DEF 14A of Red Cat Holdings, Inc.
Filed Apr 28, 2025 · FY20240001641172-25-006475
PROPOSAL ONE: ELECTION OF DIRECTORS
PROPOSAL ONE: ELECTION OF DIRECTORS At the recommendation of our Nominating and Governance Committee, our Board of Directors proposes that each of the five nominees named below be elected as a director to serve until our next annual meeting of stockholders or until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification or removal. Each of the nominees is a current director and all have consented to serving as a nominee, being named in this Proxy Statement, and serving on the Board if elected. Each director elected at the Annual Meeting will be elected to serve a one-year term. If any nominee becomes unavailable or unable to serve before the Annual Meeting, the Board of Directors may determine to leave the position vacant, reduce the number of authorized directors or designate a substitute nominee. If a substitute nominee is named, then the persons named as proxies will have full discretion and authority to vote or refrain from voting for such substitute nominee in their discretion. There are no family relationships between any directors, director nominees and executive officers of Red Cat, and there are no arrangements or understandings between any nominee and any other person pursuant to which such nominee was or is selected as a director or nominee.
NOMINEES TO OUR BOARD OF DIRECTORS
NOMINEES TO OUR BOARD OF DIRECTORS The nominees, their ages as of April 28, 2025, and biographical information are set forth below: Jeffrey M. Thompson, Director, President and Chief Executive Officer, Age 60 Jeffrey Thompson has been President and Chief Executive Officer of the Company since May 15, 2019. Mr. Thompson is a Co-Founder of Unusual Machines, Inc. (NYSE American:UMAC) and continues to serve as a director since the company was incorporated in July 2019. In December 1999, Mr. Thompson founded Towerstream Corporation (Nasdaq:TWER), a fixed-wireless fiber alternative company delivering high-speed internet access to businesses, and served as its president, chief executive officer and a director from November 2005 to February 2016. In 1994, Mr. Thompson founded EdgeNet Inc., a privately held Internet service provider (which was sold to Citadel Broadcasting Corporation in 1997) and became eFortress in 1999. Mr. Thompson holds a B.S. degree from the University of Massachusetts. Mr. Thompson’s management and public company experience and his role as President and Chief Executive Officer of the Company, led to his appointment as a director. Joseph Freedman, Director, Age 59 Joe Freedman is a seasoned entrepreneur with a proven track record of launching, scaling, and successfully exiting businesses across executive search, title insurance, legal services, and hospitality. His career spans turnarounds, mergers and acquisitions, and the strategic wind-down and asset liquidation of an underperforming company. Prior to selling three companies to NYSE-listed, private equity, and privately held acquirers, Mr. Freedman led them to industry leadership. Five of his companies earned a spot on the Inc. 500/5000 list a combined 15 times, including one ranked in the top 100. He currently serves as a Director at Red Cat Holdings, Inc. (Nasdaq: RCAT), and in 2023 joined the board of Beeline Financial, Inc., a digital home lending and title platform designed to streamline the financing process. In 2006, Mr. Freedman co-founded Peachtree Tents & Events Holdings, where he served as CEO until 2021 and its sale in 2023. He previously co-founded and led RFx Legal, LLC, Richmond Title, LLC, and AMICUS Legal Staffing, Inc., guiding all three through successful exits. Beyond his entrepreneurial ventures, Mr. Freedman is an active civic leader. He has served in multiple roles—including President—on the board of the Entrepreneurs’ Organization (EO) Nashville Chapter, and currently serves as its Governance Chair. In 2022, he founded Drones For Good Worldwide, a nonprofit dedicated to delivering drones for humanitarian use in disaster zones around the globe. Mr. Freedman holds a B.S. in Finance from Louisiana State University and a Juris Doctor from Northwestern California University School of Law. He is also NACD Certified by the National Association of Corporate Directors. His experience in governance, executive recruiting, finance, and operational leadership provided the basis upon which the Company appointed him to the Board. Nicholas Liuzza Jr., Director, Age 59 Nicholas Liuzza Jr. has been a director of the Company since June 1, 2019. Mr. Liuzza is the Co-Founder and Chief Executive Officer of Beeline Loans (Nasdaq: BLNE), a digital home lending and title platform designed to streamline the financing process. Previously, Mr Liuzza founded Linear Title & Closing, Ltd, a highly automated, and one of the largest, private national title agencies in the U.S in 2005. In 2012, he founded Nexgen Mortgage Services. Both companies merged with Real Matters and went public on the Toronto Stock Exchange (TSX) in 2018 at a $1 billion valuation. Nick served as Executive Vice President of Real Matters, Inc. and exited in 2020 to work for Beeline Loans. Mr. Liuzza founded New Age Nurses, a healthcare staffing company which he grew into a national provider of healthcare personnel services which became the platform for a reverse merger which listed on the OTC upon its acquisition in 2003 by Crdentia. Prior thereto, Mr. Liuzza was Executive Vice President of AMICUS Legal Staffing, a national staffing services provider with a specialization in real estate