UAV Manufacturer Exits Consumer Game to Focus on Military, Government Products

Uncrewed aircraft manufacturer Red Cat entered into a Stock Purchase Agreement with Unusual Machines, Inc., in a move that will spin off Red Cat subsidiaries aimed at consumer products. 

Unusual Machines will acquire Red Cat's consumer divisions under the brands of Rotor Riot and Fat Shark Holdings, providing the company with a turnkey portfolio of consumer drone offerings and first-person-view goggles. 

The stock purchase agreement follows an internal review of Red Cat’s military and enterprise projects that lead the company to feel its attentions are best focused on the meaty government contract market. Red Cat's Class 1 ISR Drone development program has been a prime focus of its attention, with continued refinements expected for its Golden Eagle I, Golden Eagle II, and Four Ship products. On the software side, Red Cat has continued development of an in-house drone swarm system, possibly chasing after the next big trend in uncrewed aviation.

While Red Cat is divesting a portion of the company, they retain Drone Box, Teal Drones, and Skypersonic under their company umbrella. Drone Box provides data-driven, UAV-related services; Teal, a range of military hardware; and Skypersonic, enterprise-level inspection and remote operation vehicles. The focus on deeper-pocketed industry, government, and SAAS products points to the level of success Red Cat has seen in their bigger projects. Recently, their Skypersonic brand tendered a drone and rover system to the Mars Simulation program at NASA - a bit more glamorous than competing with the rest of the packed consumer UAV market. 

The agreement will see Unusual Machines purchase Rotor Riot and Fat Shark Holdings from Red Cat for $18 million in cash plus some securities of Unusual Machines. In a breakdown provided announcing the specifics, Red Cat said the "purchase price will consist of $5 million in cash, $2.5 million in a convertible senior note of Unusual Machines, and $10.5 million in Series A convertible preferred stock of Unusual, payable at closing."

“The sale of Rotor Riot and Fat Shark Holdings will allow us to focus our efforts and capital on military and defense,” commented Red Cat CEO Jeff Thompson. “Our recent partnerships with Tomahawk Robotics and Reveal Technology gives the Warfighter a complete ‘Made in USA’ system with 360 degrees of situational awareness, multi-ship control of four vehicles by one operator, and rapid intelligence at the tactical edge. This transaction will strengthen our already healthy balance sheet with additional non-dilutive capital to help us execute our rapid growth.”

FMI: www.redcatholdings.com