXPECTATIONS...17\nV. 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1, "bodyDocId": null, "description": "Drawing the eye to one element above the rest of the slide.", "familyLabel": null }, "subkind": null, "framework": null }, "subkind": null, "groupRole": null, "confidence": null, "extraction": { "at": "2026-04-22 23:42:25+00", "model": "unknown-legacy", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "019dd953-3f41-721f-9e44-4954d266d881", "parentComponentId": null }, { "bbox": { "h": 0.09, "w": 0.78, "x": 0.11, "y": 0.67 }, "kind": "paragraph", "text": "First, there isn't much use for infantry reconnaissance drones in the Air Force, which doesn't really have much...infantry. As for the Marines, their small-drone program is even more modest than the Army's (by 60%) and already spoken for with other suppliers (Lockheed and FLIR, among others). So the Black Widow sales channel at other US military services is nonexistent.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:43.096+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "25c01c9a-9410-4f16-9ddd-b7e52f1b6516", "parentComponentId": null }, { "bbox": { "h": 0.11, "w": 0.78, "x": 0.11, "y": 0.87 }, "kind": "paragraph", "text": "Over at the Department of Homeland Security (DHS), of the “16 organizations” Red Cat is excited to sell to, only two of them – the Coast Guard and Customs and Border Patrol (CBP) – have anything approaching a drone procurement program. The Coast Guard's near-term budget is less than $1 million annually and dedicated to servicing the drone fleet they already have. CBP is interesting because Red Cat has been talking about selling to CBP for years. The company even announced in 2022 that it won a $90 million contract to supply CBP with drones. That contract turned out to be a multi-year multi-supplier contract through which Red Cat sold a grand total of $1.8 million in drones. As for the near term, CBP's published budget indicates that", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:43.096+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "afd4d0a7-a5cb-4694-856b-ef7a3b08964e", "parentComponentId": null }, { "bbox": { "h": 0.15, "w": 0.78, "x": 0.11, "y": 0.09 }, "kind": "paragraph", "text": "Red Cat has the manufacturing capability for mass production of drones. Getting there would take time and a real capital expenditure commitment. Considering that Red Cat has dedicated a total of just $3 million to capex over the last 3 years (most of it in 2022), it's going to be a long and expensive slog to the kind of facilities that would enable a respectable drone manufacturing operation. It certainly won't be ready to meet investor expectations for 2025.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:43.096+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "bad2c6a2-382e-447f-ae5f-91e796ea01fc", "parentComponentId": null }, { "bbox": { "h": 0.22, "w": 0.78, "x": 0.11, "y": 0.25 }, "kind": "paragraph", "text": "Management has also sent conflicting signals about Red Cat's ability to manufacture more than one model on the Teal production line. On the one hand, management is guiding to tens of millions of dollars in 2025 revenue from each of the Teal 3 and Black Widow (SRR) models. On the other hand, management blamed the precipitous dip in sales of the Teal 2 model in the second half of 2024 on the need to retool the factory for the SRR. So, can the factory produce two models simultaneously? Realistically, we think Red Cat faces a dual predicament – the company indeed lacks the manufacturing capacity to produce two models concurrently and, at the same time, demand for its $15,000 drones is much weaker than management lets on.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:43.096+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "c55c7904-e458-46d5-81d4-7530a946b3ef", "parentComponentId": null }, { "bbox": { "h": 0.12, "w": 0.78, "x": 0.11, "y": 0.54 }, "kind": "paragraph", "text": "Listening to Red Cat's management, you'd be forgiven for thinking that hundreds of millions of dollars of drone acquisition decisions were hinging on the results of the SRR competition. Now that it's been decided, the Marines and the Air Force and the Departments of Interior and Homeland Security and an array of NATO militaries will be lining up to bid on Red Cat's Black Widow or Teal 3 drones. The dam on the sales channel, so goes the narrative, has burst. 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This is another market that Red Cat has perennially been on the verge of cracking. On no fewer than six different conference calls since early 2002 has Red Cat promised that the NATO contracts are “several times the size” of the SRR program.