Merlin, Inc. (Nasdaq: MRLN) closes SPAC deal and issues $120M PIPE preferred

Filing Impact

(High)

Filing Sentiment

(Neutral)

Form Type

8-K

Rhea-AI Filing Summary

Merlin, Inc. completed its business combination with Inflection Point Acquisition Corp. IV, transforming from a SPAC into an operating aerospace technology company focused on autonomous flight. Legacy Merlin became a wholly owned subsidiary through a reverse recapitalization, and the combined company now trades on Nasdaq under the symbol MRLN.

Legacy Merlin equity holders received an aggregate 75,764,313 shares of New Merlin common stock based on an $800,000,000 purchase price and a defined exchange ratio of 3.1015099176506644. Holders of approximately $87.3 million of pre-funded convertible notes were issued 10,244,861 shares of 12.0% Series A Cumulative Convertible Preferred Stock.

Concurrently, PIPE investors purchased 9,803,922 Series A Preferred shares and Series A warrants for $100.0 million, with an additional 1,666,668 Series A Preferred shares and upsized warrants for $20 million, totaling a $120.0 million PIPE. As of closing, 84,262,886 common shares and 21,715,451 Series A Preferred shares were outstanding, with significant ownership concentrated among early venture investors and the sponsor.

The filing also details new governance and compensation structures, including a reconstituted board led by CEO and Chairman Matt George, adoption of a 2026 Incentive Award Plan and Employee Stock Purchase Plan, executive severance and director compensation programs, and lock-up and registration rights agreements for key shareholders. Inflection Point ceased to be a shell company, and BDO was appointed as the new independent registered public accounting firm, with Legacy Merlin’s audited 2025 and 2024 financial statements and pro forma combined financials incorporated by reference.

Insights

De-SPAC closes, heavy preferred and warrant overhang, no results yet.

Merlin, Inc. has finalized its merger with Inflection Point Acquisition Corp. IV, issuing 75,764,313 common shares to Legacy Merlin holders and 10,244,861 shares of 12.0% Series A Preferred to pre-funded note holders. A $120.0 million PIPE adds 11,470,590 Series A Preferred shares plus sizeable warrant coverage.

This structure creates a layered capital stack: 84,262,886 common shares and 21,715,451 preferred shares are outstanding, alongside multiple warrant instruments. Lock-up agreements for the sponsor and key Merlin holders, plus an amended registration rights agreement, shape when and how large holders may eventually sell into the market.

For now, this event primarily changes corporate form and balance sheet composition rather than providing operating performance data. Future filings containing post‑combination results and details on warrant exercises, redemptions, or preferred stock conversions will be necessary to understand dilution dynamics and the company’s path toward profitability.

03/20/2026 - 04:01 PM

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 16, 2026

MERLIN, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-42392	98-1797826
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

129 South Street

Boston, MA 02111

(Address of principal executive offices, including zip code)

(857) 201-3979

Registrant’s telephone number, including area code

INFLECTION POINT ACQUISITION CORP. IV

1345 Avenue of the Americas, Fl 47

New York, NY 10105

(212) 984-3835

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		MRLN		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

INTRODUCTORY NOTE

Terms used in this Current Report on Form 8-K (this “Current Report”) but not defined herein, or for which definitions are not otherwise incorporated by reference herein, shall have the meaning given to such terms in the Proxy Statement/Prospectus (as defined below) in the section entitled “Frequently Used Terms” and such definitions are incorporated herein by reference.

This Current Report incorporates by reference certain information from reports and other documents that were previously filed with the Securities and Exchange Commission (the “SEC”), including certain information from the Proxy Statement/Prospectus. To the extent there is a conflict between the information contained in this Current Report and the information contained in such prior reports and documents incorporated by reference herein, the information in this Current Report controls.

Business Combination

As previously announced, on August 13, 2025, Inflection Point Acquisition Corp. IV (f/k/a Bleichroeder Acquisition Corp. I), a Cayman Islands exempted company (“Inflection Point”), entered into a Business Combination Agreement, dated as of August 13, 2025 (as amended on March 14, 2026, the “Business Combination Agreement”), by and among Inflection Point, IPDX Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Inflection Point (“Merger Sub”), and Merlin Labs, Inc., a Delaware corporation (“Legacy Merlin”).

On March 16, 2026 (the “Closing Date”), as contemplated by the Business Combination Agreement and described in the section titled “Proposal No. 1—The Business Combination Proposal” of the final prospectus and definitive proxy statement, dated February 12, 2026 (the “Proxy Statement/Prospectus”) and filed with the SEC, Inflection Point, Merger Sub and Legacy Merlin consummated the transactions contemplated by the Business Combination Agreement and its related agreements (the “Transactions”), culminating in Merger Sub merging with and into Legacy Merlin (the “Merger”), with Legacy Merlin continuing as the surviving corporation (the date and time of such merger, the “Effective Time”) as a wholly-owned subsidiary of Merlin, Inc. (“New Merlin”, or the “Company”).

Overview of Transactions

On March 12, 2026, Inflection Point held an extraordinary general meeting of shareholders of Inflection Point (the “Extraordinary General Meeting”) where the shareholders of Inflection Point considered and approved, among other matters, a proposal described in the Proxy Statement/Prospectus to approve the entry into the Business Combination Agreement and consummate the Transactions contemplated thereby.

On March 13, 2026, as contemplated by the Business Combination Agreement and described in the section titled “Proposal No. 2—The Domestication Proposal” of the Proxy Statement/Prospectus, Inflection Point filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation (the “Certificate of Incorporation”) and a certificate of corporate domestication with the Secretary of State of the State of Delaware, pursuant to which Inflection Point was domesticated and continues as a Delaware corporation, changing its name to “Merlin, Inc.” (the “Domestication").

Immediately prior to the Domestication, pursuant to that certain Sponsor Support Agreement, dated as of August 13, 2025 (the “Sponsor Support Agreement”), by and among Inflection Point, Legacy Merlin, Bleichroeder Sponsor 1 LLC, a Delaware limited liability company (the “Sponsor”), and Inflection Point Fund I, LP, a Delaware limited partnership (“Inflection Point Fund”), the holders of the Class B ordinary shares of Inflection Point, par value $0.0001 per share (each, a “Founder Share” or “Inflection Point Class B Share”, and the holders, the “Inflection Point Class B Shareholders”), elected to convert each Founder Share, on a one-for-one basis, into a Class A ordinary share of Inflection Point, par value $0.0001 per share (each, an “Inflection Point Class A Share” and together with the Founder Shares, the “Inflection Point Ordinary Shares”) (such conversion, the “Sponsor Share Conversion”). In connection with the Domestication, (i) each of the then issued and outstanding Inflection Point Class A Shares converted automatically, on a one-for-one basis, into a share of common stock, par value $0.0001 per share, of Post-Domestication Inflection Point (the “New Merlin Common Stock”); (ii) each of the then issued and outstanding rights to receive one-tenth (1/10) of one Inflection Point Class A Share upon consummation of an initial business combination of Inflection Point (“Inflection Point Rights”) converted automatically into a right of Post-Domestication Inflection Point (each right, a “Post-Domestication Right”); and (iii) each of the then issued and outstanding units of Inflection Point containing one Inflection Point Class A Share and one Inflection Point Right (the “Inflection Point Units”) converted automatically into a unit of Post-Domestication Inflection Point, consisting of one share of New Merlin Common Stock and one Post-Domestication Right.

Upon the terms and subject to the satisfaction or waiver of the conditions of the Business Combination Agreement, immediately prior to the Effective Time of the Merger:

(1)

each convertible security of Legacy Merlin (other than the Pre-Funded Convertible Notes (as defined below)) that was outstanding immediately prior to the Effective Time, to the extent applicable, automatically converted in full into shares of preferred stock or common stock of Legacy Merlin (“Merlin Common Stock”), in accordance with the terms thereof;

(2)

each warrant of Legacy Merlin exercisable for the preferred stock of Legacy Merlin that was outstanding and unexercised immediately prior to the Effective Time was automatically exercised on a cashless basis in full in accordance with its terms or otherwise exercised in full;

(3)

immediately after giving effect to the conversions and exercises set forth in clauses (1) and (2) above, each issued and outstanding share of preferred stock of Legacy Merlin (including each share of preferred stock issued upon the conversions and exercises described in clauses (1) and (2) above) automatically converted into shares of Merlin Common Stock into which such shares of preferred stock of Legacy Merlin, as applicable, are convertible in connection with the Merger pursuant to the organizational documents of Legacy Merlin; and

(4)

each warrant of Legacy Merlin (other than the Pre-Funded Warrants (as defined below)) exercisable for Merlin Common Stock that was outstanding and unexercised immediately prior to the Effective Time was automatically exercised on a cashless basis in full in accordance with its terms or otherwise exercised in full.

