Form 8-K

8-K — Unusual Machines, Inc.

Accession: 0001683168-26-006015

Filed: 2026-08-06

Period: 2026-08-06

CIK: 0001956955

SIC: 3663 (RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT)

Item: Results of Operations and Financial Condition

Item: Regulation FD Disclosure

Item: Financial Statements and Exhibits

Documents

8-K — umac_8k.htm (Primary)

EX-99.1 — SHAREHOLDER LETTER, DATED AUGUST 6, 2026 (umac_ex9901.htm)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K — CURRENT REPORT

8-K (Primary)

Filename: umac_8k.htm · Sequence: 1

Unusual Machines Form 8-K

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0001956955

2026-08-06

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934

Date of Report (Date of earliest event

reported) August

6, 2026

Unusual Machines, Inc.

(Exact name of registrant as specified in its charter)

Nevada

001-41961

66-0927642

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

5728

Major Blvd., Suite 250

Orlando, FL

32819

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including

area code: (844) 893-7663

N/A

(Former name or former address, if changed since

last report.)

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b)

of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange

on Which Registered

Common Stock, $0.01

UMAC

NYSE American

Indicate by check mark whether the registrant

is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the

Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check

mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting

standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial

Condition.

On August 6, 2026, Unusual Machines, Inc. (the “Company”)

issued a shareholder letter announcing its financial results for the second quarter ended June 30, 2026. A copy of the shareholder letter

is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Item 2.02 and Item 7.01, including

Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities

Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this

Item 2.02, Item 7.01, and Exhibit 99.1 shall not be incorporated by reference into any filing under the Securities Act of 1933, or the

Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 7.01. Regulation FD Disclosure.

On July 24, 2026, the Company announced that it will

hold a conference call to discuss its financial results for the second quarter ended June 30, 2026. The call is scheduled for August 6,

2026 at 8:00 a.m. Eastern Time.

Interested parties may participate in the live conference

call via telephone or webcast. To join by telephone, please dial one of the following numbers:

Participants may dial (888) 506-0062 or (973) 528-0011

for international callers. Please use access code 826085. Alternatively, a live audio webcast of the conference call will be accessible

at the Unusual Machines website: www.unusualmachines.com. No passcode is required to access the webcast.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.

Description

99.1

Shareholder Letter, dated August 6, 2026 (furnished

herewith)

104

Cover Page Interactive Data File (embedded within

the Inline XBRL document)

SIGNATURES

Pursuant to the requirements

of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto

duly authorized.

Unusual Machines, Inc.

Date: August 6, 2026

By:

/s/ Brian Hoff

Name:

Brian Hoff

Title:

Chief Financial Officer

EX-99.1 — SHAREHOLDER LETTER, DATED AUGUST 6, 2026

EX-99.1

Filename: umac_ex9901.htm · Sequence: 2

Exhibit 99.1

Unusual Machines Second Quarter 2026 Shareholder Letter

Conference call today at 8:00 a.m. ET

ORLANDO, FLORIDA / ACCESS Newswire / August 6, 2026 / **Unusual Machines

(NYSE American: UMAC) (“Unusual Machines” or the “Company”), a leading provider of NDAA-compliant drone components,

today announced it filed its Form 10-Q with the U.S. Securities and Exchange Commission for the

second quarter ended June 30, 2026, and provided the following letter to its shareholders from CEO Allan Evans.

Dear Shareholders,

This shareholder letter follows the completion of our second quarter

of 2026.

We continue to execute our growth plan, and it was reflected in

the quarter’s results.

In the second quarter, we generated $16.7 million in revenue,

reflecting 687% year-over-year growth compared to the second quarter of 2025 and 106% quarter-over-quarter growth compared to the first

quarter of 2026.

The financial details reveal a continued growth story in a very

high-demand market. Our revenue growth was driven by the continued increase in headcount and capacity. In Q1 2026, we grew from 81 to

141 employees. This contributed to the rapid revenue growth in Q2. This capacity growth continues, with our total headcount growing to

240 employees at the end of the second quarter. While this type of growth can have a negative impact on gross margins, we have stabilized,

and our gross margin increased to 34.7% for the quarter. As a note, we do not expect Q3 revenue to follow this historical quarterly pattern,

as our additional labor and capacity are engaged in foundational work to enable us to dramatically expand in Q4 and into 2027.

