Unusual Machines Third Quarter 2026 Shareholder Letter

An $18.4 million unrealized investment loss weighed on earnings while manufacturing expansion continued.

Rhea-AI Summary

Unusual Machines (NYSE American: UMAC) reported third-quarter 2026 revenue of approximately $13.9 million as it expanded drone-component manufacturing capacity. Revenue rose 551% year over year but fell 17% sequentially. Gross margin was 35.4%, versus 39.4% a year earlier. Net loss attributable to common shareholders was approximately $25.0 million, or $0.50 per share, versus net income of approximately $1.6 million. The quarter included an $18.4 million unrealized investment loss and $5.5 million in stock compensation.

Cash ended September at approximately $162.0 million. The company received a $16.9 million Powerus order and completed the Upgrade Energy acquisition. Unusual Machines targets positive adjusted EBITDA, an adjusted earnings measure, in 2027. It plans additional motor capacity and domestic camera manufacturing in early 2027, while reaching its 40% margin target may take longer as it prioritizes growth.

13 points · 0 major

MixediHow this balance works

How this balance works

Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.

It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.

Rhea-AI Sentiment measures something else, the tone of the wording.

How the balance worksHow Sentiment works

1 major · 14 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Moderate pointThird-quarter revenue of approximately $13.9 million rose 551% year over year but declined 17% sequentially.
• Moderate pointPowerus order of $16.9 million adds to the company's disclosed customer orders. 2.5% of market cap
• Moderate pointUpgrade Energy acquisition completed, adding battery pack production to Unusual Machines.
• Moderate point. Forward-looking: it has not happened yet and may not happen.100,000 square feet of additional space is targeted for the fourth quarter to support early-2027 growth.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Positive adjusted EBITDA in 2027 remains the company's financial goal.

8 minor points

• Minor pointCash of approximately $162.0 million exceeded December's $103.3 million, but declined sequentially amid inventory purchases and investments.
• Minor pointInterest income of approximately $1.7 million increased from $0.7 million in third-quarter 2025.
• Minor pointApproximately $3.0 million in equipment purchases supported third-quarter manufacturing expansion.
• Minor pointHeadcount exceeded 340 by November 5, following growth from 240 to 276 during the third quarter.
• Minor point. Forward-looking: it has not happened yet and may not happen.New automated motor line is expected to support 100,000 additional motors monthly once fully operational.
• Minor point. Forward-looking: it has not happened yet and may not happen.Domestic camera manufacturing remains on track for early 2027; additive manufacturing expansion has begun.
• Minor point. Forward-looking: it has not happened yet and may not happen.Additional investments will be limited under the company's plan to preserve its capital position.
• Minor point. Forward-looking: it has not happened yet and may not happen.Capacity investments are expected to contribute revenue in fourth-quarter 2026 and throughout 2027.

Negative

• Major pointNet loss of approximately $25.0 million, or $0.50 per share, replaced year-earlier $1.6 million net income.
• Moderate pointGross margin of 35.4% declined from 39.4% a year earlier, while remaining consistent sequentially.
• Moderate pointOperating loss of approximately $8.4 million widened from $4.9 million in third-quarter 2025.
• Moderate pointRaw materials and prepaid inventory of $65.9 million increased from $42.4 million at June 30.
• Moderate pointReady-to-go real estate is the company's stated primary constraint on scaling production.
• Moderate point. Forward-looking: it has not happened yet and may not happen.40% margin target may take longer to achieve as the company prioritizes rapid growth.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Customer concentration is expected to generally increase through 2027.

7 minor points

• Minor pointUnrealized investment loss of $18.4 million compared with a $5.8 million gain a year earlier.
• Minor pointStock compensation expense of $5.5 million increased from $2.1 million in third-quarter 2025.
• Minor pointAdjusted EBITDA loss of approximately $0.7 million persisted in the third quarter.
• Minor pointFinished inventory of $9.3 million increased from $4.4 million at June 30, committing more capital to inventory.
• Minor pointAccounts receivable of $18.7 million increased from $9.3 million in the second quarter.
• Minor pointWorking capital of approximately $342.1 million declined sequentially, driven by unrealized investment losses.
• Minor pointInvestment portfolio volatility is dominated by positions in Powerus, Xtend and XTIA Aerospace / Drone Nerds.