transactions. Mr. Liuzza started his career with Xerox Corporation in 1988. Mr. Liuzza’s more than 20 years of experience as an entrepreneur in the software industry and his sales and software development experience led to his appointment as a director. Christopher R. Moe, Director, Age 69 Christopher R. Moe has been a director of the Company since February 2022. He is the Chief Financial Officer of Beeline Holdings, Inc. (Nasdaq: BLNE), a digital home loan lending and title platform designed to streamline the financing process. Previously, he was the Chief Financial Officer and Director of Yates Electrospace Corporation, a heavy payload autonomous cargo delivery UAS producer. Earlier, he was the Chairman, Chief Executive Officer, and co-founder of ProBrass Inc., a rifle brass cartridge case manufacturing company that Vairog US acquired. Previously, he was the Chief Financial Officer of Vectrix Holdings Limited, a subsidiary of GP Industries Ltd (G20:SGX), an international developer and manufacturer of electric motorcycles, and the Chief Financial Officer and Director of Mission Motor Company, a company focused on advanced EV and hybrid powertrains for automobile and power sports applications. He has served as the Chief Financial Officer and Director of Vectrix Corporation (LSE: VRX), Managing Director of GH Ventures, Managing Director of Kirkland-Ft. Worth Investment Partners, Chief Executive Officer of St. Louis Ship Industries, Vice President of Wasserstein, Perella & Co.’s merchant banking fund, and Vice President/Area Head with Citicorp’s Leveraged Capital Group. He serves on the Advisory Board of Innovate Newport and is Trustee Emeritus of The Pennfield School. He is the former Vice Chairman of the Choir School of Newport County and former Treasurer of the Zabriskie Memorial Church of Saint John the Evangelist. He served as a Captain of United States Marines and deployed with the 31st Marine Expeditionary Unit twice to the Western Pacific and Indian Ocean. He holds a BA degree in English from Brown University and an MBA from the Harvard Business School. Mr. Moe’s experience in operational finance, and with venture capital, private equity, M&A, and corporate finance transactions, both as agent and principal, with a focus on transportation, provide the basis upon which the Company appointed him to the Board. General (R) Paul E. Funk II, Director, Age 62
NOMINEES TO OUR BOARD OF DIRECTORS
General Funk served as an officer in the United States Army for forty-two years, where he served in various command and staff positions, to include command at every level, Company through Corps, including four Joint and Multi-National Commands and six combat deployments. General Funk has had four decades of experience in training management, including scheduling, resourcing, coordinating, and equipping at all echelons of the Army. From June 2019 to November of 2022, General Funk served as Commander of the United States Army Training and Doctrine Command. In that position, he led the people component of the United States Army, guiding the development of citizens into professional soldiers and leaders. He was responsible for a budget in excess of $4 billion and approximately 60,000 personnel including 1,200 ROTC and 1,800 JROTC programs. In addition, he served as Chancellor of Army University, which consists of 32 Army schools organized under 10 Centers of Excellence that recruit, train, and educate more than 900,000 soldiers and service members annually. He was also the Leader of CAC-T (Combined Arms Center – Training) which covers the Mission Command Training Program, the National Simulation Center, and Combat Training Centers. From March of 2017 to June of 2019, General Funk was a Commander of III Corps and Fort Hood, and Operation Inherent Resolve. In that position, commanded four combat divisions, a sustainment command, a cavalry regiment, a fires brigade, and multiple enabler units that equate to almost 100,000 Soldiers on five installations. General Funk deployed and led a coalition comprising over 72 nations in the fight against ISIS in Iraq and Syria for thirteen months. For his service in Operation Inherent Resolve, he was awarded the Defense Distinguished Service Medal – the United States’ 4th highest honor – for outstanding leadership in combat. From September 2015 to December 2017, General Funk served as Assistant Deputy Chief of Staff for the United States Army, where he was responsible for current and future operations, planning and training for the entire Army, including integration of policy, doctrine, and training. General Funk currently serves as President of the Advisory Board of Katie’s Way Mental Health and as an Advisor to the Chairman of Tokyo Electron Ltd., USA. General Funk also currently serves as a member of the Boards of Advisors for ColdQuanta, Inc., DBA Infleqtion (a multi-platform quantum technology company), First Tee (a non-profit youth development organization), and Rheinmetall (a leading international systems supplier in the defense industry). General Funk earned a B.A. in Communications and Public Information from Montana State University and an M.S. in administration from Central Michigan University, and he completed a Senior Service College Fellowship at the University of Texas at Austin, Institute for Advanced Technologies. General Funk’s distinguished career as an Army commander, including his extensive experience in leading significant military operations and personnel organizations, as well as his experience in managing large military budgets, provide the basis upon which the Company appointed him to the Board.