Growth results in increased operating costs. Our total operating

expenses for the quarter were approximately $13.6 million, resulting in a GAAP loss from operations of approximately $7.8 million. This

was dominated by non-cash stock compensation expense of approximately $5.7 million. Our adjusted EBITDA loss for the quarter was only

about $0.4 million, as we are starting to scale past the point of more significant losses. See the discussion of Non-GAAP Financial Measure

and Table 2 below. The change in this cost is very encouraging as our top-line growth and sustained margins are becoming more meaningful.

Our costs are increasing, but at a slower rate than our revenue, and we are on track to be cash flow positive. While our continued growth

has moved our breakeven point to a higher revenue number, it now seems within striking distance, and I believe we can reach it by the

end of the first quarter of 2027. We are still constantly evaluating what the “right-size” is for Unusual Machines. In our

view, we are still much too small, and continued legislation such as the FCC ban on light-show drones and other robots continues to expand

the market opportunity.

To facilitate growth, we continue to find opportunities to manage

equity and capital. In the second quarter, we raised $60 million at $30 per share in block transactions through our at-the-market (ATM)

facility. This is a continuation of our staircase financing strategy. We have furthered our integration of Upgrade Energy and expect to

close that transaction by the end of the third quarter.

Our capital position allows us to continue to grow as necessary

and leaves us open to exploring strategic opportunities as they arise.

We want to take this opportunity to provide additional context

around our financial results and the scaling of Unusual Machines as we continue to execute during this growth phase.

Operations Update

Our workforce expansion continues. Headcount grew from 141 employees

at the end of the first quarter of 2026 to 240 at the end of the second quarter. As of today, the Company has grown to more than 255 employees,

and we are continuing to expand and scale production.

Demand is not driven by a single product. We are adding shifts and increasing

capacity across all of our facilities. Our largest customer in the second quarter of 2026 represented approximately 42% of our total Q2

revenue, and our single best-selling product accounted for approximately 13% of our revenue. This mix is a sign of the robust growth we

are seeing across our entire business as we scale.

Growth is evident in our second-quarter financial results. We increased

raw materials and prepaid inventory from $25.8 million as of March 31, 2026, to $42.4 million as of June 30, 2026. The conversion of this

inventory resulted in rapid sales, with our finished inventory value changing from $1.6 million as of March 31, 2026, to $4.4 million

as of June 30, 2026. We are investing to expand our motor line with high levels of automation, as reflected in the $3.3 million in Capex.

Demand continues to increase as the market grows. Several public indicators

and contracts highlight demand growth across the sector. In the second quarter, the Drone Dominance program, a $1.1 billion Department

of War (DoW) program, announced Phase 2 finalists will be selected by the end of this month. Over half of the participants are Unusual

Machines customers. The Purpose-Built Attritable System (PBAS) program has resulted in a $500 million follow-on contract for Neros. There

has been a dramatic increase in demand for counter-drones (cUAS), which use the same parts we make for small drones, as exemplified through

purchase orders secured by Powerus, Perennial Autonomy, and AeroVironment. The Office of Strategic Capital issued an $820 million loan

vehicle for PDW. Additionally, the FCC recently announced a ban on light-show and other swarming drones (effective immediately), as well

as a variety of other robotic systems. The U.S. Government is now actively using policy tools to create a highly favorable marketplace,

while the Department of War is starting to deploy larger contracts to accelerate the entire domestic drone ecosystem.

We plan to spend the third quarter building out the systems we need to

sustain and supply this relentless demand and meet the needs of our customers for domestic drone components.

Cash Flow Management

Cash management is one of the core elements our management team

prioritizes. I want to highlight how we continue to balance operational growth costs with our cash-management strategy.

We ended the quarter with approximately $229.6 million in cash.

The increase in cash was bolstered by an equity financing of $60 million at $30 per share using our open ATM facility. Our cash position

has allowed us to aggressively scale the Company while maintaining financial flexibility and the ability to invest in customers and partners

to further accelerate the domestic drone ecosystem.

Cash can be allocated to many different balance sheet categories

at any given time. It can be used to purchase inventory, fund capital equipment, and other operating needs. The purpose of these balance

sheet activities is to use cash to generate a positive return. The best way to measure cash flow for our business is to aggregate these

categories and subtract payables to quickly understand the financial health of our entire business. This is working capital, and it is

summarized in Table 3. At the end of Q2 2026, our working capital was approximately $367.5 million.

