XML 37 R19.htm IDEA: XBRL DOCUMENT v3.25.1
Sale of Equity Method Investment
 8 Months Ended
Dec. 31, 2024
Equity Method Investments and Joint Ventures [Abstract]  
Sale of Equity Method Investment

Note 9 – Sale of Equity Method Investment

 

On July 22, 2024, the Company sold all of its securities in UMAC to two unaffiliated third-party purchasers (the “Purchasers”). As part of the transaction, on July 22, 2024, the Company entered into an Exchange Agreement with UMAC pursuant to which the Company exchanged 4,250,000 shares of UMAC’s common stock, par value $0.001 per share, for 4,250 shares of UMAC’s newly designated Series A Convertible Preferred Stock (the “Series A”). The Company sold the Series A ownership interest ($4,408,357 at time of sale) and the Note Receivable of $4,000,000 to the Purchasers for $4.4 million in cash pursuant to a Purchase Agreement in a transaction that closed on July 22, 2024.

 

As of April 30, 2024, the Company had owned a 46% interest in Unusual Machines. The primary business operations included selling first-person-view video goggles for drone pilots, drones, parts and related equipment to the consumer marketplace. UMAC’s financial statements were prepared in accordance with GAAP. See Note 4 for additional information.

 

Financial information for UMAC was derived from UMAC’s Form 10-Q for the quarter ending March 31, 2024 and was as follows:

 

      
Current assets  $6,128,890 
Long-term assets   18,099,802 
Current liabilities   691,978 
Long-term liabilities   2,313,896 
Revenues   618,915 
Gross profit   204,167 
Net loss  $(1,106,001)

 

 

The Company’s investments in UMAC have been impacted by the following:

 

      
Initial investment, February 16, 2024  $17,000,000 
Equity method loss   (503,625)
Impairment   (11,353,875)
Investment balance, April 30, 2024  $5,142,500 
Equity method loss   (734,143)
Sale of ownership interest   (4,408,357)
Investment balance, December 31, 2024  $— 

 

The computation of both the initial investment as of February 16, 2024 and investment balance as of April 30, 2024, was based on the fair market value of UMAC’s common stock.