News Explained

The letter adds that cash fell from $229.6 million at June 30, 2026 to $162.0 million at September 30, 2026, with $35.0 million used for short-term investments and a loan receivable and $24.8 million for inventory, clarifying how the quarter’s cash reduction was allocated.

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Key Figures

Revenue: $13.9 million Year-over-year revenue growth: 551% Quarter-over-quarter revenue change: -17% +5 more

Revenue

$13.9 million

Q3 2026

Year-over-year revenue growth

551%

Q3 2026 versus Q3 2025

Quarter-over-quarter revenue change

-17%

Q3 2026; reported at the high end of revenue targets

Gross margin

35.4%

Q3 2026, versus 39.4% in Q3 2025

Net loss

$25.0 million

Q3 2026

Unrealized loss on short-term investments

$18.4 million

Q3 2026

Adjusted EBITDA loss

$0.7 million

Q3 2026

Cash

$162.0 million

As of September 30, 2026

Historical Context

1 past event · Latest: Oct 22

1 event

1. Oct 22

   Purchase order

   24h Move

   -4.2%

   Powerus order for drone components, also referenced in the Q3 shareholder letter.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

ndaA-compliant, adjusted ebitda, gaap, idiq, +1 more

5 terms

ndaA-compliant regulatory

"a leading provider of NDAA-compliant drone components"

NDAA-compliant means that a product, supplier, or company meets the rules in the U.S. National Defense Authorization Act that bar certain foreign technologies and require specific security practices. For investors, compliance matters because it determines whether a business can sell to the U.S. government, avoid fines or bans, and reduce supply‑chain or reputational risk—similar to passing a background check that lets you bid on a sensitive contract.

adjusted ebitda financial

"we remain on track with an adjusted EBITDA loss"

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

gaap financial

"I believe GAAP results may partially obfuscate actual financial performance"

GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.

View in glossary

idiq financial

"about $4.5 billion in counter-drone IDIQ awards"

An IDIQ (Indefinite Delivery/Indefinite Quantity) is a type of government procurement contract that sets terms and maximum limits for buying goods or services over a period without specifying exact delivery dates or quantities up front. For investors, an IDIQ signals a potential steady revenue stream and easier repeat business because it gives a company preferred access to future orders under agreed terms—think of it as a standing shopping account that can generate unpredictable but recurring sales.

at-the-market (atm) offering financial

"the at-the-market (ATM) offering in May 2026"

An at-the-market (ATM) offering is a way for a publicly traded company to sell new shares directly into the open market over time at the current trading price, usually through a broker, rather than in one big sale. For investors it matters because it can provide flexible funding without a large one-time price shock, but it also increases the number of shares outstanding and can gradually reduce each shareholder’s ownership and potentially put downward pressure on the stock price—think of a shop quietly adding more of the same product onto the shelves at the going price.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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ORLANDO, FL / ACCESS Newswire / November 5, 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 third quarter ended September 30, 2026, 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 2026.

During the quarter, we executed our plan on schedule, and our continued growth is reflected in the following details.

In the third quarter, we generated $13.9 million in revenue, reflecting 551% year-over-year growth compared to the third quarter of 2025. This represents a 17% quarter-over-quarter decrease, but was still at the high end of our revenue targets. This resulted from investment in foundational work to support future growth. Those growth drivers included installing more capital equipment to improve motor throughput and margins, investing in growing Upgrade Energy's business prior to closing and scaling its operations, and building out new additive manufacturing production capacity. All three of these initiatives are well underway, and we expect they will contribute meaningful revenue in the fourth quarter of 2026 and throughout 2027. This type of growth can put pressure on gross margins. Despite this, we maintained our margins, finishing the quarter at 35.4%.

