The IPO Buzz: Puerto Rico’s Unusual Machines Prices Upsized IPO at $4.00 – Low End

Unusual Machines, Inc. (UMAC), a drone technology company based in San Juan, Puerto Rico, upsized its micro-cap IPO at pricing to 1.25 million shares – up from 1.0 million shares in the prospectus – and priced the deal at $4.00 – the low end of its $4.00-to-$6.00 range – to raise $5.0 million on Tuesday night, Feb. 13, 2024. Shares of Unusual Machines closed their first day of trading at $3.03 – down 97 cents or off 24.25 percent from their $4.00 IPO price – on the NYSE – American Exchange on Wednesday (Feb. 14, 2024 – Valentine’s Day). The stock opened flat at $4.00 and rose to an intraday high of $4.40 at 10:34 a.m. EST before giving up gains to slip below its IPO price. Unusual Machines’ stock had traded at $3.00 at about 12:08 p.m. EST today on the NYSE – American Exchange, also known as the Amex.

Dominari Securities, R.F. Lafferty & Co. and Revere Securities were the joint book-runners.

Unusual Machines is “focused exclusively on FPV (first person view) goggles to serve FPV pilots,” the prospectus says.

In late November 2022, the company entered into a share purchase agreement with Red Cat Holdings Inc. and Jeffrey Thompson, Red Cat’s founder and CEO, to buy Red Cat’s consumer business consisting of Fat Shark and Rotor Riot, according to the prospectus. Fat Shark and Rotor Riot design and market consumer drones and first-person-view (FPV) goggles. The purchase price is $20.0 million, according to the prospectus.

After the IPO, Red Cat will own 44.54 percent of Unusual Machines’ outstanding common stock, based on an assumed IPO price of $5.00, and Thompson will own 4.30 percent of the company’s outstanding common stock, the prospectus says.

Unusual Machines said it plans to use $1.0 million in cash form the IPO proceeds toward the purchase of Fat Shark and Rotor Riot, according to the prospectus.

“We plan to acquire Fat Shark and Rotor Riot simultaneously with the closing of this Offering,” the prospectus says.

Unusual Machines filed plans to go public 11 months ago – in mid-March 2023.

Drone pilots use FPV goggles to navigate their drones, the prospectus says, in:

  • Freestyle flights, which can be used for public safety and package delivery;

  • FPV racing, when pilots routinely achieve speeds of over 90 miles per hour, and

  • Aerial photography.

The company was not profitable for the year ended Dec. 31, 2022, according to financial statements in the prospectus.

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