ORLANDO, FLORIDA / ACCESS Newswire / March 9, 2026 / Unusual Machines (NYSE:UMAC) ("Unusual Machines" or the "Company"), a leading provider of NDAA-compliant drone components, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2025 and is anticipating filing its Form 10-K with the U.S. Securities and Exchange Commission for the fiscal year ended December 31, 2025 in the coming days. The Company provided the following letter to its shareholders from CEO Allan Evans.

During the year we strengthened the financial position of the company to execute an aggressive expansion through multiple financings. As of December 31, 2025, we held approximately $103 million in cash and $39 million in short-term investments, with no debt, resulting in net working capital of approximately $157 million. This capital position allows us to continue scaling manufacturing capacity, expanding our workforce, and investing in the infrastructure required to support the rapidly growing domestic drone ecosystem.

We ended the year with approximately $103.3 million in cash, compared to approximately $3.7 million at the end of 2024. The increase in cash was primarily driven by several equity financings completed during the year as well as warrant exercises and ATM activity. Over the course of 2025 we raised $157.8 million through equity sales. These financings allow us to invest aggressively in scaling the company while maintaining financial flexibility and providing a working capital basis for us to manage inventory and material flow.

Cash can be allocated to many different balance sheet categories at any given time. It can be used to purchase inventory, fund capital equipment, etc. The purpose of these balance sheet activities is to use the cash to generate a positive return. The best way to measure cash flow for our business is to aggregate these categories and subtract out payables to quickly understand our entire business. We call this our working capital and is summarized in Table 3. At the end of 2025, our working capital was approximately $157.4 million. Our working capital at the end of 2024 was $5.2 million and across 2025 we raised $157.8 million through equity sales. Through all activities across 2025 we generated a cash loss of approximately $5.6 million.

In this same year, we recognized a GAAP net loss of approximately $19.2 million. This GAAP loss is primarily driven by non-cash stock compensation expense of approximately $15.7 million. Reference Table 2 for additional details on our net loss to operational loss for the fourth quarter. I believe that if Unusual Machines was cash flow positive with a relatively minimal operational net loss we would be in the "goldilocks" zone for rapid growth. It demonstrates that we are constantly re-investing in maximum growth while not creating risks from significant cash depletion. As long as we continue to sustain high YoY growth rates, we will target this type of financial performance.

As we scale manufacturing, we will need to grow revenues to consume the material or we run the risk of scaling past demand and incurring significant losses. We do not believe we will be demand limited in the next 18 months. The Drone Dominance program (www.dronedominance.io) indicates the need for U.S. production of 90,000 drones in 2026 and 250,000 drones in 2027. Each drone represents about $1,000 in total revenue potential for Unusual Machines. This provides an immediately addressable market of at least $90 million this year and $250 million next year without considering the market potential of any of the other government and commercial drone programs.

Introducing new products, processes, and production facilities results in initial inefficiencies that will reduce gross margins in the short term. This margin impact is generally the most pronounced in the quarter after the facility is operational. For instance, our gross margins in Q4 of 2025 were approximately 36% while our margins from just motor production were approximately 20%. We expect margins from motor production will dip further in Q1 before rebounding as the margin impacts are not realized until after the product is shipped. Once we get past these initial inefficiencies, we will work to return margins to our 40% target.

• Revenues totaled approximately $4.9 million for the three months ended December 31, 2025 as compared to $2.0 million for the three months ended December 31, 2024 which was a 144% increase for the fourth quarter year over year.

• Revenues totaled approximately $11.2 million for the year ended December 31, 2025 as compared to revenue of $5.6 million for the year ended December 31, 2024, which represents a 101% increase year over year.

• Gross margin for the fourth quarter was approximately 36%, which improved due to the increase in our enterprise sales mix over retail sales. Our gross margin for the year ended December 31, 2025 is approximately 35%.

• Our loss from operations was approximately $9.7 million for the three months ended December 31, 2025 as compared to an operating loss of $2.8 million for the three months ended December 31, 2024. Included in this is non-cash stock compensation expense of $6.1 million and $1.5 million for the three months ended December 31, 2025 and 2024, respectively. See table 2 for additional details.

• Interest income was $0.9 million for the three months ended December 31, 2025 related to interest earned from our cash balance which increased from our recent common stock offerings.

• Unrealized gain from short-term investments was $2.7 million for the year ended December 31, 2025 and realized gains from short-term investments was $1.4 million related to investment gains from our investments made during the year.

• Net loss for the year ended December 31, 2025 was approximately $19.2 million or ($0.74) per share as compared to a net loss of approximately $31.9 million for the year ended December 31, 2024 or ($3.84) per share. See table 2 for additional details.

• We had approximately $103.3 million of cash as of December 31, 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, July and October 2025 and cash exercise of warrants in February and December 2025. See table 1 for additional details.

Unusual Machines manufactures and sells drone components and drones across a diversified brand portfolio, which includes Fat Shark, the leader in FPV (first-person view) ultra-low latency video goggles for drone pilots. The Company also retails small, acrobatic FPV drones and equipment directly to consumers through the curated Rotor Riot ecommerce store. With a changing regulatory environment, Unusual Machines seeks to be a dominant Tier-1 parts supplier to the fast-growing multi-billion-dollar U.S. drone industry. According to Fact.MR, the global drone accessories market is currently valued at $17.5 billion and is set to top $115 billion by 2032.

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 expectations concerning the growth of our operations, our business and our revenues, the growth of the NDAA-compliant drone market, our anticipated gross margins, our plans to scale manufacturing capacity including the timing and success of new production lines for motors, batteries, cameras and headsets, our ability to achieve cash flow positive operations in the future, our workforce expansion plans, and our building a profitable business and achieving positive cash flow from operations. 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 the risks that enough of our customers receive orders under the Drone Dominance program or other government programs and in turn place component orders with us; our dependence on a limited number of enterprise customers and the risk of customer concentration; the risks that our inventory buildup will become obsolete or that we cannot sell such inventory at reasonable margins; our ability to manage our rapid growth, including integrating new employees and maintaining quality control; risks relating to manufacturing bugs, delays, or failure to achieve anticipated production efficiencies; the availability of a satisfactory labor pool to meet our planned growth; potential supply chain disruptions or component shortages; the impact from tariffs, including inflation and increased costs of goods sold; risks related to our dependence on government contracts and programs, including potential funding reductions, program delays, or changes in procurement priorities; the risk that our automated production equipment may not be operational on the anticipated timeline; the risk of continued dilution from future equity financings; any risk that our auditors may require us to make changes to our financial statements, and the Risk Factors contained in our Form 10-Q, filed with the Securities and Exchange Commission (the "SEC") on November 6, 2025, Prospectus Supplements filed with the SEC on September 2, 2025, July 15, 2025, and May 6, 2025 and in our Form 10-K for the year ended December 31, 2025, which we anticipate filing in the coming days. 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.

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.