Unusual Machines, Inc. Micro-Cap Virtual Conference

Thank you. Appreciate the introduction, and thank you everybody for taking the time to join us today. Before I get started, just want to talk, lawyers always make us say, "This presentation is going to contain forward-looking statements." You can read the full disclosure on our website at www.unusualmachines.com. We will go in today a little bit about Unusual Machines, what we do, how we have been growing over the last couple of years, the legislation that is behind it, and really the kind of balance sheet and strong cash position that we are in that is going to help continue to enable this growth. When we kind of simplify this, Unusual Machines, we are a drone component manufacturer based in the U.S.

Here at the bottom, you can kind of see a picture of some of our components that we manufacture in the U.S., primarily driven out of our Orlando facilities. We did just acquire Upgrade Energy. That is still subject to closing here probably in the next 30-ish days. They are based out in the L.A. area. These components, for the longest time, have been really manufactured, and really the expertise of it really has been done in China for the last 20, 30 years. There has been some legislation, which we will go into here shortly, but really that legislation has really created this demand vacuum here in the U.S. to onshore this piece. We have got flight controllers, electronic speed controllers, drone motors, FPV headsets, which is first-person view.

Really the primary piece that we want to do is we want to build these components at a large scale in terms of volume and really kind of maintain that price competition that we would see in China. Really this is really the legislation from these components have really been driven by the conflict that has happened with Ukraine, Iran. There has been just a large supply chain need to bring this back to the U.S. That has really driven the demand for us and other manufacturers here to bring this back to the U.S. These components go on these kind of small, kind of what we call Group 1 attritable drones. These are what we call FPV or first-person view. They will be anywhere from 5, 7, 10-inch drones, depending on what the needs and payload capacity is going to be.

These are lower cost, kind of acceptable to lose, as we kind of say, just because you're going to want to see these in larger quantities that aren't really going to be overly cost-prohibitive. This is a great slide to kind of just picture where to put our pieces into the drone. This really kind of also talks about how the market is really developing here. With some of the regulations that have come out, there's this Drone Dominance that has been kind of mandated from the Department of War to really onshore the manufacturing of drones, but also the drone components. Starting this year and over the next 3-5 years, there's a need to create 1 million of these small drones and the components that go into it.

Originally there was legislation that was saying, "Okay, you can't use this out of covered countries." Now it's really saying it has to be done in the U.S. That's kind of a rolling phase as to what we're seeing. With this market opportunity, we're seeing a massive increase in customers just constantly coming to us. What we'll do is we may supply one product, or we may make full programs for our customers. The Drone Dominance program is just one program. There's several from the defense side that is really driving kind of the influx of the need for this large capacity. As we kind of continue to build these out for our customers, we've kind of started building out the full powertrain as to what we're doing here.

Really when our customers are kind of competing for this, what they're going to do is they're going to say, okay, for Drone Dominance part one, they're going to have, let's call it 20-40 customers are competing for one contract, right? That's going to get whittled down to 5-10 customers. We're not necessarily going to be competing against those customers. We're B2B2G. We're going to go and sell into our customers that are going to win those contracts. We're not reliant on winning one specific government contract. We're more after we can go supply whoever wins. We're not going to be reliant and customer dependent on those types of programs. We'll see from our parts, we'll be anywhere from $600-$1,000 per drone.

If we're talking 250, there's going to be 90,000 drones this year, there's going to be 250,000 next year. Then it's going to even continue on into 2028 for just that Drone Dominance program. We're seeing a large market of continued growth in what drone components and what they're going to be doing for just the defense section. Going to give you a little bit of history as to what Unusual Machines started as. We really were this small, hobbyist kind of consumers that wanted to just go fly on their own, make cool YouTube videos. That kind of started as a really good, strong community that we've got still a strong following in relation to. This defense bubble that has kind of created this large opportunity in these kind of small drones.

That is kind of the section that we are in, and we are really taking advantage of this growth vector right now. We are wanting to maintain a lot of our price sensitivity and just kind of making sure our prices are staying competitive as we start thinking about what the future state of this section is going to look like. When we start thinking about drone delivery, when we start talking about other competition like DJI, which is the primary what we call the Best Buy drone, there is a large vacuum that is getting created. There is a large demand bubble or kind of hole that is needing to be filled post this defense section, right? That is going to be used in the enterprise and kind of consumer next stage as to what this is going to be.

With that FCC regulation that came out in December of 2025, all of that needs to now be supplied within the United States. We are thinking about not only today, but we are thinking about what is it going to be in the next two to five years as well, as we continue to need to supply these components for commercial uses, delivery, DoorDash type scenarios, and be the primary source vendor for these customers as well. This is a fantastic slide. It really just shows kind of where have we come from, the rapid growth. We will see it in another kind of visual when we kind of look here at our revenue, but we have grown tremendously. We are making strong continued investments into this. If we flash back a year ago in June of 2025, we were 19 people, primarily retail.

We were selling again to those kind of. We were starting to enable a large portion of what we knew was coming from this kind of the NDAA, the FCC regulations. We saw them coming, and so we started making calculated pieces to onshore the manufacturing here. Again, 19 people started making investments. We started putting in orders for our motor equipment. That which is, and I will kind of get into some of those aspects here in a second, but really that $2 million mainly retail. We started increasing our team size to kind of enable that, so we had turned on our motor manufacturing plant around August is kind of when we started to first get in those. The equipment started to put our first designs in place. We acquired Rotor Lab, which is an Australian-based motor company.

We did not acquire them for customers or any of that, but more their know-how, their engineering. They have been through this, they have built it, and then you add in our scale and size as to what this is going to look like, and really gets us a head start as to what this next year was going to be. Then we continued to double around November of 2025. That is when we first turned on our motor manufacturing plant. We are kind of on our semi-automated line right now. We produce about 30,000 motors in relation to this a month. Soon we will have our highly automated line, which will increase it to about 100,000 a month. Really, we started with a single shift of motor manufacturing. We had all of our equipment turned on, and we started to see that inflection point.

When we talk also about inventory, the supply chain to get these pieces, especially if we are trying to get components outside of China, those things could take 2-9 months, depending on which kind of raw material component we are talking about. We had to start making those investments in Q2 of 2025, just so we could start being in a position at the end of the year and into where we are today. We are continuing to make team increases. In Q1, we have gone from one to three shifts in our motor manufacturing. We turned on our headset production. We are making cameras. There is just a large increase as to. It has all been facilitated by that defense bubble that has really been created. We will see that continue to turn on, and our customers are just continually coming to us and saying, "Hey, we need more.

Our main objective is let us make sure we have the material on hand for what this is going to be. Over the course of the year, we have also made large good capital raises. We have raised about $450 million over the last year to enable us to make sure that we can ride this kind of growth curve. If we think about from a purchasing perspective as well, if I start purchasing stuff today and it is going to take, let us call it on average 6-8 months to get the full material in stock, we build it, I sell it is going to take probably 9-12 months before we start seeing some of that stuff turn back into cash. There is a long cycle of what this cash is going to look like.