美國
證券和交易委員會
華盛頓特區 20549
表單
| 根據1934年證券交易法第13或15(d)部分的季度報告 | |
| 截至季度結束日期的財務報告 | |
| 或者 | |
| 根據1934年證券交易法第13或15(d)部分的過渡報告 | |
| 過渡期從 _____________ 到 _____________ | |
委員會文件號。
（按其章程規定的確切註冊人名稱）
| （國家或其他管轄區的 公司註冊或組織 |
（聯邦稅號 |
|
|
||
| 主執行辦公室地址 | 郵政編碼 |
(
（註冊人的電話號碼，包括區號）
根據法案第12（b）項註冊的證券：
| 每一類的名稱 | 交易標誌 | 在其上註冊的交易所的名稱 | ||
請選擇複選框，指示註冊者：
(1) 在過去12個月內按照1934年證券交易所法案第13或15(d)條的規定提交了所有要求提交的報告
(或者針對註冊者需要提交這些報告的更短期間，也屬於這類報告)，以及(2) 已經受到這類提交要求的影響
在過去的90天內。
請以勾選方式說明註冊人是否在前12個月內(或被要求提交文件的較短時期內)提交了電子版交互式數據文件，並且獲得了《電子文件規定》第405條的提交要求。
請打勾表示註冊者是大型加速文件提交者、加速文件提交者、非加速文件提交者、較小的報告公司還是新興增長公司。 請參閱《交易所法規》第120億.2條中「大型加速文件提交者」、「加速文件提交者」、「較小的報告公司」和「新興增長公司」的定義。
| 大型加速申報者 ☐ | 加速歸檔者 ☐ |
| 小型報告公司 | |
| 新興成長公司 |
如果是新興成長型公司，通過複選標記來表明註冊人是否選擇不使用按照《交易法》第13(a)條規定提供的任何新的或修訂的財務會計準則的延長過渡期進行合規。
請用勾號指示註冊者是否爲殼公司（按《交易所法》第12（b）-2條定義）。是 ☐ 否
截至2024年11月13日， 普通股股份中 每股面值爲$0.01的登記公司股份已發行。
飛凡機器公司
2024年季度報告 表格10-Q
目錄
| 頁碼 | ||
| 第一部分 - 財務信息 | ||
| 項目1。 | 基本報表 | 4 |
| 未經審計的 綜合簡明資產負債表 | 4 | |
| 未經審計的綜合簡明損益表 | 5 | |
| 未經審計的綜合簡明股東權益變動表 | 6 | |
| 未經審計的綜合簡明現金流量表 | 7 | |
| 未經審計的合併簡明財務報表附註 | 8 | |
| 項目2。 | 分銷計劃 | 28 |
| 項目 3. | 有關市場風險的定量和定性披露 | 34 |
| 項目4。 | 控制和程序 | 34 |
| 第二部分- 其他信息 | ||
| 項目 1. | 法律訴訟 | 35 |
| 項目1A。 | 風險因素 | 35 |
| 項目 2. | 未註冊的股票股權銷售和籌款用途 | 35 |
| 項目 3. | 對優先證券的違約 | 35 |
| 項目 4. | 礦山安全披露 | 35 |
| 項目5。 | 其他信息 | 35 |
| 項目6。 | 展示資料 | 36 |
| 簽名 | 37 | |
| 2 |
除非另有說明或環境另行要求，「飛凡機器」、「我們」、「我們的」和「公司」一詞指的是內華達州的飛凡機器股份有限公司。
關於前瞻性聲明的特別說明
本季度報告 按表格10-Q呈報，或稱季度報告，包含涉及風險和不確定性的前瞻性陳述。我們按照1995年《私人證券訴訟改革法》及其他聯邦證券法的安全港條款進行這樣的前瞻性陳述。所有其他非歷史事實的陳述均爲前瞻性陳述。在某些情況下，您可以通過「可能」、「將」、「應該」、「預計」、「打算」、「計劃」、「預期」、「相信」、「估計」、「預測」、「潛在」、「繼續」或這些術語的否定形式或其他可比術語來識別前瞻性陳述。
前瞻性聲明既不是歷史事實，也不是對未來業績的保證，僅基於我們目前對業務未來、籌集額外資本以滿足流動性需求、未來計劃和策略、預期事件和趨勢、某些無形資產攤銷金額的不確定性、經濟和其他未來情況的信仰、期望和假設。鑑於前瞻性聲明涉及未來，因此受固有不確定性、風險和難以預測的環境變化的影響，許多因素不可控。因此，您不應依賴於這些前瞻性聲明。可能導致我們的實際業績和財務狀況與前瞻性聲明中所示有實質性差異的重要因素在於我們於2024年10月25日向證券交易所提交的最終招股說明書中更全面地描述了部分「風險因素」欄目中。
這些前瞻性聲明只在本10-Q表格的日期下有效，並且受到業務和經濟風險的影響。我們沒有任何義務更新或修改前瞻性聲明，以反映在作出這些聲明後發生的事件或存在的情況，法律要求的情況除外。
| 3 |
第一部分 - 財務信息
| 項目1。 | 基本報表 |
不尋常的機器公司
合併簡明資產負債表
9月30日 2024 | 十二月 31, 2023 | |||||||
| (未經審計) | ||||||||
| 資產 | ||||||||
| 流動資產： | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 應收賬款 | ||||||||
| 庫存 | ||||||||
| 預付存貨 | ||||||||
| 其他流動資產 | ||||||||
| 總流動資產 | ||||||||
| 非流動資產： | ||||||||
| 物業和設備，淨值 | ||||||||
| 延遲募資成本 | ||||||||
| 經營租賃使用權資產 | ||||||||
| 商譽和無形資產 | ||||||||
| 總非流動資產 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債和股東權益 | ||||||||
| 流動負債 | ||||||||
| 應付賬款和應計費用 | $ | $ | ||||||
| 營運租賃負債 | ||||||||
| 遞延收入 | ||||||||
| 認股權證負債 | ||||||||
| 可轉股債務-轉股債券轉換選擇權 | ||||||||
| 總流動負債 | ||||||||
| 長期負債 | ||||||||
| 可轉換債券 | ||||||||
| 營運租賃負債-長期 | ||||||||
| 總負債 | ||||||||
| 承諾和 contingencies（見注13） | ||||||||
| 股東權益: | ||||||||
| A系列優先股 - $面值， 授權並 和 於2024年9月30日和2023年12月31日分別發行並已發行的股數 | ||||||||
| B系列優先股 - $ 票面價值， 已授權和 和 於2024年9月30日和2023年12月31日分別發行和流通的股份 | ||||||||
| C輪優先股 - $ 面值， 覈准的 和 於2024年9月30日和2023年12月31日分別發行和流通的股份 | ||||||||
| 普通股-美元 par value, authorized and and 截至2024年9月30日和2023年12月31日已發行和流通的股份。 | ||||||||
| 股票認購應收款項。 | ||||||||
| 累積赤字 | ( | ) | ( | ) | ||||
| 股東權益總額 | ||||||||
| 負債合計及股東權益總計 | $ | $ | ||||||
請查看附註的簡明未經審計的基本報表。
| 4 |
飛凡機器公司。
合併簡明利潤表
截至2024年和2023年9月30日的三個月和九個月
(未經審計)
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
|
(重述 - 注意事項 14) |
||||||||||||||||
| 收入 | $ | $ | $ | $ | ||||||||||||
| 銷售成本 | ||||||||||||||||
| 毛利潤 | ||||||||||||||||
| 運營費用 | ||||||||||||||||
| 運營 | ||||||||||||||||
| 研發 | ||||||||||||||||
| 銷售和市場推廣 | ||||||||||||||||
| General and administrative | ||||||||||||||||
| 折舊和攤銷 | ||||||||||||||||
| 總營業費用 | ||||||||||||||||
| 營業損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收益（費用） | ||||||||||||||||
| 利息收入 | ||||||||||||||||
| 利息支出 | ( | ) | ( | ) | ||||||||||||
| 債務中止損失 | ( | ) | ( | ) | ||||||||||||
| 衍生品和認股權證負債公允價值的變動 | ||||||||||||||||
| 其他（收入）費用 | ( | ) | ( | ) | ||||||||||||
| 淨損失 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 普通股股東應占淨虧損每股金額 | ||||||||||||||||
| 基本和攤薄 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| 基本和攤薄 | ||||||||||||||||
請參閱附帶的未經審計簡明附註，以及綜合簡明的基本報表。
| 5 |
飛凡機器公司。
股東權益變動綜合簡明報表
截至2024年9月30日和2023年的九個月
(未經審計)
2023年9月30日止九個月（經調整-注14）
| A系列，優先股 | B系列，優先股 | C系列，優先股 | 普通股 | 股本所對應的賬面超額支付 | 累積 | 股東總數 | ||||||||||||||||||||||||||||||||||
| 分享 | 價值 | 股票 | 價值 | 股票 | 價值 | 股票 | 價值 | 資本 | 赤字 | 股本 | ||||||||||||||||||||||||||||||
| 2022年12月31日餘額 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| 發行普通股以換取服務。 | – | – | – | |||||||||||||||||||||||||||||||||||||