Pursuant to the Business Combination Agreement, the aggregate consideration (the “Aggregate Consideration”) paid to the holders of securities of Legacy Merlin (the “Merlin Equity Holders”) (other than the holders of the Pre-Funded Convertible Notes and the Pre-Funded Warrants in respect of those securities) in, or in connection with, the Merger was 75,764,313 shares of New Merlin Common Stock. The Aggregate Consideration was calculated as the number of shares of New Merlin Common Stock equal to the quotient of: (a) $800,000,000 (the “Purchase Price”), divided by (b) the redemption price of $10.55906094.

In connection with the transactions contemplated by the Business Combination Agreement, on July 2, 2025, and on August 13, 2025, Legacy Merlin entered into certain convertible note purchase agreements (the “Pre-Funded NPAs”) and securities purchase agreement (the “Signing Pre-Funded SPA” and together with the Pre-Funded NPAs, the “Signing Pre-Funded PIPE Agreements”), respectively, with certain accredited investors named therein (collectively, the “Pre-Funded Investors”). Pursuant to the Signing Pre-Funded PIPE Agreements, the Pre-Funded Investors agreed, among other things, to purchase, and Legacy Merlin issued and sold, an aggregate of approximately $78 million of convertible promissory notes (the “Pre-Funded Convertible Notes”) and warrants to purchase a number of shares of Merlin Common Stock at a purchase price of $12.00 per share (the “Pre-Funded Warrants”), substantially concurrently with the execution and delivery of the Business Combination Agreement.

On November 17, 2025, Legacy Merlin and one of the Pre-Funded Investors entered into an additional securities purchase agreement (“Post-Signing Pre-Funded SPA,” collectively with the Signing Pre-Funded SPAs, the “Pre-Funded SPAs”), pursuant to which such Pre-Funded Investor purchased for approximately $9.3 million an additional Pre-Funded Convertible Note with a principal amount of approximately $10.9 million and a Pre-Funded Warrant, on the same terms and conditions as the Signing Pre-Funded SPA (such investments contemplated by the Signing Pre-Funded PIPE Agreements and the Post-Signing Pre-Funded SPA, the “Pre-Funded Note Investment”).

The consideration paid in, or in connection with, the Merger to each holder of a Pre-Funded Convertible Note (the “Convertible Note Consideration”) was 10,244,861 shares of New Merlin’s 12.0% Series A Cumulative Convertible Preferred Stock, par value $0.0001 per share (“Series A Preferred Stock”). The Convertible Note Consideration was calculated as the number of shares equal to the quotient, rounded up to the nearest whole share, of (i) the total outstanding principal and accrued and unpaid interest on each Pre-Funded Convertible Note as of one day prior to the Closing, divided by (ii) $10.20 (with respect to the Pre-Funded Convertible Notes sold pursuant to the Pre-Funded NPAs), as may be adjusted pursuant to the terms and conditions of such Pre-Funded Convertible Notes, or $12.00 (with respect to the Pre-Funded Convertible Notes sold pursuant to the Pre-Funded SPAs).

Upon the terms and subject to the satisfaction or waiver of the conditions of the Business Combination Agreement, at the Effective Time of the Merger:

(1)

each share of Merlin Common Stock that was owned by Inflection Point, Merger Sub, or Legacy Merlin immediately prior to the Effective Time (each, an “Excluded Share”) was canceled and ceased to exist and no consideration was delivered in exchange therefor;

(2)

each share of Merlin Common Stock that was issued and outstanding immediately prior to the Effective Time (other than Excluded Shares) was canceled and converted into the right to receive shares of New Merlin Common Stock equal to the Aggregate Consideration divided by 24,428,203 Merlin Common Stock, the fully diluted capital of Legacy Merlin, which is the sum (without duplication) of the aggregate number of shares of Merlin Common Stock that are (i) issued and outstanding immediately prior to the Effective Time (including those issued upon conversion of all issued and outstanding preferred stock of Legacy Merlin, as applicable, and excluding securities underlying the Pre-Funded Convertible Notes or Pre-Funded Warrants), (ii) issuable upon full exercise of all issued and outstanding options of Legacy Merlin, and (iii) issuable upon full settlement of all issued and outstanding Merlin RSUs (such conversion ratio, the “Exchange Ratio”);

(3)

each option to purchase equity securities of Legacy Merlin (“Merlin Option”) automatically ceased to represent an option to purchase Merlin Common Stock and was assumed and converted on the same terms and conditions as were applicable as of the Effective Time, into an option to acquire that number of shares of New Merlin Common Stock (rounded down to the nearest whole share) equal to the product of (A) 2,460,597 shares of Merlin Common Stock subject to such Merlin Options and (B) the Exchange Ratio, at an exercise price per share of Merlin Common Stock (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (x) the exercise price per share of Merlin Common Stock of such Merlin Option by (y) the Exchange Ratio;

(4)

each Pre-Funded Convertible Note that was outstanding immediately prior to the Effective Time was automatically canceled and converted into the right to receive the Convertible Note Consideration;

(5)

each Pre-Funded Warrant that was outstanding and unexercised immediately prior to the Effective Time was automatically canceled and converted into the right to receive the Pre-Funded Warrant Consideration; and

(6)

(x) each then issued and outstanding Post-Domestication Right converted automatically into one-tenth of one share of New Merlin Common Stock, pursuant to that certain Rights Agreement, dated as of October 31, 2024, by and between Inflection Point and the right agent, with any fractional shares of New Merlin Common Stock issued in connection with such conversion rounded down to the nearest whole share; and (y) each then issued and outstanding Post-Domestication Unit was canceled and thereafter entitled the holder thereof to one and one-tenth (1.1) shares of New Merlin Common Stock, with any fractional shares of New Merlin Common Stock issued in connection with such separation rounded down to the nearest whole share.

The Exchange Ratio is 3.1015099176506644. The Exchange Ratio was calculated by dividing the Aggregate Consideration by the fully diluted capital of Legacy Merlin, which is the sum (without duplication) of the aggregate number of shares of Merlin Common Stock that are (i) issued and outstanding immediately prior to the Effective Time (including those issued upon conversion of all issued and outstanding preferred stock of Legacy Merlin, as applicable, and excluding securities underlying the Pre-Funded Convertible Notes or Pre-Funded Warrants), (ii) issuable upon full exercise of all issued and outstanding Merlin Options, and (iii) issuable upon full settlement of all issued and outstanding Merlin RSUs.

A description of the Transactions and the terms of the Business Combination Agreement are included in the Proxy Statement/Prospectus in the section titled “Proposal No. 1—The Business Combination Proposal.” The foregoing description of the Transactions is a summary only, does not purport to be complete, and is qualified in its entirety by the full text of the Business Combination Agreement, which is incorporated by reference to this Current Report as Exhibits 2.1 and 2.2.

Item 1.01. Entry into a Material Definitive Agreement.

Indemnification Agreements

In connection with the consummation of the Transactions, the Company entered into indemnification agreements with each of its newly elected directors and executive officers. Each indemnification agreement provides for indemnification and advancement by the Company of certain expenses and costs relating to claims, suits, or proceedings arising from service to the Company or, at its request, service to other entities, as officers or directors to the maximum extent permitted by applicable law. The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the indemnification agreements, a form of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Lock-Up Agreements

Sponsor Lock-Up Agreement

On the Closing Date, in connection with the consummation of the Transactions and as contemplated by the Business Combination Agreement, the Company and the Sponsor entered into the Sponsor Lock-Up Agreement (the “Sponsor Lock-Up Agreement”), pursuant to which the Sponsor and its permitted assigns agreed, among other things, not to sell, pledge, grant any option to purchase or otherwise dispose of (i) the Sponsor Lock-Up Shares prior to the date that is six months after the Closing Date and (ii) the Sponsor Lock-Up Units prior to the date that is 90 days after the Closing Date. The material terms of the Sponsor Lock-Up Agreement are described in the section of the Proxy Statement/Prospectus titled “Proposal No. 1—The Business Combination Proposal—Related Agreements—Sponsor Lock-Up Agreement.” The foregoing description is qualified in its entirety by the text of the Sponsor Lock-Up Agreement, which is included as Exhibit 10.2 to this Current Report and is incorporated herein by reference.

Company Lock-Up Agreement

On the Closing Date, in connection with the consummation of the Transactions and as contemplated by the Business Combination Agreement the Company and certain equity holders of Legacy Merlin entered into the Merlin Lock-Up Agreement (the “Merlin Lock-Up Agreement”), pursuant to which the Merlin Lock-Up Holders agreed not to, among other things, sell, pledge, grant any option to purchase or otherwise dispose of the Lock-Up Shares, prior to the date that is six months after the Closing Date. The material terms of the Merlin Lock-Up Agreement are described in the section of the Proxy Statement/Prospectus titled “Proposal No. 1—The Business Combination Proposal—Related Agreements— Merlin Lock-Up Agreement.” The foregoing description is qualified in its entirety by the text of the Merlin Lock-Up Agreement, which is included as Exhibit 10.3 to this Current Report and is incorporated herein by reference.

