Unusual Machines Issues Letter to Shareholders

CEO Allan Evans Shares Q3 2025 Highlights and Provides Strategic Insight into the Company's Plans

ORLANDO, FLORIDA / ACCESS Newswire / November 6, 2025 / Unusual Machines, Inc. (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 third quarter of 2025 and provided the following letter to its shareholders from CEO Allan Evans.

Dear Shareholders,

This shareholder letter follows the completion of our third quarter of 2025. It has been another record revenue quarter. It is also our first profitable quarter with a net gain of $0.05 per share. We achieved the highest margins in our history and saw great returns on our corporate investments. We closed a financing for $48.5 million of gross proceeds during the quarter and raised another $72.1 million in gross proceeds last month on our ATM. We want to take this opportunity to provide context and deeper insights into our business and discuss Unusual Machines' future.

Operations Update

Unusual Machines revenue for the third quarter was about $2.13 million which represents a year over year increase for the quarter of approximately 39%. This is our best revenue quarter of all time for the sixth consecutive quarter and was achieved through increasing enterprise sales offsetting weak consumer demand. For the first quarter ever, enterprise sales exceeded 50% of our total revenue. This allowed us to continue to improve gross margins to 39% which represents our highest quarterly margins to date. We expect the increase in enterprise sales to continue throughout 2025 and extend into 2026. We already have more than $16 million in purchase order commitments that we expect to fulfill in Q4 of 2025 through Q2 of 2026. We have a variety of GAAP results that obscure cashflow including $2.1 million in non-cash stock compensation expense and $5.8 million in unrealized gains from our investment strategy. Our non-GAAP adjusted numbers for the third quarter after taking into account the non-cash and non-recurring items resulted in an adjusted net loss from operations of $0.9 million (see Table 2).

Cash Position

We prioritize managing our cash position and cash flow. We started the third quarter with $38.9 million and finished the quarter with $64.3 million. We have subsequently raised an additional $72.1 million in gross proceeds through our ATM in October. The breakdown of the cash position change over the quarter (see Table 1) provides greater detail into our expenses. Total expenses are increasing as we rapidly grow, and we expect it to take a few quarters until revenue and operational gains catch up. We still absolutely prioritize prudent spending and are seeking to get to being consistently cash flow positive in late 2026.

Cap Table Changes

The financings have changed our capitalization table substantially. Unusual Machines now has 36.8 million of common shares outstanding with no shareholder to our knowledge owning more than 9.9% of the total. We have over $133 million in cash as of today (which includes the ATM, but excludes investments and inventory), and $0 in debt. Given the cash position, limited cash burn, improving revenues, and diversified shareholder base; we believe the company is in a very strong position to continue to grow quickly.

Looking Ahead

Our priorities moving forward are clear:

Grow Revenue: We are being aggressive. This quarter enterprise sales overtook consumer sales and we have over $16 million in purchase orders that we plan on fulfilling in less than a year. We expect these bookings to continue to increase as the government reopens and more of the 2025 and 2026 U.S. Government fiscal budgets are spent on drones.

Grow the Company: We have been scaling as quickly as we can. On Monday, we onboarded 31 new employees to help build motors and drone kits. We have expanded from our initial 7,000 square feet and expect to have approximately 70,000 square feet under lease by the end of 2025 with 60,000 square feet dedicated to manufacturing and fulfillment of drone components.

Get to Cash Flow Positive : We were profitable this quarter, but we don't expect that to consistently happen over the next year. We are growing with the focus of our efforts driving us toward positive cash flow once we have scaled to the next revenue milestones. Accounting for growth, we expect to need $30 million in an annual revenue run rate to reach this target and are working toward getting there in 2026.

We are enthusiastic about the future of Unusual Machines. The company is in a great position to capitalize on enterprise sales and take advantage of macroeconomic factors to continue rapidly scaling. We are doing everything we can to capture market share and deliver great products for our customers. We appreciate you all for the confidence and support in our vision. Please reach out with any questions or comments.

Sincerely,

Allan Evans

CEO of Unusual Machines

Third Quarter Financial Results

Revenues totaled approximately $2.13 million for the three months ended September 30, 2025 as compared to $1.53 million for the three months ended September 30, 2024 which was a 39% increase for the third quarter year over year.

Revenues totaled approximately $6.30 million for the nine months ended September 30, 2025 as compared to pro forma revenue of $4.06 million for the nine months ended September 30, 2024, which represents a 55% increase for the first nine months year over year.

Gross margin for the third quarter was approximately 39%, which improved related to the increase in enterprise sales, increasing costs related to tariffs and expanding certain retail margins. Our gross margin for the first nine months of the year is approximately 34%.

Our loss from operations was approximately $4.9 million for the three months ended September 30, 2025 as compared to an operating loss of $1.4 million for the three months ended September 30, 2024. Included in this is non-cash stock compensation expense of $2.1 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively.