The work our team did with Upgrade Energy (prior to closing) is one example of growth not fully reflected in our recognized revenue. During the first half of 2026, Upgrade Energy generated about $3.37 million in revenue. At the start of the third quarter, our team began working with their team to scale, helping their workforce grow from 24 to 49 employees. That expansion helped support Upgrade's third-quarter revenue of $3.32 million, nearly matching the $3.37 million generated during the entire first half of the year.

Our financial results reflect our continued effort to grow operations, meet demand, and build capacity for future growth. In Q3 2026, we grew from 240 to 276 employees. This capacity growth continues, with our total headcount growing to 325 employees after the close of the Upgrade Energy acquisition. We made approximately $3.0 million in equipment purchases in the third quarter. Our inventory and prepaid inventory increased from $42.4 million at the end of the second quarter to $65.9 million at the end of the third quarter, while finished goods only increased from $4.4 million to $9.3 million. Our accounts receivable increased from $9.3 million to $18.7 million. These are all strong indicators of operational growth, positioning us for future revenue growth.

It is easy to overlook the positives when the quarter's net loss was $25 million. This loss is almost entirely driven by non-cash items, including an unrealized loss on short-term investments of $18.4 million and stock compensation expense of $5.5 million. While I believe GAAP results may partially obfuscate actual financial performance, we remain on track with an adjusted EBITDA loss of approximately $0.7 million for the quarter. See the discussion of Non-GAAP Financial Measures and Table 2 below. I am extremely encouraged by our relatively small adjusted EBITDA loss in a quarter where revenue does not yet reflect the benefits of our ongoing investments in growth. I continue to believe that Unusual Machines can achieve positive adjusted EBITDA in 2027 without compromising our growth plans.

This financial goal has become more important as the macroeconomic environment for domestic drone companies is changing. We recognize that the entire segment is now trading at lower revenue multiples than it was a few months ago, making it more challenging, and less desirable, for both private and public companies to raise capital. This change is no surprise, as it occurs across maturing industries. It will require us to shift from an external investment mindset to an approach focused on reinvesting internally generated gains to drive growth until we scale substantially or the marketplace undergoes meaningful change. Our capital position and financial discipline allow us to continue growing, while the challenging financial environment may also create high-value strategic opportunities in the next year.

We want 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 240 employees at the end of the second quarter of 2026 to 276 at the end of the third quarter of 2026. As of today, the Company has grown to more than 340 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 our facilities. We have also added batteries through the Upgrade Energy acquisition and have begun expanding into additive manufacturing. Our single best-selling product accounted for approximately 19% of our revenue. This mix is a sign of the robust growth we are seeing across our business as we scale. We expect customer concentration to generally increase through 2027 as the market consolidates around a smaller number of winners in different drone categories.

Growth is evident in our third-quarter financial results. We increased raw materials and prepaid inventory from $42.4 million as of June 30, 2026, to $65.9 million as of September 30, 2026. These goods are being rapidly converted into finished products and shipped to customers. Our finished inventory value also increased from $4.4 million as of June 30, 2026, to $9.3 million as of September 30, 2026. We are continuing to invest in expansion, as reflected in our $3.0 million in equipment purchases.

Demand shows no signs of slowing down. For example, the Drone Dominance Program (DDP), a $1.1 billion Department of War (DoW) program, finalized its orders. More importantly, several DoW programs allocated 2026 money to continue to drive demand in 2027 without requiring additional congressional budgetary action. This includes the DDP announcing and allocating budget for Phase 3 of the program and about $4.5 billion in counter-drone IDIQ awards issued to 10 different vendors. These programs (and others) are starting to manifest in more substantial orders, such as the recent $16.9 million order we received from Powerus. This already allocated money creates a demand environment that will support our growth trajectory without additional programs through at least the first quarter of 2027.

The market will have some short-term demand uncertainty from the U.S. election, but, over the long term, we believe domestic drone production has widespread bipartisan support. We will continue to build the systems and scale to meet the needs of both our commercial and defense partners until market signals suggest anything but overwhelming demand.

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, and touch on our investment approach.