Director Compensation Table
Director Compensation Table The following table presents the total compensation for each person who served as a non-employee director during the Transition Year Ended 2024. Mr. Thompson is not included in the table below, as he is employed as our Chief Executive Officer and receives no compensation for his service as director. The compensation received by Mr. Thompson as an employee is included in the “Executive Compensation—Summary Compensation Table.”
Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) | | Joe Freedman | $64,583 | $202,300 | $- | $- | $25,335 | $292,218 | | Paul Funk | $41,250 | $187,543 | $- | $- | $- | $228,793 | | Nick Liuzza | $40,000 | $178,500 | $- | $- | $19,474 | $237,974 | | Christopher Moe | $60,000 | $202,300 | $- | $- | $25,335 | $287,635 |
Director Compensation Table
| (1) We value stock awards based on their grant date fair value. Fair value is calculated by multiplying the number of awards granted times the Company’s closing stock price on the grant date. The grant date fair values are computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation—Stock Compensation. See “Stock Based Compensation” in Note 2 of the Company’s consolidated financial statements included in our 2024 Transition Report on Form 10-KT filed with the SEC on March 31, 2025. |
Director Compensation Table
| (2) There were no options granted during the Transition Period. As of December 31, 2024, outstanding options held by directors were as follows: Mr. Freedman – 100,000 options fully vested, awarded in connection with prior board service and 150,000 options fully vested, awarded in connection with prior consulting services; Mr. Liuzza – 100,000 options fully vested, awarded in connection with prior Board service. |
Director Compensation Table
| (3) Consists of taxes paid by the Company on behalf of the directors in connection with equity awards, including tax gross-ups related to the grant or vesting of such awards. |
Director Compensation Table
Stock awards granted during the Transition Period were granted on May 6, 2024, and consist of the following: Mr. Freedman – 170,000 restricted stock units; Mr. Funk – 157,599 restricted stock units; Mr. Liuzza – 150,000 restricted stock units; and Mr. Moe – 170,000 restricted stock units. The restricted stock units noted for all directors were unvested as of December 31, 2024, and fully vest on May 6, 2026.