Amended and Restated Registration Rights Agreement

On the Closing Date, in connection with the consummation of the Transactions and as contemplated by the Business Combination Agreement, the Company, the Sponsor, certain persons and entities receiving shares of New Merlin Common Stock in connection with the Business Combination (the “Merlin Stockholders”), and other parties thereto entered into the Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”), pursuant to which, among other things, the Sponsor, the Merlin Stockholders and other parties thereto will be granted certain customary registration rights, on the terms and subject to the conditions therein, with respect to securities of the Company that they hold following the Business Combination.

The Company has agreed to use its commercially reasonable efforts to (1) file with the SEC (at the Company’s sole cost and expense) a registration statement registering the resale of certain securities held by or issuable to the parties to the A&R Registration Rights Agreement and (2) cause the registration statement to become effective as soon as reasonably practicable after the filing thereof. In certain circumstances, the parties thereto may demand underwritten offerings and will be entitled to customary piggyback registration rights.

The material terms of the A&R Registration Rights Agreement are described in the section of the Proxy Statement/Prospectus titled “Proposal No. 1—The Business Combination Proposal—Related Agreements— Registration Rights Agreement” and “Certain Relationships and Related Person Transactions—Post-Business Combination Arrangements—Registration Rights Agreement.” The foregoing description of the A&R Registration Rights Agreement is qualified in its entirety by the full text of the A&R Registration Rights Agreement, a copy of which is filed as Exhibit 10.4 to this Current Report and incorporated herein by reference.

Securities Purchase Agreements

Pursuant to the securities purchase agreements (as amended and supplemented, the “Securities Purchase Agreements”) entered into on August 13, 2025 and as amended on November 17, 2025, by and among Inflection Point, Legacy Merlin and certain investors (collectively, the “PIPE Investors”), Inflection Point issued and sold to the PIPE Investors (substantially concurrently with the consummation of the Transactions) an aggregate of (i) 9,803,922 shares of the Series A Preferred Stock and (ii) New Merlin Series A Warrants to purchase shares of Common Stock, for a total purchase price of $100.0 million (the “Initial PIPE Investment”).

Additionally, pursuant to the Securities Purchase Agreements, the Additional Closing PIPE Investors agreed to purchase an aggregate of 1,666,668 shares of Series A Preferred Stock and Upsized New Merlin Series A Warrants to purchase a number of shares of New Merlin Common Stock equal to 75% of the number of New Merlin Common Stock into which such shares of Series A Preferred Stock are initially convertible, for a total purchase price of $20 million (together with the Initial PIPE Investment, the “PIPE Investment”). The material terms of the Securities Purchase Agreements are described in the Proxy Statement/Prospectus in the section titled “Proposal No. 1—The Business Combination Proposal—Related Agreements—Series A SPA.”

The foregoing description of the Securities Purchase Agreements is a summary only, does not purport to be complete, and is qualified in its entirety by the full text of the forms of Securities Purchase Agreements, which are incorporated by reference to this Current Report as Exhibits 10.15, 10.16, and 10.17.

Company Incentive Plan and Stock Purchase Plan

The information set forth under Item 5.02 of this Current Report is incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets.

The disclosure set forth under “Introductory Note—Domestication and Transactions” above is incorporated into this Item 2.01 by reference.

FORM 10 INFORMATION

Item 2.01(f) of Form 8-K provides that if the predecessor registrant was a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as Inflection Point was immediately before the Transactions, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. As a result of the consummation of the Transactions, and as discussed below in Item 5.06 of this Current Report, the Company has ceased to be a shell company. Accordingly, the Company is providing the information below that would be included in a Form 10 if it were to file a Form 10. Please note that the information provided below relates to the combined company after the consummation of the Transactions, unless otherwise specifically indicated or the context otherwise requires.

Cautionary Note Regarding Forward-Looking Statements

This Current Report and the documents incorporated herein by reference contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act. These forward-looking statements include, without limitation, statements relating to expectations for future financial performance, business strategies or expectations of our businesses. These statements are based on the beliefs and assumptions of the Company’s management. The Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions or expectations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Current Report, words such as “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “seek”, “should”, “strive”, “target”, “will”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Forward-looking statements in this Current Report and in any document incorporated by reference in the Proxy Statement/Prospectus may include, for example, statements about Legacy Merlin prior to the consummation of the Transactions and the Company following the consummation of the Transactions, including:

●

the ability of the Company to realize the benefits expected from the Transactions;

●

the ability to maintain the listing of the New Merlin Common Stock on The Nasdaq Stock Market LLC (“Nasdaq”);

●

the ability to raise financing in the future and to comply with restrictive covenants related to long-term indebtedness;

●

the future financial performance of the Company following the Business Combination;

●

the Company’s ability to retain or recruit, or to effect changes required in, its officers, key employees or directors following the Business Combination;

●

changes in the market for the Company’s products and services and the Company’s ability to effectively compete in the aviation technology industry following the Business Combination;

	●	the Company’s ability to comply with laws and regulations applicable to its business;

	●	expectations regarding the time during which the Company will be an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, as amended; and

	●	other risks and uncertainties set forth in the Proxy Statement/Prospectus in the section titled “Risk Factors” beginning on page 35 of the Proxy Statement/Prospectus, which is incorporated herein by reference.

These forward-looking statements are based on information available as of the date of this Current Report and the Company’s management teams’ current expectations, forecasts and assumptions, and involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside the control of the Company and their respective directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing the views of the Company’s management as of any subsequent date. The Company does not undertake any obligation to update, add or to otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable securities laws.

Business

The business and properties of Inflection Point and Legacy Merlin prior to the Business Combination are described in the Proxy Statement/Prospectus in the sections titled “Information About Inflection Point” beginning on page 201 and “Information About Merlin Labs” beginning on page 236 of the Proxy Statement/Prospectus, which are incorporated herein by reference.

Risk Factors

The risks associated with the Company’s business are described in the Proxy Statement/Prospectus in the section titled “Risk Factors” beginning on page 35 of the Proxy Statement/Prospectus, which is incorporated herein by reference.

Financial Information

Audited Financial Statements

The audited financial statements of Legacy Merlin as of and for the years ended December 31, 2025 and 2024 and the related notes thereto are set forth in Item 9.01 of this Current Report and are incorporated herein by reference.

These audited financial statements should be read in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein.

Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined financial information of Legacy Merlin and Inflection Point as of and for the year ended December 31, 2025 and the related notes thereto are set forth in Item 9.01 of this Current Report and are incorporated herein by reference.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Reference is made to the disclosure contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Legacy Merlin, which is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.

Reference is made to the disclosure contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations of Inflection Point, which is included in Inflection Point’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 12, 2026 (the “Inflection Point Annual Report”) beginning on page 56 and is incorporated herein by reference.

Quantitative and Qualitative Disclosures about Market Risk

Reference is made to the disclosure contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Legacy Merlin which is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.

Properties

Reference is made to the disclosure contained in the Proxy Statement/Prospectus in the section titled “Information About Merlin Labs,” which is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth beneficial ownership of New Merlin Common Stock following the consummation of the Transactions by:

●

each person who is known to be the beneficial owner of more than 5% of the outstanding shares of the New Merlin Common Stock;

●

each of the Company’s current named executive officers and directors; and

●

all current executive officers and directors of the Company as a group.

The information below is based on an aggregate of 84,262,886 shares of New Merlin Common Stock and 21,715,451 shares of Series A Preferred Stock issued and outstanding as of the consummation of the Transactions. Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she, or it possesses sole or shared voting or investment power over that security, including Warrants that are currently exercisable or exercisable within 60 days.

Unless otherwise indicated, the Company believes that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them.

Name and Address of Beneficial Owner⁽¹⁾	Number of Shares of Common Stock Beneficially Owned		%			12.0% Series A Cumulative Convertible Preferred Stock		%
5% Holders
Bleichroeder Sponsor 1 LLC (the “Sponsor”)⁽²⁾		8,800,833		10.4	%		—		—
Alyeska Master Fund, L.P.⁽³⁾⁽⁴⁾		10,853,922		9.99	%		9,803,922		45.2	%
First Round Capital⁽⁵⁾		11,748,961		13.9	%		272,210		1.3	%
Quiet Venture⁽⁶⁾		11,947,548		14.2	%		464,534		2.1	%
Bling Capital⁽⁷⁾		6,853,516		8.1	%		216,629		1.0	%
SnowPoint Ventures⁽⁸⁾		6,637,530		7.9	%		795,474		3.7	%
WTI⁽⁹⁾		4,794,779		5.7	%		1,146,155		5.3	%
Floodgate Fund VI, L.P.⁽¹⁰⁾		5,008,273		5.9	%		160,997		*
Directors and Executive Officers of the Company
Matt George⁽¹¹⁾		16,403,107		19.5	%		—		—
Ryan Carrithers		—		—			—		—
Leslie Ravestein		—		—			—		—
Michael Blitzer		3,293,192		3.9	%		1,572,603		7.2	%
Kenneth Braithwaite		—		—			—		—
Kelyn Brannon		—		—			—		—
Michael Montelongo		—		—			—		—
Dr. Robert H. Smith		—		—			—		—
Carolyn Trabuco		—		—			—		—
All directors and executive officers as a group (9 individuals)		19,696,299		23.4	%		1,572,603		7.2	%

*	Less than one percent

(1)

Unless otherwise noted, the business address of each of those listed in the table above is c/o Merlin, Inc. 129 South Street Boston, MA 02111.