We ended the quarter with approximately $162.0 million in cash. The decrease in cash was primarily driven by inventory purchases of $24.8 million and investments of $35 million (which is inclusive of our loan receivable). Our strong cash position has enabled us to continue scaling the Company while providing flexibility to ensure working capital does not constrain our partners' ability to deliver products on time. Our cash position is excellent as we go into 2027, and we plan on limiting any additional investments to remain well positioned for the next several years.

Cash is only one measure of value, as it can be allocated across the balance sheet to eventually generate a positive return. We measure our business's financial position by aggregating these categories and subtracting payables to get a clear financial picture. We refer to this as working capital, and Table 3 summarizes it. At the end of Q3 2026, our working capital was approximately $342.1 million. The reduction in working capital from Q2 2026 was driven by the unrealized loss in our investments.

Our investment portfolio and the volatility therein are dominated by three large positions in public companies: Powerus, Xtend, and XTIA Aerospace / Drone Nerds. We are highly engaged with these partners and believe these represent long-term strategic relationships that will benefit Unusual Machines by providing deep market insights. Each investment provides market exposure to a different program and market opportunity. These include Drone Dominance (Xtend), counter-UAS (Powerus), and commercial markets in anticipation of the FAA's proposed Part 108 rule (XTIA). We have strong partnerships and supplier relationships with Powerus and Xtend, and we expect those investments to also drive meaningful revenue over the coming years as those companies win more business. I recently became Chairman of the Board of XTIA and am working with the new CEO to drive substantial growth and partnerships in the commercial market once the FAA finalizes the Part 108 rule.

We are growing quickly while maintaining a healthy cash balance and strategically investing to gain insights and access to critical subsegments of the drone market. This allows us to plan and build the Company without being overly exposed 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 will continue to scale production as quickly as possible, including adding a new automated motor production line expected to support 100,000 additional motors per month once fully operational. We continue to add people, shifts, and equipment to all our production facilities and are now actively looking for substantially more space. With the acquisition of Upgrade Energy, we have added battery pack production and have also just expanded into additive manufacturing. We are on track to add domestic camera manufacturing in early 2027. Right now, our primary scaling limit is ready-to-go real estate, and we are working to add 100,000 square feet in the fourth quarter, which will allow us to continue our growth in early 2027.

Grow Revenue and Manage Margins

We used the third quarter to adjust and scale our supply chains, production equipment, and quality processes. We are now well positioned to meet emerging demand, scale in the fourth quarter, and continue that growth into 2027. Every demand indicator is positive, and we appear to still be in the early stages of the market. However, macroeconomic factors could reduce investment capital in the market, so we must stay disciplined and effectively manage margins and cash flow to avoid putting undue pressure on working capital as we scale. We will work toward our 40% margin target, but achieving it may take longer as we prioritize rapid growth while managing losses.

Drive Toward Positive Adjusted EBITDA

Our long-term goal is to build a profitable and sustainable business. To do this, our next financial goal is to achieve positive adjusted EBITDA. Reaching this milestone would help to sustain the Company and continue to grow through internal investment regardless of the macroeconomic environment. We want to achieve this in 2027 as revenues increase and margins are maintained while we continue to improve new operating centers and processes.

Closing Thoughts

The third quarter of 2026 has been one of significant progress, driven by the hard work of our team. Unusual Machines is firmly structured for another cycle of growth, and we are doing so while maintaining discipline in how we deploy our cash. Demand signals remain strong, and we are aggressively pursuing the market opportunity created by a need for a robust domestic supply chain.

We continue to expand our team and build the operational capacity needed to support increasing demand for NDAA-compliant drone components. We also continue to add product categories, such as batteries and additive manufacturing, and expect to continue expanding operations to meet demand. We believe the U.S. drone industry is entering the first stage of consolidation as it continues to rapidly grow. The need for secure, domestic supply chains will continue to grow at an accelerating rate as the industry expands. We are pursuing continued growth and expect 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. Please use access code 183155. A live audio webcast will also be available by accessing this LINK.

