UMAC

Download the Complete Report Here Key Takeaways: Revenue accelerated sharply from 1Q26, with SkyKnight license delivery and cash collection providing a better indication of underlying commercial progress than reported revenue alone. SWMR reported 2Q26 revenue of $216,413, up 56.6% y/y from $138,206 and more than 10x the $20,325 reported in 1Q26. The company invoiced approximately $1.5 million under the SkyKnight program and collected $1.4 million following license delivery, while only approximately $0.2 million was recognized as revenue, $0.1 million was deferred and the remaining amount was recorded as an advance. Certain deployment, integration and market-development payments associated with the program also reduced recognized revenue under the combined arrangement, creating a meaningful gap between commercial activity and revenue in the quarter. SkyKnight remains the clearest validation of SWMR’s licensing model, with contracted value expanding approximately 34% only weeks after the initial award without consuming the original upgrade optionality. The program’s contracted license value increased from approximately $2.9 million to $3.9 million after Meta Bureau increased projected production of its fixed-wing platform, while existing operating-system-to-full-autonomy upgrade options remain intact and could still lift the combined arrangement to approximately $14.2 million. Importantly, the approximately $1.0 million incremental award was outside the scope of the initial option structure rather than an exercise of previously disclosed upgrades. The original arrangement covered full-autonomy licenses across SkyKnight’s quadcopter and fixed-wing platforms together with operating-system licenses on planned production that can subsequently be upgraded to SWMR’s full platform. This structure gives SWMR two potential monetization layers as partner volumes grow: additional autonomy licenses as manufacturers increase production and higher-value software attach when OS-only units are upgraded over time. Oak Grove extends SWMR’s commercialization funnel beyond OEM integration into operator training and U.S. defense-channel exposure. SWMR’s relationship with Oak Grove Technologies integrates its autonomy software with the Chimera UAV platform, making Oak Grove the first U.S.-based company to integrate Swarmer’s autonomous software into its platform. Integration, testing and operational fielding were completed in late 2025 in Eastern Europe across ~100 test flights spanning varied weather and mission profiles, providing additional validation of the technology on a U.S. platform. Following the initial integration effort, the integrated Chimera systems remained overseas through early 2026 to support continued testing, operator evaluation and training before returning to Oak Grove’s U.S. headquarters for incorporation of operational feedback into future mission and training requirements. The partnership also benefits from Oak Grove’s established training and operational support activities with the U.S. special operations community, giving operators hands-on exposure to autonomous systems under realistic conditions and broadening SWMR’s customer-acquisition channel beyond direct OEM engagement. Combined with SWMR’s 100,000+ combat missions in Ukraine, the relationship provides a potential bridge between battlefield-proven autonomy and U.S. operator adoption, with the key commercial proof point remaining conversion of testing and training activity into funded defense programs. Lantronix creates a potentially scalable distribution wedge by embedding SWMR’s operating system at the compute layer rather than requiring software adoption after a drone is already designed. The collaboration is developing an NDAA-compliant compute platform for Group 1 unmanned systems with more than 400% greater onboard processing capability, targeting what SWMR sees as an underserved performance gap between lower-end Raspberry Pi systems and higher-end NVIDIA Jetson solutions commonly used for autonomy. With more than seven million drones projected to be manufactured this year, an embedded compute-layer position could provide SWMR with a scalable route into a substantially larger installed base. Strategically, the opportunity is larger than hardware integration alone: SWMR intends for its operating system to be embedded on the compute platform, allowing customers to upgrade to full autonomy through software rather than completing a separate integration. If adopted broadly, that architecture could shift customer acquisition earlier in the OEM design cycle, increase the installed base of upgradeable SWMR-enabled platforms, and create a lower-friction OS-to-full-stack monetization path. It also preserves the software-led business model because SWMR’s primary economics would remain tied to software penetration and upgrades rather than manufacturing the unmanned system itself. Brightline and Molfar expand the combat-data flywheel beyond platforms already running SWMR software, potentially accelerating AI development without waiting for every OEM integration to scale. SWMR continues to cite more than 100,000 real-world combat missions as a core source of telemetry, sensor information and operational feedback, but the new relationships broaden the available training dataset. Brightline provides access to operational data across unmanned platforms already used within the U.S. special operations community, including platforms whose manufacturers have not yet integrated SWMR, while Molfar contributes verified open-source and battlefield intelligence datasets to the AI training pipeline. The strategic implication is that model development can increasingly benefit from third-party operating data rather than only the installed SWMR fleet. This could broaden the range of mission profiles and operating conditions available for model training, strengthening the feedback loop between data capture, model improvement and subsequent deployment as the platform scales. Powerus illustrates both the scalability of SWMR’s integration model and why revenue can remain a lagging indicator even after technical work is complete. Integration work under the Powerus MOU has begun across several air and maritime platforms, with integration on familiar hardware configurations potentially requiring only 2-4 weeks including field testing, while substantially different platforms can require several months. More importantly, software integration does not itself trigger meaningful revenue. Once integration is completed, the manufacturer must still secure buyers for the finished platform, which are typically government customers operating through longer acquisition cycles. This creates a multi-stage funnel from MOU to integration, field testing, OEM production, government procurement and finally software revenue recognition. The relatively short 2-4 week integration period for familiar platforms indicates the technical layer can scale efficiently, but end-customer procurement remains the principal gating factor between integration progress and recognized revenue. The partnership strategy is broadening beyond defense deployments into dual-use autonomy applications, expanding SWMR’s addressable market without changing the core software architecture. In addition to Oak Grove, Lantronix, Brightline, Molfar and Powerus, SWMR is working with Tekmara and Florida International University to evaluate autonomous drone swarms for environmental monitoring and coastal restoration applications. These initiatives broaden the addressable use case beyond kinetic operations while leveraging the same multi-vehicle coordination architecture developed through more than 100,000 combat missions. The Tekmara/FIU initiative will evaluate coordinated autonomous operations across air, surface and underwater domains, using FIU’s Aquarius Reef Base as a real-world testing environment for persistent environmental monitoring and restoration. This supports SWMR’s broader dual-use strategy, with potential applications across environmental restoration, disaster relief, wildfire detection, search and rescue and other public-sector missions. Commercially, however, the initiatives remain at different stages of maturity, and the quarter did not disclose material revenue from these newer programs. We therefore view these programs as incremental extensions of the platform and customer funnel, with greater strategic relevance as they progress toward funded deployments and repeat licensing. Post-quarter leadership changes consolidate executive responsibility under Alex Fink while strengthening SWMR’s communications and market-development capabilities. Effective July 2026, Serhii Kupriienko resigned as Global CEO while remaining on SWMR’s Board, and President and U.S. CEO Alex Fink assumed the role of principal executive officer reporting directly to the Board. SWMR does not intend to appoint a successor Global CEO, streamlining the prior dual-CEO structure as the company scales commercialization and strategic execution. Separately, Swarmer promoted Garrett Kasper to Chief Communications Officer, bringing 30 years of experience across defense, aerospace, intelligence and cybersecurity, including prior work at L3Harris Technologies on the VAMPIRE counter-UAS program. In the expanded role, he will oversee global marketing, branding and corporate communications, supporting customer awareness and market development across U.S. and allied defense channels. SWMR expects gross margins to remain attractive as revenue scales, although they may moderate as engineering services are incorporated into customer contracts. 2Q26 gross margin increased to 84.8% from 59.4% y/y, providing early evidence of the high-margin economics embedded in the licensing model. Currently, cost of sales primarily consists of web-based data services, resulting in relatively low direct costs. As the company scales, engineering support is expected to increase COGS as a percentage of revenue, with management currently targeting approximately 80% gross margins, although the methodology remains under development and may vary by deal. While the current revenue base remains small, sustaining margins near this level as licensing scales would be an important driver of the operating leverage embedded in the 2027E profitability outlook. Operating expenses increased sharply as SWMR scaled its operations and transitioned to a public-company cost structure. 2Q operating expenses rose to $7.5 million from $0.9 million y/y, driven primarily by higher personnel, engineering and product-development costs, as well as increased legal, consulting and professional expenses. SG&A increased to $5.7 million from $0.3 million y/y, while R&D rose to $1.8 million from $0.6 million, reflecting investment ahead of the expected licensing ramp. The quarter also included one-time equipment purchases and $1.2 million of non-cash stock compensation, meaning reported expenses were partly elevated by non-recurring and non-cash items. The key forward consideration is whether software revenue can begin scaling across this expanded cost base, rather than requiring a meaningful reduction in investment to reach profitability. Capital formation is providing SWMR with greater flexibility to fund growth and pursue strategic opportunities as it expands beyond its core autonomy software offering. Cash and equivalents increased to $25.3 million at June 30 from $9.3 million at December 31, supported by IPO proceeds and equity financing, with a further $17.9 million raised through August 10, taking cumulative ELOC proceeds above $26 million. The stronger liquidity supports continued investment in engineering and platform integration while giving SWMR capacity to invest in or acquire complementary defense technologies and potentially broaden its value capture beyond software licensing. This aligns with the broader strategic vision recently articulated by Chairman Erik Prince around identifying and scaling battlefield-proven defense technologies that may lack capital, commercial infrastructure or international distribution. However, the strategy remains subject to acquisition execution risk and shareholder dilution from equity-funded capital deployment. Street estimates embed a hockey-stick revenue ramp as SWMR moves toward scaled license activation. Street estimates sourced from TIKR suggest revenue of $4.24 million in 2026E before rising to $25.0 million in 2027E and $40.0 million in 2028E, with EBITDA margin inflecting to 17.8% in 2027E and 28.3% by 2028E. With 2Q26 revenue of $0.2 million despite $1.4 million received from SkyKnight, the key focus now shifts to whether deferred/advance amounts and the broader partnership pipeline convert into recognized revenue in 2H26 and beyond, with SkyKnight recognition, OS-to-full-autonomy upgrades and additional OEM production providing the clearest paths to the expected 2027E step-up. Disclaimer: Exec Edge does not publish proprietary estimates, ratings, price targets, or investment recommendations. The valuation discussion below is illustrative only and is based on company filings, management commentary, and third-party data and estimates. It does not constitute a recommendation, price target, rating, or prediction of future pricing. SWMR trades at a clear premium to broader public-market peers, but we believe that premium is defensible given its combat-validated software model, hardware-agnostic architecture and higher-margin licensing potential. SWMR currently trades at approximately 22x 2027E sales, reflecting its early commercialization stage and significant operating investment. However, the valuation also reflects SWMR’s positioning as a combat-validated, platform-agnostic autonomy software provider rather than a traditional defense hardware or drone manufacturer, with the company increasingly expanding its ecosystem through OEM integrations, compute partnerships, operational data relationships and potential strategic acquisitions. The multiple declines to 14x based on 2028E sales (source: TIKR), highlighting the meaningful forward valuation compression as the expected software-license ramp scales. In our view, further support for the current premium will depend on converting SkyKnight, Powerus, Lantronix and other integrations into scaled deployments, recurring software revenue and improving profitability. SWMR’s premium to public drone peers is notable, but defensible given its hardware-agnostic software model, combat validation and stronger margin potential. Relative to the broader listed comp set, SWMR’s higher multiple reflects a business model with less hardware intensity, greater software attach potential and a path toward materially higher gross margins as licensing scales, while sustained relative outperformance will depend on converting integrations and license deployments into recurring revenue and positive EBITDA. Street positioning also remains constructive, with a consensus price reference of approximately $60 providing an additional external valuation benchmark. Private-market defense-autonomy valuations also support premium forward revenue multiples for differentiated platforms. A recent Financial Times report indicates Helsing was valued at approximately 32x forecast 2026 revenue, Shield AI at approximately 21x revenue, and Anduril at approximately 13x forward revenue. Against this range, SWMR’s approximately 22x 2027E sales multiple sits within the premium private-market autonomy range. While differences in scale, maturity, valuation period and hardware exposure limit direct comparability, SWMR’s hardware-agnostic architecture, 100,000+ combat missions and high-margin licensing model provide a defensible basis for premium positioning as commercial adoption scales. Read Exec Edge’s Initiation on Swarmer Inc. Here Subscribe to our Weekly Newsletter to Receive All Research Contact: Executives-Edge.com [email protected] The post Swarmer’s SkyKnight & Platform Expansion Builds Commercial Momentum – Quarterly Update Report appeared first on ExecEdge.

