Red Cat Class Action Lawsuit: Painstaking, Comprehensive and Extremely Helpful Answers to 6 Frequently Asked Questions [2025]

The Red Cat class action lawsuit seeks to represent purchasers or acquirers of Red Cat Holdings, Inc. (NASDAQ: RCAT) securities between March 18, 2022 and January 15, 2025, inclusive (the “Class Period”).  Captioned Olsen v. Red Cat Holdings, Inc., No. 25-cv-05427 (D.N.J.), the Red Cat class action lawsuit charges Red Cat and certain of Red Cat’s top current and former executives with violations of the Securities Exchange Act of 1934.

If you suffered substantial losses and wish to serve as lead plaintiff of the Red Cat lawsuit, or just have general questions about you rights as a shareholder, please contact attorney Timothy L. Miles of the Law Offices of Timothy L. Miles, at no cost, by calling 855/846-6529 or via e-mail at tmiles@timmileslaw.com.

Lead plaintiff motions for the Red Cat class action lawsuit must be filed with the court no later than July 22, 2025.

Lead Plaintiff Deadlines

1. What is the Lead Plaintiff Process in a Securities Class Action Lawsuit?

In securities class action lawsuits, the lead plaintiff process is a critical component that determines who will represent the interests of the class. This process begins when a group of investors, who believe they have been wronged by a corporation’s fraudulent activities or misleading statements, file a lawsuit seeking redress.

The selection of the lead plaintiff is governed by the Private Securities Litigation Reform Act (PSLRA) of 1995, which aims to enhance the quality of representation and reduce frivolous lawsuits. Candidates for the lead plaintiff position must file motions within a specified period, usually 60 days from the notice, providing evidence of their losses and commitment to overseeing the litigation.

The court evaluates these submissions based on various factors such as financial losses, adequacy of representation, and willingness to manage the responsibilities involved. Once appointed, the lead plaintiff plays a pivotal role in steering the Red Cat Lawsuit, making crucial decisions about legal strategies, settlement negotiations, and overall case management.

In high-profile cases like the Red Cat Lawsuit, where allegations involve significant misconduct or substantial financial losses, the lead plaintiff’s role becomes even more pronounced. The chosen lead plaintiff will work closely with legal counsel to ensure that the class’s interests are vigorously represented throughout the litigation process.

This includes coordinating discovery efforts, participating in court proceedings, and potentially testifying on behalf of the class. The ultimate goal is to achieve a favorable outcome that compensates affected investors and holds the offending corporation accountable for its actions.

2. What Are the Allegations in the Red Cat Class Action Lawsuit?

The Red Cat class action lawsuit centers on claims of false and misleading statements made during the Class Period. Legal documents show that executives thought over misrepresenting two key aspects of company operations.

Red Cat’s claims about its Salt Lake City facility’s production capabilities came under scrutiny. The company boasted about its ability to produce “thousands of drones per month” or “tens of thousands of drones per year” throughout 2022. Management confirmed in March 2023 that “The Salt Lake City factory is complete and ready to go” and “We now have the capacity to produce thousands of drones per month”. Plaintiffs claim the reality was starkly different – the facility could only produce 100 drones monthly.

The Red Cat class action lawsuit also targets Red Cat’s SRR Contract value inflation. The company described the agreement’s worth as “hundreds of millions to over a billion dollars” and showed confidence in generating $50-79.5 million in revenue from this contract in fiscal year 2025. Kerrisdale Capital’s analysis of U.S. Army budget documents revealed the contract’s actual value was just $20-25 million. The plaintiffs also point out that Red Cat “announced the win without Army approval”, which could affect future negotiations.

The Red Cat class action lawsuit highlights suspicious insider activities. George Matus, the company’s former CTO who created the SRR-winning drone design, stepped down and sold most of his stock right after securing the Army contract. CEO John Thompson also sold his shares during this time.

The company’s financial statements showed no major capital spending toward building the promised mass production infrastructure, which contradicted their public statements. The defendants’ positive claims about Red Cat’s business operations and future prospects were “materially misleading and/or lacked a reasonable basis at all relevant times”, supporting the securities fraud claims.

3. What Are the Eligibility Criteria for Lead Plaintiff Appointment in the Red Cat Lawsuit?

To be eligible for appointment as the lead plaintiff in the Red Cat class action lawsuit , an investor must meet the following criteria:

1. Securities Acquisition: The investor must have purchased or acquired Red Cat securities between March 18, 2022 and January 15, 2025.
2. Financial Losses: The investor must have suffered financial losses as a direct result of the alleged securities fraud perpetrated by Red Cat and its executives.
3. Typicality and Adequacy: The investor’s legal claims must be typical of those asserted on behalf of the class, and they must demonstrate their ability to adequately represent the interests of the entire class through experience, resources, and the absence of conflicts of interest.

It is crucial to note that both domestic and international investors who meet these criteria are eligible to seek appointment as the lead plaintiff in the class action lawsuit, as courts have consistently recognized the rights of non-U.S. investors in securities class actions.

4. What Are the Benefits of Serving as a Lead Plaintiff in the Red Cat Class Action Lawsuit?

1. Negotiating more competitive attorney fees and reducing litigation costs.
2. Managing the litigation by overseeing the progress of the case and reviewing important filings.
3. Participating in mediation and settlement discussions.
4. Having a voice in decision-making processes regarding the settlement.
5. No financial risk, as lead counsel covers all costs and expenses and are paid only if they secure a settlement or judgment recovery for the class
6. Potentially enjoying long-term benefits from governance reform resulting from the litigation.

5. What Are the Responsibilities the Lead Plaintiff Will Have in the Red Cat Class Action Lawsuit?

1. Selecting, monitoring, and overseeing Lead Counsel.​
2. Reviewing and commenting on court filings on behalf of the class.
3. Discussing litigation strategies with the Lead Counsel.
4. Attending depositions (if necessary) and giving a deposition.
5. Attending hearings (if necessary).
6. Participating in mediation and the trial (if necessary).

6. What Does it Mean to be a Lead Plaintiff in a Securities Class Action Lawsuit like the Red Cat Lawsuit?

Being a lead plaintiff in a securities class action lawsuit, such as the Red Cat Class Action Lawsuit, entails significant responsibilities and roles. The lead plaintiff acts as the representative party for all other plaintiffs in the lawsuit, essentially serving as the face of the litigation. This role is crucial because the lead plaintiff’s actions and decisions can significantly impact the outcome of the case for all class members.

The lead plaintiff must have a substantial financial interest in the litigation and typically has experienced significant losses due to the securities in question. This individual or entity works closely with legal counsel to develop and execute the litigation strategy, from filing the complaint to negotiating settlements.

Moreover, the lead plaintiff is expected to actively participate in the litigation process. This includes reviewing and approving key legal documents, attending depositions and court proceedings, and ensuring that the legal team is representing the interests of all class members effectively.

In cases like the Red Cat Class Action Lawsuit, the lead plaintiff also has a fiduciary duty to act in the best interest of the entire class, making decisions that ensure fair and adequate compensation for all affected parties.

Being a lead plaintiff also comes with certain risks and rewards. While it can be time-consuming and may require navigating complex legal issues, it also provides an opportunity to play a pivotal role in seeking justice and holding corporations accountable for securities fraud or misconduct.