(2)

The Sponsor is the record holder of such shares. Consists of (i) 8,333,333 shares of New Merlin Common Stock upon the conversion of 8,333,333 Founder Shares, which were initially purchased in a private placement that closed prior to the IPO for $0.004 per share and (ii) 467,500 shares of New Merlin Common Stock upon the exchange of 425,000 Private Placement Units, which were initially purchased in a private placement that closed concurrently with the IPO for $10.00 per unit. MC Advisory L.L.C-FZ, an entity formed in Dubai (of which Michel Combes is the manager), as well as Andrew Gundlach, are the managing members of the Sponsor and hold voting and investment discretion with respect to the shares held of record by the Sponsor. Mr. Combes and Mr. Gundlach disclaim any beneficial ownership of the securities held by the Sponsor other than to the extent of any pecuniary interest they may have therein, directly or indirectly. The business address of the Sponsor is c/o Inflection Point Acquisition Corp. IV, 1345 Avenue of the Americas, Fl 47, New York, NY 10105.

(3)

Consists of (i) 9,803,922 shares of New Merlin Common Stock issuable upon conversion of 9,803,922 shares of Series A Preferred Stock to be issued to Alyeska and (ii) 9,803,922 shares of New Merlin Common Stock issuable upon exercise of the New Merlin Series A Warrant to be issued to Alyeska, at the initial exercise price, convertible or exercisable (as applicable) within 60 days.

(4)

Alyeska has informed Inflection Point that it has opted for 9.99% beneficial ownership blockers, pursuant to which it may not convert Series A Preferred Stock or exercise the New Merlin Series A Warrant to the extent that after giving effect to such conversion or exercise, Alyeska (together with its affiliates, and any persons acting as a group together with it or any of its affiliates) would beneficially own in excess of 9.99% of the outstanding New Merlin Common Stock calculated in accordance with the rules of the SEC. Alyeska Investment Group, L.P., the investment manager of Alyeska, has voting and investment control of the shares held by Alyeska. Anand Parekh is the Chief Executive Officer of Alyeska Investment Group, L.P. and may be deemed to be the beneficial owner of such shares. Mr. Parekh, however, disclaims any beneficial ownership of the shares held by Alyeska. The registered address of Alyeska Master Fund, L.P. is at c/o Maples Corporate Services Limited, P.O. Box 309, Ugland House, South Church Street George Town, Grand Cayman, KY1-1104, Cayman Islands. Alyeska Investment Group, L.P. is located at 77 W. Wacker, Suite 700, Chicago IL 60601.

(5)

The business address of First Round Capital is 2400 Market Street, Suite 237, Philadelphia PA 19103.

(6)

The business address of Quiet Venture is 113 Cherry Street PMB 27167, Seattle WA 98104.

(7)

The business address of Bling Capital is 135 Palm Avenue, Miami Beach FL 33139.

(8)

The business address of SnowPoint Ventures is 700 S. Rosemary Ave, Suite 204, West Palm Beach, FL 33401.

(9)

The business address of WTI is 104 La Mesa Dr, Suite 102, Portola Valley, CA 94028.

(10)

The business address of Floodgate Fund is c/o Floodgate Partners VI, L.L.C., 506 Santa Cruz Ave, Suite 200, Menlo Park, CA 94025.

(11)

Consists of (i) 14,890,622 shares of New Merlin Common Stock issued upon conversion of 4,801,088 shares of Merlin Common Stock at the Exchange Ratio and (ii) 1,512,485 shares of New Merlin Common Stock issuable upon exercise of New Merlin Options, representing the conversion of 487,661 Legacy Merlin options at the Exchange Ratio, at an adjusted exercise price of $8.48 per share, granted on February 4, 2026, which vest in full on February 4, 2027 and are not exercisable within 60 days of the Closing Date. If these options are excluded from beneficial ownership, Mr. George’s beneficial ownership would be 14,890,622 shares of New Merlin Common Stock, representing approximately 17.7% of the outstanding New Merlin Common Stock.

Directors and Executive Officers

Upon the consummation of the Transactions, and in accordance with the terms of the Business Combination Agreement, each executive officer of Inflection Point prior to the consummation of the Transactions ceased serving in such capacities, and Andrew Gundlach, Michael Blitzer, Joseph Samuels, Antoine Theysset, and Kathy Savitt ceased serving on Inflection Point’s board of directors.

On March 16, 2026, Matt George, Michael Blitzer, Kenneth Braithwaite, Kelyn Brannon, Michael Montelongo, Dr. Robert H. Smith and Carolyn Trabuco were appointed as directors of the board of directors of the Company (the “Board”), to serve until their terms expire at the next annual meeting of stockholders and until their successors are elected and qualified. Matt George was appointed as Chairman of the Board.

On March 16, 2026, Matt George was appointed as the Company’s Chief Executive Officer and President, Ryan Carrithers was appointed as the Company’s Chief Financial Officer, and Leslie Ravestein was appointed as the Company’s Chief Legal Officer and Secretary.

Reference is also made to the disclosure described in the Proxy Statement/Prospectus in the section titled “Proposal No. 6 — The Director Election Proposal” and “Management of the Company Following the Business Combination” for biographical information about each of the directors and officers, following the Transactions, which is incorporated herein by reference. Additionally, interlocks and insider participation information regarding the Company’s executive officers is described in the Proxy Statement/Prospectus in the section titled “Management of the Company Following the Business Combination — Compensation Committee Interlocks and Insider Participation” and that information is incorporated herein by reference.

Director Independence

The Board has determined that each of Michael Blitzer, Kenneth Braithwaite, Kelyn Brannon, Michael Montelongo, Dr. Robert H. Smith and Carolyn Trabuco is deemed to be an independent director within the meaning of the listing rules of Nasdaq.

Executive & Director Compensation

The executive and director compensation of the Company’s named executive officers is described in the Proxy Statement/Prospectus in the section titled “Executive and Director Compensation of Merlin Labs” and that information is incorporated herein by reference.

Committees of the Board of Directors

Effective as of immediately prior to the Closing, the standing committees of the Board consist of an audit committee (the “Audit Committee”), a compensation committee (the “Compensation Committee”) and a nominating and corporate governance committee (the “Nominating Committee”).

Effective as of immediately prior to the Closing, the Board appointed Kelyn Brannon, Michael Montelongo and Carolyn Trabuco to serve on the Audit Committee, with Kelyn Brannon serving as chairperson and qualifying as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. All members of the Audit Committee meet the requirements for financial literacy under the applicable Nasdaq rules and regulations. The Board appointed Kelyn Brannon, Dr. Robert H. Smith and Carolyn Trabuco to serve on the Compensation Committee, with Carolyn Trabuco serving as chairperson, and the Board appointed Michael Blitzer, Kenneth Braithwaite and Michael Montelongo to serve on the Nominating Committee, with Michael Blitzer as the chairperson.

Certain Relationships and Related Party Transactions

Certain relationships and related party transactions of the Company are described in the Proxy Statement/Prospectus in the section titled “Certain Relationships and Related Person Transactions” and that information is incorporated herein by reference.

Legal Proceedings

Reference is made to the disclosure regarding legal proceedings in the section of the Proxy Statement/Prospectus titled “Information About Inflection Point—Legal Proceedings” and “Information About Merlin Labs—Legal Proceedings,” which is incorporated herein by reference.

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

Inflection Point’s Class A Ordinary Shares, Rights and Units were historically quoted on Nasdaq under the symbols “BACQ”, “BACQR” and “BACQU”, respectively. On March 17, 2026, New Merlin Common Stock began trading on Nasdaq under the trading symbol “MRLN.”

Dividends

The Company has not paid any cash dividends on its shares of common stock to date. It is the present intention of the Board to retain all earnings, if any, for use in the Company’s business operations and, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future. The payment of cash dividends in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements, and general financial condition. The payment of any cash dividends is within the discretion of the Board. Further, the ability of the Company to declare dividends may be limited by the terms of financing or other agreements entered into by it or its subsidiaries from time to time.

Information respecting the Company’s securities are described in the Proxy Statement/Prospectus in the section titled “Market Price and Dividends of Securities” and “Description of New Merlin Securities” and such information is incorporated herein by reference.