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:37.318+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "20617576-8547-4bed-8191-885720051101", "parentComponentId": null }, { "bbox": { "h": 0.08, "w": 0.78, "x": 0.11, "y": 0.56 }, "kind": "paragraph", "text": "As we said above, the guidance for the Teal 3 is hard to square with management's explicitly stated inability to effectively manufacture two products in the single existing Teal facility.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:37.318+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "90f5eaf8-1809-490f-ba1b-59cd8bc2953a", "parentComponentId": null }, { "bbox": { "h": 0.05, "w": 0.78, "x": 0.11, "y": 0.09 }, "kind": "paragraph", "text": "they're in the market for 60 drones, which would amount to less than $1 million in revenue for Red Cat. Not exactly a sales gusher (even if Red Cat wins the entire bid).", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:37.318+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "a4b343dc-6527-44cc-8e29-7c4242eb6c3e", "parentComponentId": null }, { "bbox": { "h": 0.15, "w": 0.78, "x": 0.11, "y": 0.67 }, "kind": "paragraph", "text": "The Edge 130 (the other half of the guidance) is a light VTOL drone... manufactured by FlightWave... FlightWave didn't even have a manufacturing facility for its drone... We're skeptical.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:37.318+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "f0871107-769c-4b6c-bec9-1fa1b9ddc46f", "parentComponentId": null }, { "bbox": null, "kind": "quote", "text": "so excited that we don't have to switch aircraft for the first time ever and just build — CEO Jeffrey Thompson", "attrs": null, "canon": { "kind": { "name": "Quote", "slug": "quote", "status": 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CFO Leah Lunger announced on the mid-December earnings call that she was resigning for family reasons and sold half a million shares.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:37.095+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "4651277b-08b3-4e49-bbb5-547080cd7088", "parentComponentId": null }, { "bbox": { "h": 0.065, "w": 0.764, "x": 0.118, "y": 0.093 }, "kind": "paragraph", "text": "Here’s a different way to think 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The following statements about the number of drones in the contract, the pricing, and the revenue opportunity, are all taken from the transcript of the call, which was filed by Red Cat in a form 8-K the next day (emphasis is ours):", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:37.123+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "7d0e412f-4045-4199-b22c-66420b420d7b", "parentComponentId": null }, { "bbox": { "h": 0.12, "w": 0.8, "x": 0.1, "y": 0.67 }, "kind": "paragraph", "text": "The press release issued by Red Cat on November 19th announcing its win of the SRR contract is suspiciously lacking in detail... That's carefully worded to makes it seem like the Army is going to procure 5,880 “systems” from Red Cat over a 5-year period without actually saying exactly that.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:37.123+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "f48be9aa-d8f2-4a6e-ae83-19d86e6adea9", "parentComponentId": null }, { "bbox": null, "kind": "quote", "text": "The company is focused on ramping production of Teal’s next generation system to meet the Army’s currently stated acquisition objective for 5,880 systems, which is subject to change over the 5 year period of performance. — Red Cat press release", "attrs": null, "canon": { "kind": { "name": "Quote", "slug": "quote", "status": "active", "canonId": "019de52c-f8fb-751e-8bc6-d58e2d59562a", "version": 1, "description": "Pull quote or testimonial." }, "tool": { "name": "Authority citation", "slug": "authority-citation", "status": "active", "bestFor": null, "canonId": "019dd9e1-49ae-7557-89ad-3fca70469b45", "version": 1, "bodyDocId": null, "description": "Quoting an authority figure, study, or precedent to lend weight.", "familyLabel": null }, "subkind": null, "framework": null }, "subkind": null, "groupRole": null, "confidence": null, "extraction": { "at": "2026-04-22 23:42:26+00", "model": "unknown-legacy", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "019dd953-3f41-721f-9e45-4f73dc77efe6", "parentComponentId": null }, { "bbox": { "h": 0.05, "w": 0.8, "x": 0.1, "y": 0.605 }, "kind": "title", "text": "III. 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In discussions with defense industry participants, we discovered that those who were familiar with the SRR program dynamics all knew that Red Cat had improperly announced the program win without the Army's approval.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:41.141+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "0e2adf23-5a9d-4f73-8d9e-22ba54663f6c", "parentComponentId": null }, { "bbox": { "h": 0.065, "w": 0.77, "x": 0.118, "y": 0.845 }, "kind": "paragraph", "text": "In the end, we believe that much of what Red Cat has led investors to believe about its SRR win is either exaggerated or just plain wrong. 