Non-Employee Director Compensation Arrangements
Non-Employee Director Compensation Arrangements In April 2022, the Board of Directors established a formal compensation plan for Non-Employee Directors. In May 2024, the Board of Directors updated the compensation plan such that Non-Employee Directors shall receive annual compensation of $125,000 consisting of:
Non-Employee Director Compensation Arrangements
| ● | $50,000 in cash compensation, payable in monthly installments beginning May 2024; and | | ● | $75,000 in equity compensation, payable in the form of shares of restricted common stock. |
Non-Employee Director Compensation Arrangements
In addition, the Chairman of each Committee of the Board shall receive additional annual cash compensation, payable in monthly installments, as follows:
Non-Employee Director Compensation Arrangements
| ● | $20,000 - Audit Committee | | ● | $10,000 - Compensation Committee | | ● | $10,000 - Nominating and Governance Committee |
Non-Employee Director Compensation Arrangements
In addition, the Lead Director of the Board shall receive additional annual cash compensation of $25,000, payable in monthly instalments.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) (4) | Stock Awards ($) (5) | Option Awards ($) (5) | All Other Compensation ($) (6) | Total ($) | | Jeffrey Thompson | Transition Period | $200,000 | $100,000 | $- | $- | $7,793 | $307,793 | | Chief Executive Officer and President | Fiscal YE April 30, 2024 | $300,000 | $155,600 | $- | $1,323,750 | $11,147 | $1,790,497 | | Leah Lunger (1) | Transition Period | $153,333 | $- | $796,500 | $- | $15,206 | $965,039 | | Former Chief Financial Officer | Fiscal YE April 30, 2024 | $188,750 | $- | $- | $- | $17,600 | $206,350 | | Geoffrey Hitchcock (2) | Transition Period | $138,750 | $50,000 | $5,157,750 | $68,000 | $52 | $5,414,552 | | Chief Revenue Officer | | | | | | | | | George Matus (3) | Transition Period | $150,139 | $25,000 | $1,026,000 | $- | $10,673 | $1,211,812 | | Former Chief Technology Officer | Fiscal YE April 30, 2024 | $183,333 | $- | $- | $- | $12,646 | $195,979 |
Summary Compensation Table
| (1) Leah Lunger joined the Company in November 2020 and was promoted to Chief Financial Officer in June 2024. She resigned her position as Chief Financial Officer in January 2025. |
Summary Compensation Table
| (2) Geoffrey Hitchcock joined the Company in September 2021 and was promoted to Chief Revenue Officer in November 2024. |
Summary Compensation Table
| (3) George Matus joined the Company in August 2021 and resigned his position as Chief Technology Officer in November 2024. |
Summary Compensation Table
| (4) These discretionary bonuses paid during the Transition Period and Fiscal 2024 were determined by the Board based on the operations of the Company and paid in cash. |
Summary Compensation Table
| (5) Amounts reported represent the aggregate grant date fair value for stock-based awards granted in each respective year in accordance with FASB ASC Topic 718, excluding the effect of forfeitures. For more information regarding the Company’s accounting for share-based compensation, see “Share Based Awards” in Note 19 of the Company’s consolidated financial statements included in our Transition Period Report on Form 10-KT filed with the SEC on March 31, 2025, and in the Annual Report on Form 10-K filed with the SEC on August 8, 2024, each of which are incorporated by reference herein. |
Summary Compensation Table
| (6) Represents health insurance premiums paid by Company. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The table below summarizes outstanding equity awards held by our Named Executive Officers at December 31, 2024. All of the below awards were issued under the Equity Incentive Plans.
Outstanding Equity Awards at Fiscal Year End
| | | Option Awards | | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(#) | Market Value of Shares or Units of Stock That Have not Vested(#) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested($) | | Jeffrey Thompson (1) | 3/31/2021 | 25,316 | - | - | $3.95 | 3/31/2031 | - | - | - | $- | | Jeffrey Thompson (2) | 5/15/2023 | - | 833,334 | - | $1.06 | 5/15/2033 | - | - | - | $- | | Leah Lunger (3) | 2/8/2023 | - | 35,417 | - | $1.27 | 2/8/2033 | - | - | - | $- | | Leah Lunger (4) | 6/10/2024 | - | - | - | - | - | 525,000 | 6,746,250 | - | $- | | Geoffrey Hitchcock (5) | 2/8/2023 | - | 20,834 | - | $1.27 | 2/8/2033 | - | - | - | $- | | Geoffrey Hitchcock (6) | 8/8/2023 | - | 6,667 | - | $0.98 | 8/8/2033 | - | - | - | $- | | Geoffrey Hitchcock (7) | 7/10/2024 | - | 41,667 | - | $1.29 | 7/10/2034 | - | - | - | $- | | Geoffrey Hitchcock (8) | 11/24/2024 | - | - | - | - | - | 321,428 | 4,130,350 | - | $- |
Outstanding Equity Awards at Fiscal Year End