Securities Authorized for Issuance Under Equity Compensation Plans

As of March 16, 2026, following the completion of the Transactions, there were 84,262,886 shares of New Merlin Common Stock and 21,715,451 shares of Series A Preferred Stock issued and outstanding. The Company has reserved an initial 14,943,232 total shares of New Merlin Common Stock outstanding for issuance pursuant to the 2026 Incentive Plan (as defined below), subject to certain adjustments set forth therein. Additionally, the Company has reserved an initial 2,241,484 total shares of New Merlin Common Stock for issuance pursuant to the ESPP (as defined below), subject to certain adjustments set forth therein. As of March 16, 2026, there were approximately 79 holders of record of New Merlin Common Stock and 33 holders of record of Series A Preferred Stock. However, because many of the shares of New Merlin Common Stock are held by brokers and other institutions on behalf of stockholders, the Company believes there are substantially more beneficial holders of New Merlin Common Stock than record holders.

The New Merlin Common Stock is described in the Proxy Statement/Prospectus in the sections titled “Proposal No. 7 — The New Merlin Incentive Plan Proposal” and “Proposal No. 8 — The New Merlin Employee Stock Purchase Plan Proposal,” which are incorporated herein by reference.

Recent Sales of Unregistered Securities

The information set forth under Items 1.01 and 3.02 of this Current Report is incorporated herein by reference.

Description of Registrant’s Securities to Be Registered

The description of the Company’s securities is contained in the Proxy Statement/Prospectus in the section titled “Description of New Merlin Securities” and is incorporated herein by reference.

The information set forth under Item 1.01 of this Current Report is incorporated herein by reference.

Indemnification of Directors and Officers

The information set forth under Item 1.01 of this Current Report is incorporated herein by reference.

Financial Statements and Supplementary Data

The information set forth under Item 9.01 of this Current Report is incorporated herein by reference.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 3.02. Unregistered Sales of Equity Securities.

The information set forth in the “Introductory Note” and in Item 1.01 of this Current Report under the caption “Securities Purchase Agreements” is incorporated into this Item 3.02 by reference.

The PIPE Shares and Series A Preferred Stock issued by the Company in connection with the PIPE Investment have not been registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.

Item 3.03. Material Modification to Rights of Security Holders.

On March 13, 2026, in connection with the Domestication, the Company filed the Certificate of Incorporation with the Secretary of State of the State of Delaware. The material terms of the Certificate of Incorporation and the Company’s bylaws (the “Bylaws”) and the general effect upon the rights of holders of the Company’s capital stock are discussed in the Proxy Statement/Prospectus in the sections titled “Proposal No. 2 — The Domestication Proposal” and “Proposal No. 4 — The Organizational Documents Proposal,” which are incorporated by reference herein.

Item 4.01. Change in Registrant’s Certifying Accountant.

For accounting purposes, the transactions contemplated by the Business Combination Agreement are treated as a reverse recapitalization and, as such, the historical financial statements of the accounting acquirer, Legacy Merlin, which have been audited by BDO USA, P.C. (f/k/a HORNE LLP) (“BDO”), will become the historical financial statements of the Company. In a reverse recapitalization, a change of accountants is presumed to have occurred unless the same accountant audited the pre-transaction financial statements of both the legal acquirer and the accounting acquirer, and such change is generally presumed to occur on the date the reverse recapitalization is completed.

(a) Dismissal of independent registered public accounting firm.

On March 16, 2026, the Audit Committee dismissed WithumSmith+Brown, PC (“Withum”), Inflection Point’s independent registered public accounting firm prior to consummation of the Transactions, as the Company’s independent registered public accounting firm effective immediately.

The reports of Withum on Inflection Point’s financial statements as of and for each of the fiscal years ended December 31, 2025 and 2024, did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainties, audit scope or accounting principles.

During the period from June 24, 2024 (inception) to December 31, 2024 and the year ended December 31, 2025, there were no (1) ‘disagreements’ (within the meaning of Item 304(a)(1)(iv) of Regulation S-K and related instructions under the Exchange Act) between Inflection Point and Withum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to Withum’s satisfaction, would have caused Withum to make reference to the subject matter of the disagreement in its reports on Inflection Point’s financial statements for such period; or (2) ‘reportable events’ (as defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act).

The Company has provided Withum with a copy of the foregoing disclosures and has requested that Withum furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements made by the Company set forth above. A copy of Withum’s letter, dated March 20, 2026, is filed as Exhibit 16.1 to this Current Report and is incorporated by reference herein.

(b) Disclosures regarding the appointment of new independent registered public accounting firm.

On March 16, 2026, the Audit Committee approved the engagement of BDO as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ending December 31, 2026. BDO served as the independent registered public accounting firm for Legacy Merlin prior to the consummation of the Transactions. During the period from June 24, 2024 (inception) through December 31, 2025, and subsequent interim period through March 16, 2026, neither Inflection Point nor anyone on Inflection Point’s behalf consulted with BDO with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that BDO concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any other matter that was either the subject of a disagreement or a reportable event (each as defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act).

Item 5.01. Changes in Control of Registrant.

The information set forth above in the section titled “Directors and Executive Officers” in Item 2.01 to this Current Report is incorporated in this Item 5.01 by reference. See also the section of the Proxy Statement/Prospectus titled “Executive and Director Compensation of Merlin Labs” for a description of compensation arrangements with the Company’s executives and directors, which is incorporated herein by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Executive Officers and Directors

The information set forth above in the sections titled “Directors and Executive Officers,” “Executive & Director Compensation,” “Committees of the Board of Directors” and “Certain Relationships and Related Party Transactions” in Item 2.01 to this Current Report is incorporated in this Item 5.02 by reference. See also the section of the Proxy Statement/Prospectus titled “Executive and Director Compensation of Merlin Labs” for a description of compensation arrangements with the Company’s executives and directors, which is incorporated herein by reference. Our named executive officers are Matthew George (Chief Executive Officer and President), Ryan Carrithers (Chief Financial Officer), and Leslie Ravestein (Chief Legal Officer and Secretary).

Merlin, Inc. Executive Severance Plan

On March 16, 2026, in connection with the consummation of the Transactions, the Compensation Committee adopted and approved the Merlin, Inc. 2026 Executive Severance Plan (the “Executive Severance Plan”), under which the Company may provide severance protections to a select group of management or highly compensated employees in connection with qualifying terminations of employment, including our named executive officers.

Under the Executive Severance Plan, if the named executive officer’s employment is terminated by us without cause or by the executive for good reason, in either case, outside of the 12-month period commencing on a change in control, the executive will be eligible to receive the following payments and benefits:

●

cash payments in an amount equal to the product of 1.0 (1.5 for Mr. George) and the executive’s then-current annual base salary, paid in substantially equal installments over the 12-months (18-months for Mr. George) following the termination date;

●

eligibility for a pro-rata annual bonus for the calendar year in which the termination date occurs and based on actual performance of applicable performance goals;

●

any earned but unpaid prior-year bonus;

●

Company-subsidized COBRA premium payments for the executive and the executive’s eligible dependents for up to 12-months (18-months for Mr. George); and

●

accelerated vesting of the portion of the executive’s then-unvested time-vesting equity awards that would have vested during the 12-month period following the termination date (had the executive’s employment not been terminated).

If the executive’s employment is terminated by us without cause or by the executive for good reason, in either case, within the 12-month period commencing on a change in control, the executive will be eligible to receive the following payments and benefits:

●

cash payments in an amount equal to the product of (i) 1.5 (2.0 for Mr. George) and (ii) the sum of executive’s then-current annual base salary and target annual bonus, paid in a lump sum;

●

any earned but unpaid prior-year bonus;

●

Company-subsidized COBRA premium payments for the executive and the executive’s eligible dependents for up to 18-months (24-months for Mr. George); and

●

full vesting of then-unvested equity awards (with performance-vesting equity awards vesting at “target” performance).

An executive’s right to receive the severance payments and benefits described above is subject to the executive’s execution and, as applicable, non-revocation of a general release of claims in our favor. In addition, the executive will only be entitled to receive severance outside the 12-month change in control protection period if the executive’s termination occurs following the first anniversary of his or her commencement of employment with the Company.

In addition, in the event that any payment under the Executive Severance Plan, together with any other amounts paid to the executive, would subject such executive to an excise tax under Section 4999 of the Internal Revenue Code, such payments will be reduced to the extent that such reduction would produce a better net after-tax result for the executive.

The foregoing description of the Executive Severance Plan is qualified in its entirety by reference to the full text of the Executive Severance Plan, a copy of which is attached hereto as Exhibit 10.11 and incorporated herein by reference.

Merlin, Inc. Non-Employee Director Compensation Program

On March 16, 2026, in connection with the consummation of the Transactions, the Board adopted and approved the Merlin, Inc. Non-Employee Director Compensation Program (the “Director Compensation Program”), pursuant to which eligible directors serving on the Board are entitled to receive certain cash and equity compensation.