A replay will be available on the Unusual Machines website: unusualmachines.com

Third Quarter 2026 Financial Results

• Revenues totaled approximately $13.9 million for the three months ended September 30, 2026, as compared to $2.1 million for the three months ended September 30, 2025, which was a 551% increase for the third quarter year over year.
• Gross margin was approximately 35.4% for the three months ended September 30, 2026, as compared to 39.4% for the three months ended September 30, 2025. We continue to maintain consistent margins quarter over quarter. Our margins have slightly decreased from the prior year as we continue to ramp up drone component manufacturing, as our revenue shifts primarily to enterprise from retail, and as we incur other near-term costs to ensure inventory stock meets current demand.
• Our loss from operations was approximately $8.4 million for the three months ended September 30, 2026, as compared to an operating loss of $4.9 million for the three months ended September 30, 2025. These figures include non-cash stock compensation expense of $5.5 million and $2.1 million for the three months ended September 30, 2026 and 2025, respectively. Refer to Table 2 for our non-GAAP measures and additional details related to our loss from operations.
• Interest income was approximately $1.7 million for the three months ended September 30, 2026, as compared to $0.7 million for the three months ended September 30, 2025. Interest income relates to interest earned from our cash balance.
• Unrealized loss from short-term investments was $18.4 million for the three months ended September 30, 2026.
• Net loss attributable to common shareholders for the three months ended September 30, 2026 was approximately $25.0 million, or ($0.50) per share, as compared to net income of approximately $1.6 million for the three months ended September 30, 2025, or $0.05 per share. The increase in net loss for the 2026 period relates primarily to an unrealized loss from short-term investments of $18.4 million, as compared with an unrealized gain from short-term investments of $5.8 million during the 2025 period.
• We had approximately $162.0 million in cash as of September 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 (ATM) 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 is a leading provider of NDAA-compliant drone components, focused on building a domestic supply chain for the growing U.S. drone industry. The Company manufactures a broad portfolio of critical components, including flight controllers, electronic speed controllers, video systems, motors, FPV headsets, cameras, and, following its acquisition of Upgrade Energy, batteries and power systems. Unusual Machines is expanding U.S. manufacturing to meet increasing demand from defense, enterprise, and commercial customers, while serving the consumer FPV market through its Fat Shark and Rotor Riot brands. According to Fact.MR, the U.S. drone components market represents a $3 billion to $5 billion opportunity. For more information, 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 revenue growth in the fourth quarter and 2027, our belief that we can be adjusted EBITDA positive in 2027, our expectations concerning customer concentration, our future investments, the impact from our partnerships, our manufacturing and real estate leasing expectations, and the future of the U.S. drone industry. 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 and 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 future of the Drone Dominance program, the impact of the U.S. elections on defense spending and the economy in general, the risks that our inventory buildup may become obsolete and we may be unable to sell such inventory at reasonable margins, our ability to manage our growth, risks relating to manufacturing bugs or delays, 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, technical or other issues that may affect the FAA's rulemaking process including possible litigation, and the Risk Factors contained in our Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (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 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 not be considered as 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 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 and Adjusted EBITDA, which are non-GAAP financial measures. We believe that management, analysts, and shareholders benefit from referring to the following non-GAAP financial measures 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 measures have inherent limitations because of the excluded items described below.

We have included in Table 2 a reconciliation of our non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP. We believe that providing the non-GAAP financial measures, 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

Cash balance at June 30, 2026		$	229.6
Q3 cash financings:
Interest income			1.7M
Employee stock option exercises			0.1M
Q3 cash spend:
Normal operations, net			(1.1M	)
Working capital changes			(4.4M	)
Non-recurring cash expenses			(1.1M	)
Inventory purchases			(24.8M	)
Equipment purchases			(3.0M	)
Short-term investments and loan receivable			(35.0M	)
Cash Balance at September 30, 2026		$	162.0M

Table 2 (Non-GAAP)

		Three Months Ended September 30				Nine Months Ended September 30
Net loss		$	(25.0M	)		$	(22.6M	)
Non-cash income and expenses:
Unrealized change in short-term investments			18.4M				12.8M
Stock compensation expense			5.5M				15.1M
Depreciation and amortization			0.1M				0.2M
Adjusted net income (loss) for non-cash related activity		$	(1.0M	)		$	5.5M
Non-operating and non-recurring expenses:
Realized gains from short-term investments			-				(9.5M	)
Interest income			(1.7M	)			(4.3M	)
Non-recurring expenses			2.0M				5.5M
Adjusted EBITDA		$	(0.7M	)		$	(2.8M	)

