Unusual Machines, Inc. entered into a Stock Purchase Agreement to acquire Fat Shark Holdings, LTD. and Rotor Riot LLC from Red Cat Holdings, Inc. (NasdaqCM:RCAT) for $18 million on November 21, 2022. The purchase price will consist of $5 million in cash plus the amount of any Agreed Working Capital, if any, $2.5 million in a convertible senior note of Unusual Machines, and $10.5 million in Series A convertible preferred stock of Unusual, payable at closing. Both the convertible senior note and convertible preferred stock of Unusual Machines will be convertible into shares of Unusual Machines. In addition, closing of the SPA is subject to successful completion of an initial public offering by Unusual Machines in the minimum amount of $15 million and approval by Nasdaq of listing of Unusual Machine?s common stock. At the Closing, the Principal Stockholder shall deliver to the Escrow Agent, 450,000 shares of Unusual Common Stock with an agreed upon value of $1.8 million. The Escrow Shares shall provide security for Red Cat?s and the Principal Stockholder?s indemnification obligations. If the Purchase and Sale has not been consummated on or before March 30, 2023 the parties would have the right to terminate this Agreement.

Red Cat accepts an Acquisition Proposal relating to a third party obtaining Control of the Target Companies collectively, then Red Cat upon closing the Acquisition Proposal shall pay Unusual a non-refundable fee in the amount of $0.5 million in cash or shares of Red Cat common stock if elected by Red Cat, at the highest VWAP prior to the date of issuance payable within 5 days.

The transaction is subject to the sale of the Target Companies shall have been duly approved by the Requisite Red Cat Vote, The SEC shall have declared the S-1 effective and the Offering shall have been consummated, Unusual?s Nasdaq Listing Application shall have been approved and trading shall commence simultaneously with the consummation of the Offering and the Closing of the Purchase and Sale (with a customary non-compete provision that may not be amended or waived without the reasonable consent of Red Cat), The Principal Stockholder and Unusual and the Escrow Agent shall have executed and delivered the Escrow Agreement, and Lockup Agreements with officers, directors and 5% owners of Unusual in form and substance acceptable to Red Cat shall have been executed and delivered by the applicable parties. Red Cat Holdings, Inc Board of Directors has unanimously approved the Share Purchase Agreement. Board of Directors of Unusual has approved this Agreement and the Purchase and Sale. As of March 8, 2023, shareholders of Red Cat Holdings, Inc. approved the deal. As of April 5, 2023, the Agreement is amended on March 31, 2023 and consideration is revised. At the Closing, Red Cat agrees to sell to Unusual 100% of the Target Companies? Capital Stock owned by Red Cat in exchange for a Purchase Price of $20.0 million (a) $3.0 million in cash and (b) $17.0 million of shares of Unusual?s Common Stock. As of December 15, 2023, the Agreement is amended on December 11, 2023 and consideration is revised. At the Closing, Red Cat agrees to sell to Unusual 100% of the Target Companies? Capital Stock owned by Red Cat in exchange for a Purchase Price of $20.0 million consisting of (a) $1.0 million in cash (b) a $2.0 million Unusual Secured Promissory Note which shall be in form and substance mutually acceptable to the Parties, and (c) $17.0 million of shares of Unusual?s Common Stock.

Michael D. Harris of Nason, Yeager, Gerson, Harris & Fumero, P.A. acted as legal advisor to Unusual Machines. Harvey Kesner of Law office of Harvey Kesner acted as legal advisor to Red Cat Holdings.

Unusual Machines, Inc. completed the acquisition of Fat Shark Holdings, LTD. and Rotor Riot LLC from Red Cat Holdings, Inc. (NasdaqCM:RCAT) for $13.5 million on February 16, 2024. Historical revenues for the two companies for the 12-months ended April 30, 2023, were $5.8 million.