In the quarter, we recognized a GAAP net loss of approximately

$7.8 million. This GAAP loss was primarily driven by non-cash stock-based compensation expense of $5.7 million and an unrealized loss

on our investments of approximately $3.9 million. After accounting for non-cash related items and non-recurring expenses, our adjusted

EBITDA loss was approximately $0.4 million for the quarter. See Table 2 for additional details related to our operating and non-GAAP financial

measure.

We are growing at an incredible pace while maintaining our cash

balance. This allows us to plan and build the Company without being susceptible to market dynamics associated with recurring cash losses,

and it leaves us with the flexibility to be opportunistic when needed.

Looking Ahead

Our priorities moving forward remain clear.

Scale Manufacturing

We are scaling as quickly as possible. We continue to add people,

shifts, and equipment to all our production facilities. With the pending acquisition of Upgrade Energy, we anticipate adding battery pack

manufacturing capacity in both Orlando and California as the acquisition nears closing. We are on track to add camera manufacturing in

late 2026. We plan to dramatically increase our motor production capacity in the fourth quarter. The equipment is already in the country,

and the work is on schedule. We are exploring adding more space and capabilities as we develop a better understanding of our customers’

needs.

Grow Revenue and Manage Margins

As we scale manufacturing, we will have a quarter when we won’t

emphasize revenue growth to quickly adjust and scale our supply chains, production equipment, and quality processes. We have to do this

now because major demand from the drone dominance program will start to hit in September. This demand is urgent and will require us to

scale rapidly in the fourth quarter and continue that growth into 2027. Every demand indicator is growing, and we appear to still be in

the early stages of the market. However, the urgency is high, and we must put the foundational work in place now so we do not break under

the pressure of scaling.

These new products, processes, and production facilities will

continue to introduce inefficiencies that will reduce gross margins in the short term. I expect production margins to decline from the

34.7% reported in Q2 as we incur introduction costs in Q3, then rebound in Q4 as revenue ramps up quickly again. We will work to achieve

our 40% margin target, which may not happen until late 2026 or early 2027.

Drive Toward Positive Cash Flow from Operations

Our long-term goal is to build a profitable and sustainable business.

While we were cash-flow positive in the first half of 2026 including interest income and realized gains from short-term investments, we

still incurred an operating loss. Our next financial goal is to achieve positive cash flow, as adjusted and related to our normal operations.

We are still targeting to achieve this by the end of 2026 as revenues increase and margins recover from the anticipated pressure created

by the introduction of new operating centers and processes.

Closing Thoughts

The second quarter of 2026 has been incredible. Unusual Machines

is firmly into our next phase of growth, and we are doing it without burning cash. The demand signals are overwhelming, and we are aggressively

pursuing the emerging market opportunity created by the DoW and the FCC regulatory actions, emphasizing the need for a robust domestic

supply chain.

We continue to expand our team, strengthen our balance sheet,

and build the operational capacity needed to support increasing demand for NDAA-compliant drone components. We also continue to add product

categories, such as headsets and batteries, and expect to continue expanding operations to meet demand. The need for growth and the pace

at which it is occurring have been so intense that we are proactively using the third quarter to update and improve all of our systems

so they do not break and can support our business as we continue scaling at this pace.

We believe the U.S. drone industry is in the early stages of growth.

The need for secure, domestic supply chains will continue to grow at an accelerating rate with the industry. Our focus remains on building

the infrastructure necessary to support that ecosystem, and we are pursuing this with the expectation that we will not be demand-limited

through 2027.

We appreciate the continued support and confidence of our employees,

customers, and shareholders.

Sincerely,

Allan Evans

CEO

Unusual Machines

Conference Call and Webcast Details

Participants may dial (888)506-0062 or (973)528-0011 for international

callers. Please use access code 826085. A live audio webcast will also be available by clicking here.

A replay will be available later today by visiting Unusual Machines website:

https://www.unusualmachines.com

Second Quarter 2026 Financial Results

· Revenues totaled approximately $16.7 million

for the three months ended June 30, 2026, as compared to $2.1 million for the three months ended June 30, 2025, representing a 687% increase

for the second quarter year over year.