Table 3

Working Capital Detail
		Q3 2026				Q2 2026
Total current assets		$	351.3M			$	370.6M
Total current liabilities less operating lease liability			(9.2M	)			(3.1M	)
Net working capital		$	342.1M			$	367.5M
Total financings, net of fees		$	-			$	58.2M

Unusual Machines, Inc.
Consolidated Condensed Balance Sheets

		September 30, 2026 (Unaudited)				December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents		$	161,965,505			$	103,261,397
Short-term investments at fair value			53,391,766				39,214,909
Short-term investment at cost			45,000,000				-
Accounts receivable			18,703,356				1,779,423
Inventories			42,622,077				5,316,648
Note receivable			5,000,000				-
Prepaid inventory			23,259,023				9,748,483
Other current assets			1,370,481				190,622
Total current assets			351,312,208				159,511,482
Non-current assets:
Property and equipment, net			8,500,523				2,233,891
Operating lease right-of-use assets			3,617,334				2,607,256
Other assets			243,551				197,785
Goodwill			15,596,105				15,596,105
Intangible assets, net			2,393,977				2,561,895
Total non-current assets			30,351,490				23,196,932
Total assets		$	381,663,698			$	182,708,414
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses		$	6,055,909			$	1,506,793
Deferred revenue			114,491				638,125
Operating lease liability			972,234				456,429
Contingent consideration			3,000,000				2,847,000
Total current liabilities			10,142,634				5,448,347
Non-current liabilities
Deferred tax liability			146,772				146,772
Operating lease liability - less current portion			2,741,969				2,173,626
Total non-current liabilities			2,888,741				2,320,398
Total liabilities			13,031,375				7,768,745
Commitments and contingencies (See note 13)
Stockholders' equity:
Common stock - $0.01 par value, 500,000,000 authorized and 49,982,430 and 37,759,911 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively			499,827				377,596
Additional paid in capital			445,760,785				229,665,734
Accumulated deficit			(77,652,637	)			(55,107,131	)
Accumulated other comprehensive income			24,348				3,470
Total stockholders' equity			368,632,323				174,939,669
Total liabilities and stockholders' equity		$	381,663,698			$	182,708,414

-Of the $18.7 million balance in Accounts Receivable as of September 30, 2026, approximately $1.9 million is from related parties.

Unusual Machines, Inc.
Consolidated Condensed Statement of Operations
For the Three and Nine Months Ended September 30, 2026 and 2025
(Unaudited)

		Three months ended September 30,								Nine months ended September 30,
		2026				2025				2026				2025
Revenues		$	13,903,032			$	2,134,588			$	38,721,336			$	6,300,857
Cost of goods sold			8,986,728				1,294,200				25,348,791				4,168,984
Gross Margin			4,916,304				840,388				13,372,545				2,131,873
Operating Expenses
Operations			2,012,744				636,705				5,380,364				1,343,584
Research and development			350,548				39,369				994,649				110,002
Sales and marketing			613,614				373,539				1,983,665				883,513
General and administrative			10,238,161				4,730,063				28,265,622				15,151,160
Depreciation and amortization			64,859				22,449				204,996				63,635
Total operating expenses			13,279,926				5,802,125				36,829,296				17,551,894
Loss from operations			(8,363,622	)			(4,961,737	)			(23,456,751	)			(15,420,021	)
Other income and (expense)
Interest income			1,700,977				715,489				4,313,216				942,755
Unrealized gain (loss) from investments			(18,381,680	)			5,849,713				(12,773,139	)			5,849,713
Realized gain from investments			-				-				9,532,673				-
Change in contingent consideration for Rotor Lab			-				-				(153,000	)			-
Loss from foreign currency transactions			(622	)			-				(7,858	)			-
Interest expense			-				-				(648	)			-
Other income, net			(16,681,325	)			6,565,202				911,244				6,792,468
Net income (loss)		$	(25,044,947	)		$	1,603,465			$	(22,545,507	)		$	(8,627,553	)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
Net income (loss)			(25,044,947	)			1,603,465				(22,545,507	)			(8,627,553	)
Foreign currency translation adjustment			(10,397	)			-				24,348				-
Comprehensive income (loss)		$	(25,055,344	)		$	1,603,465			$	(22,521,159	)		$	(8,627,553	)
Net income (loss) per share
Basic		$	(0.50	)		$	0.05			$	(0.49	)		$	(0.38	)
Diluted		$	(0.50	)		$	0.05			$	(0.49	)		$	(0.38	)
Weighted average common shares outstanding
Basic			49,968,207				30,002,179				46,094,557				22,610,516
Diluted			49,968,207				30,581,194				46,094,557				22,610,516

