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Divestiture of Consumer Segment

8 Months Ended

Dec. 31, 2024

Discontinued Operations and Disposal Groups [Abstract]

Divestiture of Consumer Segment

Note 4 – Divestiture of Consumer Segment

On February 16, 2024, the Company closed the sale of Rotor Riot and Fat Shark to Unusual Machines. 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 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 Unusual Machines.

The Promissory Note from Unusual Machines 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.

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.

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 the years ended April 30, 2024 and 2023. The Consumer segment had no activity for the eight months ended December 31, 2024.

		2024				2023
		Year ended April 30,
		2024				2023
Revenues		$	4,213,653			$	5,290,946

Cost of goods sold			4,577,980				4,793,430

Gross (Loss) Profit			(364,327	)			497,516

Operating Expenses
Research and development			118,093				346,002
Sales and marketing			1,157,448				862,384
General and administrative			863,361				1,044,435
Total operating expenses			2,138,902				2,252,821
Operating loss			(2,503,229	)			(1,755,305	)

Other expense (income)
Interest expense			22,856				—
Other, net			(152	)			(24,919	)
Other expense (income)			22,704				(24,919	)

Net loss from discontinued operations		$	(2,525,933	)		$	(1,730,386	)

Assets and liabilities for the Consumer segment included the following as of April 30, 2023. There were no balances as of December 31, 2024 or April 30, 2024.

		April 30, 2023
Current assets
Cash		$	86,656
Accounts receivable, net			61,107
Inventory			3,065,954
Other			2,069,438
Total current assets			5,283,155

Intangible assets, net			20,000
Other			3,853
Operating lease right-of-use assets			84,544
Total long term assets			108,397

Current liabilities
Accounts payable		$	606,872
Accrued expenses			109,480
Customer deposits			244,688
Operating lease liabilities			49,461
Total current liabilities			1,010,501

Long term liabilities - Operating lease liabilities			41,814

Working capital		$	4,272,654