| 淨損失 | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 2023年3月31日的結存 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| 優先股轉換 | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 淨虧損 | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 餘額，2023年6月30日 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| 淨虧損 | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 餘額，2023年9月30日 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
續）
| 6 |
截至2024年9月30日的九個月
| A系列，優先股 | B系列，優先股 | C系列，優先股 | 普通股 | 股本所對應的賬面超額支付 | 累積 | 股東總數 | ||||||||||||||||||||||||||||||||||
| 股票 | 價值 | 股票 | 價值 | 股票 | 價值 | 股票 | 價值 | 資本 | 赤字 | 股本 | ||||||||||||||||||||||||||||||
| 2023年12月31日餘額 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| 以普通股作爲結算 | – | – | – | |||||||||||||||||||||||||||||||||||||
| 發行普通股，首次公開募股，扣除發行費用 | – | – | – | |||||||||||||||||||||||||||||||||||||
| 發行普通股，業務合併 | – | – | – | |||||||||||||||||||||||||||||||||||||
| 當收購日期，票據的公允價值與面值之間的差額攤銷爲利息費用，時間爲 | – | ( | ) | ( | ) | – | ( | ) | ||||||||||||||||||||||||||||||||
| 淨虧損 | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 2024 年 3 月 31 日餘額 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| 優先股轉換 | – | ( | ) | – | ( | ) | ||||||||||||||||||||||||||||||||||
| 普通股發行，股權激勵計劃 | – | – | – | ( | ) | |||||||||||||||||||||||||||||||||||
| 股票補償費用 - 已歸屬股票 | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| 股票期權補償支出 | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| 淨虧損 | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 餘額，2024年6月30日 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| 普通股發行，股權激勵計劃 | – | – | – | ( | ) | |||||||||||||||||||||||||||||||||||
| 普通股與A優先股的交易 | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 可轉換票據與C優先股的交易 | – | – | – | |||||||||||||||||||||||||||||||||||||
| 股票補償費用 - 已歸屬股票 | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| 股票期權補償費用 | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| 淨虧損 | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 餘額，2024年9月30日 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
請參閱隨附的合併基本報表未經審計的簡要說明。
| 7 |
飛凡機器公司。
合併簡明現金流量表
截至2024年9月30日和2023年的九個月
(未經審計)
| 截至9月30日的九個月 | ||||||||
| 2024 | 2023 | |||||||
| (重新表述 - 註釋14) | ||||||||
| 經營活動現金流量： | ||||||||
| 淨虧損 | $ | ( | ) | $ | ( | ) | ||
| 折舊 | ||||||||
| 股票補償開支作爲結算 | ||||||||
| 股票補償費用 | ||||||||
| 權證和衍生債務公允價值變動 | ( | ) | ||||||
| 債務清償損失，非現金部分 | ||||||||
| 資產和負債的變動： | ||||||||
| 應收賬款 | ( | ) | ||||||
| 庫存 | ||||||||
| 預付存貨 | ( | ) | ||||||
| 其他資產 | ( | ) | ||||||
| 應付賬款和應計費用 | ( | ) | ||||||
| 營運租賃負債 | ( | ) | ||||||
| 客戶存款和其他流動負債 | ||||||||
| 用於經營活動的淨現金 | ( | ) | ( | ) | ||||
| 投資活動現金流量 | ||||||||
| 收購業務支付的現金部分；扣除收到的現金 | ( | ) | ||||||
| 購買資產和設備 | ( | ) | ||||||
| 投資活動中使用的淨現金 | ( | ) | ( | ) | ||||
| 融資活動的現金流： | ||||||||
| 發行普通股所得款項 | ||||||||
| 普通股份發行的發行費用 | ( | ) | ( | ) | ||||
| 籌集資金的淨現金流量 | ( | ) | ||||||
| 現金淨增加（減少） | ( | ) | ||||||
| 期初現金 | ||||||||
| 期末現金 | $ | $ | ||||||
| 補充現金流信息披露： | ||||||||
| 爲所收購的資產支付的非現金對價和承擔的負債 | $ | $ | ||||||
| 延期獲取成本 | $ | $ | ||||||
| 延遲發行成本記錄爲收益減少 | $ | $ | ||||||
請參閱附帶的未經審計簡明附註，以及綜合簡明的基本報表。
| 8 |
飛凡機器公司。
合併簡要財務報表附註
報告期截至2024年9月30日
注1-組織和業務性質
飛凡機器公司（「公司」） 是一家位於內華達州的公司，專注於商業無人機行業。公司於2024年4月22日從波多黎各重新註冊至內華達州。
2024年2月16日，公司結束了其首次公開發行（「IPO」），每股發行價格爲 每股，總計募集 。這些股票在紐交所美國交易。與IPO結束同時，公司收購了Fat Shark Holdings有限公司（「Fat Shark」）和轉子暴亂有限責任公司（「轉子暴亂」）從Red Cat Holdings，Inc.（「Red Cat」）（見註釋3）。
注2-顯著會計政策摘要
合併原則
合併基本報表包括 公司的賬目及其全資子公司Fat Shark和Rotor Riot，自2024年2月16日收購以來。公司間 交易和結餘在合併時已被消除。
未經審計的中期財務信息
公司的合併簡明基本報表已根據證券交易所（"SEC"）的規定和法規，在未經審計的情況下編制。根據這些規定和法規的規定，通常包括在根據GAAP編制的財務報表中的某些信息和腳註披露已經被壓縮或省略在這份季度報告中。因此，這些簡明基本報表應與公司在年度報告10-K/A中包含的財務報表和附註一起閱讀，截至2023年12月31日結束的年度。任何中間期間的結果未必能反映任何未來期間的結果。
使用估計
根據通用會計準則（GAAP）編制基本報表需要管理層進行估計和假設，這些估計和假設會影響資產和負債的報告金額，基本報表日期的附註性資產和負債的披露，以及報告期間內收入和費用的金額。因此，實際結果可能會與這些估計有所不同，而這種結果可能是重大的。
基本報表包括一些基於管理層最佳估計和判斷的金額。這些基本報表中反映的重要估計包括用於 (i) 判斷以股份爲基礎的補償、 (ii) 企業併購中收購資產和承擔負債的公允價值和作爲對價發行的股份的價值、 (iii) 與應收賬款、庫存和銷售相關的準備金和減值準備、 (iv) 評估包括商譽在內的長期資產的減值、 (v) 租賃負債和相關使用權資產的公允價值、嵌入式換股選擇權衍生金融工具和認股權準備金的公允價值，以及 (vi) 保修負債準備。
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現金和現金等價物
公司認爲所有高度流動的債務工具和其他到期日短於三個月的投資，在購買時視爲等同現金。公司在多家商業銀行和金融服務公司中保留存款。這些金融機構由美國聯邦存款保險公司保險，最高可達$
應收賬款淨額
公司以發票金額確認應收賬款。在2024年2月收購達成後，公司採納ASC 326《金融工具-信貸損失》，評估報告日期的所有信貸損失。公司定期評估其應收賬款，並根據過去壞賬覈銷和追收情況以及當前信貸條件設立壞賬準備金。根據管理層的自主權，應收賬款被覈銷爲無法收回。截至2024年9月30日和2023年12月31日，公司認爲應收賬款能夠全部收回；因此，
庫存
庫存包括成品， 按成本或淨可變現價值較低者計價，並採用先進先出法進行計量。成本元件包括 直接材料和直接人工，以及入境運費。在每個資產負債表日期，公司評估其存貨的淨可變現價值， 使用包括當前產品售價在內的各種參考指標，並評估過剩數量和過時情況。
延遲募資成本
公司推遲了與其IPO相關的直接增量成本。公司資本化了$
物業和設備，淨值
財產和設備按成本減去累計折舊的淨值進行計算。折舊採用直線法，根據所擁有資產的預計使用壽命提供，範圍從
租賃
公司已採用會計準則彙編
(ASC) 842，「租賃」，該準則要求確認與租賃協議相關的資產和負債。截至2024年2月16日，即收購日期，公司確認了價值$的租賃負債。
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公司確定合同在簽訂時是否爲租賃或包含租賃。經營租賃負債根據剩餘租賃期內未來最低租金支付的現值，在每個報告日進行衡量。公司的租賃合同沒有規定隱含利率。因此，公司根據其最近的債務融資使用了一個有效折扣率。
商譽和開多資產
