|
|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
As previously reported,
on December 31, 2019, Red Cat Holdings, Inc., a Nevada corporation (the “Company”), entered into an Agreement of Merger
(the “Merger Agreement”) with Rotor Riot Acquisition Corp., a wholly owned Ohio subsidiary of the Company (the “Ohio
Acquisition Sub”), Rotor Riot, LLC, an Ohio limited liability company (“Rotor Riot”), and the three members of
Rotor Riot (the “Members”). Pursuant to the terms of the Merger Agreement, upon consummation of the merger contemplated
by the Merger Agreement (the “Merger”), the Ohio Acquisition Sub would merge with and into Rotor Riot, with Rotor Riot
continuing as the surviving entity and a wholly owned subsidiary of the Company. At the effective time of the Merger, the issued
and outstanding membership interests of Rotor Riot held by the Members, which represented 100% of Rotor Riot’s issued and
outstanding membership interests, would be converted into shares of common stock of the Company. In accordance with its terms,
the Merger Agreement would terminate if a closing did not occur on or before January 14, 2020 (the “Termination Date”),
unless such Termination Date was extended by mutual consent of the parties.
On January 14, 2020,
the parties to the Merger Agreement entered into a first amendment to the Merger Agreement (the “First Amendment”),
pursuant to which the Termination Date for the Merger was extended to January 17, 2020.
On January 22, 2020,
the parties to the Merger Agreement entered into a second amendment to the Merger Agreement (the “Second Amendment”),
joined in by Rotor Riot Acquisition Corp., a newly formed, wholly owned Delaware subsidiary of the Company (the “Delaware
Acquisition Sub”). Pursuant to the terms of the Second Amendment, (a) the Delaware Acquisition Sub replaced the Ohio Acquisition
Sub as the acquisition subsidiary to merge with and into Rotor Riot in connection with the Merger, and (b) the Termination Date
for the Merger was further extended to January 24, 2020.
The Merger was consummated
as of January 23, 2020 (the “Effective Date”), as further described in Item 2.01 below. At the closing of the Merger,
the Company entered into a Make Whole Agreement (the “Make Whole Agreement”) with Rotor Riot, Brains Riding in Tanks,
LLC, an Ohio limited liability company and the majority owner of Rotor Riot (“BRIT”), and Chad Kapper, the Chief Executive
Officer and Manager of Rotor Riot, and the Chief Executive Officer and beneficial owner of 100% of the membership interests of
BRIT (“Kapper”), pursuant to which the Company agreed to pay all obligations of Rotor Riot, which were approximately
$915,563 as of the Effective Date. This included the issuance to BRIT of a promissory note (the “BRIT Promissory Note”),
as of the Effective Date, in the principal amount of $175,000 (the “Principal Amount”), at an interest rate of 4.75%
per annum (“Interest”), with $3,500 of the Principal Amount to be paid monthly, and the remaining Principal Amount
and any accrued and unpaid Interest to be paid on the earlier of (A) twelve months from the date of issuance, and (B) the closing
of an equity offering by the Company of no less than $3,000,000.
The foregoing summaries of the Merger Agreement,
the First Amendment, the Second Amendment, the Make Whole Agreement and the BRIT Promissory Note, do not purport to be complete
and are qualified in their entirety by reference to the complete text of the Merger Agreement, the First Amendment, the Second
Amendment, the Make Whole Agreement and the BRIT Promissory Note, copies of which are filed as Exhibits 10.1, 10.2, 10.3, 10.4
and 4.1 to this Current Report on Form 8-K (this “Report”), respectively, and incorporated herein by reference.