-Of the $13.9 million in revenue for the three months ended September 30, 2026, approximately $2.0 million is from related parties.
-Of the $38.7 million in revenue for the nine months ended September 30, 2026, approximately $4.2 million is from related parties.

Unusual Machines, Inc.
Consolidated Condensed Statement of Changes in Stockholders' Equity
For the Three and Nine Months Ended September 30, 2026 and 2025
(Unaudited)

Three and Nine Months Ended September 30, 2025

		Common Stock								Additional Paid-In				Accumulated				Other Comprehensive Accumulated				Total Stockholders'
		Shares				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	)			-				-				-
Issuance of common shares for 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, Management/BOD			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				(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 option compensation expense			-				-				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
Issuance of common shares, Management/BOD			589,232			$	5,892			$	(5,892	)		$	-			$	-			$	-
Issuance of common shares, Option exercises			25,250				253				133,487				-				-				133,740
Issuance of common shares, consulting services			1,539				15				(15	)			-				-				-
Issuance of common shares, public offering			5,000,000				50,000				44,851,000				-				-				44,901,000
Issuance of common shares, Rotor Lab acquisition			656,642				6,566				5,916,345				-				-				5,922,911
Issuance of common shares - warrant exercises			8,500				85				42,415				-				-				42,500
Stock compensation expense			-				-				114,960				-				-				114,960
Stock compensation expense - vested stock			-				-				1,987,600				-				-				1,987,600
Net income			-				-				-				1,603,465				-				1,603,465
Equity adjustment from foreign currency translation			-				-				-				-				2,278				2,278
Balance, September 30, 2025			31,568,949			$	315,688			$	150,239,016			$	(44,541,067	)		$	2,278			$	106,015,915

Three and Nine Months Ended September 30, 2026

		Common Stock						Additional											Accumulated Other
		Number of Shares			Par Value			Paid-In Capital				Stocks to be Issued			Accumulated Deficit				Comprehensive Income				Total
Balance, December 31, 2025			37,759,911		$	377,596		$	229,665,734			$	-		$	(55,107,131	)		$	3,470			$	174,939,669
Issuance of common shares, Management/BOD			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, CMPO			8,823,529			88,235			138,711,758				-			-				-				138,799,993
Issuance of common shares, warrants			350,000			3,500			3,391,500				-			-				-				3,395,000
Stock option compensation expense			-			-			291,412				-							-				291,412
Stock Compensation expense - vested stock						-			3,648,567				-			-				-				3,648,567
Net income			-			-			-				-			10,282,994				-				10,282,994
Equity Adjustment from Foreign Currency Translation			-			-			-				-			-				19,431				19,431
Balance, March 31, 2026			47,793,923		$	477,938		$	375,960,698			$	-		$	(44,824,137	)		$	22,901			$	331,637,400
Issuance of common shares, Management/BOD			8,352		$	84		$	(84	)		$	-		$	-			$	-			$	-
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, ATM			2,000,000			20,000			58,178,764				-			-				-				58,198,764
Stock option compensation expense			-			-			2,239,605				-			-				-				2,239,605
Stock Compensation expense - vested stock			-			-			3,405,957				-			-				-				3,405,957
Net loss			-			-			-				-			(7,783,553	)			-				(7,783,553	)
Equity Adjustment from Foreign Currency Translation			-			-			-				-			-				15,314				15,314
Balance, June 30, 2026			49,956,505		$	499,569		$	440,110,644			$	-		$	(52,607,690	)		$	38,215			$	388,040,738
Issuance of common shares, Option exercises			25,925		$	258		$	162,528			$	-						$	-			$	162,786
Stock option compensation expense			-			-			2,595,874				-							-				2,595,874
Stock Compensation expense - vested stock			-			-			2,891,739				-							-				2,891,739
Net income			-			-			-				-			(25,044,947	)			-				(25,044,947	)
Equity Adjustment from Foreign Currency Translation			-			-			-				-			-				(13,867	)			(13,867	)
Balance, September 30, 2026			49,982,430		$	499,827		$	445,760,785			$	-		$	(77,652,637	)		$	24,348			$	368,632,323