Interest income was $0.7 million for the three months ended September 30, 2025 related to interest earned from our cash balance which increased from our recent common stock offerings.

Unrealized gain from short term trading securities was $5.8 million for the three months ended September 30, 2025 related to investment gains from our investments made during the third quarter.

Net income attributable to common shareholders for the third quarter 2025 was approximately $1.6 million or $0.05 per share as compared to a net loss of approximately $2.1 million for the third quarter 2024 or $0.30 per share. The improvement in net income from a net loss position during the third quarter primarily related to the increase in our other income from unrealized gains in our short term trading securities and interest income.

We had approximately $64.3 million of cash as of September 30, 2025 as compared to $3.7 million as of December 31, 2024. The increase in cash primarily relates to our common stock offerings completed in May and July 2025 and cash exercise of warrants in February 2025. See table 1 for additional details.

For further information concerning our financial results, see the tables attached to this shareholders' 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 e-commerce store. With a changing regulatory environment, Unusual Machines seeks to be a dominant component supplier to the fast-growing multi-billion-dollar US drone industry and the global defense business. According to Fact.MR, the global drone accessories market is currently valued at $17.5 billion and is set to top $115 billion by 2032.

For more information visit Unusual Machines at https://www.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 expectation that we will improve gross margins, grow the Company and grow our revenues, expand enterprise sales throughout 2025 and extend into 2025, our ability to become cash flow positive and the timing, our ability to achieve rapid growth, our expectation concerning the impact from tariffs and achieve GAAP validation, that we will be successful leasing a new facility and expand our manufacturing footprint and build our headset production capabilities, our ability to anticipate market conditions, and the impact that the uncertain regulatory environment may have on our ability to accurately model for and grow our consumer business. The results expected by some or all of these forward-looking statements may not occur. Factors that affect our ability to achieve these results include our expectation that we will commence operations in our new Orlando manufacturing facility in September 2025, the continued availability of commercial real estate near our Orlando, Florida facilities, the availability of a satisfactory labor pool, potential supply chain issues, the impact from tariffs including inflation, and the Risk Factors contained in our Form 10-Q, filed with the SEC on May 8, 2025, Prospectus Supplement filed with the Securities and Exchange Commission (the "SEC") on March 6, 2025 and in our Form 10-K for the year ended December 31, 2024. 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.

Contact:

CS Investor Relations

917-633-8980

investors@unusualmachines.com

Non-GAAP - Financial Measures

This shareholder letter includes both financial measures in accordance with Generally Accepted Accounting Principles, or 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 as alternatives to net income (loss), operating income (loss), and 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 potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

Our management uses and relies on adjusted net loss, which is a non-GAAP financial measure. We believe that management, analysts, and shareholders benefit from referring to the following 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. Our management recognizes that the non-GAAP financial measure has inherent limitations because of the excluded items described below.

We have included in Table 2 a reconciliation of our non-GAAP financial measure to the most comparable financial measure calculated in accordance with GAAP. We believe that providing the non-GAAP financial measure, together with reconciliation to GAAP, helps investors make comparisons between the Company and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance.

Table 1

38.9M

44.9M

0.2M

0.7M

(1.0M)

(0.3M)

(0.9M)

(6.0M)

(1.3M)

(11.0M)

64.3M

Table 2

1.6M

2.1M

($5.8M)

0.9M

0.3M

(0.9M)

Unusual Machines, Inc.

Consolidated Condensed Balance Sheets

September 30,

2025

December 31,

2024

(Unaudited)

64,285,750

3,757,323

16,849,713

309,544

66,575

3,118,491

1,335,503

6,921,679

904,728

218,871

31,500

91,704,048

6,095,629

1,728,661

570

1,268,278

323,514

84,693

59,426

7,402,906

2,164,264

2,225,530

8,725,968

21,374,770

10,011,946

113,078,818

16,107,575

1,167,242

668,732

247,957

67,820

1,518,736

197,117

3,000,000

5,933,935

933,669

93,793

1,035,175

262,171

1,128,968

355,964

7,062,903

1,289,633

315,688

151,221

150,239,016

50,580,235

(44,541,067

)

(35,913,514

)

2,278

106,015,915

14,817,942

113,078,818

16,107,575

Unusual Machines, Inc.

