Unusual Machines Announces Pricing of $1.96 Million Private Placement

Rhea-AI Summary

Unusual Machines (NYSE American: UMAC) has announced a $1.96 million private placement with institutional investors. The company will issue 1,286,300 units at $1.52 per unit, with each unit comprising one common stock share and one warrant exercisable at $1.99 per share. The warrants will be exercisable 180 days after closing and have a 5-year term. Company insiders, including CEO Allan Evans and board members, will invest $250,000 on identical terms. The proceeds will be used for general corporate purposes and working capital. The placement is expected to close on October 30, 2024.

Positive

• Secured $1.96 million in funding through private placement
• Insider participation with $250,000 investment from management

Negative

• Potential dilution of existing shareholders through new share issuance
• Warrant exercise price of $1.99 represents potential future dilution
• Additional dilution possible due to anti-dilution provisions in warrants

Insights

Financial Analyst

This $1.96 million private placement, priced at $1.52 per unit, represents a significant dilutive event for UMAC shareholders. The deal structure includes warrants with a $1.99 exercise price, creating potential additional dilution over the next 5 years. The participation of insiders investing $250,000 signals some management confidence, but the small size of the raise relative to the $9.6 million market cap suggests challenging capital market conditions.

The unit pricing at $1.52 likely represents a discount to market, which is typical for these transactions but impacts existing shareholders. The 180-day warrant exercise delay and 5-year term create a long-term overhang on the stock. With approximately 1.29 million new shares plus potential warrant exercises, this represents substantial dilution for a micro-cap company.

ORLANDO, FL / ACCESSWIRE / October 29, 2024 / Unusual Machines, Inc. (NYSE American:UMAC) ("Unusual Machines" or the "Company"), a drone and drone components manufacturer, today announced the pricing of a private placement with certain institutional investors. The aggregate gross cash proceeds were approximately $1.96 million, before deducting fees to the placement agent and other offering expenses payable by the Company. The Company intends to use the net proceeds from the private placement for general corporate purposes and working capital.

In connection with the private placement, the Company will issue an aggregate of 1,286,300 units at a per unit price of $1.52 per unit. Each unit consists of one share of common stock and one warrant, each exercisable for one share of common stock at an exercise price of $1.99 per share. The warrants are exercisable beginning 180 days after the closing date. The warrants have a term of 5 years from the closing date. The exercise price and number of shares of common stock issuable upon exercise of the warrants are subject to adjustment upon future dilutive issuances and stock splits, subject to a floor, as described in more detail in the Current Report on Form 8-K to be filed in connection with the private placement.

Allan Evans, the Company's Chief Executive Officer and Sanford Rich and Robert Lowry, each a member of the Company's Board of Directors, will invest an aggregate of $250,000 in the private placement on identical terms.

The closing of the private placement is expected to close on October 30, 2024.

Dominari Securities LLC acted as the Exclusive Placement Agent for the private placement. Nason, Yeager, Gerson, Harris & Fumero, P.A served as counsel to the Company. Sichenzia Ross Ference Carmel LLP served as counsel to Dominari.

The securities described above will be sold in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the "Act"), and have not been registered under the Act, or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Act and such applicable state securities laws. Pursuant to a registration rights agreement with the investor, the Company has agreed to file one or more registration statements with the Securities and Exchange Commission (the "SEC") covering the resale of the common stock to be sold in the private placement and the common stock issuable upon exercise of the warrants to be sold in the private placement.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

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 e-commerce 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 $17.5 billion and is set to top $115 billion by 2032.

For more information visit Unusual Machines at https://www.unusualmachines.com/.

Contact:
CS Investor Relations
917-633-8980
investors@unusualmachines.com

SOURCE: Unusual Machines, Inc.

View the original press release on accesswire.com

FAQ

How much did Unusual Machines (UMAC) raise in its October 2024 private placement?

Unusual Machines raised approximately $1.96 million in gross proceeds through its private placement announced on October 29, 2024.

What are the terms of UMAC's October 2024 private placement units?

Each unit was priced at $1.52 and consists of one common stock share and one warrant exercisable at $1.99 per share, with warrants exercisable 180 days after closing for a 5-year term.

How much did UMAC insiders invest in the October 2024 private placement?

Company insiders, including CEO Allan Evans and two board members, invested an aggregate of $250,000 in the private placement.