· Gross margin was approximately 34.7% for the

three months ended June 30, 2026, as compared to 37.4% for the three months ended June 30, 2025. Our margins have experienced slight fluctuations

quarter over quarter as we continue to onshore and ramp up manufacturing of drone components, as our revenue shifts primarily to enterprise

instead of retail, and as we incur other near-term costs to ensure inventory levels meet current demand.

· Our loss from operations was approximately $7.8

million for the three months ended June 30, 2026, as compared to an operating loss of $7.2 million for the three months ended June 30,

2025. Included in this was non-cash stock compensation expense of $5.6 million and $5.5 million for the three months ended June 30, 2026,

and 2025, respectively. See Table 2 for our non-GAAP measure and additional details related to our loss from operations.

· Interest income was approximately $1.8 million

for the three months ended June 30, 2026, as compared to $0.2 million for the three months ended June 30, 2025. Interest income relates

to interest earned from our cash balance.

· Unrealized gain from short-term investments totaled

$5.6 million for the six months ended June 30, 2026, and realized gains from short-term investments were $9.5 million, related to investment

gains realized during the first half of the year. We did not have any unrealized or realized gains in the first six months of 2025.

· Net loss attributable to common shareholders

for the three months ended June 30, 2026, was approximately $7.8 million, or ($0.16) per share, as compared to a net loss of approximately

$6.9 million for the three months ended June 30, 2025, or ($0.32) per share.

· We had approximately $229.6 million in cash as

of June 30, 2026, as compared to $103.3 million as of December 31, 2025. The increase in cash primarily relates to our common stock offering

completed in March 2026, the at-the-market offering in May 2026, and the cash exercise of warrants in January 2026. See Table 1 for additional

details.

For further information concerning our financial results,

see the tables attached to this shareholder letter.

About Unusual Machines

Unusual Machines manufactures and sells drone components and drones

across a diversified brand portfolio, which includes Fat Shark, the leader in FPV (first-person view) ultra-low-latency video

goggles for drone pilots. The Company also retails small, acrobatic FPV drones and equipment directly to consumers through the

curated Rotor Riot ecommerce store. With a changing regulatory environment, Unusual Machines seeks to be a dominant Tier-1 parts

supplier to the fast-growing, multi-billion-dollar U.S. drone industry. According to Fact.MR, the global drone accessories market is

currently valued at $25.2 billion and is set to reach $156 billion by 2034. For more information, please

visit unusualmachines.com.

Safe Harbor Statement

This shareholder letter contains forward-looking

statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “may,”

“estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,”

“target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they

relate to us, are intended to identify forward-looking statements. These statements include: our ability to meet customers’ demands;

our future gross margins and our target of achieving 40% gross margins; our future break-even point and our goals with respect to operating

cash flow; the expected closing of our acquisition of Upgrade Energy and its anticipated impact, including battery pack manufacturing

capabilities; our future expansion of our operations, including planned camera manufacturing in late 2026 and increased motor production

capacity in the fourth quarter of 2026; our expectations regarding Q3 and Q4 2026 revenue patterns and rapid scaling into 2027; our expectations

regarding demand from the Drone Dominance program and other government programs; and our belief that we will not be demand-limited through

2027. The results expected by some or all of these forward-looking statements may not occur. Forward-looking statements are neither historical

facts nor assurances of future performance, and are based only on our current beliefs, expectations and assumptions regarding the future

of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because

forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are

difficult to predict, many of which are outside of our control. Therefore, you should not rely on any of these forward-looking statements.

Factors that affect our ability to achieve these results include the risks that enough of our customers receive orders under the Drone

Dominance program and in turn place component orders with us; the risks that our inventory buildup may become obsolete or that we cannot

sell such inventory at reasonable margins; our ability to manage our growth including rapid scaling of our workforce and facilities; risks

relating to manufacturing bugs, delays, or capacity constraints; risks related to new product and process introductions reducing gross

margins; the availability of a satisfactory labor pool to meet our planned growth; potential supply chain issues; the impact from inflation

and its continuing to affect the U.S. economy; risks related to the integration and closing of the Upgrade Energy acquisition; risks related

to our dependence on government contracts and government spending priorities; risks related to our customer concentration; technical or

other issues that may affect the Federal Aviation Administration’s rule making process, including possible litigation; and the Risk

Factors contained in our Form 10-K for the year ended December 31, 2025, filed with the SEC and our Prospectus Supplement filed with the

SEC on March 19, 2026. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible

for us to predict all of them. Any forward-looking statement made by us herein speaks only as of the date on which it is made. We undertake

no obligation to update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except

as may be required by law.