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 8:00 a.m. ET Investor Relations - Christine Petraglia Chief Executive Officer - Allan Evans Chief Financial Officer - Brian Hoff Operator: Greetings, and welcome to Unusual Machines Second Quarter 2026 Financial Results Conference Call and Webcast. Please note, this conference is being recorded. I will now turn the conference over to Christine Petraglia, Investor Relations for Unusual Machines. Christine, over to you. Christine Petraglia Thank you, operator. Good morning, everyone. With us today are Unusual Machines CEO, Allan Evans; and CFO, Brian Hoff. During this call, management will make forward-looking statements regarding our expectations for product demand, revenue growth, manufacturing expansion, gross margins and anticipated regulatory developments. Actual results may differ materially due to factors, including government program funding and timing, customer concentration, inventory risks, manufacturing challenges, supply chain disruptions, tariff impacts and other risks described in our Form 10-K for the year ended December 31, 2025. We undertake no obligation to update forward-looking statements, except as required by law. For a complete discussion of risk factors, please refer to our SEC filings and the shareholder letter accompanying this call. In addition to reporting financial results in accordance with GAAP, we will discuss certain non-GAAP financial measures, including adjusted EBITDA. We believe these measures provide useful supplemental information to investors regarding our operating performance. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is included in the shareholder letter earnings press release, which are also available on our website and filed with the SEC. As a reminder, this call is being recorded, and a replay will be available on Unusual Machines website at www.unusualmachines.com. Now let me hand over the call to our CEO, Allan Evans. Please go ahead, Allan. Allan Evans: Thank you, Christine. Good morning, everyone, and thank you for joining us today. During this call, I will discuss our second quarter 2026 performance. In the second quarter, we generated more than $16.7 million in operating revenue. This is a 687% year-over-year growth from the second quarter in 2025, and it's more than double the revenue we generated last quarter, the first quarter of 2026. We generated a GAAP loss of approximately $7.8 million for the quarter, which represents a net loss of $0.16 per share and that's a reduction in loss when compared to the $0.32 per share from the second quarter of 2025. The key takeaway from this quarter for me is that we are continuing to dramatically increase revenue while getting closer to consistent profitability. The Q2 results begin to reflect the underlying financial structure Unusual Machines is working to achieve. There is rapid continued growth, doubling to almost $17 million in revenue with the growth driven entirely from our Enterprise segment. At the same time, we've managed to reduce our non-GAAP adjusted EBITDA from a loss of $1.6 million last quarter to a loss of only $400,000 this quarter. Our margins have remained consistent and healthy with the slightly lower than target depression that we see from rapid growth, and we finished the quarter with a 34.7% gross margin. This is in that backdrop of scaling as our head count went from 141 employees to 240 employees as of July 1. A healthy balance sheet remains a priority for us, and we took the opportunity to raise another $60 million at $30 a share, and we did this with block ATM transactions. Right now, we have about $367.5 million in total working capital and no debt. It's very important to remember that we don't burn cash. So this money remains in the war chest and enables us to both manage inventory and make investments that accelerate our customers and the entire drone marketplace. The success of this quarter and of the company just would not be possible without the hard work everyone on the entire Unusual Machines team puts in. Everybody works hard and brings incredible energy to all of the challenges we face. I am confident we can handle continued growth because I am confident in everyone I have the pleasure of working with. So I want to say thank you to everyone working at Unusual Machines. I'll hand this call off to our CFO, Brian Hoff, to cover our financial results in detail. And then once he finishes, I'm going to go into more detail on both this quarter and our plans going forward. With that, I'm handing the call off to our CFO, Brian Hoff. Brian Hoff: Thank you, Allan, and thank you, everyone, for joining the call. As Allan just mentioned, we've had another strong quarter with $16.7 million recognized in revenue for the quarter, which, as we said, is 687% increase from the prior year and 107% increase from the prior quarter. That puts us at revenue year-to-date at $24.8 million. And we continue to see this significant shift toward Enterprise revenue, about approximately 95% of our second quarter revenue was generated from Enterprise customers, which is across a diverse base of customers and products. Gross margin was 34.7% for the quarter, which is an increase from last quarter and slightly below our 2025 margins. We expect to continue to see these margin fluctuations as we can scale our manufacturing and work to capture the market demand. We anticipate additional margin fluctuation for the remainder of 2026, primarily related to our growth initiatives. However, we expect them to kind of continue to recover. Our operating expenses also increased during the quarter to $13.6 million for Q2 of '26. This increase reflects deliberate investments and strategic decisions to support our continued growth and scale of our business, things that are including of building out our G&A infrastructure, head count, systems, process. Including is also $5.7 million in noncash stock compensation expense and about $1.8 million in nonrecurring expenses. We continue to expect additional operating expenses as we continue to hire additional staff, add additional manufacturing space and have additional public company-related expenses. Please reference the tables at the end of the shareholder letter for the additional detail, which reflects our adjusted EBITDA. As Allan said, we've brought this down from about $1.6 million in Q1 to about $400,000 in Q2, so showing very positive trends. In other income and expense, we had additional positive results from our investments. These investments are designed for strategic purposes, and they create goodwill in the U.S. drone industry and develop supplier partnerships and customer relationships. Our strategy is continuing to work. The results show a $2.3 million realized gain from investments during the quarter, which is a nice add-on to our overall cash without adding additional dilution. We also had interest income of about $1.8 million during the quarter. Our balance sheet also remains very strong and reflects our focus on positioning for anticipated growth. Our cash balance ended the quarter at $229 million, which included the $60 million from our ATM block funding in May at $30 a share. The balance sheet is also further supported by our short-term investments of over $86 million and inventory, which includes raw materials and finished goods and deposits paid of about $42.4 million. And we're going to see this continue to increase in Q3 and Q4 as we make significant purchases to meet demand and do our part in managing supply chain issues as much as possible. Our total working capital was over $367 million, which puts us in a great position to capitalize on demand moving forward. I'd also like to reiterate what Allan just said. None of this is possible without the fantastic team working extremely hard to make things move. It's an exciting time to be at Unusual Machines and looking forward to the rest of the year. Thank you to our shareholders and partners for continuing to support our mission throughout it all. Back to Allan. Allan Evans: Thanks, Brian. At a high level, it's been an impressive quarter. We keep scaling both sales and company size. We maintain a strong cash position. We've added product categories through activities like the Upgrade Energy acquisition, and we've been able to achieve these results while reducing our operating losses. We believe we remain well positioned to be a supply chain leader for components for small drones as the domestic industry expands. I'm about to go into a lot more detail on the second quarter and also discuss our outlook going forward. I'd like to remind everyone that my comments coming forward from here definitely contain forward-looking statements, and actual results may differ from those anticipated. Quarter 2, the second quarter is worth talking about in more detail. The second quarter is the moment where I've gone from hoping we could be a major supplier in the emerging drone industry to believing that we will be. Two major threads emerged in the second quarter that are not going to show up in the financial statements, but are really core to Unusual Machines' ability to effectively grow forward and be a larger company. The first was the supply chain issue. During the quarter, we outgrew one of our electronics vendors, and we had to work through challenging supply chain challenges as we replaced different components and where we got parts is we still fulfill products for our customers. Our sales and operations team did an incredible job of navigating this and putting in the extra hours and working with customers. And I cannot be more proud of those teams and how they handled what was this really challenging situation to deliver for our customers and keep our business on track. The second challenge was that we had a quality issue with one of our motor SKUs. There was this intermittent issue that required deep coordination with our product team, our motor production team and our customers to go in and find the root cause of the intermittent challenge. They then had to go through and create remedies to our production processes as well as new ways to do quality testing to eliminate the issue from everything we're doing going forward. These 2 challenges are both pretty normal types of issues for a company like ours at scale. They should be expected. But this is really the first time that we faced either one of these types of challenges at this scale. At the same time, they both showed up simultaneously, either one of these operating issues could have easily been used to justify a flat quarter, could have easily derailed what we were doing or slowed it down. Our team members could have treated this as routine. They could have not put in the 10- to 12-hour days and worked the long hours required to be sure our customers were in the best place they could be. I've been watching everyone, and I mean everyone involved work through these challenges and still deliver the kind of growth we've seen and the margins that we've seen has me fully believing that we have the team and the mindset to be successful as we continue to grow. I absolutely believe in the team we have and what we are continuing to build. That's probably enough on the second quarter, but I think it's important for everyone to understand that as it doesn't show up. So now let's talk about the future. First and foremost, demand remains strong. The current U.S. marketplace remains very supply constrained, and we still see demand outstripping supply both this year and deep into 2027. We are continuing to build the company and procure raw material to grow into this demand as fast as we possibly can, and we don't see any signs of softness now or in the near future. The primary driver of this demand growth continues to be the Department of War. The Drone Dominance Gauntlet Program remains on track as Phase 2 is currently in the final selection process and more than 60,000 drones are expected to be ordered in the second half of 2026, mostly in the fourth quarter. The NDAA continues to move forward through legislation with big increases in spending for autonomous systems. And in addition to that, there are drone programs and counter drone orders for the same parts. Counter drone is really becoming another emergent addressable market segment that's creating immediate and near-term demand. There have also been orders that have been propagated through the sort of Department of War procurement process. And I just want to give some examples. There was a $90 million counter UAS order for Powerus. There was $500 million in counter UAS from AeroVironment, $500 million in counter UAS orders from Perennial Autonomy, a $500 million IDIQ for FPV drones from Neros, which is an extension of the PBAS program and very recently, an $820 million loan from the OSC to PDW. These and other orders are really just starting to