The Director Compensation Program consists of the following components:

Cash Compensation:

●

Annual Retainer: $65,000

●

Annual Committee Chair Retainer:

○

Audit: $20,000

○

Compensation: $15,000

○

Nominating and Governance: $10,000

●

Annual Committee Member (Non-Chair) Retainer:

○

Audit: $10,000

○

Compensation: $7,500

○

Nominating and Corporate Governance: $5,000

●

Lead Independent Director: $50,000

The annual cash retainers will be paid in quarterly installments in arrears. Annual cash retainers will be pro-rated for any partial calendar quarter of service. In addition, eligible directors may elect to receive vested shares of New Merlin Common Stock in lieu of any annual retainers.

Equity Compensation:

●

Initial Awards: An eligible director who is initially elected or appointed to serve on the Board after the consummation of the Transactions automatically shall be granted, on the date of such eligible director’s election or appointment to the Board, an award of restricted stock units (the “Initial Award”) pursuant to the 2026 Incentive Plan (as defined below). The number of restricted stock units subject to the Initial Award will be determined by dividing the Pro-Rated Value (as defined below) by the closing price of New Merlin Common Stock on the applicable grant date. The “Pro-Rated Value” will equal $175,000, multiplied by the fraction, (i) the numerator of which is the difference between 365 and the number of days from the immediately preceding annual meeting of the Company’s stockholders through such eligible director’s appointment date, and (ii) the denominator of which is 365.

Each Initial Award will vest in full one day prior to the date of the next annual meeting of the Company’s stockholders following such eligible director’s appointment date, or, if earlier, the first anniversary of the eligible director’s election date, subject to continued service through the applicable vesting date.

●

Annual Awards: An eligible director who is serving on our board of directors as of the date of an annual meeting of stockholders (beginning with calendar year 2027) automatically shall be granted, on the date of such annual meeting, an award of restricted stock units with an aggregate value of $175,000 (the “Annual Award”). The number of restricted stock units subject to the Annual Award will be determined by dividing $175,000 by the closing price of New Merlin Common Stock on the applicable grant date.

Each Annual Award will vest in full on the earlier to occur of the first anniversary of the grant date and one day prior to the date of the next annual meeting following the grant date, subject to continued service.

In addition, each equity award granted to an eligible director under the Director Compensation Program will vest in full immediately prior to the occurrence of a “change in control” (as defined in the 2026 Incentive Plan) or upon such eligible director’s termination of service due to the director’s death or disability. Compensation under the Director Compensation Program will be subject to the annual limits on non-employee director compensation set forth in the 2026 Incentive Plan.

The foregoing description of the Director Compensation Program is qualified in its entirety by reference to the full text of the Director Compensation Program, a copy of which is attached hereto as Exhibit 10.12 and incorporated herein by reference.

Equity Awards

In March 2026, the Board also approved two awards of restricted stock units to each of our non-employee directors (the “Director RSU Awards”), which will be granted on the date on which a registration statement on Form S-8 with respect to the New Merlin Common Stock issuance under the 2026 Incentive Plan becomes effective, subject to continued service through such date.

The first Director RSU award has a dollar-denominated value of $175,000 and will vest in full on the earlier to occur of the first anniversary of the Closing Date and one day prior to the date of the 2027 annual meeting, subject to continued service. The second Director RSU Award has a dollar-denominated value of $200,000 and will vest with respect to 25% of the restricted stock units subject to the Director RSU Award on each of the 6-, 12-, 18- and 24-month anniversaries of the Closing Date, subject to continued service. In addition, each Director RSU Award will vest in full immediately prior to the occurrence of a “change in control” or upon such eligible director’s termination of service due to the director’s death or disability.

The foregoing description of the Director RSU Awards does not purport to be complete and is subject to and qualified in its entirety by reference to the applicable form of RSU agreement, a copy of which is attached hereto as Exhibit 10.7 and incorporated herein by reference.

Merlin, Inc. 2026 Incentive Award Plan

At the Extraordinary General Meeting, the shareholders of Inflection Point considered and approved the Merlin, Inc. 2026 Incentive Award Plan (the “2026 Incentive Plan”), under which the Company and its affiliates may grant cash and equity incentive awards to its eligible service providers in order to attract and retain key personnel. The 2026 Incentive Plan was approved by the Inflection Point shareholders on March 12, 2026 and was ratified and approved by the Board on March 16, 2026, and became effective upon the Closing Date. A total of 14,943,232 shares of New Merlin Common Stock are reserved for issuance under the 2026 Incentive Plan.

A summary of the terms of the 2026 Incentive Plan is set forth in the Proxy Statement/Prospectus in the section titled “Proposal No. 7 — The New Merlin Incentive Plan Proposal,” which is incorporated herein by reference. Such summary and the foregoing description of the 2026 Incentive Plan are qualified in their entirety by reference to the full text of the 2026 Incentive Plan, a copy of which is attached hereto as Exhibit 10.5 and incorporated herein by reference.

Merlin, Inc. 2026 Employee Stock Purchase Plan

At the Extraordinary General Meeting, the shareholders of Inflection Point considered and approved the Merlin, Inc. 2026 Employee Stock Purchase Plan (the “ESPP”), which provides employees of the Company and its participating subsidiaries with the opportunity to purchase shares of New Merlin Common Stock at a discount through accumulated payroll deductions during successive offering periods. The ESPP was approved by the Inflection Point shareholders board of directors on March 12, 2026 and was ratified and approved by the Board on March 16, 2026, and became effective upon the date of approval by the shareholders of Inflection Point. A total of 2,241,484 shares of New Merlin Common Stock were reserved under the ESPP.

A summary of the terms of the ESPP is set forth in the Proxy Statement/Prospectus in the section titled “Proposal No. 8 — The New Merlin Employee Stock Purchase Plan Proposal,” which is incorporated herein by reference. Such summary and the foregoing description of the ESPP are qualified in their entirety by reference to the full text of the ESPP, a copy of which is attached hereto as Exhibit 10.8 and incorporated herein by reference.

Merlin Labs, Inc. 2018 Equity Incentive Plan

In connection with the consummation of the Transactions, the Company assumed the Merlin Labs, Inc. 2018 Equity Incentive Plan, as amended (the “2018 Plan”) from Legacy Merlin and, thereafter, terminated the 2018 Plan. However, any outstanding awards granted under the 2018 Plan will remain outstanding, subject to the terms of the 2018 Plan and applicable award agreement.

A summary of the terms of the 2018 Plan is set forth in the Proxy Statement/Prospectus in the section titled “Executive and Director Compensation of Merlin Labs — Equity Incentive Plans — 2018 Equity Incentive Plan,” which is incorporated herein by reference. Such summary and the foregoing description of the 2018 Plan are qualified in their entirety by reference to the full text of the 2018 Plan, a copy of which is attached hereto as Exhibit 10.9 and incorporated herein by reference.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The disclosure set forth in Item 3.03 of this Current Report is incorporated in this Item 5.03 by reference.

Item 5.06. Change in Shell Company Status.

As a result of the Transactions, Inflection Point ceased being a shell company. Reference is made to the disclosure in the Proxy Statement/Prospectus in the sections titled “Proposal No. 1—The Business Combination Proposal” and “Proposal No. 2—The Domestication Proposal” which are incorporated herein by reference. Further, the information set forth in the Introductory Note and under Item 2.01 of this Current Report is incorporated herein by reference.

Item 8.01. Other Events.

On March 16, 2026, the Company issued a press release announcing the completion of the Business Combination, a copy of which is furnished as Exhibit 99.4 hereto.

The information set forth in Item 8.01 (including Exhibit 99.4) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

The audited financial statements of Legacy Merlin as of and for the years ended December 31, 2025 and 2024 are set forth in Exhibit 99.1 hereto and are incorporated herein by reference.

The audited consolidated financial statements of Inflection Point as of and for the years ended December 31, 2025 and 2024 and the related notes are included in the Inflection Point Annual Report, and are incorporated herein by reference.

(b) Pro forma financial information.

The unaudited condensed consolidated financial information of Legacy Merlin and Inflection Point as of and for the year ended December 31, 2025 is set forth in Exhibit 99.3 hereto and is incorporated herein by reference.

Exhibit Number		Description
2.1+**		Business Combination Agreement, dated as of August 13, 2025, by and among Bleichroeder Acquisition Corp. I, IPDX Merger Sub, Inc., and Merlin Labs, Inc (incorporated by reference to Exhibit 2.1 to Amendment No. 3 to the Registration Statement on Form S-4 (File No. 333-292719) filed February 12, 2026).

2.2		Amendment No. 1 to Business Combination Agreement, dated as of March 14, 2026, by and between Bleichroeder Acquisition Corp. I (now known as Merlin, Inc.) and Merlin Labs, Inc.

2.3+**		Plan of Domestication (incorporated by reference to Exhibit 2.2 to Amendment No. 3 to the Registration Statement on Form S-4 (File No. 333-292719) filed February 12, 2026).

2.4		Certificate of Merger of Merlin Labs, Inc. with and into IPDX Merger Sub, Inc.

3.1		Certificate of Corporate Domestication.

3.2		Certificate of Incorporation of Merlin, Inc.

3.3		Bylaws of Merlin, Inc.

3.4		Certificate of Designation of Preferences, Rights and Limitations of 12.0% Series A Cumulative Convertible Preferred Stock.

4.1+		Specimen Common Stock Certificate of Merlin, Inc. (incorporated by reference to Exhibit 4.5 to Amendment No. 3 to the Registration Statement on Form S-4 (File No. 333-292719) filed February 12, 2026).

4.2		Specimen Series A Preferred Stock of Merlin, Inc.

4.3+		Specimen Common Stock Purchase Warrant of Merlin, Inc. (incorporated by reference to Exhibit 4.6 to Amendment No. 3 to the Registration Statement on Form S-4 (File No. 333-292719) filed February 12, 2026).

4.4+		Specimen Unit Certificate of Inflection Point (incorporated herein by reference to Exhibit 4.1 filed with the Company’s Registration Statement on Form S-1 (Reg. No. 333-280777), filed with the SEC on October 23, 2024).

4.5+		Specimen Class A Ordinary Share Certificate of Inflection Point (incorporated herein by reference to Exhibit 4.2 filed with the Company’s Registration Statement on Form S-1 (Reg. No. 333-280777), filed with the SEC on October 23, 2024).

4.6+		Specimen Rights Certificate of Inflection Point (incorporated by reference to Exhibit 4.3 filed with the Company’s Registration Statement on Form S-1 (Reg. No. 333-280777), filed with the SEC on October 23, 2024).

4.7+		Share Rights Agreement, dated as of October 31, 2024, by and between the Company and Continental Stock Transfer & Trust Company, as rights agent (incorporated herein by reference to Exhibit 4.1 filed with the Company’s Current Report on Form 8-K (File No. 001-42392), filed with the SEC on November 5, 2024).

10.1		Form of Indemnification Agreements, dated March 16, 2026 between Merlin, Inc. and each of its officers and directors.

10.2		Sponsor Lock-Up Agreement, dated March 16, 2026, by and among Merlin, Inc., Bleichroeder Sponsor 1 LLC, a Cayman Islands limited liability company, and any additional party thereto.

10.3		Lock-Up Agreement, dated March 16, 2026, by and among Merlin, Inc. and the Merlin Lock-Up Holders listed on Schedule I thereto.

10.4		Amended and Restated Registration Rights Agreement, dated March 16, 2026, by and among Merlin, Inc. and each of the shareholders of Merlin, Inc. identified on the signature pages thereto.

10.5		Merlin, Inc. 2026 Incentive Award Plan.

10.6		Form of Stock Option Grant Notice and Stock Option Agreement under the Merlin, Inc. 2026 Incentive Award Plan.

10.7		Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the Merlin, Inc. 2026 Incentive Award Plan.

10.8		Merlin, Inc. 2026 Employee Stock Purchase Plan.

10.9		Merlin, Inc. 2018 Equity Incentive Plan.

10.10		Form of Stock Option Grant Notice and Stock Option Agreement under the 2018 Equity Incentive Plan.

10.11		Merlin, Inc. Executive Severance Plan.

10.12		Merlin, Inc. Non-Employee Director Compensation Program.

10.13+		Form of Sponsor Support Agreement (incorporated by reference to Exhibit 10.5 to Amendment No. 3 to the Registration Statement on Form S-4 (File No. 333-292719) filed February 12, 2026).

10.14+		Form of Stockholder Voting and Support Agreement (incorporated by reference to Exhibit 10.6 to Amendment No. 3 to the Registration Statement on Form S-4 (File No. 333-292719) filed February 12, 2026).

10.15+		Form of Signing Series A SPA (incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K (File No. 001-42392), filed with the SEC on August 14, 2025).

10.16+**		Form of Amendment No. 1 to the Signing Series A SPA (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-42392), filed with the SEC on November 17, 2025).

10.17+**		Form of Additional Series A SPA (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-42392), filed with the SEC on November 17, 2025).

10.18+		Letter Agreement, dated October 31, 2024, by and among Inflection Point, Bleichroeder Sponsor 1 LLC, and certain officers and directors of Inflection Point (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (File No. 001-42392), filed with the SEC on November 5, 2024).

10.19+		Private Placement Units Purchase Agreement, dated October 31, 2024, by and between Inflection Point and Bleichroeder Sponsor 1 LLC (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 001-42392), filed with the SEC on November 5, 2024).

10.20+		Investment Management Trust Agreement, dated October 31, 2024, by and between Inflection Point and Continental Stock Transfer & Trust Company, as trustee (incorporated herein by reference to Exhibit 10.1 to Inflection Point’s Current Report on Form 8-K (File No. 001-42392), filed with the SEC on November 5, 2024).

10.21+		Employment Offer Letter, dated September 19, 2025, by and between Merlin Labs, Inc. and Ryan Carrithers (incorporated by reference to Exhibit 10.18 to Amendment No. 3 to the Registration Statement on Form S-4 (File No. 333-292719) filed February 12, 2026).

16.1		Letter from WithumSmith+Brown, PC to the SEC, dated March 20, 2026.

21.1		List of Subsidiaries of Merlin, Inc.

23.1		Consent of WithumSmith+Brown, PC, dated March 20, 2026.

99.1		Audited financial statements of Legacy Merlin as of and for the years ended December 31, 2025 and 2024.

99.2		Management’s Discussion and Analysis of Financial Condition and Results of Operations of Legacy Merlin as of and for the years ended December 31, 2025 and 2024.

99.3		Unaudited pro forma condensed combined financial information of Legacy Merlin and Inflection Point as of and for the year ended December 31, 2025

99.4		Press Release, dated March 16, 2026, announcing the Closing of the Business Combination.

104		Cover page interactive data file (embedded within the iXBRL document).

**	The annexes, schedules, and certain exhibits to this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant hereby agrees to furnish supplementally a copy of any omitted annex, schedule or exhibit to the SEC upon request.

+	Previously filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: March 20, 2026	MERLIN, INC.

	By:	/s/ Ryan Carrithers
	Name:	Ryan Carrithers
	Title:	Chief Financial Officer

Exhibit 99.1

Merlin Labs, Inc. and Subsidiaries

Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

With Report of Independent Registered Public Accounting Firm

MERLIN LABS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm		1

Consolidated Balance Sheets		2

Consolidated Statements of Operations		3

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit		4

Consolidated Statements of Cash Flows		5

Notes to Consolidated Financial Statements		6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Merlin Labs, Inc. and Subsidiaries

Boston, Massachusetts

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Merlin Labs, Inc. and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ deficit, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ BDO USA, P.C.

(formerly HORNE LLP)

We have served as the Company’s auditor since 2025.

Ridgeland, Mississippi

March 20, 2026

MERLIN LABS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	As of December 31,
	2025			2024
ASSETS
Current assets:
Cash and cash equivalents	$	59,343		$	37,195
Short-term investments		330			377
Accounts receivable, net		368			536
Prepaid expenses and other current assets		3,328			1,040
Capitalized transaction costs		7,562			—
Total current assets		70,931			39,148
Property and equipment, net		7,108			8,589
Operating lease right-of-use assets, net		979			1,348
Deposits		1,564			109
Total assets	$	80,582		$	49,194
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable		3,154			1,294
Accrued expenses		7,937			2,683
Long-term debt, current portion, net ($19,175 at fair value and $96 at amortized cost, net as of December 31, 2025 and $0 at fair value and $14,224 at amortized cost, net as of December 31, 2024)		19,271			14,224
Convertible promissory notes		29,107			—
Deferred revenue		—			112
Contract loss provision		4,173			5,166
Operating lease liabilities, current		657			709
Total current liabilities		64,299			24,188
Long-term debt, non-current portion, net ($12,207 at fair value and $577 at amortized cost, net as of December 31, 2025 and $0 at fair value and $21,673 at amortized cost, net as of December 31, 2024)		12,784			21,673
Operating lease liabilities, non-current		331			653
Warrant liabilities		76,766			3,586
Total liabilities		154,180			50,100
Commitments and contingencies (Note 14)
Redeemable convertible preferred stock		461,963			130,616
Stockholders’ deficit:
Common stock: $0.0001 par value; 44,705,861 and 29,500,000 shares authorized; 5,306,250 and 5,169,812 shares issued and outstanding as of December 31, 2025 and 2024, respectively		1			1
Additional paid-in capital		15,491			4,009
Accumulated deficit		(551,053	)		(135,532	)
Total stockholders’ deficit		(535,561	)		(131,522	)
Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit	$	80,582		$	49,194

See accompanying notes to consolidated financial statements.