商譽代表着從其他資產收購中獲得的未單獨確定和單獨確認的未來經濟利益。公司根據ASC 350《無形資產-商譽及其他》（「ASC 350」）的規定對商譽進行減值測試。商譽至少每年在報告單位級別進行減值測試，或者在事件或情況的變化表明商譽可能受損時進行測試。ASC 350規定實體有選擇性地首先評估定性因素，以確定事件或情況的存在是否導致判斷報告單位的公允價值是否大於其賬面價值是更可能還是不太可能。如果在評估事件或情況的整體性之後，實體確定報告單位的公允價值大於其賬面價值不太可能，那麼不需要進行額外的減值測試。然而，如果實體得出相反結論，則需要執行減值測試。減值測試包括將報告單位的估計公允價值與其賬面價值（包括商譽）進行比較。如果估計的公允價值超過賬面價值，則商譽被認爲沒有受損。但如果報告單位的公允價值低於賬面價值，則會確認減值損失，其金額等於賬面價值超過公允價值的金額，但不超過分配給該報告單位的商譽的總額。
對報告單位公允價值的估計可使用收益方法、市場方法或兩者結合進行計算。在收益方法下，我們利用貼現現金流量法估計報告單位的公允價值。在估計公允價值時，包括估計未來現金流量、未來營業收入增長假設（包括毛利率、營業費用和資本支出）、以及用於貼現估計未來現金流量預測至其折現值的利率，該利率基於估計的加權平均資本成本（即選定的折現率）。管理層的假設基於歷史數據，輔以當前和預期市場條件、估計增長率以及管理層的計劃。在市場方法下，公允價值來源於公開交易公司的指標或類似企業歷史完成交易。選擇類似企業是基於報告單位所處市場，並考慮風險概況、規模、地理位置以及產品和服務的多樣性。
公司在發生事件或情況變化時，會審核長期資產，包括無形資產和其他具有確定生命週期的無形資產，以判斷其是否存在減值。公司根據ASC 360《長期資產的減值或處置》進行長期資產減值分析。ASC 360要求公司將資產和負債按可識別現金流基本獨立於其他資產和負債現金流的最低層級進行分組，並評估該資產組與未來未折現現金流總和的關係。如果未折現現金流未能表明資產組的賬面價值可回收，則減值費用的計算爲資產組賬面價值超過其基於折現現金流分析或評估的公允價值的金額。
金融資產和負債的公允價值、輸入和估值技術，以及相關披露
公允價值的衡量與披露指引 定義了公允價值並建立了一個衡量公允價值的框架。公允價值被定義為在測量日期的市場參與者之間，按有序交易所接收的價格來 賣出一項資產或支付的價格來轉移一項負債（退出價格）。根據這一指引，公司已將其經常性財務資產和負債分類為三級 公允價值層級，根據估價技術的輸入優先順序進行分類。
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公平值層次給予最高優先順位給予活躍市場中相同資產或負債的報價價格（第1級），並給予最低優先順位給予無法觀察的輸入（第3級）。用於衡量公平值的輸入可能屬於不同層次的公平值層次。在這種情況下，完全的公平值測量所處的公平值層次已根據對完全的公平值測量具有重要性的最低層次輸入來確定。公司對某個特定輸入對於整體公平值測量的重要性的評估需要判斷，並考慮到資產或負債的特定因素。
該指南將公平價值層次劃分為以下三個級別：
第1級輸入資料未經調整， 於計量日，為活躍市場中相同資產或負債的報價；
第2級輸入為可觀察到的，在活躍市場中的未調整報價，為類似資產或負債，在非活躍市場中的未調整報價， 其他可觀察到的或可由可觀察到的市場數據證實的輸入，對於相關資產或負債的全部期限具有實質性證明;
Level 3：無法觀測的輸入 對於支持幾乎沒有市場數據的資產或負債的公允價值進行重要性評估。
下表詳細列出截至2024年9月30日，公司金融負債的公允價值計量：
| 總計 | 第1級 | 第2級 | Level 3 | |||||||||||||
| 認股權證負債 | $ | $ | $ | $ | ||||||||||||
| 衍生負債 – 可轉換票據轉換選擇權 | ||||||||||||||||
| 總計 | $ | $ | $ | $ | ||||||||||||
第三層金融工具的變化如下：
| 12月31日, | 購買, 發行及 | 避險項目的價值變動 | 九月三十日， | |||||||||||||
| 2023 | 結算 | 公允價值 | 2024 | |||||||||||||
| 認股權證負債 | $ | $ | $ | ( | ) | $ | ||||||||||
| 衍生負債 – 可轉換票據轉換選擇權 | ( | ) | ||||||||||||||
| 總計 | $ | $ | $ | ( | ) | $ | ||||||||||
非財務資產按公允價值進行披露 在非重覆基礎上
公司的財務工具主要包括現金、應收款項、流動資產、應付帳款、應計費用、債務和衍生工具負債。由於這些工具的短期性質，現金、應收款項、流動資產、應付帳款、應計費用和流動債務的帳面金額約略等於公平價值。
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應計保固
Fat Shark產品自發貨之日起，對材料和工藝缺陷提供兩年的保修。如果在保修期內出現缺陷，Fat Shark將會 (i) 無償使用新零件或性能和可靠性相當於新零件的零件修理受影響的產品；(ii) 將受影響的產品更換為功能上等效的產品；或 (iii) 退還受影響產品的原購買價格。在銷售期間，會記錄對估計保修成本的允許。對這些允許的確定要求公司對產品保修索賠率和預期修理或更換保修產品的成本進行估算。公司目前根據每個產品線的歷史保修成本和基於過去24個月銷售活動的負債估算來確定保修準備金。如果實際退貨率和/或修理和更換成本與公司的估算有顯著差異，則可能需要在未來期間調整以承認額外的銷售成本。歷史上，保修累計和費用金額均不重大。保修負債包含在隨附的合併資產負債表的應計費用中，金額為$
Rotor Riot不對其銷售或其他分發的任何設備提供任何形式的保修。消費者承擔從Rotor Riot購買或獲得的任何產品的所有風險。
收入確認
本公司根據 ASC 606，「來自客戶合同的營業收入」，由財務會計準則委員會（“FASB”）發布。 該標準包括對營業收入確認的因素進行全面評估，包括：
步驟 1：確定與客戶的合約；
步骤 2：确定合同中的履约义务；
步骤 3：确定交易价格；
步驟 4：將交易價格分配給合同中的履約 義務；以及
第5步：當（或在）公司滿足某項表現義務於某一特定時刻時，確認營業收入。
公司從零售分銷商和個人消費者售出產品而獲得營業收入。銷售收入在產品發貨且價格確定或可確定時被確認，公司不存在其他重大責任且有可能收款。當產品的所有權已轉移給客戶，也就是產品發貨給客戶的日期時才被確認。這也是履行義務已滿足的日期。
逕列收益
這裡指的是（i）尚未履行的訂單和（ii）與公司的狂怒活動相關的客戶購票，其中門票提前售出，活動舉行後才會認列。所有這些推遲收入預計在一年內認列。與尚未履行的訂單相關的推遲收入總額為$
銷貨成本
營業成本包括庫存成本、直接 包裝成本以及相關的生產折舊（如有）。
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運費和手續費
發送和運送成本在運送給客戶的產品中
已包含在一般及行政開支內，並總額為$
研究與開發
研究與開發費用包括工資、 員工福利及其他與產品開發相關的人員成本。研究與開發費用還包括 第三方開發成本、材料和比例分攤的間接成本。
所得稅
本公司採用資產和負債法計算所得稅，這要求對預期未來稅務後果的事件確認遞延稅資產和負債。當管理層認為有較大可能性認為部分或全部的遞延所得稅資產未來將無法實現時，將建立評價準備金以將遞延稅資產減少至其估計可實現價值。
如果在審查過程中僅基於其技術優勢，公司確定認可具有不確定稅務立場的利益，且更可能以最大的利益金額實現最終解決。公司的政策是將與未認可的稅務利益相關的利息和罰款視為所得稅費用的一部分。
公司截至2024年9月30日和2023年9月30日的當前備抵為一項稅務利益，我們對此適用完全的估值備抵，因此沒有產生任何所得稅的當前備抵。由於公司自創立以來未曾產生營業利潤，故此有
股票期權是按照ASC第718號題目，償償金-股票償償金，的核算方法估計的授予當天公允價值計算的。公允價值是根據Black-Scholes模型使用反映我們對預期波動性、預期期限和未來分紅的估計輸入來確定的。公司在出現時承認沒收。受限股票的公允價值基於我們的報價價格或授予當天的其他公正價值因數。償金成本是根據服務期間均線原則認列的，這通常是認股期限。
認股權證
該公司根據ASC 480和ASC 815的指引來核算購買其普通股的認股權證。 區分負債和權益 （ASC 480）和ASC 815是根據該公司普通股購售的認股權證來分類為權益或負債工具，基於對各自合約特定條款和條件的評估。評估考慮了認股權證是獨立的金融工具還是嵌入主機合約中，認股權證是否符合ASC 480的負債定義，認股權證是否符合ASC 815的衍生品定義，以及認股權證是否符合ASC 815的權益分類的所有要求。這種評估需要使用專業判斷，在認股權證發行時進行，以及在認股權證待支付的每個後續季度期末日期進行。 衍生工具與對沖 這項評估考慮了認股權證是獨立的金融工具還是嵌入主機合約中，認股權證是否符合ASC 480的負債定義，認股權證是否符合ASC 815的衍生品定義，以及認股權證是否符合ASC 815的權益分類的所有要求。這種評估需要使用專業判斷，在認股權證發行時進行，以及在認股權證待支付的每個後續季度期末日期進行。
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對於符合所有板塊 股權分類標準的已發行或修改的 warrants，這些 warrants 在發行時需作為股權的一部分進行記錄。 對於不符合所有板塊股權分類標準的已發行或修改的 warrants，這些 warrants 必須在發行日及此後每個資產負債表日按其初始公允價值作為負債進行記錄。被分類為負債的 warrants 估計公允價值的變動在綜合營運與全面損失報表中確認為非現金收益或損失。
嵌入式轉換選擇衍生品
公司根據ASC 815中的指引來核算嵌入式債務轉換特徵。 衍生工具與對沖 （ASC 815）。如果嵌入式債務轉換特徵與債務主體沒有明確且密切相關，則必須從主合同中劃分出來，並獨立核算為衍生負債。該衍生負債需要在發行日及其後的每個資產負債表日記錄其初始公允價值。衍生負債的估算公允價值變動被認定為綜合損益表中的非現金收益或虧損。這個評估需要專業判斷力，需在備忘錄發行時以及票據有效期間內的每個後續季度結束日期進行。
基本及稀釋每股淨虧損的計算基於根據FASB ASC第260主題的已發行普通股的加權平均數， 每股盈利稀釋每股淨虧損的計算基於已發行普通股的加權平均數加上潛在稀釋普通股的影響。當公司報告淨虧損時，稀釋每股淨虧損的計算不包括潛在普通股，因為這樣的影響會是反稀釋的。