propagate through the supply chain, and we expect that they're going to create additional demand here in late Q3 and Q4 and then into 2027. So one thing we did learn in the second quarter is that we do not yet have the infrastructure to support hundreds of millions or billions of dollars in annual revenue. The massive amount of money flowing into the drone marketplace is coming faster and is larger than we anticipated. And so we are in the middle of transforming Unusual Machines. And we now very strongly believe that we only have until the end of the third quarter to complete this transformation because of this demand wave. Our high-speed motor production line is just in the process of being installed, the components from Florida, and it's going to take some time to bring that online. Our HR team is very busy in California, even this week, actively working on helping upgrade energy hire people, scale their team and process and prepare for integration into the Unusual Machines greater umbrella, even though we're not going to see any revenue from that acquisition in this quarter until we close. Our supply chain team is working closely with them to drive battery vendors and work on bringing in the cells and the material, and that is a long-term endeavor in terms of transitioning and qualifying new electronics providers. And these are all to address some of the challenges we had in the second quarter and are a ton of work that we're setting up for the long-term future. These activities, all of this work will not show up in the top line for the third quarter, but this is the work that positions us to continue our dramatic growth during the fourth quarter and into 2027 as this massive demand wave starts to fully manifest. To summarize, the second quarter of 2026 showed strong results despite operating challenges. We doubled revenue to almost $17 million and reduced our adjusted EBITDA loss to $400,000. We continued our staircase financing strategy, and we're now focused on building a strong foundation with the industry through the end of '26 and into 2027. Unusual Machines remains at the forefront of the domestic components market, and the market is growing in a way never anticipated with additional demand from counter drone pushing things even faster. Our business is well capitalized and healthy, and we're continuing to grow as fast as we possibly can, and I am now confident and believe that our team is positioned to meet this demand. I want to say thank you again to our entire staff and to all of our shareholders who are part of this with us. And with that, I would like to open up the call to questions. Operator: Our first question is coming from Austin Bohlig of Needham & Company. Austin Bohlig: Congrats on the great results. First, Allan, I just wanted to kind of dive a little bit more into kind of the revenue outlook for the rest of the year. I think prior, you guys were talking about trying to grow internally 50% quarter-over-quarter, understanding this is at a much larger base. Is the plan to still try and grow sequentially throughout the year? Allan Evans: Austin, I appreciate your question. We don't historically give guidance. I think I'm going to give you what our internal targets are and why here. And this is a unique situation. In the second quarter, we ran in front of our inventory a little bit. So we have some shortages as we go through the changeover to different electronics vendors. And we also, honestly, our motor factory right now is a construction zone, and we're prioritized plugging in our high-speed line. So our internal targets, which are not the same as guidance, these are sort of where we really work toward, and we've done a good job of this historically. Internally, because of all the efforts we're putting in, we're targeting $12 million to $14 million in the third quarter, and then that positions us to go after our internal target of $25 million for the fourth quarter. So those are our internal targets, and we're really spending this quarter rushing to build out everything to start to meet what will be drone dominance and the counter drone demand coming in the fourth quarter. And so we're applying a lot of work not toward building and selling, but to positioning to start to explode into quarter 4 and the time after that. Austin Bohlig: Okay. Perfect. And then I guess, on kind of the counter UAS market because I think that's just as hot as the FPV drone dominance market. How many customers are you guys working with in that space? Allan Evans: I am not sure of the number right now. It is definitely more than one already. And some of the same customers that are FPV customers buy the same parts for counter drone. So I would have to dive into that specifically. But it is definitely a major driver for us. And the first customer that we announced that we were doing it with where we're the furthest along was Powerus. And they were the first ones to start to see large contracts. So now that we're seeing other companies get counter drone contracts, we'll have better granularity on that probably in another month or 2 as they finalize their supply chains. Austin Bohlig: Okay. And then just was curious on the pricing environment. I think historically, you guys have just tried to, for your customers, maintain pricing, but I've just heard just due to the really imbalance of supply and demand, definitely is an environment that favors you. Just curious of how you guys have been thinking about pricing of components this year and next. Allan Evans: Yes. I think we could absolutely increase our pricing to drive margin, but we view our company and always will is competing in the global marketplace. And so our customers very often have had overseas suppliers, and they're being forced to switch. And we really think it's important for us to be -- understand their cost sensitivities as well and be a place where they can switch and not break their downstream costs or make products that are too expensive for the American people. So we try to combine the -- looking at it to have a 40% gross margin, so we have a healthy business, but also being price competitive to imported motors from Taiwan or Japan or China, so that we don't break their downstream model. So we're not looking to use this moment to create margin expansion at the expense of our customer. We think if we serve them really well, then we'll have a multiyear relationship with all of them and be able to provide them with the parts they need at a competitive price so they can compete in the marketplace. Operator: Our next question is coming from Josh Sullivan of Jones Trading. Joshua Sullivan: Congrats on the big ramp here in the quarter. Just wanted to get some additional thoughts on working capital position now and where it might need to be next year as this ramp really comes through. And then where are the supply chain stress points currently for yourselves? Allan Evans: Yes. So if you look, this is a great example. As Brian had mentioned, we have about $42.7 million in inventory, raw material, finished goods, prepaid inventory, and that's on a $16 million quarter. Multiply that by 4, you at $60 million. We, I think, have historically said we always expect about 1x working capital to forward-looking revenue. So I think that is in that ballpark. It matches sort of our baseline models. As we go into next year, I think we're going to be seeing still a year of forward-looking revenue in there, and we've always said that we aspire to do about $250 million of revenue, if possible, in 2027 if we're successful in don't run any hiccups. So we think we're going to need to land around there across the next year. I do think as we scale into that, there are options that are not equity financing, right? There's loans, et cetera, that could be possible. And then hopefully, that answers the first question. And do you mind repeating the second question, so we have an on record. Joshua Sullivan: Yes. The second one is just curious where your stress points are in the supply chain at this point. Allan Evans: So the stress points are everywhere. If you look electronics vendors across the board, and this is especially true because you just saw yesterday, China make drone export restrictions harder. It's a very dynamic environment where the sort of isolation is creating regulatory changes. So if there's even -- you could say like on an F7 flight controller, the only place where they make the OSE chip is out of China. So working around that, and that is more expensive if you use a microcontroller and program it and then you have to go find it. We've had to place orders for Sony sensors already for cameras that won't even be delivered until December because there's a shortage of camera sensors that are outside of China. If you look for magnets, we have to order 9 months out for magnets from Japan as we scale our production line and do design where magnets from other areas can be shorter. There's probably 20 different very challenging items to source where our supply chain team is on top of it and does an incredible job. And those are just some I know off the top of my head. And it gets harder as the rules are changing on short notice. Joshua Sullivan: Maybe just one last one, just a follow-up on the counter drone market. What do you think the magnitude of the counter drone market is going to be versus the legacy FEV market? Allan Evans: So I think the counter drone market is probably going to be larger. And I think it's going to be larger because I think counter drones will be used more. I think there's a lot more global defense activity and I think a lot easier U.S. export for defense activity. I'll give you an example right now. In Iran and the Middle East, the Gulf states all would want counter drones in addition to things like Patriot missiles. And I think it's a lot easier to say, hey, here are counter drones where then we're not facilitating or engaging in a conflict. I think if you look, there was a great effort done by the government during FIFA to a full drone task force. And I think you're going to see the same thing with the Olympics, et cetera. So I think if you think the counter drone and the small incredible drone markets of the same size. I think you're going to see more routine rollover and deployment in the counter drone market. And so I think that's going to be a more consistent demand driver long term. Operator: Our next question is coming from Craig Irwin of ROTH Capital. Craig Irwin: So Allan, it's rare for a growth company to have a double in revenue and for margins to hang in there. Usually, there's fairly substantial margin compression when companies are scaling. And you've delivered the opposite despite some of the challenges that you had in the quarter. Can you maybe give us a little bit more detail on your planning for scaling as far as how you allocate resources for employees, hiring, infrastructure necessary? How are you actually delivering on margins that are healthy and expanding modestly while scaling at such a rapid rate? Allan Evans: I think that's a great question, and thank you for the observation. Everybody in the company cares about building a sustainable business. I think where you see a lot of companies reduce margin for growth, they have to create demand. And as we've always talked about, there's a market vacuum here. And so our cost to create demand aren't the same as other emerging environments. And so we have the benefit then of being able to understand and build with discipline to maintain and grow those margins. Our goal and our belief is that we're going to be able to be operating cash flow positive in the new year. Now again, as I mentioned, for the third quarter, we're putting in a ton of work. So right now, we were at about 70,000 square feet of total space. And we've added 15,000 square feet in Orlando for batteries, another 4,000 square feet in Orlando for operating staff like overhead staff, G&A. The 18,000 square feet for upgrade energy will close, and we're actually looking for another 100,000 to 200,000 square feet over the next 9 months because at our current rate, we've sort of filled up the space that we had faster than we expected. It's all being operational and it's all generating margin. The other thing that is true is everybody on our team puts in the work. And so I think when you look at gross margin expansion, a lot of our gross margin costs come from labor and people are really efficient and work really hard. And I think we have an incredible workforce that has helped us achieve that. So those are the 2 pieces that I think have led us do that is not having to spend wildly on demand generation and then a really effective workforce with a senior leadership that has an attitude toward constantly building a business with profitability. I think one other thing to note, and this will create a changeover in 2027. Most of our loss is driven by equity comp. Myself and the senior executives are no longer taking restricted stock. We move to options. And so I think where you may see some more gap stuff in the third and fourth quarters by 2027, a lot of that gap loss will be ameliorated as we all believe in the future and are structured for growth. Craig Irwin: So another major item that wasn't specific to UMAC this last quarter, but specific to the industry was Performance Drone Works getting their conditional loan commitment. That's $820 million, that's a big amount of money for the Department of War to commit to the build-out of this infrastructure, this industry that you are clearly a leader in. You were obviously mentioned -- your company was mentioned in several of those press reports that talked about potential government investments. So I don't want to ask specifically about your status there, but I'd love to ask about how you could potentially use money if you did have a couple of hundred million dollars come in. What would this mean now that you've proven that you can use your capital wisely? Allan Evans: Great question. I'd like to say congratulations to the PDW team. I've known Ryan and James and Matt over there since the early DRL days, and they're great stewards of what they're doing. I think they're a great company in the industry. What we would do, what we could contribute, is very shortly, we're going to have a complete, let's call it, motor production unit, a full supply chain, a mid-tier introductory line with the ability to do things all the way through a high-volume line where we could do, let's call it, 100,000 motors a month. With hundreds of millions of dollars, we could take that production unit and parallelize it. We could rubber stamp it out and adjust it to match. So if there was a desire to do 1 million motors a month to support the drone and counter drone industry, we could take that base unit, which was confirmed and validated along with the full supply chain and the variants that we have there. And at this point, we could stamp out 10 of them. And I think in that way, with our leadership position in motor production and our quality improving through strong partnership and feedback with our customers and the hard work of our team, I think that's where you would see us go and what you could see us do with sort of a mandate that it would be desirable. Craig Irwin: Well, congrats on the progress. Allan Evans: Thank you, Craig. Operator: Our next question is coming from Amit Dayal of H.C. Wainwright. Amit Dayal: Just to begin with, did I just hear the targeted revenue for 2027 is roughly $250 million? Allan Evans: That is not guidance. We've said all the way along that is the available TAM from the Drone Dominance Program. And so we are aggressively trying to grow our company to fill as much of that demand as we can. Amit Dayal: Understood. Just so in that context, what revenue capacity will your manufacturing infrastructure support going into 2027? Allan Evans: I would say, as of today, with the 70,000 square feet, we're probably getting close to the limit. So that's probably $20 million. We'll know better when we put in the high-speed automated line, but we're actively looking for another couple of hundred thousand square feet to scale out. So we're trying to build the infrastructure. And that's really what quarter 3 is about is that foundation. We're trying to build the infrastructure to meet the market potential of $250 million in 2027. And we're going to have to take a moment and really build out the base to be ready to do that. Amit Dayal: Understood. And just any update on the announcement in May or the news in May about potential U.S. government investment in UMAC. Has that discussion moved forward? Any update on that would be helpful. Allan Evans: Yes. As I've said all the way along, we are in discussions with the OSC, and that's all I can say. Operator: Our next question is coming from Barry Sine of Litchfield Hills Research. Barry Sine: A couple of questions, if you don't mind. First, Allan, you've been incredibly busy on the M&A front. But if you look back at the stack now, number one, if you look at the components required to manufacture a drone, you've pretty well filled that out, especially with batteries recently, maybe frames or antennas. Anything else there? And anything else you might go beyond just drone components you thought about services in the past but pulled back. What are you thinking on M&A? Allan Evans: Right now, we're really focused on closing Upgrade Energy. And then when we look at M&A, integration is a lot of work. We don't take that lightly. And I think until we have scaled to service what is the powertrain that we're working on, and we feel more comfortable that we're there that we're really focused on driving this organic growth that we saw in the last quarter. And I think our team has demonstrated we can really start to drive rapid organic growth. So we're always looking at adjacencies or new product categories. I think with where we sit in terms of capitalization and support from the shareholders, we're in a position that if something makes sense, we could go after it. But at the same time, our core focus right now is getting batteries in-house and really scaling what we have because there's a lot of demand for it. Barry Sine: Okay. So it sounds like you're in pretty good shape for now. Shifting gears, talking about gross margin. There's a lot of work in progress. You're ramping up the facilities now, but you're going to do a step change increase in square footage next year. You've got to get batteries closed and up and running in [ a mirror ] plant in Orlando. If we look out once that's done, I don't know if there's a steady state ever for Unusual Machines. What do the gross margins look like longer term on this business? Are we at 50% gross margin? What should investors think about that you can do once you're really at scale? Allan Evans: Yes. I think what we've said is why we're scaling. We figure around 30 -- low 30% gross margin is our target. I think we've demonstrated we can hit that. I think that's what you're going to look at as long as we're scaling. We're doing everything we can structurally to keep 40% gross margin as we start to flatten out as our target, which we think is fair to both us and our customers. I think once we get there and we don't see the growth that we're seeing, if we settle into 10% year-over-year growth for some really mature state, we'll have to look around and decide then do we need to expand into other industries to drive continued growth? Or do we need to look at margin improvements. And I would say, very recently, the FCC just put out another ban, which creates potential TAM expansion and that they banned all light show drones immediately. But more importantly, they banned humanoid robots and even robot vacuums from being imported to China. So if we see a components ban in those categories, which would follow the same pattern as the drone marketplace, there are millions of robot vacuums that were sold in the U.S. last year. And right now, all of them are made in China. So there could be -- we would have the choice to pursue margin expansion or continued TAM and revenue expansion at that point. And I think when we get there, investors should be excited that we have decisions we get to make. Barry Sine: And just lastly, just a detailed question. What percent of revenue was Rotor Riot this quarter? Allan Evans: The retail channel, not the brand was only about 6% of revenue. Operator: Our next question is coming from Matthew Galinko of Maxim Group. Matthew Galinko: Allan, you framed the market as supply constrained through 2027. So is that a function of line of sight that you have today? Or do you expect suppliers to catch up with demand in 2028? Allan Evans: Just line of sight. I think there's no suppliers that are close and the continued regulatory environment is restricting supply further. And so I think we'll continue to pay attention in Q2 2027, I think we'll have better line of sight looking forward. But right now, that's just as far out as we can see. Operator: Our next question is coming from Josh Sullivan of Jones Trading. Joshua Sullivan: I just wanted to get your thoughts on the evolution of the commercial drone delivery market at this point. I know you're already a lot in your plate scaling in the drone dominance alone. But given the longer-term battery swap opportunity, just wanted to check in on your thoughts on any developments. Allan Evans: Yes. I think most importantly, you saw DoorDash just got their 135. They'll begin testing. I think they're going to have very interesting results, and that will be -- my belief is food delivery is going to be the first thing that unlocks with 108. And so I think what we see from them publicly in terms of how customers are reacting to their early testing with the 135, I think, is going to tell us a lot about what to expect from that market. I do think that you're looking at drone delivery being constrained in terms of developing new products by the FAA finishing the regulation for Part 108, in particular, the sort of detect and avoid requirement because if it requires an antenna and a radio, et cetera, then any companies building drones for that next FAA cycle won't be able to launch them until after they can qualify them. So right now, my guess as to the scaling of component demand for delivery is going to be probably late 2027 with deployment. My guess is in 2028. And I think food delivery is really the first use case that's going to scale. And so I think it will be really interesting to see what information DoorDash shares over the next year to give us really good indicators of what that market is going to look like. Operator: We appear to have reached the end of our question-and-answer session. I will now hand back over to Allan for any closing comments. Allan Evans: Yes. Again, this quarter is the one where I've gone from hoping to believing because of the team and the energy that everyone has put in and our ability to rise to the occasion. I think we're extremely well positioned going forward. And I want to say thank you to everyone for their time. I appreciate everybody that's a shareholder, and I look forward to working with everyone to continue to build the drone industry. So thank you. I hope you have a great morning. Operator: Thank you very much, Allan, and thank you, everybody. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation. Before you buy stock in Unusual Machines, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Unusual Machines wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* Now, it’s worth noting Stock Advisor’s total average return is 964% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Unusual Machines (UMAC) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Unusual Machines, Inc. UMAC framed its second-quarter 2026 earnings call around capacity, supply-chain resilience and execution. The emphasis shifted from another sequential revenue jump to preparing for a larger fourth-quarter ramp. CEO Allan Evans said that demand remains strong and supply remains constrained into 2027. He said that the third quarter will be used to strengthen infrastructure before that demand accelerates. Evans told a Needham analyst that UMAC is internally targeting $12-$14 million in third-quarter revenues. He put the fourth-quarter internal target at $25 million and stressed that neither figure is formal guidance. Second-quarter revenues were $16.70 million, beating the Zacks Consensus Estimate of $9.60 million. UMAC also posted a loss of 4 cents per share, narrower than the consensus estimate for a loss of 10 cents. Evans added that third-quarter work centers on installing a high-speed motor line and changing electronics suppliers. He also highlighted quality systems and preparation for integrating Upgrade Energy. Unusual Machines, Inc. price-consensus-eps-surprise-chart | Unusual Machines, Inc. Quote Evans informed that demand continues to exceed supply across the domestic drone component market. He cited Drone Dominance and counter-drone programs as major drivers through the company's current 2027 visibility. A JonesTrading analyst asked about counter-drone demand relative to the small-drone market. Evans said that he expects counter-drone demand to become larger and more consistent over time. A H.C. Wainwright analyst pressed on the previously discussed $250-million 2027 figure. CEO Evans clarified that it represents available market opportunity, not company guidance. Evans said that the quarter exposed two operating stress points. UMAC outgrew an electronics vendor and separately encountered an intermittent quality issue with one motor SKU. Evans added that teams changed components and suppliers while improving production and quality-testing processes. Even with those disruptions, the gross margin reached 34.7% and the adjusted EBITDA loss narrowed to $0.4 million. In response to JonesTrading, Evans described pressure across electronics, camera sensors and magnets. He noted some nine-month lead times, reinforcing the need for earlier inventory and capacity planning. Evans told a Needham analyst that UMAC could raise prices in the supply-constrained environment. He said that the company does not want to expand margins at customers' expense. Evans stated that pricing should remain competitive with imported components while supporting a healthy business. He continues to view a 40% gross margin as the company's longer-term target. In the shareholder letter, Evans said that the third-quarter margin should fall from the second-quarter level of 34.7%. He expects a fourth-quarter rebound, while the 40% target may not be reached until late 2026 or early 2027. UMAC ended the quarter with $229.6 million in cash and $367.5 million in working capital. Short-term investments totaled more than $86 million, giving the company additional balance-sheet resources for expansion. CFO Brian Hoff said that inventory spending would continue increasing in the third and fourth quarters. He tied those purchases to demand preparation and efforts to manage supply-chain constraints. CEO Evans said that UMAC raised another $60 million at $30 per share through block ATM transactions. He added that the company is seeking another 100,000-200,000 square feet over the next nine months. Evans repeatedly emphasized manufacturing scale, supplier qualification and quality control over maximizing third-quarter shipments. His comments positioned the current quarter as foundational work for the expected fourth-quarter and 2027 ramp. Evans also said that UMAC is prioritizing completion of the Upgrade Energy acquisition before additional M&A. The near-term strategic focus remains organic expansion of the existing component platform. UMAC currently carries a Zacks Rank #3 (Hold). Its Value, Growth, Momentum and VGM Score are all F, the lowest grade in the Style Score framework and below the A or B scores emphasized for stronger style characteristics. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Zacks Rank centers on earnings estimate revisions, while the Style Scores complement that signal across value, growth and momentum. The Rank can change as analysts revise estimates after the just-reported results, so the current combination should not be treated as fixed. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Unusual Machines, Inc. (UMAC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Management provides perspective on second quarter financial results, strategic execution, and initiatives supporting future growth. ANN ARBOR, MI / ACCESS Newswire / August 10, 2026 / Dynamic Aerospace Systems ("DAS") (OTCQB:BRQL), an innovator in unmanned aerial vehicles (UAVs), autonomous logistics, and aerospace technologies, today issued the following shareholder letter providing an update on its second quarter 2026 financial results, operational milestones, strategic partnerships, capital markets initiatives, and continued execution of the Company's long-term growth strategy across government, healthcare, and commercial markets. Dear Shareholders and Future Investors, The second quarter of 2026 marked another important period of progress for Dynamic Aerospace Systems as we continued to advance our technology platforms, expanding strategic relationships and positioning the Company for future growth. On April 30 we disclosed our Drone Days Demo for the Arizona Department of Public Safety. In May were able to attend the Xponential Expo in Detroit with Unusual Machines and were able to demonstrate our Mitigator class of drones. That was followed by hosting a high-level Japanese delegation at our Michigan facilities that included Mitsubishi Heavy Industries, Kawasaki Heavy Industries, Subaru, NEC, IHI, and other Japanese defense leaders after the DPS Drone Expo. The visit provided an opportunity to demonstrate our technology platforms, discuss potential applications, and begin exploring future collaboration opportunities within the Japanese market. We have subsequently been invited to continue those discussions and demos in Japan and management is evaluating participation as schedules and strategic priorities permit. Throughout the quarter we continued to drive tangible momentum: In collaboration with the Arizona Department of Public Safety, we hosted a multi-agency Drone Demo Expo as demand accelerates for U.S.-manufactured UAV systems. We delivered Breacher/Mitigator Quad and Hex tactical drone systems to the Arizona Department of Public Safety for operational evaluation. We integrated Unusual Machines NDAA-compliant components into our Mitigator/Breacher tactical drone platform. We expanded our autonomous logistics and UAV intellectual-property portfolio with three new provisional patent filings. Building on our momentum: Subsequent to June 30, 2026, we have continued to build on this momentum, most notably: We presented at RedChip's "Vertical Economy: The Race to Dominate the Skies" Virtual Investor Conference, with the conference replays now available. Most recently, we partnered with Flightbox, Inc. to advance autonomous medical drone logistics for healthcare, government, and commercial markets. Ultimately, we believe success will be measured against our ability to innovate, execute, generate sustainable revenue and create long-term value for shareholders. But numbers alone won't tell the full story. The road to success is always laid down with grit, determination, and ingenuity. At DAS we've assembled a multidisciplinary team that combines aerospace engineering, autonomous systems development, manufacturing, software, military experience, and public-company leadership. Our leadership and Board include executives with backgrounds spanning Honeywell Aerospace, FedEx, and other leading organizations. We believe this depth of experience positions us well as we continue executing our long-term strategy. Understanding Our Financial Performance and Operational Progress For the quarter ended June 30, 2026, the company reported a GAAP net loss of $2.18 million. While this figure accurately reflects required accounting treatment under U.S. GAAP standards, it is important for shareholders to understand that a meaningful portion of the reported loss consisted of non-cash accounting entries rather than actual operational cash expenditures during the quarter. Non-cash items included in the GAAP net loss are as follows: "Adjusted Operational Loss", "Adjusted Operational Loss, as normalized" and "Adjusted Operational Loss, as normalized per month" are non-GAAP financial measures. The Company defines Adjusted Operational Loss as GAAP net loss adjusted to exclude depreciation and amortization, stock-based compensation, amortization of debt discount, financing-related accounting costs, and the non-cash adjustments to fair value of derivative liabilities. S-1 registration and up-listing normalizing items relate to legal, accounting, and advisory costs incurred in connection with these discrete capital-markets initiatives, which management believes are separately identifiable from, and not indicative of, the costs incurred in the Company's core UAV design, manufacturing, and commercialization operations Management believes Adjusted Operational Loss provides useful information to investors because it reflects the Company's operational cash utilization during the period, exclusive of non-cash accounting entries, which management believes is a meaningful supplement to GAAP results given the Company's pre-revenue stage and ongoing capital-markets initiatives. Management uses Adjusted Operational Loss internally for internal budgeting and forecasting, assessing cash needs in connection with capital-markets and up-listing initiatives. Adjusted Operational Loss is not a measure of financial performance under GAAP, should not be considered in isolation or as a substitute for net loss or other measures of financial performance prepared in accordance with GAAP, and may not be comparable to similarly titled measures used by other companies. 2. Management believes it is useful to investors to identify costs related to S-1 registration and a national exchange up-listing separately because these costs are being incurred in connection with a discrete corporate initiative - the Company's registration statement and pursuit of a national securities exchange listing - rather than in the ordinary course of the Company's core operations. The Company expects the magnitude of these costs to decline once the registration statement is declared effective and the up-listing process is complete, although the Company may continue to incur legal, accounting, and compliance costs of this general nature as a public company, and there is no assurance as to the timing of completion of either process These accounting charges are required under GAAP but do not directly reduce the company's operating cash position in the same way as payroll, manufacturing, engineering, advertising and demonstrations, travel, or vendor payments. In addition, the quarter included a non-cash accounting gain of approximately $105,000 related to the fair value adjustment of derivative liabilities. While this reduced the reported accounting loss, it also did not provide operational cash to the company. After adjusting for these items, the company's total net non-cash impact for the quarter was $1.06 million. The quarter also continued to include legal, accounting, compliance, and related expenses associated primarily with ongoing S-1 activities, and capital-markets preparation. After normalizing these items, management estimates the company's adjusted operational loss for Q2 2026 was $1.1 million, or roughly $364,000 per month. Importantly, this reflects the continued scaling of operations following the 2025 asset acquisitions, including full-period salaries for the expanded team, while management remains focused on directing spending toward strategic initiatives, customer engagement, demonstrations, intellectual-property development, and sales activities that we believe can create long-term shareholder value. We believe it is important for shareholders to evaluate the company not only through traditional GAAP reporting metrics, but also through the lens of operational cash utilization, strategic investment positioning, intellectual property development, customer engagement, and long-term growth initiatives as we continue transitioning Dynamic Aerospace Systems into a scalable aerospace and autonomous systems platform. Capital Markets and Exchange Uplisting Initiatives During the second quarter, the company continued advancing its broader capital markets strategy, including ongoing efforts to position Dynamic Aerospace Systems for a potential future uplisting to a major national exchange such as the NYSE American. As part of these initiatives, the company continued to incur legal, accounting, compliance, and up-listing related expenses associated with strengthening its public-company infrastructure and preparing for future capital-markets opportunities. Management continues to evaluate these initiatives as market conditions evolve and will provide additional updates as appropriate. Management believes these efforts represent important foundational steps toward increasing institutional visibility, improving long-term market accessibility, enhancing shareholder awareness, and positioning the company for future growth and financing opportunities as the business continues to mature. In closing, none of this progress happens without the people behind it. I want to thank our team for the dedication they've shown this year, our working partners at Drops Smart Hubs, Potomac River Group, Unusual Machines, Noon Fulfillment (UAE), Flightbox and others for their continued collaboration, and our shareholders for the trust and support that make this work possible. We remain early in the Company's development, but we believe the progress achieved during the quarter provides a solid foundation for continued execution. We look forward to updating you on our continued progress in the quarters to come. Best regards, Kent WilsonCEO / Chairman of the Board About Dynamic Aerospace Systems (DAS): Dynamic Aerospace Systems is a Nevada-incorporated business dedicated to developing innovative aerospace technologies, with a focus on advanced drones (UAVs) for military defense and commercial applications. Committed to engineering excellence and strategic partnerships, DAS delivers reliable, high-performance solutions to meet the evolving needs of the aerospace industry. The Company's common stock is traded on the OTCQB Market under the ticker symbol "BRQL." For more information about DAS, visit: https://www.dynamicaerosystems.com/investor-relations/why-dynamic Contact Information:Dynamic Aerospace Systems (DAS)3753 Plaza Dr, Ann Arbor, MI 48108 Investor Relations: [email protected] Media Inquiries: [email protected] Follow DAS news and updates:X: https://x.com/DynamicAeroSysLinkedIn: https://www.linkedin.com/company/dynamic-aerospace-systems/BlueSky: https://bsky.app/profile/dynamicaerosys.bsky.socialFacebook: https://www.facebook.com/profile.php?id=61572730386312StockTwits: https://stocktwits.com/symbol/BRQL Forward-Looking Statement: This letter contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding the Company's business strategy, product development, customer evaluations, partnerships, intellectual property, regulatory approvals, anticipated demonstrations, capital markets activities, potential exchange uplisting, financing initiatives, sales opportunities, market expansion, and future operating performance. These statements are based on management's current expectations, estimates, and assumptions and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Factors that may cause actual results to differ include, among others, the Company's ability to obtain additional financing, execute its business strategy, secure customer contracts, successfully commercialize its technologies, complete regulatory and certification processes, satisfy exchange listing requirements, maintain strategic relationships, and general economic, industry, and market conditions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this letter. Except as required by applicable law, Dynamic Aerospace Systems undertakes no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances. SOURCE: Dynamic Aerospace Systems View the original press release on ACCESS Newswire

Interested in Unusual Machines, Inc.? Here are five stocks we like better. Revenue surged to more than $16.7 million in Q2 2026, up 687% year over year and 107% sequentially, with enterprise customers contributing about 95% of sales. The GAAP net loss was $7.8 million, while the adjusted EBITDA loss narrowed to approximately $400,000. Unusual Machines ended the quarter with $229 million in cash, over $86 million in short-term investments and no debt, but rising expenses and rapid hiring pressured profitability. Management expects margins to fluctuate as it expands manufacturing capacity and addresses supply-chain and quality issues. Management is preparing for a potential fourth-quarter growth acceleration, citing internal revenue targets of $12 million–$14 million for Q3 and $25 million for Q4, as well as expected demand from U.S. defense drone procurement and counter-drone markets. Drone Stocks Soar As Pentagon Considers Funding, Including a Trump-Linked Name Unusual Machines (NYSEAMERICAN:UMAC) reported second-quarter 2026 operating revenue of more than $16.7 million, up 687% from the prior-year period and 107% sequentially, as enterprise customers accounted for approximately 95% of quarterly sales. The company recorded a GAAP net loss of about $7.8 million, or $0.16 per share, compared with a loss of $0.32 per share in the second quarter of 2025. Adjusted EBITDA loss narrowed to roughly $400,000 from a $1.6 million loss in the first quarter, according to management. → No Hangover: Revisiting Microsoft One Week After Earnings Is This Pre-IPO AI Robotics Company the Next Big Defense Play? “The key takeaway from this quarter for me is that we are continuing to dramatically increase revenue while getting closer to consistent profitability,” CEO Allan Evans said on the company’s earnings call. Gross margin was 34.7% in the quarter, improving from the first quarter but remaining slightly below the company’s 2025 margin levels. CFO Brian Hoff said management expects margins to fluctuate during the rest of 2026 as the company expands manufacturing and pursues growth initiatives, though it expects margins to recover over time. → MarketBeat Week in Review – 08/03 - 08/07 3 Defense Stocks Under $20 With Massive Upside Operating expenses increased to $13.6 million, reflecting investments in general and administrative infrastructure, headcount, systems and processes. Hoff said the total included $5.7 million in non-cash stock compensation expense and approximately $1.8 million in non-recurring expenses. The company’s workforce expanded from 141 employees to 240 as of July 1, according to Evans. → Why the Landlord of the AI Boom Could Outlast the Chipmakers Unusual Machines ended the quarter with $229 million in cash, including proceeds from $60 million raised through block at-the-market transactions in May at $30 per share. The company also reported more than $86 million in short-term investments and approximately $42.4 million of inventory, including raw materials, finished goods and deposits paid. Total working capital exceeded $367 million and the company had no debt, management said. Hoff said inventory is expected to rise further in the third and fourth quarters as Unusual Machines makes purchases intended to meet demand and manage supply-chain constraints. The quarter also included a $2.3 million realized gain from investments and about $1.8 million in interest income. Evans said the company encountered two operational challenges during the quarter: it outgrew one of its electronics vendors and experienced an intermittent quality issue with one motor stock-keeping unit. The electronics issue required changes to component sourcing while the company continued filling customer orders, while the motor issue required coordination among product, production and customer teams to identify the cause and revise production and quality-testing processes. Evans said the challenges did not derail the company’s revenue growth, but they underscored the need for further infrastructure investment. The company is installing a high-speed motor production line and is working to expand operations following its planned acquisition of Upgrade Energy, which would add battery-related capabilities. Evans said Unusual Machines does not expect revenue from Upgrade Energy until the transaction closes. Management said it had about 70,000 square feet of total space and has added 15,000 square feet in Orlando for batteries and 4,000 square feet for operating staff. Evans said the company is also evaluating an additional 100,000 to 200,000 square feet over the next nine months. While emphasizing that the company does not provide formal guidance, Evans outlined internal revenue targets of $12 million to $14 million for the third quarter and $25 million for the fourth quarter. He said the third quarter will be focused heavily on expanding capacity, changing electronics suppliers and building inventory rather than solely maximizing near-term sales. “We’re applying a lot of work not toward building and selling, but to positioning to start to explode into quarter four and the time after that,” Evans said. Management said it continues to see a supply-constrained U.S. market for drone components, with demand expected to exceed supply through at least 2027 based on its current visibility. Evans cited anticipated procurement activity tied to the Department of War’s Drone Dominance Gauntlet program, which he said is in its final Phase II selection process and is expected to result in orders for more than 60,000 drones in the second half of 2026, primarily during the fourth quarter. Evans also pointed to growing counter-drone demand, describing it as an additional near-term market for components. He said some customers purchase the same components for first-person-view drones and counter-drone systems. Enterprise customers generated about 95% of second-quarter revenue. The retail channel represented about 6% of quarterly revenue, according to Evans. Management’s long-term gross-margin target remains about 40% once growth moderates, while its near-term scaling target is in the low-30% range. During the question-and-answer session, Evans said management is in discussions with the Office of Strategic Capital, but did not provide additional details. He also said the company is primarily focused on integrating Upgrade Energy and scaling its existing operations rather than pursuing additional acquisitions in the near term. Looking beyond defense-related demand, Evans said commercial drone delivery could become a more meaningful component opportunity later, though he expects regulatory progress around FAA Part 108 requirements to influence the timing. He said his current expectation is for component demand related to delivery drones to scale in late 2027, with broader deployment potentially occurring in 2028. Unusual Machines, Inc designs, manufactures, and sells ultra-low latency video goggles for drone pilots. It operates a drone-focused e-commerce marketplace. The company serves drone pilots, hobbyists, and recreational services. The company was formerly known as AerocarveUS Corporation and changed its name to Unusual Machines, Inc in July 2022. Unusual Machines, Inc was incorporated in 2019 and is based in Orlando, Florida. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Unusual Machines Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Revenue growth of 687% year-over-year was driven entirely by the Enterprise segment, which now accounts for approximately 95% of total revenue. Management attributes the successful scaling to a 'market vacuum' in the domestic drone industry, allowing for rapid expansion without the typical high costs of demand generation. The company navigated significant operational hurdles in Q2, including replacing an electronics vendor and resolving an intermittent quality issue with a motor SKU. Gross margins remained healthy at 34.7% despite rapid head count expansion from 141 to 240 employees and the costs associated with scaling manufacturing. Strategic investments and block ATM transactions have built a $367.5 million working capital 'war chest' to manage inventory and supply chain volatility without debt. The company is pivoting from a retail focus to becoming a primary supply chain leader for small drone components as domestic demand outstrips global supply. Management anticipates a 'massive demand wave' in Q4 2026 and 2027, driven by the Drone Dominance Gauntlet Program and emerging counter-drone requirements. The third quarter is viewed as a foundational 'transformation' period focused on infrastructure and hiring rather than top-line growth to prepare for a Q4 internal target of $25 million. Supply chain constraints are expected to persist deep into 2027, particularly for sensors, magnets, and specialized chips sourced outside of China. The company aims to be operating cash flow positive in the new year, supported by a transition from restricted stock to options for executive compensation. Future growth may extend beyond drones into robotics and vacuums if regulatory bans on Chinese components expand to those categories. The company is currently supply-constrained and 'ran in front' of its inventory in Q2, leading to temporary shortages during vendor transitions. A high-speed automated motor production line is currently being installed in Florida, which is expected to significantly increase capacity once online. The pending acquisition of Upgrade Energy is a key strategic move to bring battery production in-house, though no revenue will be recognized until the deal closes. Recent Chinese export restrictions on drones and components are creating a more dynamic and challenging regulatory environment for sourcing. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management is targeting $12 million to $14 million in Q3 as they prioritize infrastructure build-out and the installation of a high-speed motor line. The internal target for Q4 is $25 million, positioned to capture peak demand from government drone programs. The company is choosing not to increase pricing to drive margin expansion at this time, aiming instead to remain competitive in the global marketplace and maintain a margin target that is fair to their customers., choosing instead to remain price-competitive with overseas suppliers to ensure long-term customer loyalty. The long-term goal is to maintain a healthy 40% gross margin while helping domestic customers transition away from Chinese components. Management believes the counter-drone market could eventually be larger and more consistent than the FPV drone market due to global defense needs and easier export paths. Significant contracts from companies like Powerus and AeroVironment are expected to propagate through the supply chain starting in late Q3. Current facilities are nearing their $20 million quarterly revenue limit, prompting a search for an additional 100,000 to 200,000 square feet of space. The company is building infrastructure to support a potential $250 million annual TAM by 2027.

This article first appeared on GuruFocus. Revenue: $16.7 million in Q2 2026, a 687% increase year-over-year and a 107% increase from the prior quarter. Year-to-Date Revenue: $24.8 million for the first half of 2026. Enterprise Revenue: Approximately 95% of Q2 revenue was generated from enterprise customers. Gross Margin: 34.7% for the quarter, an increase from the prior quarter but slightly below 2025 margins. Net Loss: Approximately $7.8 million, or $0.16 per share, compared to a loss of $0.32 per share in Q2 2025. Adjusted EBITDA Loss: $400,000 in Q2, down from a loss of $1.6 million in Q1 2026. Operating Expenses: $13.6 million in Q2, including $5.7 million in non-cash stock compensation and $1.8 million in non-recurring expenses. Cash Balance: $229 million at quarter end, including $60 million raised from ATM block funding in May at $30 per share. Short-Term Investments: Over $86 million. Inventory and Deposits: Approximately $42.4 million, expected to increase in Q3 and Q4. Working Capital: Over $367 million with no debt. Realized Gain on Investments: $2.3 million during the quarter. Interest Income: Approximately $1.8 million during the quarter. Headcount: Increased from 141 employees to 240 employees as of July 1. Warning! GuruFocus has detected 3 Warning Sign with UMAC. Is UMAC fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Unusual Machines Inc (UMAC) delivered exceptional revenue growth in Q2 2026, with operating revenue of $16.7 million, a 687% increase year-over-year and a 107% increase sequentially. The company is making significant progress toward profitability, reducing its non-GAAP adjusted EBITDA loss from $1.6 million in Q1 to just $400,000 in Q2, while also cutting its GAAP net loss per share from $0.32 to $0.16. Unusual Machines Inc (UMAC) maintains a very strong balance sheet with $367.5 million in total working capital, no debt, and a cash position of $229 million, providing ample resources to scale operations and manage supply chain challenges. Demand for the company's products is robust and expected to outpace supply through 2027, driven by major government programs like the Drone Dominance Gauntlet and a rapidly growing counter-drone market, which is creating a favorable supply-constrained environment. The company is strategically investing in its future by expanding manufacturing capacity, including a new high-speed motor production line and the acquisition of Upgrade Energy for battery production, positioning it to capture a larger share of the anticipated demand wave. Unusual Machines Inc (UMAC) faced significant operational challenges in Q2, including outgrowing a key electronics vendor and a quality issue with a motor SKU, which required extensive time and resources to resolve. The company's gross margin of 34.7% was slightly below its target of 40%, and management anticipates continued margin fluctuations throughout 2026 due to rapid scaling and growth initiatives. Operating expenses increased substantially to $13.6 million in Q2, driven by deliberate investments in headcount, infrastructure, and systems, with further increases expected as the company continues to hire and expand its physical footprint. The company's internal revenue target for Q3 2026 is $12-14 million, which represents a significant sequential decline from Q2's $16.7 million, as it prioritizes infrastructure build-out over sales to prepare for future demand. The supply chain remains a major stress point, with challenges sourcing critical components like OSC chips, camera sensors, and magnets, exacerbated by new export restrictions from China and long lead times for key materials. Q: What is the revenue outlook for the rest of 2026, and can the company maintain its sequential growth targets?A: CEO Allan Evans stated that while the company does not provide formal guidance, internal targets are $12 to $14 million for Q3 and $25 million for Q4. He noted that Q3 will involve significant work on infrastructure and supply chain positioning to prepare for the massive demand wave expected in Q4 from the Drone Dominance program and counter-drone orders. Q: How is the company positioning its working capital and managing supply chain stress points to support the anticipated ramp in demand?A: CFO Brian Hoff highlighted that the company holds $42.7 million in inventory, raw materials, and prepaid goods, aligning with its model of roughly 1x working capital to forward-looking revenue. CEO Allan Evans detailed that supply chain stress points are widespread, including electronics vendors, OSC chips sourced from China, Sony camera sensors with December delivery dates, and magnets ordered nine months out from Japan, all exacerbated by recent Chinese export restrictions. Q: How is the company maintaining healthy gross margins while scaling revenue so rapidly?A: CEO Allan Evans attributed the margin resilience to a market vacuum that reduces demand-generation costs and a highly efficient workforce. He reiterated the target of a 40% gross margin as the company scales, noting that Q2 margins of 34.7% reflect the current growth phase. He also mentioned that senior executives have shifted from restricted stock to options, which should reduce GAAP losses by 2027. Q: What is the potential size of the counter-drone market compared to the legacy small drone market?A: CEO Allan Evans believes the counter-drone market will likely be larger than the legacy market due to more routine deployment and easier U.S. export pathways for defense activities. He cited examples like the FIFA drone task force and upcoming Olympics, suggesting counter-drone demand will be a more consistent long-term driver. Q: How could the company utilize a potential large government investment, similar to the $820 million loan to Performance Drone Works?A: CEO Allan Evans explained that with a validated motor production unit capable of 100,000 motors per month, the company could "rubber stamp" and parallelize this unit to scale up to a million motors per month if given a mandate. He emphasized the company's leadership in motor production and its ability to expand infrastructure to meet large-scale demand. Q: What is the company's revenue capacity with its current manufacturing infrastructure, and what are the plans for expansion?A: CEO Allan Evans stated that with 70,000 square feet of space, the company is near its limit, supporting roughly $20 million in revenue. The company is actively seeking an additional 100,000 to 200,000 square feet over the next nine months to build the infrastructure needed to meet the potential $250 million market opportunity in 2027. Q: Are there any updates on the potential U.S. government investment discussions announced in May?A: CEO Allan Evans confirmed that the company remains in discussions with the U.S. State Department (OSC) but declined to provide further details, stating, "We are in discussions with the OSC and that's all I can say." Q: What is the company's M&A strategy, and are there any plans to expand beyond drone components?A: CEO Allan Evans stated that the immediate focus is on closing the Upgrade Energy acquisition and integrating it. While the company is always looking at adjacencies, the core focus is on scaling organic growth and bringing battery production in-house. He noted that the company is well-capitalized and could pursue opportunities if they make strategic sense. Q: What do long-term gross margins look like once the company reaches a more mature state?A: CEO Allan Evans indicated that while scaling, gross margins are targeted in the low 30% range, with a structural goal of 40% as growth stabilizes. He also noted that potential future bans on other Chinese-made products, such as robot vacuums, could provide opportunities for margin expansion or TAM growth. Q: What percentage of Q2 revenue came from the retail channel (Rotor Riot)?A: CEO Allan Evans confirmed that the retail channel accounted for only about 6% of Q2 revenue, underscoring the company's significant shift toward enterprise customers, which made up approximately 95% of revenue for the quarter. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Conference call today at 8:00 a.m. ET ORLANDO, FL / ACCESS Newswire / August 6, 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 second quarter ended June 30, 2026, and provided the following letter to its shareholders from CEO Allan Evans. Dear Shareholders, This shareholder letter follows the completion of our second quarter of 2026. We continue to execute our growth plan, and it was reflected in the quarter's results. In the second quarter, we generated $16.7 million in revenue, reflecting 687% year-over-year growth compared to the second quarter of 2025 and 106% quarter-over-quarter growth compared to the first quarter of 2026. The financial details reveal a continued growth story in a very high-demand market. Our revenue growth was driven by the continued increase in headcount and capacity. In Q1 2026, we grew from 81 to 141 employees. This contributed to the rapid revenue growth in Q2. This capacity growth continues, with our total headcount growing to 240 employees at the end of the second quarter. While this type of growth can have a negative impact on gross margins, we have stabilized, and our gross margin increased to 34.7% for the quarter. As a note, we do not expect Q3 revenue to follow this historical quarterly pattern, as our additional labor and capacity are engaged in foundational work to enable us to dramatically expand in Q4 and into 2027. Growth results in increased operating costs. Our total operating expenses for the quarter were approximately $13.6 million, resulting in a GAAP loss from operations of approximately $7.8 million. This was dominated by non-cash stock compensation expense of approximately $5.7 million. Our adjusted EBITDA loss for the quarter was only about $0.4 million, as we are starting to scale past the point of more significant losses. See the discussion of Non-GAAP Financial Measure and Table 2 below. The change in this cost is very encouraging as our top-line growth and sustained margins are becoming more meaningful. Our costs are increasing, but at a slower rate than our revenue, and we are on track to be cash flow positive. While our continued growth has moved our breakeven point to a higher revenue number, it now seems within striking distance, and I believe we can reach it by the end of the first quarter of 2027. We are still constantly evaluating what the "right-size" is for Unusual Machines. In our view, we are still much too small, and continued legislation such as the FCC ban on light-show drones and other robots continues to expand the market opportunity. To facilitate growth, we continue to find opportunities to manage equity and capital. In the second quarter, we raised $60 million at $30 per share in block transactions through our at-the-market (ATM) facility. This is a continuation of our staircase financing strategy. We have furthered our integration of Upgrade Energy and expect to close that transaction by the end of the third quarter. Our capital position allows us to continue to grow as necessary and leaves us open to exploring strategic opportunities as they arise. We want to take this opportunity 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 141 employees at the end of the first quarter of 2026 to 240 at the end of the second quarter. As of today, the Company has grown to more than 255 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 of our facilities. Our largest customer in the second quarter of 2026 represented approximately 42% of our total Q2 revenue, and our single best-selling product accounted for approximately 13% of our revenue. This mix is a sign of the robust growth we are seeing across our entire business as we scale. Growth is evident in our second-quarter financial results. We increased raw materials and prepaid inventory from $25.8 million as of March 31, 2026, to $42.4 million as of June 30, 2026. The conversion of this inventory resulted in rapid sales, with our finished inventory value changing from $1.6 million as of March 31, 2026, to $4.4 million as of June 30, 2026. We are investing to expand our motor line with high levels of automation, as reflected in the $3.3 million in Capex. Demand continues to increase as the market grows. Several public indicators and contracts highlight demand growth across the sector. In the second quarter, the Drone Dominance program, a $1.1 billion Department of War (DoW) program, announced Phase 2 finalists will be selected by the end of this month. Over half of the participants are Unusual Machines customers. The Purpose-Built Attritable System (PBAS) program has resulted in a $500 million follow-on contract for Neros. There has been a dramatic increase in demand for counter-drones (cUAS), which use the same parts we make for small drones, as exemplified through purchase orders secured by Powerus, Perennial Autonomy, and AeroVironment. The Office of Strategic Capital issued an $820 million loan vehicle for PDW. Additionally, the FCC recently announced a ban on light-show and other swarming drones (effective immediately), as well as a variety of other robotic systems. The U.S. Government is now actively using policy tools to create a highly favorable marketplace, while the Department of War is starting to deploy larger contracts to accelerate the entire domestic drone ecosystem. We plan to spend the third quarter building out the systems we need to sustain and supply this relentless demand and meet the needs of our customers for domestic drone components. 