{ "docId": "019dd923-622c-750b-8b98-405eb4149c5a", "docSlug": "d9c5fbbb51d2", "documentTitle": "Red Cat Holdings, Inc. (RCAT)", "authorId": "53_Kerrisdale_Capital", "authorName": "Kerrisdale Capital", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2025-01-09 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 19, "pageCount": 29, "prevPage": 18, "nextPage": 20, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 0, "notes": "The slide uses a series of dated quotes to highlight inconsistencies in management's narrative about scaling production.", "elementsJson": [ "paragraph", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-405eb4149c5a/19", "deckHref": "/decks/019dd923-622c-750b-8b98-405eb4149c5a", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-405eb4149c5a.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-405eb4149c5a#slide-19", "components": [ { "bbox": null, "kind": "callout", "text": "If this seems confusing or dishonest (or both), it gets worse.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-3f41-721f-9e45-f6a93f4bd072", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.7, "x": 0.15, "y": 0.38 }, "kind": "paragraph", "text": "March 18th, 2024: The production facility in Salt Lake City is in full mass production mode. We are now running 1.5 shifts to meet production goals... We are now demonstrating that we can build tens of thousands of drones yearly.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2cd2862c-83fe-4f98-aa1b-9a45aa9ae2f7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.7, "x": 0.15, "y": 0.52 }, "kind": "paragraph", "text": "September 23rd, 2024: Our management, engineering and manufacturing teams quickly developed a plan to scale production for 2025. Over the past 4 months, our engineering and manufacturing teams have been retooling...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "40d064f4-6d1e-4321-b8da-8ae5d9e4b8d2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.7, "x": 0.15, "y": 0.62 }, "kind": "paragraph", "text": "[In explaining why sales didn't meet guidance:] The pause in manufacturing of Teal 2 and building Army prototypes impacted Teal 2 sales in 2 ways. First, we couldn't produce and sell Teal 2 units while retooling our factory...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6160c9a3-9efd-41aa-a430-951ef40bcfcd", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.7, "x": 0.15, "y": 0.73 }, "kind": "paragraph", "text": "The commentary there about “preparing for high-volume production” is puzzling. Red Cat has been preparing the Teal facility in Salt Lake City for mass production (and even declared mission accomplished at least 3 times) for almost three years...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "673bad40-8034-4e1b-ba39-74f1231db324", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.7, "x": 0.15, "y": 0.11 }, "kind": "paragraph", "text": "July 27th, 2023: we do 100 a month no problem at ease right now. And that number is already growing slightly. But what you can't -- you don't often build 1,000 drones because there's different frequencies...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b6f0f06b-aaec-4d0e-9ff1-42c5e752c0fc", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.7, "x": 0.15, "y": 0.27 }, "kind": "paragraph", "text": "As a follow-up to that, then-CFO Joseph Hernon seemed surprised at the investor question, exclaiming that \"I don't personally recall us ever saying we could produce 1,000 a month...\"", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "be8b46d4-7138-416e-b75d-15c5faef99de", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "July 27th, 2023: we do 100 a month no problem at ease right now. And that number is already growing slightly. But what you can't -- you don't often build 1,000 drones because there's different frequencies... If we had to, if we got an order for 1,000, we would ramp that up dramatically in a few months. — Red Cat Management. I don't personally recall us ever saying we could produce 1,000 a month. 1,000 a month at $15,000 per drones, I don't have a calculator in front of me, but that's an incredible amount of revenue. — Joseph Hernon, then-CFO. March 18th, 2024: The production facility in Salt Lake City is in full mass production mode. We are now running 1.5 shifts to meet production goals... We are now demonstrating that we can build tens of thousands of drones yearly. — Red Cat Management. September 23rd, 2024: Our management, engineering and manufacturing teams quickly developed a plan to scale production for 2025. Over the past 4 months, our engineering and manufacturing teams have been retooling and preparing for high-volume production. — Red Cat Management.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f41-721f-9e45-fb79f4b35307", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "fc72749b-f801-4b0d-9fb2-ad1e64d10a1b", "evidence": "The slide systematically juxtaposes contradictory management statements to suggest misleading communication.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }