Unusual Machines, Inc.
For the period ended Jun 30, 2025. Filed Aug 14, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 14, 2025
UMAC$11.90+10.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001683168-25-003285
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001683168-25-006163
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 40 previous paragraphs and 56 current paragraphs.
23 unchanged; 12 reworded; 20 added; 4 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
On July 14, 2025, we entered into a securities purchase agreement with certain investors for the purchase and sale of 5,000,000 shares of common stock in a registered direct offering at a public offering price of $9.70 per share. On July 15, 2025, the offering closed and we received aggregate gross proceeds of $48.5 million before deducting placement agent fees and other related expenses. The Company intends to use the proceeds of this offering for the purchase of our drone motor manufacturing equipment which we estimate to be approximately $4.0 million, general corporate purposes and working capital
Current report
On June 12, 2025, we entered into a Share Purchase Agreement (“SPA”) to acquire 100% of the capital stock of Rotor Lab Pty Ltd., an Australian company (“Rotor Lab”) from its existing shareholders. We agreed to issue the sellers a total of $4,000,000 of shares of our common stock, plus additional earnout consideration of up to $3,000,000 worth of shares of our common stock. $800,000 of the initial consideration will be restricted and subject to forfeiture in the event of a breach of representations and warranties and indemnification. The terms of the SPA are subject to standard closing conditions, in addition to receiving required regulatory approvals from the Australian Foreign Investment Review Board.
Current report
Cost of Goods Sold & Gross Profit
Current report
During the three months ended June 30, 2025, our gross profit was $794,679 compared to $388,440 during the three months ended June 30, 2024, resulting in an increase of $406,239 or 105%. Our gross margin, as a percentage of sales, totaled 37.4% during the three months ended June 30, 2025, compared to gross margin of approximately 27.5% during the three months ended June 30, 2024.
Current report
During the three months ended June 30, 2025, sales and marketing expenses totaled $302,358 compared to $386,332 for the three months ended June 30, 2024, resulting in a decrease of $83,974 or 22%. The decrease primarily relates to additional costs incurred during the second quarter of 2024 related to our Rampage marketing event that is expected to occur during the fourth quarter of this year. Other sales and marketing expenses increased slightly based on the increase in revenue and ad spend during the period.
Current report
Results of Operations – Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024
Current report
Revenue
Current report
During the six months ended June 30, 2025, we incurred cost of goods sold of $2,874,784 compared to $1,437,432 during the six months ended June 30, 2024, resulting in an increase of $1,437,352 or 100%. Similar to revenues, we did not incur any cost of goods sold until the closing of the acquisitions on February 16, 2024. Cost of goods sold primarily relate to product costs from our sales, but also include certain shipping and other direct product costs. The increase in cost of goods sold is driven entirely by the increase in our revenue.
Current report
Gross Margin
Current report
During the six months ended June 30, 2025, our gross margin was $1,291,486 compared to $592,607 during the six months ended June 30, 2024, resulting in an increase of $698,879 or 118%. Our gross margin, as a percentage of sales, totaled 31% during the six months ended June 30, 2025, compared to 29% during the six months ended June 30, 2024. We anticipate our gross margin to fluctuate period to period depending on certain promotions and products that are sold during the period and the mix of retail and enterprise sales during the period. The margins we generated during the quarter are in line with our expectations and normal operating margins.
Current report
Operating Expenses
Current report
During the six months ended June 30, 2025, operations expenses totaled $706,879 compared to $326,094 during the six months ended June 30, 2024, resulting in an increase of $380,785 or 117%. Prior to the closing of the acquisitions in February 2024, we did not have any operations. Operations expenses primarily relate to our direct operations including our warehouse personnel and warehouse expenses. In addition, we have started incurring additional operations related expenses as we start incurring costs related to our motor production facility during the second quarter of 2025.
Current report
During the six months ended June 30, 2025, research and development expenses totaled $70,633 compared to $27,078 for the six months ended June 30, 2024, resulting in an increase of $43,555 or 161%. Research and development expense primarily relates to new product development as we continue to partner with manufacturers to bring drone component manufacturing to the United States.
Current report
During the six months ended June 30, 2025, sales and marketing expenses totaled $509,975 compared to $543,390 for the six months ended June 30, 2024, resulting in a decrease of $33,415 or 6%. Sales and marketing expenses primarily relate to advertising spend related to Rotor Riot and payroll expenses. The decrease relates to additional costs incurred during the second quarter of 2024 related to our Rampage marketing event, which was then offset by additional ad spend and other sales related expenses from our increase in revenue and sales.