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. We ended the quarter with approximately $229.6 million in cash. The increase in cash was bolstered by an equity financing of $60 million at $30 per share using our open ATM facility. Our cash position has allowed us to aggressively scale the Company while maintaining financial flexibility and the ability to invest in customers and partners to further accelerate the domestic drone ecosystem. Cash can be allocated to many different balance sheet categories at any given time. It can be used to purchase inventory, fund capital equipment, and other operating needs. The purpose of these balance sheet activities is to use cash to generate a positive return. The best way to measure cash flow for our business is to aggregate these categories and subtract payables to quickly understand the financial health of our entire business. This is working capital, and it is summarized in Table 3. At the end of Q2 2026, our working capital was approximately $367.5 million. In the quarter, we recognized a GAAP net loss of approximately $7.8 million. This GAAP loss was primarily driven by non-cash stock-based compensation expense of $5.7 million and an unrealized loss on our investments of approximately $3.9 million. After accounting for non-cash related items and non-recurring expenses, our adjusted EBITDA loss was approximately $0.4 million for the quarter. See Table 2 for additional details related to our operating and non-GAAP financial measure. We are growing at an incredible pace while maintaining our cash balance. This allows us to plan and build the Company without being susceptible 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 are scaling as quickly as possible. We continue to add people, shifts, and equipment to all our production facilities. With the pending acquisition of Upgrade Energy, we anticipate adding battery pack manufacturing capacity in both Orlando and California as the acquisition nears closing. We are on track to add camera manufacturing in late 2026. We plan to dramatically increase our motor production capacity in the fourth quarter. The equipment is already in the country, and the work is on schedule. We are exploring adding more space and capabilities as we develop a better understanding of our customers' needs. Grow Revenue and Manage Margins As we scale manufacturing, we will have a quarter when we won't emphasize revenue growth to quickly adjust and scale our supply chains, production equipment, and quality processes. We have to do this now because major demand from the drone dominance program will start to hit in September. This demand is urgent and will require us to scale rapidly in the fourth quarter and continue that growth into 2027. Every demand indicator is growing, and we appear to still be in the early stages of the market. However, the urgency is high, and we must put the foundational work in place now so we do not break under the pressure of scaling. These new products, processes, and production facilities will continue to introduce inefficiencies that will reduce gross margins in the short term. I expect production margins to decline from the 34.7% reported in Q2 as we incur introduction costs in Q3, then rebound in Q4 as revenue ramps up quickly again. We will work to achieve our 40% margin target, which may not happen until late 2026 or early 2027. Drive Toward Positive Cash Flow from Operations Our long-term goal is to build a profitable and sustainable business. While we were cash-flow positive in the first half of 2026 including interest income and realized gains from short-term investments, we still incurred an operating loss. Our next financial goal is to achieve positive cash flow, as adjusted and related to our normal operations. We are still targeting to achieve this by the end of 2026 as revenues increase and margins recover from the anticipated pressure created by the introduction of new operating centers and processes. Closing Thoughts The second quarter of 2026 has been incredible. Unusual Machines is firmly into our next phase of growth, and we are doing it without burning cash. The demand signals are overwhelming, and we are aggressively pursuing the emerging market opportunity created by the DoW and the FCC regulatory actions, emphasizing the need for a robust domestic supply chain. We continue to expand our team, strengthen our balance sheet, and build the operational capacity needed to support increasing demand for NDAA-compliant drone components. We also continue to add product categories, such as headsets and batteries, and expect to continue expanding operations to meet demand. The need for growth and the pace at which it is occurring have been so intense that we are proactively using the third quarter to update and improve all of our systems so they do not break and can support our business as we continue scaling at this pace. We believe the U.S. drone industry is in the early stages of growth. The need for secure, domestic supply chains will continue to grow at an accelerating rate with the industry. Our focus remains on building the infrastructure necessary to support that ecosystem, and we are pursuing this with the expectation that we will not be demand-limited through 2027. We appreciate the continued support and confidence of our employees, customers, and shareholders. Sincerely, Allan EvansCEOUnusual Machines Conference Call and Webcast Details Participants may dial (888) 506-0062 or (973) 528-0011 for international callers. Please use access code 826085. A live audio webcast will also be available by clicking here. A replay will be available later today by visiting the Unusual Machines website: unusualmachines.com Second Quarter 2026 Financial Results Revenues totaled approximately $16.7 million for the three months ended June 30, 2026, as compared to $2.1 million for the three months ended June 30, 2025, representing a 687% increase for the second quarter year over year. Gross margin was approximately 34.7% for the three months ended June 30, 2026, as compared to 37.4% for the three months ended June 30, 2025. Our margins have experienced slight fluctuations quarter over quarter as we continue to onshore and ramp up manufacturing of drone components, as our revenue shifts primarily to enterprise instead of retail, and as we incur other near-term costs to ensure inventory levels meet current demand. Our loss from operations was approximately $7.8 million for the three months ended June 30, 2026, as compared to an operating loss of $7.2 million for the three months ended June 30, 2025. Included in this was non-cash stock compensation expense of $5.6 million and $5.5 million for the three months ended June 30, 2026, and 2025, respectively. See Table 2 for our non-GAAP measure and additional details related to our loss from operations. Interest income was approximately $1.8 million for the three months ended June 30, 2026, as compared to $0.2 million for the three months ended June 30, 2025. Interest income relates to interest earned from our cash balance. Unrealized gain from short-term investments totaled $5.6 million for the six months ended June 30, 2026, and realized gains from short-term investments were $9.5 million, related to investment gains realized during the first half of the year. We did not have any unrealized or realized gains in the first six months of 2025. Net loss attributable to common shareholders for the three months ended June 30, 2026, was approximately $7.8 million, or ($0.16) per share, as compared to a net loss of approximately $6.9 million for the three months ended June 30, 2025, or ($0.32) per share. We had approximately $229.6 million in cash as of June 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 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 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 $25.2 billion and is set to reach $156 billion by 2034. For more information, please 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 ability to meet customers' demands; our future gross margins and our target of achieving 40% gross margins; our future break-even point and our goals with respect to operating cash flow; the expected closing of our acquisition of Upgrade Energy and its anticipated impact, including battery pack manufacturing capabilities; our future expansion of our operations, including planned camera manufacturing in late 2026 and increased motor production capacity in the fourth quarter of 2026; our expectations regarding Q3 and Q4 2026 revenue patterns and rapid scaling into 2027; our expectations regarding demand from the Drone Dominance program and other government programs; and our belief that we will not be demand-limited through 2027. The results expected by some or all of these forward-looking statements may not occur. 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, 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 risks that our inventory buildup may become obsolete or that we cannot sell such inventory at reasonable margins; our ability to manage our growth including rapid scaling of our workforce and facilities; risks relating to manufacturing bugs, delays, or capacity constraints; risks related to new product and process introductions reducing gross margins; 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; risks related to the integration and closing of the Upgrade Energy acquisition; risks related to our dependence on government contracts and government spending priorities; risks related to our customer concentration; technical or other issues that may affect the Federal Aviation Administration's rule making process, including possible litigation; and the Risk Factors contained in our Form 10-K for the year ended December 31, 2025, filed with 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. Investor Contact:[email protected] Non-GAAP - Financial Measure This shareholder letter includes financial measures prepared in accordance with Generally Accepted Accounting Principles ("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 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 future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. Management uses and relies on adjusted net loss, a non-GAAP financial measure. We believe that management, analysts, and shareholders benefit from referring to this 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. Management recognizes that this non-GAAP financial measure has inherent limitations because of the excluded items described below. Table 2 includes a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP. We believe that providing this non-GAAP financial measure, together with the reconciliation to GAAP, helps investors compare the Company's performance with that of other companies. When comparing to other companies, investors should be aware that companies may calculate non-GAAP measures differently, which may limit their usefulness for comparison. Table 1 Table 2 (Non-GAAP) Table 3 Unusual Machines, Inc.Consolidated Condensed Balance Sheets Unusual Machines, Inc.Consolidated Condensed Statements of Operations and Comprehensive Income (Loss)For the Three and Six Months Ended June 30, 2026 and 2025(Unaudited) Unusual Machines, Inc.Consolidated Condensed Statements of Changes in Stockholders' EquityFor the Three and Six Months Ended June 30, 2026 and 2025(Unaudited) Unusual Machines, Inc.Consolidated Condensed Statements of Cash FlowsFor the Six Months Ended June 30, 2026 and 2025(Unaudited) SOURCE: Unusual Machines, Inc. View the original press release on ACCESS Newswire

Motorola (MSI) came out with quarterly earnings of $4.41 per share, beating the Zacks Consensus Estimate of $3.86 per share. This compares to earnings of $3.57 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +14.25%. A quarter ago, it was expected that this communications equipment maker would post earnings of $3.25 per share when it actually produced earnings of $3.37, delivering a surprise of +3.69%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Motorola, which belongs to the Zacks Wireless Equipment industry, posted revenues of $3.13 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.36%. This compares to year-ago revenues of $2.77 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Motorola shares have added about 15.5% since the beginning of the year versus the S&P 500's gain of 13%. While Motorola has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Motorola was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $4.43 on $3.32 billion in revenues for the coming quarter and $16.98 on $12.81 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Wireless Equipment is currently in the top 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Unusual Machines, Inc. (UMAC), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This company is expected to post quarterly loss of $0.10 per share in its upcoming report, which represents a year-over-year change of +68.8%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Unusual Machines, Inc.'s revenues are expected to be $9.58 million, up 351.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report Unusual Machines, Inc. (UMAC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Unusual Machines Inc. UMAC is set to report second-quarter 2026 results on Aug. 6, before the opening bell. In the last reported quarter, the company witnessed a negative earnings surprise.The company is expected to report top-line expansion year over year, backed by healthy demand from defense and enterprise customers, and continued momentum in the domestic drone supply chain. However, growing competition and integration risks remain concerns. During the second quarter, Unusual Machines continued expanding its domestic manufacturing capabilities through strategic investments. The company signed a definitive agreement to acquire Upgrade Energy, a U.S.-based developer of battery and power systems for unmanned aerial systems. The move is expected to diversify its portfolio and strengthen its position in the drone industry.During the to-be-reported quarter, the company also expanded its manufacturing footprint by leasing a new 14,000-square-foot facility in Orlando. The site is expected to increase battery production capacity and improve its ability to support growing demand for U.S.-made drone components.In the quarter under review, the company secured a $5 million-plus order from Powerus for components used in counter-UAS systems and related drone platforms. The contract highlights increasing demand for NDAA-compliant drone components from defense customers. This development is expected to have a positive impact on second-quarter revenues.However, the U.S. drone ecosystem is becoming increasingly competitive. Larger defense contractors and established drone manufacturers are also expanding their U.S.-made offerings. This could hinder UMAC’s growth prospects. The Upgrade Energy acquisition has not yet closed. Integrating the business while scaling operations could create integration risks. For the June quarter, the Zacks Consensus Estimate for total revenues is pegged at $9.58 million, indicating an improvement from the year-ago quarter’s reported figure of $2.12 million. The consensus estimate for adjusted earnings per share is pegged at a loss of 10 cents, indicating a narrower loss than the year-ago quarter's loss of 32 cents per share. Our proven model does not conclusively predict an earnings beat for UMAC for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Unusual Machines, Inc. price-eps-surprise | Unusual Machines, Inc. Quote Zacks Rank: UMAC carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. Here are some other stocks you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this season:Sandisk Corporation SNDK is set to release quarterly numbers on Aug. 5, 2026. It has an Earnings ESP of +4.13% and sports a Zacks Rank #1. Arista Networks, Inc. ANET is scheduled to report quarterly numbers on Aug. 4, 2026. It has an Earnings ESP of +3.08% carries a Zacks Rank of 2.Advanced Micro Devices, Inc. AMD is scheduled to report quarterly numbers on Aug. 4, 2026. It has an Earnings ESP of +1.56% and carries a Zacks Rank of 2. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Unusual Machines, Inc. (UMAC) : Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report Sandisk Corporation (SNDK) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research