Drone Parts Co. Invests $25M in Vertical-Flight Breakthrough Acquisition

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1. Ownership and Share Structure Information

The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.

U.S. drone parts company Unusual Machines Inc. (UMAC:NYSEAMERICAN) has invested US$25 million in vertical-flight pioneer XTI Aerospace Inc. following XTI's acquisition of another drone distribution company, XTI announced in a release on November 12.

XTI is a pioneer in vertical flight innovations and the creator of the TriFan 600, a cutting-edge vertical takeoff and landing (VTOL) aircraft for both commercial and defense sectors, as well as the burgeoning "Vertical Economy."

It said it has completed its purchase of Drone Nerds LLC, one of the largest drone distributors and service providers in the United States, boasting over US$100 million in revenue for 2024 and more than US$55 million in revenue for the first half of 2025, with a decade-long track record of profitability.

XTI issued 25,000 shares of Series 10 Convertible Preferred Stock to UMAC in a private placement, the company said. Priced at US$1,000 per share, they are convertible into XTI's common stock at a conversion rate of US$1.492, subject to shareholder approval as required by Nasdaq Listing Rule 5635.

"Drone Nerds has an unprecedented opportunity to define the entire domestic drone landscape over the next few years as the U.S. intensifies its ban on Chinese drone companies," said Allan Evans, chief executive officer of Unusual Machines. "We are excited to be a part of the Drone Nerds-XTI strategy and look forward to further strengthening our years-long relationship with Drone Nerds, and we are demonstrating our confidence in the XTI strategy by our investment as we collectively build the American aerospace ecosystem."

XTI Chief Executive Officer Scott Pomeroy called the purchase of Drone Nerds a "foundational step as we advance our strategy to build the most comprehensive portfolio of vertical flight and UAS capabilities in the industry."

"The addition of Drone Nerds significantly expands XTI's scale, recurring revenue base and near-term operating footprint," Pomeroy said.

'The Forefront of Aviation's Next Evolution'

According to Drone Nerds Chief Executive Officer Jeremy Schneiderman, as the leading drone distributor in the U.S. the company "offers extensive technical knowledge, a wide industrial reach, and a strong alignment with XTI's forward-thinking aviation goals."

"We are thrilled about this new chapter as Drone Nerds continues to secure more high-margin enterprise business and expand our influence in autonomous flight, drones-as-a-service, and first-person view (FPV) immersive and dynamic drone applications," he said. "As part of XTI, we are prepared to support our growing customer base with our unparalleled industry expertise, experience, dealer network, and service capabilities. We take pride in assisting customers in selecting secure, high-performance drone systems and software that enhance operational efficiency."

Joining XTI puts his company "at the forefront of aviation's next evolution," Schneiderman said.

"Together, our solutions aim to enable customers to achieve significant cost efficiencies, as well as speed and competitive advantages that drones and unmanned flight can provide across various economic sectors, from logistics and emergency response to defense, security, delivery, and energy, agriculture, and infrastructure inspection," he said. "We have developed a close relationship with the XTI executive team over the past several months, and we are eager to support their innovative approach to advancing U.S. drone leadership in line with the June 6, 2025, White House Executive Order on domestic drone development and the broader Vertical Economy framework."

According to the release, ThinkEquity served as the introducing party and exclusive M&A advisor to XTI in connection with the acquisition of Drone Nerds. ThinkEquity also acted as the exclusive placement agent for the US$25 million private placement investment by Unusual Machines.

Ready for Demand

UMAC has said its new 25,000-square-foot warehouse and fulfillment center in Orlando, Florida, will bolster its growing U.S. operations and function as a logistics hub for receiving materials and fulfilling outgoing orders, situated next to the company's existing motor production and drone assembly sites.

The company stated that the new center aims to improve coordination across the vertically integrated Orlando location, aligning the staging of components, manufacturing, and shipping processes.

Jason Reels, Vice President of Supply Chain at Unusual Machines, said in a release at the time, "This facility gives us the infrastructure to bring in materials at scale, stage components for future builds, and fulfill orders faster — keeping us ready as demand accelerates."