板塊報告
自從收購了Fat Shark和Rotor Riot後，該公司運營只有一個報告部分。該公司根據我們首席營運決策者如何管理業務、做出資源分配和運營決策，以及評估運營表現來確定其報告部分。
最近會計宣告
在2023年11月，發布了新的會計指導，更新了可報告板塊的披露要求，要求披露定期提供給首席運營決策者（“CODM”）的重大可報告板塊費用，並包含在每個報告的板塊損益指標之內。這項新指導還要求披露被識別為CODM的個人的職稱和職位，以及解釋CODM如何在評估板塊表現和決定如何分配資源時使用報告的板塊損益指標。該新指導自2023年12月15日後開始的年度期間生效，並適用於2024年12月15日後開始的財政年度中的中期期間。該新指導要求對所有呈現在財務報表中的先前期間進行追溯適用。也允許提前採納。2024年1月1日，公司採納了ASC 280，即板塊報告。公司目前運營單一板塊，並不預期與採納相關的任何淨影響。
在2023年12月，發布了與所得稅披露相關的新會計指導。這項新指導要求有關報告實體的有效稅率調節的分解信息，以及有關所得稅支付的附加信息。這項新指導於2024年12月15日起生效，適用於其後的年度會計期間。對於尚未發佈或尚未可以發佈的年度基本報表，也許可提前採用。採用這項新指導時，可能不會導致額外的披露要求。
| 15 |
注釋 3 – 收購
Fat Shark和Rotor Riot
在2024年2月16日，本公司完成了從Red Cat和Red Cat的創始人及首席執行官Jeffrey Thompson手中收購Fat Shark和Rotor Riot的交易（下稱“業務合併”）（請參見附註12 - 相關方交易以獲取更多信息）。Fat Shark和Rotor Riot專注於設計和銷售消費者無人機及第一人稱視角（“FPV”）護目鏡。Rotor Riot也是第三方生產的消費者無人機的授權經銷商。
本公司專門從事生產和銷售小型無人機和基本元件，通過收購Fat Shark和Rotor Riot，帶來品牌認知和在FPV無人機市場部門中堅固的精選零售渠道。這業務組合是公司策略的實現，以有機方式和通過戰略性收購充分利用我們的零售業務，實現將無人機關鍵元件的生產轉移到本土。隨著將無人機元件的生產轉移到本土，公司打算擴大到對需要國內供應鏈的B20億客戶渠道。
業務組合是基於一份於2022年11月21日簽署的股份購買協議（“購買協議”）。從2022年11月21日至2024年2月16日，購買協議經過幾次修訂，並經過某些工作資本調整。根據經修訂的購買協議條款，取得資產的對價包括（i）現金10.0萬美元及2022年存入的1000萬美元存款，（ii）向Red Cat發行的18個月期票據10.0萬美元（詳見附註8“可轉換票據”），以及（iii）發行公司普通股的股份，占2024年2月16日公司未流通普通股的約48.66%（在發行的股份生效後）（合稱“支付的對價”）。公司將Red Cat普通股估值為每股5美元，該價格代表了2024年2月15日公司普通股的IPO價格。因此，支付的對價的價值等於
收購符合ASC 805《業務組合》下的業務合併定義，因此所購買的資產和承擔的負債以公允價值計入。公司尚未完成對Fat Shark和Rotor Riot資產和負債公允價值的評估，因此尚未完全確定未分配購買價格在商譽和其他無形資產之間的分配。這些金額在一年的測量期內可能會有調整。
以下代表Fat Shark和Rotor Riot的公允價值分配：
| 現金 | $ | |||
| 應收賬款（接近合同價值） | ||||
| 存貨（現有及預付） | ||||
| 其他流動資產 | ||||
| 租用權資產-營運 | ||||
| 其他長期資產 | ||||
| 商譽和無形資產（未分配購買價） | ||||
| 總資產 | ||||
| 應付帳款及應計負債 | ||||
| 客戶存款 | ||||
| 營運租賃負債－流動和長期 | ||||
| 總負債 | ||||
| 總購買價格 | $ | |||
| 16 |
最初的商譽和無形資產與Fat Shark和Rotor Riot作為FPV市場領導者以及它們在行業內著名且知名的品牌有關。將這些實體以及它們現有的客戶群結合起來，再加上Unusual Machines擴展至無人機元件20億銷售的策略，將提供戰略優勢。公司將評估商譽和無形資產的金額，一旦未分配的購買價格確定後，預計將可從稅務目的上扣除。
Fat Shark 和 Rotor Riot 的結果已包括在從收購日期起的合併基本報表中。以下表格顯示公司報告的結果及假定在每個期間開始時收購 Fat Shark 和 Rotor Riot 的公司未經審計的形式結果。這些未經審計的形式結果並不一定代表在所呈報的期間內，若收購已生效，實際上會發生的情況（以千為單位，除每分享數據外）：
| 截至九個月結束 | 截至九個月結束 | |||||||||||||||
| 2024年9月30日 | 2023年9月30日 | |||||||||||||||
| 如報告所述 | Proforma （未經審核） | 如報告所述 | Proforma （未經審核） | |||||||||||||
| 營業收入 | $ | $ | $ | $ | ||||||||||||
| 毛利/(虧損) | ||||||||||||||||
| 營運虧損 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他費用 | ( | ) | ( | ) | ||||||||||||
| 淨虧損 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 每股淨收益: | ||||||||||||||||
| 基本 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
本未經審計的合併臨時財務 資訊僅供參考之用。未經審計的合併臨時調整基於初步估算、可用資訊及某些假設，並可能隨著額外資訊的可用而修訂。此外，未經審計的 臨時財務資訊未反映任何針對非經常性項目或預期的協同效應所做的調整，這些協同效應是由於收購而產生的。
截至展示期間開始至收購日期的未經審計的保形財務資訊包含以下調整：1）消除Fat Shark對Rotor Riot的產品銷售的內部營業收入及相關銷售成本，2）將某些Fat Shark庫存的公平價值調整為如同收購在各期間開始時已經發生，3）在2023年第一季度包含於2024年第一季度發生的收購相關費用。
附註四 - 存貨
庫存僅包括成品，總額為$
備註5 - 其他流動資產
截至: 其他流動資產包括:
| 2024年9月30日 | 2023年12月31日 | |||||||
| 與Rotor Riot, LLC和Fat Shark, Ltd.收購相關的存入資金 | $ | $ | ||||||
| 預付保險 | ||||||||
| 租金存入資金 | ||||||||
| 其他預付費用存入資金 | ||||||||
| 其他流動資產總額 | $ | $ | ||||||
| 17 |
注釋6 – 資產和設備淨值
財產和設備包括資產，其預估壽命超過一年。財產和設備應扣除累計折舊，所報金額定期接受減值評估。截至目前的財產和設備如下:
| 2024年9月30日 | 2023年12月31日 | |||||||
| 計算機設備 | $ | $ | ||||||
| 累計折舊 | ( | ) | ( | ) | ||||
| 總固定資產淨值 | $ | $ | ||||||
折舊費用合計為$
注意 7 – 營運租賃
| 年 | 未來租賃 支付 | 經營租賃 折現 | 經營租賃 負債 | |||||||||
| 2024 | $ | $ | ( | ) | $ | |||||||
| 2025 | ( | ) | ||||||||||
| 2026 | ( | ) | ||||||||||
| 2027 | ( | ) | ||||||||||
| 2028 | ( | ) | ||||||||||
| 總計 | $ | $ | ( | ) | $ | |||||||
| 補充資訊 | ||||
| 平均剩餘租賃年限（年） | ||||
| 加權折現率加權值 | ||||
Note 8 – 承諾票據和可轉換票據
在2024年2月，與收購Fat Shark和Rotor Riot一起，如註釋3所討論，本公司向Red Cat Holdings, Inc.（「Red Cat」）發行了一張票據（「票據」）金額為$
| 18 |
隨後，在2024年7月，Red Cat與兩位合格投資者（「投資者」）私下出售其普通股和應付票據，公司向投資者發行新票據（「七月票據」），並取消原來的票據。七月票據中包含
在2024年8月21日，公司與投資者簽訂了兩項
交易所協議，根據協議，投資者交換了他們各自的
八月債券在下列情況下載利息
2024年9月30日止九個月的總利息費用為$
衍生負債
衍生負債的公允價值 是使用二項式期權定價模型來確定的，該模型根據授予日期的股票價格、股票的估計波動性、預期期限內的無風險利率，以及不同結果的某些估計和概率來為負債估值。 衍生工具的公允價值變化每季度記錄在損益表的其他收入和支出中。
衍生負債-轉換選擇權
於2024年8月，並與《8號附註 - 可轉換票據》討論中的8月票據發行同步，公司根據ASC 815記錄了一個與可選轉換功能相關的衍生負債（“轉換衍生負債”），因為它與主合同不明確且密切相關，而嵌入的債務轉換功能符合由於轉換時可能發行的股份量的潛在變量而導致的負債的定義。2024年8月21日，轉換衍生工具的初始公允價值為$
認股權負債
在2024年8月，與備註8 – 可轉換票據中討論的8月份票據的發行一同，公司發行了包括特定條款和義務的權證，其中包括一項基本交易條款，可能會在觸發事件發生時要求向持有人支付現金，根據ASC 815，這些權證需要被分類為負債。權證負債在2024年8月21日的初始公允價值為$
| 19 |
每股盈利
計算稀釋每股淨虧損時未包括的未償還證券，因為其效果將是反稀釋的，包括 和 系列A可轉換優先股（“系列A”）的股份，截至2024年9月30日和2023年9月30日分別轉換後的股份數。 和 系列B可轉換優先股（“系列B”）的股份，截至2024年9月30日和2023年9月30日分別轉換後的股份數。 且 系列C可轉換優先股（“系列C”）的股份，截至2024年9月30日和2023年9月30日分別轉換後的股份數。 截至2024年9月30日，發給員工的期權股份數， 與2024年2月IPO相關的承銷商發行的普通股warrants， 與債務轉換相關的warrants，以及 與第8註解“可轉換票據”中討論的票據相關的普通股股份，經轉換後。
優先股
首選股票面值為$.
