Divestiture of Consumer Segment

9 Months Ended

Sep. 30, 2025

Discontinued Operations and Disposal Groups [Abstract]

On February 16, 2024, the Company closed the sale of Rotor Riot and Fat Shark to Unusual Machines, Inc (“UMAC”). The sale was conducted pursuant to a Share Purchase Agreement dated November 21, 2022, as amended on April 13, 2023, July 10, 2023, and December 11, 2023 (the “SPA”). The transaction closed concurrently with UMAC’s initial public

offering and listing on the NYSE American exchange (“IPO”) under the symbol “UMAC.” The sale resulted in a gain that was recorded in the consolidated statements of operations.

The total consideration received by the Company was valued at $22 million and consisted of i) $1 million in cash, ii) $4 million in a secured promissory note (“Promissory Note”) including a post-closing adjustment for excess working capital of $2 million, iii) $17 million in securities of UMAC.

Secured Promissory Note

The Promissory Note from UMAC bore interest at a rate of 8% per year, was due 18 months from the date of issue, and required monthly payments of interest due in arrears on the 15th day of each month.

UMAC Securities

The $17 million worth of UMAC common stock was valued at the IPO price for UMAC’s common stock of $4.00 per share, resulting in 4,250,000 shares of UMAC common stock being issued to the Company (representing approximately 49% of UMAC’s issued and outstanding common stock after giving effect to the IPO and to the issuance of common stock to the Company upon closing of the IPO). Refer to Note 7 for further information.

Working Capital

The purchase price was adjusted for working capital as of the closing date. Actual working capital excess amounts increased the principal amount of the Promissory Note dollar for dollar. Working capital as of closing was finalized at $2 million in July 2024. As a result, UMAC issued the Company $4,000,000 of its 8% Promissory Notes due November 30, 2025 reflecting (i) satisfaction and settlement of working capital adjustments and (ii) a maturity date extension to November 30, 2025.

The Consumer segment has been classified as Discontinued Operations and reported in accordance with the applicable accounting standards. Set forth below are the results of operations for the Consumer segment for:


	Nine months ended September 30,
	2025		2024
Revenues	$	—	$	494,737

Cost of goods sold	—		1,407,760

Gross loss	—		(913,023)

Operating Expenses
Research and development	—		13,389
Sales and marketing	—		278,078
General and administrative	—		168,967
Total operating expenses	—		460,434
Operating loss	—		(1,373,457)

Net loss from discontinued operations	$	—	$	(1,373,457)