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Cat made an unapproved announcement was that a vague press release with no details beyond “5,880 systems” would be a lot more impressive than a detailed contract award announcement in which the most salient feature would be the underwhelming financial aspects of the award compared to what Red Cat management had previously guided.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:41.141+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, 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The idea that “other services” will now be interested in the SRR is just ridiculous.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:37.798+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "d5632799-ea31-40f2-b6dd-cf877c2419a2", "parentComponentId": null }, { "bbox": null, "kind": "quote", "text": "waiting for the Army to announce, and they finally have, so now we can announce. 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"kind": "quote", "text": "sitting on top of each other in their office right now. They'll be able to spread out, put a bunch of tables out there and just get a production line that's mapped out. 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It makes a lot more sense, though, in the context of the original Teal acquisition and its terms. Recall that Matus had negotiated to receive millions of dollars of Red Cat stock in the event that the Golden Eagle had cleared certain revenue hurdles. None of the revenue hurdles were ever cleared, though, and Matus had his first experience with management's grandiose assurances ending in disappointment. 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In the next few weeks, Red Cat will be finalizing its SRR contract with the Army. The official announcement made by Red Cat will probably follow the historical pattern - grand announcement with impressive headline numbers, but details that are less than meets the eye. Don't be fooled. Red Cat's future is going to look very similar to its past: high hopes grounded by reality.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:42.508+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "b8af79aa-33c3-4da5-b1bd-a0026d64b052", "parentComponentId": null }, { "bbox": { "h": 0.2, "w": 0.78, "x": 0.11, "y": 0.35 }, "kind": "paragraph", "text": "While the SRR win is real, its scope and its potential to bring in new customers have been vastly overstated by Red Cat's management, and we believe Matus knows this. Given the stock market reaction, Matus was able to take his cards off the table and cash out: in December, he sold 800,000 shares at an average price of $11.75. The fact that he left Red Cat to help found a new company is further confirmation that his resignation is a vote of no-confidence in Red Cat's future. 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It is not intended as an official confirmation of any transaction. All market prices, data and other information are not warranted as to completeness or accuracy.", "attrs": null, "canon": { "kind": { "name": "Disclaimer", "slug": "disclaimer", "status": "active", "canonId": "91173477-d91f-4024-bbaf-d4f93e3f82dc", "version": 1, "description": "Legal/cautionary text that occupies most of the body of its slide." }, "tool": null, "subkind": null, "framework": null }, "subkind": null, "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:39.841+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "b2acaf5b-ac51-47b2-bfed-67a42e4d04cb", "parentComponentId": null }, { "bbox": { "h": 0.045, "w": 0.764, "x": 0.118, "y": 0.271 }, "kind": "disclaimer", "text": "This report is not a recommendation to short or sell shares of any company, including the Covered Issuer, and is only a discussion of why Kerrisdale is short the Covered Issuer.", "attrs": null, "canon": { "kind": { "name": "Disclaimer", "slug": "disclaimer", "status": "active", "canonId": "91173477-d91f-4024-bbaf-d4f93e3f82dc", "version": 1, "description": "Legal/cautionary text that occupies most of the body of its slide." }, "tool": null, "subkind": null, "framework": null }, "subkind": null, "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:44:39.841+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "b991d630-9ea1-4c43-a34b-4b3808e45a65", "parentComponentId": null }, { "bbox": { "h": 0.065, "w": 0.764, "x": 0.118, "y": 0.143 }, "kind": "disclaimer", "text": "As of the publication date of this report, Kerrisdale Capital Management LLC and its affiliates (collectively \"Kerrisdale\") have short positions in the stock of Red Cat Holdings, Inc. 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