A系列可轉換為普通股 每持有一股A系列股票可轉換為1,000股普通股，但需遵循某些限制。A系列股票 不享有對公司股東所提交事項的投票權。
換股系列b可按比例轉換為普通股 每持有一股系列b股票可轉換為5,000股普通股，並受限於某些條件。系列b股票 在公司提交給股東的任何事項上沒有投票權。
C系列股票可按每持有一股C系列股票可轉換為3,000股普通股的比率轉換為普通股，但受某些限制。C系列股票不享有對公司股東所提交的任何事項投票的權利。
在2024年7月22日，公司的主要股東紅貓將其在該公司的所有證券全部出售給兩名非關聯的第三方投資者。作為交易的一部分並在上述銷售之前，紅貓與公司簽署了一份交易協議，根據該協議，紅貓交換了 公司普通股的股份 公司的A系列股份。這些A系列股份可轉換回相同數量的普通股，就原始交換的日期而言，因此公司並未認定與交換相關的任何收益或虧損。
於2024年8月21日，公司與投資者簽訂了兩份
交易所協議，根據該協議，每位投資者將其總計$
| 20 |
在首次公開募股之後，但在2024年9月30日之前，某些股東將 系列b的股份轉換為 普通股的股份。公司在轉換後取消了 系列b的股份。
在2023年6月1日，該公司增發了額外的 系列B股份，以配合取消 股普通股。
2024年9月30日和2023年12月31日的優先股情況如下：
| 優先系列 | 股份截至 2024年9月30日 | 股份，截至2024年9月30日的轉換後 | 股份截至 2023年12月31日 | 股份，截至2023年12月31日的轉換後 | ||||||||||||
| A輪系列 | ||||||||||||||||
| B輪 | ||||||||||||||||
| C系列 | ||||||||||||||||
普通股
普通股面值為$.
2024交易
在2024年1月2日，公司向其前首席執行官發行了 普通股的股份，作為一項分離協議的一部分，並認列薪酬費用為 $ 或每股4美元，這是2024年2月首次公開募股的價值。
二零二零四年二月十六日，該公司完成
首次公開招股及發行 以上市價格的普通股股份，總收益淨額為 $
Simultaneously with its IPO and as a part of
the Purchase Agreement as discussed in Note 3, the Company issued Red Cat shares of common stock as consideration of the
business combination. These were subsequently exchanged into Series A preferred shares as discussed above. As agreed in the
Purchase Agreement, $
Subsequent to the IPO and prior to September 30, 2024, the Company issued shares of common stock related to certain shareholders converting Series B shares into common stock.
On April 30, 2024, the Company issued restricted shares of common stock to executive officers and board members of the Company. The shares of restricted stock were granted under the Company’s 2022 Equity Incentive Plan. The restricted shares issued to executive officers are subject to pro rata forfeiture through February 14, 2025.
On May 2, 2024, the Company issued an additional of restricted shares of common stock to Allan Evans, the Company’s CEO related to an agreed upon reduction of compensation. The shares of restricted stock were granted under the Company’s 2022 Equity Incentive Plan (the “Plan”).
| 21 |
The April 30, 2024 and May 2, 2024 shares were
valued at $ and $ per share, respectively for a total of $
On July 22, 2024, Red Cat sold all of its securities in the Company to two accredited investors in a private transaction. As part of the transaction, Red Cat entered into an Exchange Agreement with the Company pursuant to which Red Cat exchanged shares of the Company’s common stock for shares of the Company’s Series A. There was no gain or loss on this exchange as both the common and preferred shares were determined to have the same fair value as of the exchange date.
On July 30, 2024, the Company issued immediately vested restricted shares of common stock to board members of the Company. The shares of restricted stock were granted under the Plan. The shares were valued at $ per share, which was the value of the Company’s common stock on the date of grant, respectively for a total of $ to be recognized as stock compensation expense during the three months ended September 30, 2024.
2023 Transactions
On March 7, 2023, the Company issued shares of common stock to an investment banking firm (“Revere”) as a fee for the termination of the January 2023 engagement with Revere. These shares were allocated by Revere to some of the Company’s existing shareholders. The Company recorded $ of stock compensation expense related to the issuance of the shares valued at $ per share, which was based on the most recent private sale of common stock for the Company.
On July 10, 2023, the Company’s Board of
Directors approved a
Stock Options
The Plan allows the Company to incentivize key employees and directors with long term compensation awards such as stock options, restricted stock, and other similar types of awards. The Plan is authorized to issue of awards and has an “evergreen” provision, pursuant to which the number of shares of common stock reserved for issuance pursuant to awards under such plan shall be increased on the first day of each year beginning in 2025 and ending in 2032 equal to the lesser of (a) five percent (5%) of the shares of stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (b) such smaller number of shares of stock as determined by our board of directors.
During the nine months ended September 30, 2024, the Company’s board of directors approved the grant of stock options under the Plan to certain employees. The stock options are subject to certain vesting provisions.
The following table presents the activity for stock options outstanding:
Non-Qualified Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding - December 31, 2023 | $ | – | ||||||||||||||
| Granted | $ | |||||||||||||||
| Forfeited/canceled | – | – | ||||||||||||||
| Exercised | – | – | ||||||||||||||
| Outstanding – September 30, 2024 | $ | $ | ||||||||||||||
| 22 |
The range of assumptions used to calculate the fair value of options granted during the nine months ended September 30, 2024 was:
| Exercise Price | $ | – | ||
| Stock Price on date of grant | $ | – | ||
| Risk-free interest rate | - % | |||
| Dividend yield | ||||
| Expected term (years) | ||||
| Volatility | – % | |||
The Company recognized $ in stock-based compensation expense related to stock options during the nine months ended September 30, 2024. As of September 30, 2024, there was $ of unrecognized stock-based compensation expense related to unvested stock options to be recognized over the remaining vesting term through 2028.
Restricted Stock
The following table presents the activity for restricted stock outstanding:
| Restricted | Awards | Awards | ||||||||||
| Stock | Vested | Unvested | ||||||||||
| Outstanding - December 31, 2023 | ||||||||||||
| Granted | ||||||||||||
| Forfeited/canceled | ||||||||||||
| Outstanding – September 30, 2024 | ||||||||||||
The Company recognized $ in stock-based compensation expense related to restricted stock during the nine months ended September 30, 2024. As of September 30, 2024, there was $ of unrecognized stock-based compensation expense related to unvested restricted stock to be recognized over the remaining vesting term through February 15, 2025.
Warrants
The following table presents the activity for warrants outstanding as of September 30, 2024:
| Weighted | ||||||||
| Warrants | Average | |||||||
| Outstanding | Exercise Price | |||||||
| Outstanding - December 31, 2023 | $ | |||||||
| Granted | ||||||||
| Forfeited/cancelled/restored | ||||||||
| Exercised | ||||||||
| Outstanding – September 30, 2024 | $ | |||||||
As discussed in Note 10, “Earnings Per Share and Stockholders’ Equity”, in connection with the IPO, the Company issued representative warrants to its underwriters to purchase shares of common stock. The representative warrants have an exercise price of $5.00 or can be exercised through a cashless exercise feature.
| 23 |
As discussed in Note 8, “Convertible Note”,
in connection with the exchange of the $
All warrants outstanding have a weighted average remaining contractual life of approximately years as of September 30, 2024. The intrinsic value of the warrants at September 30, 2024 is $ as the share price of the Company’s common stock is lower than the strike price of the warrants.
Note 12 – Related Party Transactions
In November 2022, the Company entered into the Purchase Agreement, as amended with Red Cat and Jeffrey Thompson, the Company’s former Chief Executive Officer and President and current director and also the current Chief Executive Officer of Red Cat, pursuant to which, among other things, Mr. Thompson and the Company have agreed to indemnification obligations, which shall survive for a period of nine months from February 16, 2024, subject to certain limitations, which includes a basket of $250,000 before any claim can be asserted and a cap equal to the value of 100,000 shares of our common stock owned by him to secure any indemnification obligations, which stock is our sole remedy, except for fraud. Our prior Chief Executive Officer, Mr. Brandon Torres Declet, negotiated the terms of the Purchase Agreement on an arms’ length basis with Joe Freedman who was the head of Red Cat’s Special Committee. The transaction was ultimately approved by the Company’s and Red Cat’s board of directors. On March 8, 2023, a majority of the disinterested Red Cat shareholders approved the transactions contemplated in the Purchase Agreement in a special meeting. Mr. Thompson recused himself from such vote.
