Red Cat Holdings, Inc. - 19 Jul 2024 Form 4 Insider Report for Unusual Machines, Inc. (UMAC)

Footnote F1

Effective July 22, 2024, the Reporting Person sold all of its securities in the Issuer to two unaffiliated third-party purchasers (the "Purchasers"). As part of that transaction and immediately prior to the sale to the Purchasers, the Reporting Person entered into an Exchange Agreement with the Issuer pursuant to which the Reporting Person exchanged 4,250,000 shares of Common Stock of the Issuer for 4,250 shares of Series A Convertible Preferred Stock ("Preferred Stock") of the Issuer. The Preferred Stock is not subject to conversion if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of the Issuer's common stock outstanding immediately after giving effect to such conversion. The Purchaser acquired all of the Reporting Person's Preferred Stock and all of the Notes (as defined below) for a total purchase price of $4,400,000.

Footnote F2

As previously reported, the Reporting Person previously acquired a $2,000,000 original principal amount of UMAC 8% Promissory Notes (the "Notes") as part of the purchase price paid by the Issuer for the Reporting Person's former subsidiaries Rotor Riot, LLC and Fat Shark Holdings, Ltd. On July 19, 2024, the Reporting Person and UMAC agreed to amend and re-issue the Notes in order to increase the principal amount of the note to $4,000,000 from $2,000,000 pursuant to the working capital adjustment provision for adjustment of the purchase price for the Reporting Person's former subsidiaries. The Notes are not subject to conversion if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of the Issuer's common stock outstanding immediately after giving effect to such conversion. On July 22, 2024, the Reporting Person sold the Notes together with its equity securities in the Issuer as described above.