| (1) The options granted to Mr. Thompson on March 31, 2021, were fully vested upon the grant date. | | (2) Unvested options as of December 31, 2024, for Mr. Thompson vest in equal instalments on May 15, 2025, and May 15, 2026. | | (3) All unvested options for Ms. Lunger as of December 31, 2024, were forfeited upon her resignation in January 2025. | | (4) All unvested stock awards for Ms. Lunger as of December 31, 2024, were forfeited upon her resignation in January 2025. | | (5) Unvested options as of December 31, 2024, granted to Mr. Hitchcock on February 8, 2023, vest in 5 equal instalments commencing on January 1, 2025, and continuing every three months thereafter. | | (6) Unvested options as of December 31, 2024, granted to Mr. Hitchcock on August 8, 2023, vest in equal instalments on August 8, 2025, and August 8, 2026. | | (7) Unvested options as of December 31, 2024, granted to Mr. Hitchcock on July 10, 2024, vest in 10 equal instalments commencing on February 1, 2025, and continuing every three months thereafter. | | (8) Unvested stock awards for Mr. Hitchcock as of December 31, 2024, vest in equal instalments on October 1, 2025, and October 1, 2026. |
Potential Payments and Benefits Upon Termination or a Change in Control
Potential Payments and Benefits Upon Termination or a Change in Control Our named executive officers are entitled to certain benefits in the event their employment is terminated without cause by the Company or for good reason by the Executive, as described in the Employment Agreements. The following table sets forth the potential payments and benefits to each of our named executive officers, as if these obligations became payable in connection with a qualifying termination on December 31, 2024. The actual amounts payable to each executive listed below upon termination can only be determined definitively at the time of each executive’s actual departure. In addition to the amounts shown in the table below, each executive would receive payments for amounts of base salary accrued and unpaid through the date of termination and payment for any accrued and unpaid reimbursable business expenses through the date of termination. In the event of a named executive officer’s death, the named executive officer’s beneficiary, legal representative or estate would receive the named executive officer’s potential payments.
Potential Payments and Benefits Upon Termination or a Change in Control
| Potential Payments and Benefits | Jeffrey Thompson | Leah Lunger | Geoffrey Hitchcock | George Matus | | Base Salary (1) | $600,000 | $230,000 | $230,000 | $- | | Healthcare Benefits (2) | 15,418 | 7,603 | - | - | | Equity Awards Vesting on Termination (3) | 9,825,008 | 328,108 | 657,387 | - | | Total | $10,440,426 | $565,711 | $887,387 | $- |
Potential Payments and Benefits Upon Termination or a Change in Control
| (1) Represents the continuation of base salary payable to Mr. Thompson over 24 month period following termination and 12 month period for Ms Lunger and Mr. Hitchcock. |
Potential Payments and Benefits Upon Termination or a Change in Control
| (2) Represents the cost of continued healthcare coverage for Mr. Thompson for the 18 month period following termination and the 6 month period for Ms. Lunger and Mr. Hitchcock following termination. This value is based upon the type of health insurance coverage and applicable premiums in effect on December 31, 2024. |
Potential Payments and Benefits Upon Termination or a Change in Control
| (3) Represents the value attributable to the accelerated vesting or continued vesting of unvested shares of restricted stock and stock options. The value of options is determined by multiplying the number of options by the difference between the closing price of our common stock and the exercise price of the options. The value of stock is determined by multiplying the number of shares by the closing price of our common stock on December 31, 2024 which was $12.85. |
Pay Versus Performance
Pay Versus Performance
Valuation Methods
| Fiscal Year | Summary Compensation Table Total for PEO (1) (2) | Compensation Actually Paid for PEO (1) (3) | Average Summary Compensation Table Total for Non-PEO NEOs (2) (4) | Average Compensation Actually Paid to Non-PEO NEOs (3) (4) | Value of $100 investment in Company based on: Total Shareholder Return | Net Loss | | Transition Period | 307,793 | 9,353,479 | 2,530,468 | 4,645,193 | $633 | $43,613,971 | | 2024 | 1,790,497 | 2,337,134 | 539,442 | 526,097 | $38 | $24,052,629 | | 2023 | 826,352 | 826,352 | 916,280 | 296,903 | $22 | $27,087,737 | | 2022 | 408,933 | 408,933 | 851,105 | (82,983) | $50 | $11,689,127 |
Valuation Methods
| (3) The dollar amounts reported in these columns represent the amounts of “compensation actually paid.” The Amounts are computed in accordance with Item 402(v) of Regulation S-K by deducting and adding the following amounts from the “Total” column of the SCT (pursuant to SEC rules, fair value at each measurement date is computed in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements under GAAP). |