In February 2024, the Company completed the acquisitions to purchase Fat Shark and Rotor Riot from Red Cat. Jeffrey Thompson is the founder and current Chief Executive Officer of Red Cat. Mr. Thompson is also the founder, prior Chief Executive Officer and current member on the Board of Directors of Unusual Machines. Prior to the acquisition, Mr. Thompson held 328,500 shares of common stock in Unusual Machines, which represented approximately 10% prior to the acquisition and IPO.
On April 30, 2024 (“Grant Date”), the Company’s board of directors approved the Company entering into a two-year Management Services Agreement (the “Agreement”) with 8 Consulting LLC (the “Consultant”) for the services of our Chief Executive Officer, Dr. Allan Evans, whereby the Consultant agreed to cause Dr. Evans to perform his services as the Company’s Chief Executive Officer and the Consultant will be compensated on behalf of Dr. Evans by the Company in connection with his performance of such services. The Agreement allows Dr. Evans to receive favorable tax benefits as a resident of the Commonwealth of Puerto Rico who will perform such services in Puerto Rico. Pursuant to the Agreement, Dr. Evans will perform the duties and responsibilities that are customary for a chief executive officer of a public company that either have revenues similar to the Company on a pro forma basis as reflected in the Prospectus filed with the SEC on February 15, 2024, or if pre-revenues, are an active and on-going business that are performing pre-revenue activities. The Consultant agreed to cause Dr. Evans, as Chief Executive Officer, (i) to undertake primary responsibility for managing all aspects of the Company and overseeing the preparation of all reports, registration statements and other filings required filed by the Company with the SEC and executing the certifications required the Sarbanes Oxley Act of 2002 and the rules of the SEC as the principal executive officer of the Company; (ii) attend investor meetings and road shows in connection with the Company’s fundraising and investor relations activities; (iii) to report to the Company’s board of directors; (iv) to perform services for such subsidiaries of the Company as may be necessary.
The Consultant receives
a $
Note 13 – Commitments and Contingencies
Note 14 – Restatement of Previously Issued Financial Statements
On April 16, 2024, the Company changed their independent PCAOB-registered accounting firm and terminated its engagement with their prior auditor. On May 3, 2024, the Securities and Exchange Commission (“SEC”) issued an order that instituted a cease-and-desist against the Company’s previous auditor, which required the Company to obtain new auditors and re-audit its financial statements for the years ended December 31, 2023 and 2022.
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The Company engaged a new, an independent and registered accounting firm, to re-audit the Company’s previously issued financial statements. During the Company’s re-audits, it was noted that certain transactions were not recorded in the correct period, stock compensation expense of $600,000 related to the March 7, 2023 common stock issuance was not recorded and deferred offering costs were classified as an operating activity rather than a financing activity. Expenses totaling $10,993 were originally recorded in 2023 but related to 2022 expenses.
With this restatement, the transactions previously recorded in the incorrect period have been updated to the correct period, classifications on the statements of cash flow have been corrected and the stock compensation previously not recorded has been properly recorded.
The following presents reconciliations of the impacted financial statement line items as filed to the restated amounts as of September 30, 2023 and for the periods then ended. The previously reported amounts reflect those included in the registration statements the Company filed with the Securities and Exchange Commission on February 1, 2024. These amounts are labeled “As Filed” in the tables below. The amounts labeled “Restatement Adjustments” represent the effects of these restatements due to the timing differences and stock compensation expense.
| Statement of Operations for the Nine months Ended September 30, 2023 | ||||||||||||
| As Filed | Restatement Adjustments | As Restated | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of goods sold | ||||||||||||
| Gross profit | ||||||||||||
| Operating expenses: | ||||||||||||
| Research and development | ||||||||||||
| General and administrative | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Total operating expenses | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Other income: | ||||||||||||
| Interest income | ||||||||||||
| Total other income | ||||||||||||
| Net loss before income tax | ( | ) | ( | ) | ( | ) | ||||||
| Income tax benefit (expense) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss per share attributable to common stockholders | ||||||||||||
| Basic and diluted | $ | ) | $ | ) | $ | ) | ||||||
| Weighted average common shares outstanding | ||||||||||||
| Basic and diluted | ||||||||||||
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Statements of Changes in Stockholders’ Equity – As Filed – For the Nine months Ended September 30, 2023
| Series B, Preferred Stock | Common Stock | Additional Paid-In | Stocks to be | Accumulated | ||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Capital | Issued | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Issuance of common shares | – | – | ( | ) | – | – | – | |||||||||||||||||||||||||
| Conversion to preferred shares | ( | ) | ( | ) | – | – | – | |||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
Statements of Changes in Stockholders’ Equity – Restatement Adjustments – For the Nine months Ended September 30, 2023
| Series B, Preferred Stock | Common Stock | Additional Paid-In | Stocks to be | Accumulated | ||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Capital | Issued | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Issuance of common shares | – | – | – | – | – | – | ||||||||||||||||||||||||||
| Conversion to preferred shares | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
Statements of Changes in Stockholders’ Equity – As Restated – For the Nine months Ended September 30, 2023
| Series B, Preferred Stock | Common Stock | Additional Paid-In | Stocks to be | Accumulated | ||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Capital | Issued | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Issuance of common shares | – | – | – | – | ||||||||||||||||||||||||||||
| Conversion to preferred shares | ( | ) | ( | ) | – | – | – | |||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
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Statement of Cash Flows for the Nine months Ended September 30, 2023
| As Filed | Restatement Adjustments | As Restated | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Depreciation | ||||||||||||
| Stock compensation expense | ||||||||||||
| Change in assets and liabilities: | ||||||||||||
| Accounts receivable | ||||||||||||
| Deferred offering costs | ( | ) | ||||||||||
| Other current assets | ||||||||||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||||||
| Cash flows from investing activities | ||||||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Deferred offering costs | ( | ) | ( | )) | ||||||||
| Net cash provided by financing activities | ( | ) | ( | )) | ||||||||
| Net increase (decrease) in cash | ( | ) | ( | ) | ||||||||
| Cash, beginning of period | ||||||||||||
| Cash, end of period | $ | $ | $ | |||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Cash paid for interest | $ | $ | $ | |||||||||
| Cash paid for income tax | $ | $ | $ | |||||||||
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Note 15 – Subsequent Events
Quarterly Grants to our Board of Directors
On October 22, 2024, the Company issued non-employee directors listed in the table below the equity portion of their quarterly compensation. Each of the directors received a vested restricted stock grant for services as a director (and where applicable, committee member) during the quarter ended September 30, 2024. The shares of restricted common stock were granted under the Company’s 2022 Equity Incentive Plan and was subject to each director executing the Company’s standard Restricted Stock Agreement. The fair value per share was based on the quoted trading price as of the close of the market as of October 22, 2024.
| Director | Fair Value Per Share | Amount of Restricted Common Stock | Aggregate Fair Value |
| Cristina Colon | $1.45 | 7,472 | $10,833 |
| Sanford Rich | $1.45 | 7,472 | $10,833 |
| Robert Lowry | $1.45 | 7,472 | $10,833 |
| Jeffrey Thompson | $1.45 | 6,897 | $10,000 |
Private Placement Agreement
On October 29, 2024 (the “Closing Date”), the Company entered into Securities Purchase Agreements (the "SPA”) with accredited investors (each, an "Investor” and together the "Investors”) for a private placement offering ("Private Placement”), for aggregate gross proceeds of $1.95 million before deducting fees to the placement agent and other expenses payable by the Company in connection with the Private Placement. The Company intends to use the net proceeds of approximately $1.7 million of the Private Placement for working capital and general corporate purposes. As part of the Private Placement, the Company issued an aggregate of 1,286,184 units at a per unit purchase price of $1.52 per unit. Each unit consists of one share of common stock, par value $0.01 per share (the "Common Stock”) and one warrant to purchase one share of the Company’s Common Stock at an exercise price of $1.99 per share (each an "Investor Warrant”) and collectively, the Investor Warrants”). The Investor Warrants have a term of five and a half years from the Closing Date and may not be exercised for 180 days after the Closing Date and are exercisable at $1.99 per share, subject to certain limitations and adjustments set forth in the Investor Warrants. Allan Evans, the Company’s Chief Executive Officer and Sanford Rich and Robert Lowry, each a member of the Company’s board of directors, invested an aggregate of $250,000 in the Private Placement on identical terms to the other Investors.
On November 5, 2024, the Board of Directors of the Company awarded each of the Company’s Chief Executive Officer, Chief Financial Officer and Chief Operation Officer 50,000 restricted shares of the Company’s Common Stock under the Plan as bonuses related to the Private Placement. The restricted shares are valued at $1.96 per share, the closing price of our common stock as of the date of the grant, for a total value of $98,000 for each of the Company’s Officers. The bonuses are subject to the Company’s clawback Policy.
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis should be read in conjunction with the unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report and our audited financial statements and related notes thereto included in our Annual Report on Form 10-K/A for the year ended December 31, 2023, which was filed with the SEC on August 9, 2024. The following discussion contains forward-looking statements that are subject to risks and uncertainties. See “Special Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks, and assumptions associated with those statements. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report and of our final prospectus filed with the SEC on October 25, 2024, particularly in the section entitled “Risk Factors.” Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer to Unusual Machines, Inc. and its subsidiaries. All amounts presented in tables, other than per share amounts, are in thousands unless otherwise noted.