Consolidated Condensed Statement of Operations

For the Three and Nine Months Ended September 30, 2025 and 2024

(Unaudited)

Three months ended September 30,

Nine months ended September 30,

2025

2024

2025

2024

2,134,588

1,531,264

6,300,857

3,561,303

1,294,200

1,131,777

4,168,984

2,569,209

840,388

399,487

2,131,873

992,094

636,705

218,126

1,343,584

544,220

39,369

15,000

110,002

42,078

373,539

252,253

883,514

795,643

4,730,063

1,374,989

15,151,160

3,728,749

22,449

171

63,635

513

5,802,125

1,860,539

17,551,894

5,111,203

(4,961,737

)

(1,461,052

)

(15,420,021

)

(4,119,109

)

715,489

180

942,755

180

5,849,713

(41,465

)

(101,648

)

(685,151

)

(685,151

)

43,238

6,565,202

(683,198

)

6,792,468

(743,381

)

1,603,465

(2,144,250

)

(8,627,553

)

(4,862,490

)

Net income (loss) per share attributable to common stockholders

0.05

(0.30

)

(0.38

)

(0.63

)

0.05

(0.30

)

(0.38

)

(0.63

)

30,002,179

7,147,866

22,610,516

7,749,285

30,581,194

7,147,866

22,610,516

7,749,285

Unusual Machines, Inc.

Consolidated Condensed Statement of Changes in Stockholders' Equity

For the Three and Nine Months Ended September 30, 2025 and 2024

(Unaudited)

Three and Nine Months Ended September 30, 2024

Series A, Preferred Stock

Series B, Preferred Stock

Series C, Preferred Stock

Common Stock

Additional Paid-In

Accumulated

Total Stockholders'

Value

Capital

Deficit

Equity

190

3,217,255

32,173

5,315,790

(3,933,046

)

1,414,919

16,086

161

64,183

64,344

1,250,000

12,500

3,837,055

3,849,555

4,250,000

42,500

16,957,500

17,000,000

(120

)

600,000

6,000

(5,999

)

(1,106,002

)

(1,106,002

)

9,333,341

93,334

26,168,529

(5,039,048

)

21,222,816

(20

)

100,000

1,000

(1,000

)

977,899

9,779

(9,779

)

346,854

14,389

(1,612,238

)

(1,612,238

)

10,411,240

104,113

26,518,993

(6,651,286

)

19,971,821

23,743

237

(237

)

4,250

(4,250,000

)

(42,500

)

42,457

210

999,998

1,000,000

375,345

23,086

(2,144,250

)

(2,144,250

)

4,250

210

6,184,983

61,850

27,959,642

(8,795,536

)

19,226,002

Unusual Machines, Inc.

Consolidated Statement of Changes in Stockholders' Equity

For the Three and Nine Months September 30, 2025 and 2024

(Unaudited)

Three and Nine Months Ended September 30, 2025

Series A, Preferred Stock

Series B, Preferred Stock

Series C, Preferred Stock

Common Stock

Additional Paid-In

Accumulated

Total Stockholders'

Value

Capital

Deficit

Income

Equity

15,122,018

151,221

50,580,235

(35,913,514

)

14,817,942

483,546

4,835

(4,835

)

1,224,606

12,246

2,424,720

2,436,966

1,883,433

22,940

(3,266,279

)

(3,266,279

)

16,830,170

168,302

54,906,493

(39,179,793

)

15,895,002

208,336

2,082

(2,082

)

94,650

947

366,923

367,870

4,630

(46

)

150,000

1,500

(1,500

)

8,000,000

80,000

36,416,000

36,496,000

576,831

4,936,497

(6,964,739

)

(6,964,739

)

25,287,786

252,877

97,199,116

(46,144,532

)

51,307,461

589,232

5,892

(5,892

)

25,250

253

133,487

133,740

1,539

(15

)

5,000,000

50,000

44,851,000

44,901,000

656,642

6,566

5,916,345

5,922,911

8,500

42,415

42,500

114,960

1,987,600

1,603,465

2,278

31,568,949

315,688

150,239,016

(44,541,067

)

2,278

106,015,915

Unusual Machines, Inc.

Consolidated Condensed Statement of Cash Flows

For the Nine Months Ended September 30, 2025 and 2024

(Unaudited)

Nine Months Ended September 30,

2025

2024

(8,627,553

)

(4,862,490

)

63,635

513

64,344

9,522,261

759,673

(5,849,713

)

12,146

(43,239

)

663,250

(122,696

)

(73,109

)

(1,746,100

)

337,562

(6,016,951

)

(319,532

)

(165,529

)

(29,100

)

72,202

406,399

630,595

(80,346

)

(33,056

)

1,137,953

186,076

(11,394,294

)

(2,718,513

)

93,054

(852,801

)

(11,000,000

)

(1,550,687

)

(12,457,633

)

(852,801

)

5,000,000

40,000,000

48,500,000

501,610

2,479,466

(7,103,000

)

(637,687

)

84,378,076

4,362,313

60,526,149

790,999

2,278

3,757,323

894,773

64,285,750

1,685,772

8,922,911

19,000,000

973,443

100,000

512,758

SOURCE: Unusual Machines, Inc.