Current report
During the six months ended June 30, 2025, general and administrative expenses totaling $10,421,097 compared to $2,353,761 for the six months ended June 30, 2024, resulting in an increase of $8,067,336 or 343%. The increase relates primarily to increased non-cash expenses totaling $7,419,701 related to stock based compensation expense and the additional increase is from increase in professional fees and other public company related expenses.
Current report
Net Loss
Current report
Our net loss for the six months ended June 30, 2025, totaled $10,231,018 compared to $2,718,240 for the six months ended June 30, 2024, resulting in an increase in net loss of $7,419,701 or 276%. The increase primarily relates to increased non-cash expenses related to stock based compensation expense discussed in the above paragraph.
Current report
Net cash provided by financing activities totaled $39,300,836 during the six months ended June 30, 2025, compared to net cash provided by financing activities of $4,362,313 during the six months ended June 30, 2024, resulting in an increase in net cash provided by financing activities of $34,938,523. The increase primarily relates to proceeds received from our public offering of $36,496,000 in May 2025, proceeds from warrant exercises of $2,436,966, and employee stock option exercises of $367,780 during the period.
Current report
On July 15, 2025, we completed a registered direct offering in which we sold 5,000,000 shares of our common stock at $9.70 per share and after deducting underwriting discounts and expenses, we received approximately $44.9 million in net cash proceeds.
Current report
On May 7, 2025, we completed a confidentially marketed public offering in which we sold 8,000,000 shares of our common stock at $5.00 per share and after deducting underwriting discounts and expenses, we received approximately $36.5 million in cash proceeds.
Removed paragraphs (4)
Previous report
On February 1, 2025, we entered into a Merger Agreement to acquire drone software company, Aloft. We believe that Aloft is a leader in the drone fleet and airspace management sector, powering more than 70% of all FAA-approved Low Altitude Authorization and Notification Capability airspace authorizations in the United States. Aloft has provided more than 1.6 million authorizations in total with 400,000 authorizations provided in 2024. The acquisition is for $14.5 million, almost entirely in the Company’s Common Stock. Customary closing conditions by the parties including Aloft shareholder approval must be met before closing the merger. On May 6, 2025, the Company and Aloft executed an Amendment and Waiver to the Merger Agreement (the “Aloft Amendment”) which (i) waives the exclusivity provision in the Agreement, (ii) extends the end date in the Agreement from April 30, 2025 to August 31, 2025, (iii) adds a $100,000 breakup fee in the event Aloft consummates an alternative transaction while the Agreement remains in effect, and (iv) permits the Company to terminate the Agreement at any time upon written notice, however, the Company will forfeit the breakup fee. A copy of the Aloft Amendment is furnished as Exhibit 10.9 and is incorporated herein by reference. The foregoing description of the terms of the Aloft Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference, to the Aloft Amendment.
Previous report
Gross Profit
Previous report
During the three months ended March 31, 2025, selling and marketing expenses totaled $207,616 compared to $157,058 for the three months ended March 31, 2024, resulting in an increase of $50,558 or 32%. Pro forma selling and marketing expense as if the Acquisitions were completed for the full quarter for the three months ended March 31, 2024 were approximately $435,000 which is approximately a 53% decrease. We continue to work to optimize our selling and marketing and in particular our advertising spend. We expect to continue to see significant selling and marketing expenses, especially for ad spend as it relates to retail sales.
Previous report
Net cash provided by financing activities totaled $2,436,966 during the three months ended March 31, 2025, compared to $4,362,313 during the three months ended March 31, 2024, resulting in a decrease in net cash provided by financing activities of $1,925,347 or 44.1%. Our first quarter 2025 proceeds are from cash warrant exercises from certain investors exercising their warrants that we issued in our October 2024 private placement. Our first quarter 2024 proceeds were from our IPO of $5,000,000, offset by deferred offering costs and other IPO related expenses of $637,687.
Reworded paragraphs (12)
Previous wording
With the funds received from our recent public offering, we are focusing on growing both our retail and enterprise revenue channels and investing in drone component manufacturing in the United States. During the first quarter of 2025, we added both the Rotor Riot Brave 55A ESC (electronic speed controller), and the Fat Shark Aura FPV (first-person view) Camera to the U.S. Department of Defense Innovation Units Blue UAS Framework. While we continued to see top line revenue growth during the first quarter of 2025, our continued future plans for retail revenue growth and margins are subject to uncertainties outside of our control, including changes to trade policy with respect to tariffs and other impacts to our global supply chain cost structure. We are continually evaluating the tariff landscape and working to find reliable and high quality suppliers in multiple countries including the United States and Taiwan that we anticipate will have the least amount of impact to our retail costs and overall margin.
Current wording
With the funds received from our recent offerings, we are focusing on growing both our retail and enterprise revenue channels and investing in drone component manufacturing in the United States. During the first quarter of 2025, we added both the Rotor Riot Brave 55A ESC (electronic speed controller), and the Fat Shark Aura FPV (first-person view) Camera to the U.S. Department of Defense Innovation Units Blue UAS Framework (“DIU Blue Framework”). In addition, in July 2025, we added the Fat Shark Aura Video Transmitter (VTX) to the DIU Blue Framework. In furtherance of our B2B business, we have entered into a new lease of a 17,000 square foot facility in Orlando, Florida effectively August 1, 2025, where we plan to open a drone motor manufacturing plant. See Note 8 to Consolidated Financial Statements. While we continued to see top line revenue growth during the first half of 2025, our continued future plans for retail revenue growth and margins are subject to uncertainties outside of our control, including changes to trade policy with respect to tariffs and other impacts to our global supply chain cost structure. We are continually evaluating the tariff landscape and working to find reliable and high quality suppliers in multiple countries including the United States and Taiwan that we anticipate will have the least amount of impact to our retail costs and overall margin. Because of the tariff uncertainties, we cannot predict the impact tariff policies in the United Staes and other countries will have on our business. But our B2C business relies heavily on China so retaliatory tariffs can adversely affect us especially our B2C business. See “Item 1A – Risk Factors” for more information on the risks associated with the uncertainty of the imposition of tariffs on our business.
Previous wording
During the three months ended March 31, 2025 we generated revenues totaling $2,042,300 compared to $618,915 during the three months ended March 31, 2024, representing an increase of $1,423,385 or 230%. We did not have any revenue prior to the completion of the acquisitions of Fat Shark and Rotor Riot (the “Acquisitions”) in February 2024. Pro forma revenues if the Acquisitions were completed for the full quarter for the three months ended March 31, 2024, were approximately $1.1 million. The growth in revenue is driven both in our existing retail channel and our expanding enterprise channel as we are manufacturing additional Blue UAS products.
Current wording
During the three months ended June 30, 2025 we generated revenues totaling $2,123,970 compared to $1,411,124 during the three months ended June 30, 2024, representing an increase of $712,846 or 51%. The growth in revenue is driven from growth in our existing retail channel and expanding our enterprise channel as we are manufacturing additional Blue UAS products.
Previous wording
During the three months ended March 31, 2025, our gross profit was $496,807 compared to $204,167 during the three months ended March 31, 2024, resulting in an increase of $292,640 or 143%. Pro forma gross margin as if the Acquisitions were completed for the full quarter for the three months ended March 31, 2024 were approximately $0.3 million. Our gross margin, as a percentage of sales, totaled 24.3% during the three months ended March 31, 2025, compared to pro forma gross margin of approximately 21% during the three months ended March 31, 2024. We try and maintain margins in the 20% - 30% range on majority of our products and anticipate our gross profit to fluctuate period to period depending on certain promotions and products that are sold during the period. Our gross margin is also subject to additional fluctuations based on the increased tariffs being imposed on certain products. We have started passing these additional costs to customers, however, this would have an impact on our overall gross profit percentage. We expect that in the three months ended June 30, 2025, our cost of goods sold will experience an increase from the tariffs and increase in inventory costs as we source inventory from countries outside of China including the United States and Taiwan.
Current wording
During the three months ended June 30, 2025, our cost of goods sold was 1,329,291 compared to $1,022,684 during the three months ended June 30, 2024, resulting in an increase of $306,607 or 30%. Our gross margin, as a percentage of sales, totaled 37.4% during the three months ended June 30, 2025, compared to gross margin of 27.5% during the three months ended June 30, 2024. We try and maintain margins in the 20% - 30% range on majority of our products and anticipate our gross profit to fluctuate period to period depending on certain promotions and products that are sold during the period and the mix of retail and enterprise sales that are sold during the period. Our gross margin is also subject to additional fluctuations based on the increased tariffs being imposed on certain products. We have started passing these additional costs to customers and will have an impact on our overall gross profit percentage. We expect that in the three months ended September 30, 2025, our cost of goods sold will experience an increase from the tariffs and increase in inventory costs as we source inventory from countries outside of China including the United States and Taiwan. See “Item 1A – Risk Factors” for more information on the risks associated with the uncertainty of the imposition of tariffs on our business.