Recent Developments
Private Placement
On October 29, 2024 (the “Closing Date”), we entered into Securities Purchase Agreements (the "SPA”) with accredited investors (each, an "Investor” and together the "Investors”) for a private placement offering ("Private Placement”), for aggregate gross proceeds of $1.95 million before deducting fees to the placement agent and other expenses payable by us in connection with the Private Placement. We intend to use the net proceeds of the Offering for working capital and general corporate purposes. As part of the Private Placement, we issued an aggregate of 1,286,184 units at a per unit purchase price of $1.52 per unit. Each unit consisted of one share of common stock, par value $0.01 per share (the "Common Stock”) and one warrant to purchase one share of the Company’s Common Stock (each an "Investor Warrant”) and collectively, the Investor Warrants”). The Investor Warrants have a term of five and a half years from the Closing Date and may not be exercised for 180 days after the Closing Date and are exercisable at $1.99 per share, subject to certain limitations and adjustments set forth in the Investor Warrants.
Results of Operations – Three Months Ended September 30, 2024 compared to the Three Months Ended September 30, 2023
Revenue
During the three months ended September 30, 2024 we generated revenues totaling $1,531,264 compared to $0 during the three months ended September 30, 2023, representing an increase of $1,531,264 or 100%. We did not generate any revenues until the closing of the acquisitions of Fat Shark Holdings Ltd. (“Fat Shark”) and Rotor Riot LLC (“Rotor Riot”) on February 16, 2024. The majority of our revenue during the quarter relates to completed and fulfilled product sales during the period through our Rotor Riot retail channel and from our B2B wholesale through Fat Shark.
Cost of Goods Sold
During the three months ended September 30, 2024, we incurred cost of goods sold of $1,131,777 compared to $0 during the three months ended September 30, 2023, resulting in an increase of $1,131,777 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.
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Gross Margin
During the three months ended September 30, 2024, our gross margin was $399,487 compared to $0 during the three months ended September 30, 2023, resulting in an increase of $399,487 or 100%. Our gross margin, as a percentage of sales, totaled 26% during the three months ended September 30, 2024, compared to 0% during the three months ended September 30, 2023. We anticipate our gross margin to fluctuate period to period depending on certain promotions and products that are sold during the period and the margins we generated during the quarter are in line with our expectations and normal operating margins.
Operating Expenses
During the three months ended September 30, 2024, operations expenses totaled $218,126 compared to $0 during the three months ended September 30, 2023, resulting in an increase of $218,126 or 100%. Prior to the closing of the acquisitions in February 2024, we did not have any operations expenses. Operations expenses primarily relate to our direct operations including our warehouse personnel and warehouse expenses.
During the three months ended September 30, 2024, research and development expenses was $15,000 compared to $0 for the three months ended September 30, 2023, resulting in an increase of $15,000. Prior to the closing of the acquisitions in February 2024, we did not have any research and development expenses during 2023. 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.
During the three months ended September 30, 2024, sales and marketing expenses totaled $252,253 compared to $0 for the three months ended September 30, 2023, resulting in an increase of $252,253 or 100%. Prior to the closing of the acquisitions in February 2024, we did not have any sales and marketing expenses. Sales and marketing expenses primarily relate to advertising spend related to Rotor Riot and payroll expenses.
During the three months ended September 30, 2024, general and administrative expenses totaling $1,374,989 compared to $353,029 for the three months ended September 30, 2023, resulting in an increase of $1,021,960 or 289%. The increase primarily relates to stock compensation expense during quarter that we did not have in the previous year, an increase in expenses related to closing the IPO including legal and accounting fees, additional transition and integration related expenses, and the costs related to operating Fat Shark and Rotor Riot.
Net Loss
Our net loss for the three months ended September 30, 2024, totaled $2,144,250 compared to $353,674 for the three months ended September 30, 2023, resulting in an increase in net loss of $1,790,576 or 506%. The increase in net loss primarily relates to stock compensation expense taken during the period, the $685,151 loss on debt extinguishment, of which $663,250 was non-cash, in connection with the $1.0 million debt exchange for Series C preferred shares. In addition, the increase in general and administrative expenses related to closing the initial public offering (the “IPO”) and the increased operations and sales and marketing expenses we incurred since the acquisition from Fat Shark and Rotor Riot. This was partially offset by generating gross margin related to the revenue and cost of goods sold from sales for Fat Shark and Rotor Riot. In the fourth quarter of 2024 we expect to complete our valuation and identification of any intangible assets related to the acquisitions of Fat Shark and Rotor Riot. For any identified intangibles, we will begin to amortize during the fourth quarter which will result in a non-cash charge going forward. However, and until we complete our valuation on intangibles, the amount is uncertain, and the future amortization may or may not be material. After the identification and valuation of intangibles is complete, we will complete our impairment analysis on goodwill and the identified intangibles during the fourth quarter. While the amount is uncertain, we expect that our goodwill impairment could be material.
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Results of Operations – Nine months Ended September 30, 2024 compared to the Nine months Ended September 30, 2023
Revenue
During the nine months ended September 30, 2024 we generated revenues totaling $3,561,303 compared to $0 during the nine months ended September 30, 2023, representing an increase of $3,561,303 or 100%. We did not generate any revenues until the closing of the acquisitions of Fat Shark and Rotor Riot on February 16, 2024. Accordingly, our revenues for the nine months ending September 30, 2024 are affected by not having any revenues for half of the first quarter. Revenues relate to completed and fulfilled product sales during the period through our Rotor Riot retail channel and from our B2B wholesale through Fat Shark.
Cost of Goods Sold
During the nine months ended September 30, 2024, we incurred cost of goods sold of $2,569,209 compared to $0 during the nine months ended September 30, 2023, resulting in an increase of $2,569,209 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.
Gross Margin
During the nine months ended September 30, 2024, our gross margin was $992,094 compared to $0 during the nine months ended September 30, 2023, resulting in an increase of $992,094 or 100%. Our gross margin, as a percentage of sales, totaled 28% during the nine months ended September 30, 2024, compared to 0% during the nine months ended September 30, 2023. We anticipate our gross margin to fluctuate period to period depending on certain promotions and products that are sold during the period and the margins we generated during the quarter are in line with our expectations and normal operating margins.
Operating Expenses
During the nine months ended September 30, 2024, operations expenses totaled $544,220 compared to $0 during the nine months ended September 30, 2023, resulting in an increase of $544,220 or 100%. Prior to the closing of the acquisitions in February 2024, we did not have any operations expenses. Operations expenses primarily relate to our direct operations including our warehouse personnel and warehouse expenses.
During the nine months ended September 30, 2024, research and development expenses totaled $42,078 compared to $0 for the nine months ended September 30, 2023, resulting in an increase of $42,078 or 100%. Prior to the closing of the acquisitions in February 2024, we did not have any research and development expenses during 2023. 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.
During the nine months ended September 30, 2024, sales and marketing expenses totaled $795,643 compared to $0 for the nine months ended September 30, 2023, resulting in an increase of $795,643 or 100%. Prior to the closing of the acquisitions in February 2024, we did not have any sales and marketing expenses. Sales and marketing expenses primarily relate to advertising spend related to Rotor Riot and payroll expenses.
During the nine months ended September 30, 2024, general and administrative expenses totaling $3,728,749 compared to $1,965,469 for the nine months ended September 30, 2023, resulting in an increase of $1,763,280 or 90%. The increase relates to increased expenses related to closing the IPO including legal and accounting fees, additional transition and integration related expenses, and the costs related to operating Fat Shark and Rotor Riot.
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Net Loss
Our net loss for the nine months ended September 30, 2024, totaled $4,862,490 compared to $1,966,876 for the nine months ended September 30, 2023, resulting in an increase in net loss of $2,895,614 or 147%. The increase in net loss primarily relates the increase in general and administrative expenses related to closing the IPO with additional increase in expenses for operations, sales and marketing expenses we incurred since the acquisition from Fat Shark and Rotor Riot, and other expenses of $743,381 related to interest expense and a large non-cash loss on debt extinguishment during the period. This was partially offset by generating gross margin related to the revenue and cost of goods sold from sales for Fat Shark and Rotor Riot. In the fourth quarter of 2024 we expect to complete our valuation and identification of any intangible assets related to the acquisitions of Fat Shark and Rotor Riot. For any identified intangibles, we will begin to amortize during the fourth quarter which will result in a non-cash charge going forward. However, and until we complete our valuation on intangibles, the amount is uncertain, and the future amortization may or may not be material. After the identification and valuation of intangibles is complete, we will complete our impairment analysis on goodwill and the identified intangibles during the fourth quarter. While the amount is uncertain, we expect that our goodwill impairment could be material.
Cash Flow Analysis
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.
Operating Activities
Net cash used in operating activities was $2,718,513 during the nine months ended September 30, 2024, compared to net cash used in operating activities of $1,382,538 during the nine months ended September 30, 2023, representing an increase of $1,335,975 or 97%. This increase in net cash used primarily resulted from our increase in net loss of $2,895,614 and an increase in prepaid expenses of $319,532, accounts receivable of $73,109, other assets of $62,850, offset by a decrease in inventory of $337,562, an increase in accounts payable and accrued expenses of $681,414, other liabilities of $153,020 and non-cash expenses of $1,378,790.
Investing Activities
Net cash used in investing activities was $852,801 during the nine months ended September 30, 2024 compared to net cash used in investing activities of $3,164 during the nine months ended September 30, 2023, representing an increase of $849,637. This increase in net cash used related to the $1,000,000 we paid to purchase Fat Shark and Rotor Riot, offset by $147,199 in cash acquired as compared to $3,164 used for purchase of computer equipment during 2023.