Non-GAAP - Financial Measure

This shareholder letter includes financial measures

prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) as well as non-GAAP financial measures. Generally,

a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes

or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance

with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered alternatives to net income (loss),

operating income (loss), cash flow from operating activities, liquidity, or any other financial measures. They may not be indicative of

the historical operating results of the Company nor are they intended to be predictive of future results. Investors should not consider

non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

Management uses and relies on adjusted net loss, a

non-GAAP financial measure. We believe that management, analysts, and shareholders benefit from referring to this non-GAAP financial measure

to evaluate and assess our core operating results from period to period after removing the impact of items that affect comparability.

Management recognizes that this non-GAAP financial measure has inherent limitations because of the excluded items described below.

Table 2 includes a reconciliation of this non-GAAP

financial measure to the most directly comparable financial measure calculated in accordance with GAAP. We believe that providing this

non-GAAP financial measure, together with the reconciliation to GAAP, helps investors compare the Company’s performance with that of other

companies. When comparing to other companies, investors should be aware that companies may calculate non-GAAP measures differently, which

may limit their usefulness for comparison.

Table 1

Cash balance at March 31, 2026

$ 222.9M

Q2 cash financings:

ATM facility, net

58.2M

Short-term investments

7.3M

Interest income

1.8M

Employee stock option exercises

0.2M

Q2 cash spend:

Normal operations

(1.1M )

Working capital changes

(6.0M )

Non-recurring cash expenses

(1.4M )

Inventory purchases

(14.4M )

Equipment purchases

(2.9M )

Short-term investments

(35.0M )

Cash Balance at June 30, 2026

$ 229.6M

Table 2 (Non-GAAP)

Three Months

Ended

June 30

Six Months

Ended

June 30

Net income (loss)

$ (7.8M )

$ 2.5M

Non-cash income and expenses:

Unrealized change in short-term investments

3.9M

(5.6M )

Stock compensation expense

5.7M

9.6M

Depreciation and amortization

0.1M

0.2M

Adjusted operating income for non-cash related activity

$ 1.9M

$ 6.7M

Non-operating and non-recurring expenses:

Realized gains from short-term investments

(2.3M )

(9.6M )

Interest income

(1.8M )

(2.6M )

Non-recurring expenses

1.8M

3.5M

Adjusted EBITDA

$ (0.4M )

$ (2.0M )

Table 3

Working Capital Detail

Q2 2026

Q1 2026

Total current assets

$ 370.6M

$ 315.2M

Total current liabilities less operating lease liability

(3.1M )

(1.7M )

Net working capital

$ 367.5M

$ 313.5M

Total financings, net of fees

$ 58.2M

$ 138.8M

Unusual Machines, Inc.

Consolidated Condensed Balance Sheets

June 30, 2026

(Unaudited)

December 31,

2025

ASSETS

Current assets:

Cash and cash equivalents

$ 229,598,776

$ 103,261,397

Short-term investments at fair value

39,273,449

39,214,909

Short-term investment at cost

47,500,000

–

Accounts receivable

9,333,235

1,564,739

Related party accounts receivable

1,278,160

214,684

Inventories

21,914,332

5,316,648

Prepaid inventory

20,543,732

9,748,483

Other current assets

1,134,261

190,622

Total current assets

370,575,945

159,511,482

Non-current assets:

Property and equipment, net

2,711,375

2,233,891

Operating lease right-of-use assets

3,090,057

2,607,256

Other assets

3,067,056

197,785

Goodwill

15,596,105

Intangible assets, net

2,452,610

2,561,895

Total non-current assets

26,917,203

23,196,932

Total assets

$ 397,493,148

$ 182,708,414

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable and accrued expenses

$ 2,863,569

$ 1,506,793

Deferred revenue

286,056

638,125

Operating lease liability

735,521

456,429

Contingent consideration

3,000,000

2,847,000

Total current liabilities

6,885,146

5,448,347

Non-current liabilities

Deferred tax liability

146,772

Operating lease liability – less current portion

2,420,493

2,173,626

Total non-current liabilities

2,567,265

2,320,398

Total liabilities

9,452,411

7,768,745

Commitments and contingencies (See note 12)

Stockholders’ equity:

Common stock - $0.01 par value, 500,000,000 authorized and 49,956,505 and 37,759,911 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively

499,568

377,596

Additional paid in capital

440,110,645

229,665,735

Accumulated deficit

(52,607,690 )

(55,107,131 )

Accumulated other comprehensive income

38,214

3,470

Total stockholders’ equity

388,040,737

174,939,670

Total liabilities and stockholders’ equity

$ 397,493,148

$ 182,708,414

Unusual Machines, Inc.