Unusual Machines, Inc.
Consolidated Condensed Statement of Cash Flows
For the Nine Months Ended September 30, 2026 and 2025
(Unaudited)

		Nine Months Ended September 30,
		2026				2025
Cash flows from operating activities:
Net income (loss)		$	(22,545,507	)		$	(8,627,553	)
Depreciation and amortization			390,717				63,635
Stock-based compensation expense			15,073,154				9,522,261
Unrealized loss (gain) on short-term investments			12,773,139				(5,849,713	)
Realized gain on short-term investments			(9,532,673	)			-
Bad debt			-				12,146
Contingent consideration			153,000				-
Change in assets and liabilities:
Accounts receivable			(16,923,933	)			(122,696	)
Inventories			(37,305,429	)			(1,746,100	)
Prepaid inventory			(13,510,540	)			(6,016,951	)
Other assets			(1,225,625	)			(165,529	)
Right of use asset and lease liabilities			74,071				(8,144	)
Note Receivable			(5,000,000	)			-
Accounts payable and accrued expenses			4,549,114				406,399
Deferred revenue and other current liabilities			(523,634	)			1,137,953
Net cash used in operating activities			(73,554,146	)			(11,394,292	)
Cash flows from investing activities
Acquisition of businesses, net of cash received			-				93,054
Investments in short-term securities			(82,499,998	)			(11,000,000	)
Proceeds from sale of short-term investments			20,082,674				-
Purchase of property and equipment			(6,481,450	)			(1,550,687	)
Purchase of intangible assets (patents)			(7,980	)			-
Net cash used in investing activities			(68,906,754	)			(12,457,633	)
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, registered direct offering			-				48,500,000
Gross proceeds from issuance of common shares, at the market			60,000,000				-
Proceeds from option exercises			750,373				501,610
Proceeds from issuance of common shares, warrant exercises			3,395,000				2,479,466
Common share issuance offering costs			(13,001,236	)			(7,103,000	)
Net cash provided by financing activities			201,144,130				84,378,076
Net increase in cash			58,683,230				60,526,149
Effect of exchange rates changes on cash			20,878				2,278
Cash, beginning of period			103,261,397				3,757,323
Cash, end of period		$	161,965,505			$	64,285,750

SOURCE: Unusual Machines

View the original press release on ACCESS Newswire

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were Unusual Machines' third-quarter 2026 revenue and earnings?

Unusual Machines generated approximately $13.9 million in revenue and recorded a net loss attributable to common shareholders of approximately $25.0 million, or $0.50 per share. Revenue increased 551% year over year but declined 17% from the preceding quarter.

When does UMAC aim to achieve positive adjusted EBITDA?

Unusual Machines aims to achieve positive adjusted EBITDA in 2027. Its third-quarter 2026 adjusted EBITDA loss was approximately $0.7 million. This is a company financial goal, not an achieved result.

How much cash did Unusual Machines spend on inventory and investments in the third quarter of 2026?

Unusual Machines made $24.8 million in inventory purchases and $35 million in investments, including its loan receivable. These were the primary drivers of the quarter's cash decrease.