Financing Activities
Net cash provided by financing activities totaled $4,362,313 during the nine months ended September 30, 2024, compared to net cash used in financing activities of $376,702 during the nine months ended September 30, 2023, resulting in an increase in net cash provided by financing activities of $4,739,015. The increase primarily relates to proceeds received from our IPO of $5,000,000, offset by change in deferred offering costs and other IPO related expenses of $260,985.
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Liquidity and Capital Resources
As of September 30, 2024, we had current assets totaling $4,517,325 primarily consisting of cash balances of $1,685,772, inventory of $1,453,042 and prepaid deposits for inventory of $1,140,511. Our current liabilities as of September 30, 2024 totaled $2,018,255, primarily consisting of accounts payable and accrued expenses of $1,032,637 and customer deposits and other current liabilities of $985,618. Our net working capital as of September 30, 2024 was $2,499,070.
On October 29, 2024, we completed a private placement offering for the sale of 1,286,184 shares of common stock at a price of $1.52 per share for aggregate gross proceeds of $1.95 million before deducting fees to the placement agent and other expenses payable by us in connection with the private placement. We retained approximately $1.7 million in net proceeds.
As of November 13, 2024, we have approximately $2.4 million in cash. We believe that the net proceeds from our 2024 financings and revenues, October 2024 private placement and existing cash balances will be sufficient to fund our current operating plans through at least the next 12 months. We have based these estimates, however, on assumptions that may prove to be wrong, and we could spend our available financial resources much faster than we currently expect and need to raise additional funds sooner than we anticipate. We do not anticipate any significant cost increases post the Fat Shark and Rotor Riot acquisitions and with consideration of the combined companies’ net low and cash position, we expect we will have sufficient working capital to support our operations for at least 12 months.
As described in Note 8 of our financial statements, we issued the August Notes following our agreement with Red Cat on the Working Capital Adjustment. Once the August Notes mature in November 2025, we will need to either (a) raise additional capital, (b) refinance the August Notes, (c) seek an extension of the maturity date of the Notes, or (d) explore the conversion or exchange of the New Notes into equity, which will result in dilution to our shareholders, if the August Notes have not been converted or paid in full prior to the maturity date. If we are unable to raise capital or explore such other options when needed or on acceptable terms, we may default under the obligation pursuant to the New Notes, or be forced to delay, reduce or eliminate certain operational efforts.
Critical Accounting Policies and Estimates
Our financial statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Fair value of assets acquired and liabilities assumed in business combination
The Fat Shark and Rotor Riot acquisitions are accounted for as a business combination under ASC 805. We recognized the assets acquired and liabilities assumed at fair value as of the date of acquisition. We have not yet completed our evaluation of the fair value for determining the unallocated purchase price between goodwill and other intangible assets. Such amounts are subject to adjustment during the one-year measurement period. The fair value will be determined based on assumptions used in valuations and estimates determined by management, which are subjective.
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Impairment of goodwill and long-lived assets
Goodwill represents the future economic benefit arising from other assets acquired in an acquisition that are not individually identified and separately recognized. Goodwill represents costs in excess of fair values assigned to the underlying identifiable net assets of acquired businesses. Intangible assets from acquired business are recognized at fair value on the acquisition date. We are continuing our evaluation of the fair value of the assets acquired and liabilities assumed from the Fat Shark and Rotor Riot acquisition, and we have not yet determined the unallocated purchase price between goodwill and other intangible assets. Goodwill is tested for impairment at least annually at the reporting unit level or whenever events or changes in circumstances indicate that goodwill might be impaired.
Valuation of Inventory
Our policy for valuation of inventory requires us to evaluate the net realizable value of our inventory using various reference measures including current product selling prices, as well as evaluating for excess quantities and obsolescence. We may be required to record inventory write-downs if actual inventory values are less favorable than those estimates by management.
Stock Based Compensation
Certain employees and directors have received grants of restricted common shares in our company. Other employees received grants of stock options in our Company. These awards are accounted for in accordance with guidance prescribed for accounting for equity-based compensation. Based on this guidance and the terms of the awards, the awards are equity classified.
The fair value of restricted stock awards is based on the fair value of the Company’s common stock on the date of grant and expensed over the vesting period.
The fair value of each stock option award is determined using the Black-Scholes option-pricing model which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, and the risk-free interest rate over the expected life of the option. The expected volatility was determined considering comparable companies historical stock prices as a peer group for the fiscal year the grant occurred and prior fiscal years for a period equal to the expected life of the option. The risk-free interest rate was the rate available from the St. Louis Federal Reserve Bank with a term equal to the expected life of the option. The expected life of the option was estimated based on a mid-point method calculation.
In addition, the Company issued shares of our common stock in 2023 to consultants for services performed. Prior to our IPO in February 2024, we were a private company with no active public market for our common stock. Therefore, we have periodically determined the overall value of our company and the estimated per share fair value of our common equity at their various dates and valuations based on a per share valuation using the private funding transactions as an estimate. These values and estimates are subjective.
Warrant Classification and Fair Value
The Company classifies warrants issued for the purchase of shares of its common stock as either equity or liability instruments based on an assessment of the specific terms and conditions of each respective contract. The assessment considers whether the warrants are freestanding financial instruments or embedded in a host instrument, whether the warrants meet the definition of a liability pursuant to ASC 480, whether the warrants meet the definition of a derivative under ASC 815, and whether the warrants meet all of the requirements for equity classification under ASC 815. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their fair value. The fair value of the warrant liability is determined using the binomial option pricing model the binomial option pricing model which values the liability on the stock price at the grant date, the estimate volatility of the stock, the expected term until exercise, the risk-free interest rate over the expected term, certain estimates and probabilities of different outcomes.
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Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
| Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures as of September 30, 2024, were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms because of a material weakness in the Company’s internal control over financial reporting. Specifically, the Company did not maintain effective controls, segregation of duties, and procedures to support the identification of, accounting for, and the evaluation and disclosure of certain transactions, as limited individuals, either the Principal Executive Officer or Principal Financial Officer, initiates all transactions and they also review, evaluate, and approve these same transactions.
Changes in Internal Control Over Financial Reporting
During the nine months ended September 30, 2024, we have:
| · | Continued to strengthen our internal policies, processes, and reviews, including drafting of related documentation thereof; | |
| · | Engaged outside consultants to ensure that appropriate level of knowledge and experience is applied based on the risk and complexity of the transactions and tasks under review; | |
| · | Hired additional accounting staff to provide additional segregation of duties within accounting functions; | |
| · | Started internal control documentation along with the engagement of outside consultants to assist in the design, implementation, and documentation of internal controls to address relevant risks; | |
| · | Implemented the initial phase of an ERP and financial accounting system and added additional systematic internal controls and timely recording of transactions. We will continue to build out and expand the functionality of our ERP system and build in additional automation and controls. |
The process of implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations. As we continue to evaluate and take actions to improve our internal control over financial reporting, we may take additional actions to address control deficiencies or modify certain of the remediation measures described above.
While progress has been made to enhance our internal control over financial reporting, we are still in the process of implementing these processes, procedures and controls. Additional time is required to complete implementation and to assess and ensure the sustainability of these procedures. There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the nine months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than the activities described above.
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PART II – OTHER INFORMATION
| Item 1. | Legal Proceedings |
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.
| Item 1A. | Risk Factors |
In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors disclosed under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
All recent sales of unregistered securities have previously been reported.
Use of Proceeds
On February 13, 2024, the SEC declared effective our registration statement on Form S-1 (File No. 333-270519), as amended, filed in connection with our IPO. On February 16, 2024, we closed our IPO in which we sold 1,250,000 shares of our common stock, par value $0.01 per share (the “Shares”) at a public offering price of $4.00 per share, resulting in net proceeds of $4.5 million after deducting offering costs, underwriting discounts, and other commissions. We incurred and paid additional direct offering costs prior to the close of the IPO of $0.1 million during the nine months ended September 30, 2024, and $0.5 million during the year ended December 31, 2023. We used $1.0 million of proceeds to pay for the acquisition of Fat Shark and Rotor Riot.
There has been no material change in the planned use of proceeds from our IPO from that described in the prospectus dated February 16, 2024, filed with the SEC pursuant to Rule 424(b)(1) under the Securities Act. As described in such prospectus, we have used IPO proceeds to pay $1.0 million to Red Cat related to the business combination and acquisition of Fat Shark and Rotor Riot and the remaining amount will be used for working capital and general corporate purposes.
The Company shall use the net proceeds from the sale of the securities issued in the October 2024 private placement for general corporate purposes (which for the avoidance of doubt may include acquisitions, in the Company’s discretion), including working capital.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the nine months ended September 30, 2024.
| Item 3. | Defaults Upon Senior Securities |
None.
| Item 4. | Mine Safety Disclosures |
None.
| Item 5. | Other Information |
During the quarter ended September 30, 2024,
no director or officer
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| Item 6. | Exhibits |
The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Report are listed in the Exhibit Index below. The exhibits listed in the Exhibit Index are incorporated by reference herein.
EXHIBIT INDEX
| + | Certain schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the SEC Staff upon request. |
| # | Indicates management contract or compensatory plan, contract or agreement. |
| * | This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Unusual Machines, Inc. | ||
| By: | /s/ Allan Evans | |
Allan Evans (Principal Executive Officer) | ||
| By: | /s/ Brian Hoff | |
| Brian Hoff Chief Financial Officer | ||
Date: November 14, 2024
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