Consolidated Condensed Statements of Operations

and Comprehensive Income (Loss)

For the Three and Six Months Ended June 30, 2026

and 2025

(Unaudited)

Three months ended June 30,

Six months ended June 30,

2026

2025

2026

2025

Revenues

$ 16,722,467

$ 2,123,970

$ 24,818,304

$ 4,166,270

Cost of goods sold

10,920,334

1,329,291

16,362,063

2,874,784

Gross Margin

5,802,134

794,679

8,456,241

1,291,486

Operating Expenses

Operations

1,540,919

404,277

3,367,620

706,879

Research and development

430,759

62,731

644,101

70,633

Sales and marketing

790,012

302,358

1,370,051

509,975

General and administrative

10,799,261

7,195,193

18,027,462

10,421,097

Depreciation and amortization

75,324

20,593

140,137

41,186

Total operating expenses

13,636,276

7,985,152

23,549,371

11,749,770

Loss from operations

(7,834,143 )

(7,190,473 )

(15,093,130 )

(10,458,284 )

Other income and (expense)

Interest income

1,820,162

225,734

2,612,240

227,266

Unrealized gain (loss) from investments

(3,883,535 )

–

5,608,541

–

Realized gain from investments

2,267,931

–

9,532,673

–

Change in contingent consideration for Rotor Lab

(153,000 )

–

(153,000 )

–

Loss from foreign currency transactions

(687 )

–

(7,235 )

–

Interest expense

(281 )

–

(648 )

–

Other income, net

50,590

225,734

17,592,571

227,266

Net income (loss)

$ (7,783,553 )

$ (6,964,739 )

$ 2,499,441

$ (10,231,018 )

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Net income (loss)

(7,783,553 )

(6,964,739 )

2,499,441

(10,231,018 )

Foreign currency translation adjustment

15,314

–

34,744

–

Comprehensive income (loss)

$ (7,768,239 )

$ (6,964,739 )

$ 2,534,185

$ (10,231,018 )

Net income (loss) per share

Basic

$ (0.16 )

$ (0.32 )

$ 0.06

$ (0.54 )

Diluted

$ (0.16 )

$ (0.32 )

$ 0.06

$ (0.54 )

Weighted average common shares outstanding

Basic

48,611,102

21,771,954

44,125,630

18,853,428

Diluted

48,611,102

21,771,954

44,775,513

18,853,428

Unusual Machines, Inc.

Consolidated Condensed Statements of Changes in

Stockholders’ Equity

For the Three and Six Months Ended June 30, 2026

and 2025

(Unaudited)

Common Stock

Additional

Paid-In

Accumulated

Accumulated Other Comprehensive

Total Stockholders’

Value

Capital

Deficit

Income

Equity

Balance, December 31, 2024

15,122,018

$ 151,221

$ 50,580,235

$ (35,913,514 )

$ –

$ 14,817,942

Issuance of common shares, equity

incentive plan

483,546

4,835

(4,835 )

–

Cash exercise of warrants

1,224,606

12,246

2,424,720

–

2,436,966

Stock compensation expense - vested

stock

–

1,883,433

–

1,883,433

Stock compensation expense

–

22,940

–

22,940

Net loss

–

(3,266,279 )

–

(3,266,279 )

–

Balance, March 31, 2025

16,830,170

$ 168,302

$ 54,906,493

$ (39,179,793 )

$ –

$ 15,895,002

Issuance of common shares, employees,

officers, and directors

208,336

2,082

(2,082 )

–

Issuance of common shares, option

exercises

94,650

947

366,923

–

367,870

Issuance of common shares, consulting

services

4,630

(46 )

–

Issuance of common shares, advisory

board

150,000

1,500

(1,500 )