The establishment of the new site is part of the company's ongoing initiative to create a strong domestic supply chain for high-performance drone components. The expansion aligns with a broader national movement toward onshoring drone manufacturing in response to recent legislative and regulatory measures. U.S. laws enacted in 2025, such as the American Securities Drone Act and the Countering CCP Drones Act, limit the use of drones and essential components from Chinese manufacturers in federal procurement. These restrictions, along with increased tariffs, have created a favorable environment for domestic suppliers of drone hardware.

Analyst Says Investment Is 'Effective Strategy'

According to a research note by Needham & Co. Analyst Austin Bohlig dated November 12, "We believe the investment could have robust implications on Unusual Machines' position in the emerging commercial market. Given the company's lean operating model and cash burn, we believe this is an effective strategy for UMAC to drive value for shareholders."

Needham & Co. assigned a Buy rating and a target price of US$20 per share to Unusual Machines, as noted by Bohlig, due to the company's strong potential for significant growth in the coming years. Factors contributing to this outlook include its comprehensive component portfolio, the ramp-up of its new manufacturing facility, and the anticipated addition of more components through organic growth and mergers and acquisitions.

"We believe UMAC's robust growth profile, scarcity value, and strong ties to the Trump Administration justify a premium 15x enterprise value-to-sales multiple compared to our drone comp group," Bohlig added.

At the time of Bohlig's report, Unusual Machines was trading at approximately US$10.86 per share, implying an 84% upside to the target price of US$20 per share.

Earlier, on November 7, Analyst Barry Sine at Litchfield Hills Research gave an update on UMAC.

"The company now holds roughly US$16 million in purchase orders scheduled for delivery through Q2/26," Sine noted. "[It] is aggressively expanding its U.S. manufacturing footprint."

Litchfield Hills maintained its target price of US$25 per share for Unusual Machines Inc., as highlighted by the analyst, who mentioned the potential for a rerating of UMAC.

"As program awards resume post shutdown, as automation equipment comes online and as the company demonstrates progress toward cash flow break even, we expect the market to rerate the shares in line with a higher-growth, defense-technology peer set," Sine wrote.

At the time of Sine's report, UMAC was trading at approximately US$10.75 per share, implying a 132% return to the target price of US$25 per share. Unusual Machines remains a Buy.

The Catalyst: Rapid Technological Advancements

According to Grand View Research, the global drone market was valued at US$73.06 billion in 2024 and is anticipated to grow to US$163.60 billion by 2030, with a compound annual growth rate (CAGR) of 14.3% from 2025 to 2030. This expansion is largely fueled by rapid technological advancements in drones, enhancements in battery efficiency, AI-driven autonomous systems, and improved imaging sensors, which are broadening the application of drones across various sectors, as noted by Grand View.

In 2024, North America dominated the drone market, capturing over 39% of the market share. The hardware segment accounted for the largest revenue share by component, surpassing 58% in 2024, and the multi-rotor segment held the largest revenue share by product in 2024, according to researchers.

The integration of AI into the drone market has revolutionized drone capabilities, according to Markets and Markets. No longer merely remote-controlled flying devices, today's drones utilize AI to navigate independently, recognize objects, make real-time decisions, and perform complex tasks with minimal human intervention.

The AI-driven drone market is expanding rapidly. Although valuations vary slightly among analysts, the consensus is clear: the market is expected to more than triple in value over the next decade, with compound annual growth rates ranging from 15% to nearly 30%, the research firm noted.

Startups and defense technology companies in the U.S. are at the forefront, developing autonomous drone platforms for real-world applications. Major defense initiatives are funding the creation of drones capable of thinking, coordinating, and carrying out missions with minimal input. In the commercial sector, AI-powered drones are inspecting pipelines, mapping agricultural land, and responding to emergencies more swiftly than ever before.

Ownership and Share Structure¹

About 7.5% of the company is owned by management and insiders. The rest, 92.5%, is retail and institutional investors.

Unusual Machines has 36.88 million shares outstanding. Its market cap is US$344.79 million. Its 52-week high and low share prices are US$23.62 and US$2.55 per share, respectively.