Previous wording
During the three months ended March 31, 2025, operations expenses totaled $302,602 compared to $112,322 during the three months ended March 31, 2024, resulting in an increase of $190,280 or 169%. Operations expense relate to expenses incurred for fulfilling orders and warehouse related expenditures including our warehouse personnel, supplies, and shipping expenses. Pro forma operations expense as if the Acquisitions were completed for the full quarter for the three months ended March 31, 2024 were approximately $245,000 which is approximately a 23% increase. This increase is primarily related to increase in shipping expenses included in operating expenses from product sales.
Current wording
During the three months ended June 30, 2025, operations expenses totaled $404,277 compared to $213,772 during the three months ended June 30, 2024, resulting in an increase of $190,505 or 89%. Operations expense relate to expenses incurred for fulfilling orders and warehouse related expenditures including our warehouse personnel, supplies, and shipping expenses. The increase primarily relates to additional costs incurred related to our motor factory operations that we are putting in place along with additional shipping costs from the increase in revenue.
Previous wording
During the three months ended March 31, 2025, research and development expenses totaled $7,903 compared to $16,796 for the three months ended March 31, 2024, resulting in a decrease of $8,893 or 53%. Research and development expense primarily relates to new product development and is subject to fluctuations based on specific research and development projects ongoing during the period.
Current wording
During the three months ended June 30, 2025, research and development expenses totaled $62,731 compared to $10,282 for the three months ended June 30, 2024, resulting in a increase of $52,449 or 510%. Research and development expense primarily relates to new product development and is subject to fluctuations based on specific research and development projects ongoing during the period.
Previous wording
During the three months ended March 31, 2025, general and administrative expenses totaling $3,225,904 compared to $1,004,173 for the three months ended March 31, 2024, resulting in an increase of $2,221,731 or 221%. The increase primarily relates to the increase in non-cash stock compensation expense of approximately $1.8 million and increase in professional fees and operating as a public company.
Current wording
During the three months ended June 30, 2025, general and administrative expenses totaling $7,195,193 compared to $1,349,587 for the three months ended June 30, 2024, resulting in an increase of $5,845,606 or 433%. The increase primarily relates to the increase in non-cash stock compensation expense of approximately $5.5 million and increase in professional fees and operating as a public company.
Previous wording
Our net loss for the three months ended March 31, 2025, totaled $3,266,279 compared to $1,106,001 for the three months ended March 31, 2024, resulting in an increase in net loss of $2,160,278 or 195%. This increase in net loss relates to the increase in general and administrative expenses which was primarily driven by the increase in non-cash stock compensation expense. We also saw additional increases in operations expense and selling and marketing as we had a full quarter of operations since we didn’t complete the Acquisitions in 2024 until mid-way through the first quarter of 2024. This was partially offset by generating higher gross profit related to the increase in revenue and cost of goods sold.
Current wording
Our net loss for the three months ended June 30, 2025, totaled $6,964,739 compared to $1,612,238 for the three months ended June 30, 2024, resulting in an increase in net loss of $5,352,501 or 332%. This increase in net loss relates to the increase in general and administrative expenses which was primarily driven by the increase in non-cash stock compensation expense, which was $5,513,328 for the second quarter of 2025.
Previous wording
Our future cash flows from operating activities will be significantly impacted by revenues received, our investment in sales and marketing to drive growth, and general and administrative expenses related to operating a public company. Our ability to meet future liquidity needs will be driven by our operating performance and the extent of continued investment in our operations. Failure to generate sufficient revenues and related cash flows could have a material adverse effect on our ability to meet our liquidity needs and achieve our business objectives.
Current wording
Prior to the closing of our IPO and the acquisitions of Fat Shark and Rotor Riot, we did not have any cash inflows from operations and all cash outflows related to our activities related to our IPO. Our future cash flows from operating activities will be significantly impacted by revenues received, our investment in sales and marketing to drive growth, and general and administrative expenses related to operating a public company. Our ability to meet future liquidity needs will be driven by our operating performance and the extent of continued investment in our operations. Failure to generate sufficient revenues and related cash flows could have a material adverse effect on our ability to meet our liquidity needs and achieve our business objectives.