–

Issuance of common shares, public

offering

8,000,000

80,000

36,416,000

–

36,496,000

Stock compensation expense - options

–

576,831

–

576,831

Stock compensation expense - vested

stock

–

4,936,497

–

4,936,497

Net loss

–

(6,964,739 )

–

(6,964,739 )

Balance, June 30, 2025

25,287,786

$ 252,877

$ 97,199,116

$ (46,144,532 )

$ –

$ 51,307,461

Balance, December 31, 2025

37,759,911

$ 377,596

$ 229,665,734

$ (55,107,131 )

$ 3,470

$ 174,939,670

Issuance of common shares, employees,

officers, and directors

745,883

7,460

(7,460 )

–

Issuance of common shares, option

exercises

74,600

747

259,587

–

260,334

Issuance of common shares, consulting

services

40,000

400

(400 )

–

Issuance of common shares, confidentially

marketed public offering, net of offering costs

8,823,529

88,235

138,711,758

–

138,799,993

Issuance of common shares, warrant

exercise

350,000

3,500

3,391,500

–

3,395,000

Stock compensation expense - options

–

291,412

–

291,412

Stock compensation expense - vested

stock

–

3,648,567

–

3,648,567

Net income

–

10,282,994

–

10,282,994

Foreign Currency

Translation

–

19,431

Balance, March 31, 2026

47,793,923

$ 477,938

$ 375,960,697

$ (44,824,137 )

$ 22,901

$ 331,637,400

Issuance of common shares, employees, officers, and directors

8,352

(83 )

–

Issuance of common shares, option exercises

46,230

467

326,784

–

327,251

Issuance of common shares, advisory board

108,000

1,080

(1,080 )

–

Issuance of common shares, at-the-market offering, net of issuance costs

2,000,000

20,000

58,178,764

–

58,198,764

Stock compensation expense - options

–

2,178,041

–

2,178,041

Stock compensation expense - vested stock

–

3,467,522

–

3,467,522

Net loss

–

(7,783,554 )

–

(7,783,553 )

Foreign Currency Translation

–

15,314

Balance, June 30, 2026

49,956,505

$ 499,568

$ 440,110,645

$ (52,607,690 )

$ 38,214

$ 388,040,737

Unusual Machines, Inc.

Consolidated Condensed Statements of Cash Flows

For the Six Months Ended June 30, 2026 and 2025

(Unaudited)

Six Months Ended June 30,

2026

2025

Cash flows from operating activities:

Net income (loss)

$ 2,499,441

$ (10,231,018 )

Depreciation and amortization

140,137

41,186

Stock-based compensation expense

9,585,542

7,419,701

Unrealized gain on short-term investments

(5,608,541 )

–

Realized gain on short-term investments

(9,532,673 )

–

Bad debt

–

12,146

Amortization on right of use asset

(490,971 )

–

Change in assets and liabilities:

Accounts receivable

(8,831,972 )

(118,959 )

Inventories

(16,597,684 )

(273,614 )

Prepaid inventory

(10,795,249 )

(409,864 )

Other assets

(943,639 )

(151,547 )

Accounts payable and accrued expenses

1,356,776

(60,038 )

Operating lease liabilities

525,959

(32,660 )

Contingent consideration

153,000

–

Deferred revenue

(352,069 )

(57,682 )

Net cash used in operating activities

(38,891,945 )

(3,862,349 )

Cash flows from investing activities

Investments in short-term securities

(52,500,000 )

–

Proceeds from sale of short-term investments

20,082,674

–

Purchase of property and equipment

(508,336 )

(262,751 )

Deposits for property and equipment

(2,861,101 )

–

Net cash used in investing activities

(35,786,762 )

(262,751 )

Cash flows from financing activities:

Gross proceeds from issuance of common shares, public offering

149,999,993

40,000,000

Gross proceeds from issuance of common shares, at the market

60,000,000

–

Proceeds from option exercises

587,584

367,870

Proceeds from issuance of common shares, warrant exercises

3,395,000

2,436,966

Common share issuance offering costs

(13,001,236 )

(3,504,000 )

Net cash provided by financing activities

200,981,341

39,300,836

Net increase in cash

126,302,635

35,175,736

Effect of exchange rates changes on cash

34,744

–

Cash, beginning of period

103,261,397

3,757,323

Cash, end of period

$ 229,598,776

$ 38,933,059

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