Previous wording
Net cash used in operating activities was $1,193,628 during the three months ended March 31, 2025, compared to net cash used in operating activities of $1,195,604 during the three months ended March 31, 2024, representing a decrease of $1,976 or 0.2%. This decrease in net cash used primarily resulted from our increase in net loss of $2,160,278, changes in inventory of $27,552, other assets of $114,816, and other liabilities of $153,282. These were offset by changes in non-cash expenses of $1,862,451, changes in prepaid expenses of $446,593, accounts payable and accrued expenses of $138,100 and accounts receivable of $10,760.
Current wording
Net cash used in operating activities was $3,862,349 during the six months ended June 30, 2025, compared to net cash used in operating activities of $2,181,840 during the six months ended June 30, 2024, representing an increase of $1,680,509 or 77%. This increase in net cash used primarily resulted from our increase in accounts receivable of $125,757, inventory of $426,180, prepaid expenses of $156,440, accounts payable and accrued expenses of $444,594 and changes in other operating assets and liabilities of $61,864. This was offset by the change in non-cash stock based compensation of $6,994,114 and changes in other non-cash related expenses of $52,990.
Previous wording
Net cash used in investing activities was $0 during the three months ended March 31, 2025 compared to net cash used in operating activities of $852,876 during the three months ended March 31, 2024, representing a decrease of $852,876 or 100%. This decrease in net cash used related to the $1,000,000 of cash paid pursuant to the Purchase Agreement related to Fat Shark and Rotor Riot, offset by $147,124 in cash acquired that was completed in the first quarter of 2024.
Current wording
Net cash used in investing activities was $262,751 during the six months ended June 30, 2025 compared to net cash used in investing activities of $852,201 during the six months ended June 30, 2024, representing a decrease of $590,050 or 69%. The cash used in investing activities during the six months ended June 30, 2025 related to the purchasing of equipment related to our motor factory while the cash used in investing activities during the six months ended June 30, 2024 related to our acquisitions of Rotor Riot and Fat Shark.
Previous wording
As of March 31, 2025, we had current assets totaling $7,306,327 primarily consisting of cash balances of $5,000,661, inventory of $1,214,290 and other assets and deposits for inventory of $1,040,426. Our current liabilities as of March 31, 2025 totaled $1,048,379, primarily consisting of accounts payable and accrued expenses of $860,554 and deferred revenue and current operating lease liability of $187,825. Our net working capital as of March 31, 2025 was $6,257,948.
Current wording
As of June 30, 2025, we had current assets totaling $42,222,934 primarily consisting of cash balances of $38,933,059, inventory of $1,609,117 and other current assets of $192,778 and deposits for inventory of $1,314,592. Our current liabilities as of June 30, 2025 totaled $821,698, primarily consisting of accounts payable and accrued expenses of $608,694 and deferred revenue of $139,435 and current operating lease liability of $73,569. Our net working capital as of June 30, 2025 was $41,399,236.
Previous wording
As of May 7, 2025, we have approximately $40.1 million in cash. We believe that the net proceeds from our financings, warrant exercises, revenues, and existing cash balances will be sufficient to fund our current operating plans through more than the next 12 months. With the approximately $36.6 million of net proceeds we received on May 7, 2025, we have substantial liquidity to support our business.
Current wording
As of August 14, 2025, we have approximately $81 million in cash. We believe that the net proceeds from our financings, warrant exercises, revenues, and existing cash balances will be sufficient to fund our current operating plans through more than the next 12 months. With the approximately $45 million of net proceeds we received on July 15, 2025 and our existing cash balances, we have substantial liquidity to support our business.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
During the six months ended June 30, 2025 we generated revenues totaling $4,166,270 compared to $2,030,039 during the six months ended June 30, 2024, representing an increase of $2,136,231 or 105%. The growth in revenue is driven from growth in our existing retail channel and expanding our enterprise channel as we are manufacturing additional Blue UAS products.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
During the three months ended March 31, 2025, our gross profit was $496,807 compared to $204,167 during the three months ended March 31, 2024, resulting in an increase of $292,640 or 143%. Pro forma gross margin as if the Acquisitions were completed for the full quarter for the three months ended March 31, 2024 were approximately $0.3 million. Our gross margin, as a percentage of sales, totaled 24.3% during the three months ended March 31, 2025, compared to pro forma gross margin of approximately 25% during the three months ended March 31, 2024. We try and maintain margins in the 20% - 30% range on majority of our products and anticipate our gross profit to fluctuate period to period depending on certain promotions and products that are sold during the period. Our gross margin is also subject to additional fluctuations based on the increased tariffs being imposed on certain products. We have started passing these additional costs to customers, however, this would have an impact on our overall gross profit percentage.