MERLIN LABS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

	Year Ended December 31,
	2025			2024
Revenue	$	7,551		$	1,229
Cost of revenue		9,182			8,500
Gross loss		(1,631	)		(7,271	)
Operating expenses:
Research and development		32,477			27,146
General and administrative		20,093			17,864
Selling and marketing		1,318			1,744
Total operating expenses		53,888			46,754
Loss from operations		(55,519	)		(54,025	)
Other (expense) income:
Interest income		1,443			2,005
Interest expense		(2,957	)		(2,420	)
Other expense		(159	)		(197	)
Change in fair value of warrant liabilities		(2,357	)		(265	)
Change in fair value of convertible promissory notes		(7,563	)		—
Loss on exchange of warrant liabilities		(3,320	)		—
Loss on issuance of financial instruments		(585	)		—
Loss on extinguishment of long-term debt		(2,157	)		—
Change in fair value of long-term debt		(1,554	)		—
Total other expense		(19,209	)		(877	)
Loss before provision for income taxes		(74,728	)		(54,902	)
Provision for income taxes		50			351
Net loss	$	(74,778	)	$	(55,253	)
Deemed dividend on exchange of redeemable convertible preferred stock		(345,717	)		—
Net loss attributable to common stockholders		(420,495	)		(55,253	)
Net loss per share:
Basic and diluted	$	(80.68	)	$	(10.80	)
Weighted-average shares outstanding:
Basic and diluted		5,211,618			5,118,223

See accompanying notes to consolidated financial statements.

MERLIN LABS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(in thousands, except share and per share amounts)

	Redeemable Convertible Preferred Stock						Common Stock					Additional						Total
	Number of Shares			Amount			Number of Shares			Amount		Paid-In Capital			Accumulated Deficit			Stockholders’ Deficit
Balances as of December 31, 2023		17,696,748			130,616			4,882,717			1		2,204			(80,279	)		(78,074	)
Vesting of restricted common stock		—			—			206,250			—		—			—			—
Exercise of common stock options		—			—			80,845			—		66			—			66
Stock-based compensation		—			—			—			—		1,739			—			1,739
Net loss		—			—			—			—		—			(55,253	)		(55,253	)
Balances as of December 31, 2024		17,696,748		$	130,616			5,169,812		$	1	$	4,009		$	(135,532	)	$	(131,522	)
Exercise of common stock options		—			—			136,438		$	—	$	391		$	—		$	391
Stock-based compensation		—			—			—			—		1,695			—			1,695
Deemed dividend on exchange of redeemable convertible preferred stock		—			345,717			—			—		(4,974	)		(340,743	)		(345,717	)
Conversion of Series A Prime redeemable convertible preferred stock to common stock		(541,846	)		(14,370	)		541,846			—		14,370			—			14,370
Forfeiture of common stock		—			—			(541,846	)		—		—			—			—
Net loss		—			—			—			—		—			(74,778	)		(74,778	)
Balances as of December 31, 2025		17,154,902		$	461,963			5,306,250		$	1	$	15,491		$	(551,053	)	$	(535,561	)

See accompanying notes to consolidated financial statements.

MERLIN LABS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31,
	2025			2024
Cash flows from operating activities
Net loss	$	(74,778	)	$	(55,253	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,582			1,466
Stock-based compensation		1,695			1,739
Amortization of right-of-use assets		746			568
Non-cash interest expense		587			179
Loss on disposal of property and equipment		147			—
Change in fair value of warrant liabilities		2,357			265
Change in fair value of convertible promissory notes		7,563			—
Loss on foreign currency exchange rate		281			197
Gain on early lease termination		—			(1	)
Contract loss expense accrual		1,451			6,347
Loss on exchange of warrant liabilities		3,320			—
Loss on issuance of financial instruments		585			—
Loss on extinguishment of long-term debt		2,157			—
Change in fair value of long-term debt		(166	)		—
Change in operating assets and liabilities:
Accounts receivable		168			(519	)
Prepaid expenses and other current assets		(2,302	)		455
Capitalized transaction costs		(7,562	)		—
Deposits		(1,524	)		25
Accounts payable		1,857			(104	)
Accrued expenses		5,279			882
Deferred revenue		(112	)		112
Contract loss provision		(2,444	)		(1,181	)
Operating lease liabilities		(755	)		(643	)
Net cash used in operating activities	$	(59,868	)	$	(45,466	)

Cash flows from investing activities
Additions of property and equipment	$	(427	)	$	(1,904	)
Proceeds from sales of property and equipment		15			—
Maturities of short-term investments		44			140
Target Bridge Notes principal originated		—			(2,250	)
Repayment of Target Bridge Notes		—			2,250
Net cash used in investing activities	$	(368	)	$	(1,764	)

Cash flows from financing activities
Proceeds from issuance of long-term debt	$	—		$	34,378
Proceeds from issuance of warrants		67,292			496
Proceeds from issuance of convertible promissory notes		20,413			—
Repayments of long-term debt		(5,712	)		(1,000	)
Proceeds from exercise of common stock options		391			66
Net cash provided by financing activities		82,384			33,940

Net increase (decrease) in cash and cash equivalents	$	22,148		$	(13,290	)
Cash, and cash equivalents at beginning of year		37,195			50,485
Cash, and cash equivalents at end of year	$	59,343		$	37,195

Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest	$	4,358		$	1,586
Taxes (Note 13)	$	50		$	237
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	379		$	842
Deemed dividend on exchange of redeemable convertible preferred stock	$	345,717		$	—

See accompanying notes to consolidated financial statements.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

1. Organization and Description of Business

Merlin Labs, Inc. was incorporated on October 10, 2018 as a Delaware corporation under the name Apollo Flight Research, Inc. and changed its name to Merlin Labs, Inc. on October 27, 2020. Merlin Labs, Inc. is the parent company of two wholly-owned subsidiaries: Merlin Labs NZ Limited (“MLNL”), a New Zealand limited company, was incorporated on August 17, 2020 and Merlin Labs Securities Corporation (“MLSC”), a Massachusetts Securities Corporation, was incorporated on December 13, 2022. Merlin Labs, Inc., together with its subsidiaries are herein referred to as “Merlin,” the “Company,” “we,” or “our”.

The Company develops sophisticated software that fulfill the functions of a human pilot in self-flying aircraft to enable both reduced crew and unmanned flight. This technology is designed to be scalable and adaptable across different aircraft types for a growing range of aircraft platforms. The Company’s aircraft-agnostic, AI-powered software is purpose-built for military and civil programs, and is powering an expanding range of missions and aircraft, proven through hundreds of autonomous flights from test facilities across the globe.

On August 13, 2025, the Company entered into a Business Combination Agreement (the “Business Combination Agreement” or “BCA”) with Bleichroeder Acquisition Corp. I, a Cayman Islands exempted company and Nasdaq-listed special purpose acquisition company (a “SPAC” and the “Purchaser”), and IPDX Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Purchaser (“Merger Sub”). On October 21, 2025, the Purchaser changed its name to Inflection Point Acquisition Corp. IV. Under the terms of the BCA, the Purchaser will domesticate as a Delaware corporation (the “Domestication”), and Merger Sub will merge with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of the Purchaser (the “Merger”).

Following the Domestication, the Company and Merger Sub will file a certificate of merger to consummate the Merger. Upon completion of the Merger, the combined company is expected to be publicly listed on the Nasdaq Stock Exchange, subject to regulatory approvals and customary closing conditions.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of Merlin Labs, Inc., and its consolidated subsidiaries, MLNL and MLSC. All intercompany balances and transactions have been eliminated in consolidation.

Risk and Uncertainties

The consolidated financial statements have been prepared in accordance with U.S. GAAP assuming that the Company will continue as a going concern over the next twelve months. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business, including having sufficient liquidity in the future to meet, among other things, the Company’s obligations under its borrowing arrangements (refer to Note 8. Debt).

Since its inception, the Company has primarily operated in the pre-commercialization stage and funded historical losses through debt and equity financings. The Company expects to incur additional net losses while it continues to advance its commercialization efforts and pursue profit-generating revenue contracts with customers, namely, the United States (“U.S.”) government.

During the years ended December 31, 2025 and 2024, the Company incurred net losses in the amounts of $74,778 and $55,253, respectively, and generated negative cash flows from operations in the amounts of $59,868 and $45,466, respectively. Additionally, as of December 31, 2025, the Company has an accumulated deficit in the amount of $551,053 and cash and cash equivalents of $59,343.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The Company previously concluded in its consolidated financial statements for the nine months ended September 30, 2025, that there was substantial doubt about the Company’s ability to continue as a going concern due to the Company’s outstanding debt obligations and projected operating cash flows. On March 16, 2026, the Company completed its planned Merger (refer to Note 17. Subsequent Events). In connection with the Merger, the Company issued debt and equity-linked instruments in additional private investment in public entity (“PIPE”) transaction for $120,000 in gross proceeds and the Company’s outstanding convertible promissory notes converted into preferred stock and warrants to purchase common stock of the Company (refer to Note 8. Debt).

Based on the Company’s liquidity position as of December 31, 2025, the Company’s cash proceeds and debt conversion from the Merger, the Company’s current forecast of operating results and cash flows, and the Company’s outstanding debt obligations, the Company determined that its financial condition is sufficient to fund its planned operations, commitments, and contractual obligations for a period of at least one year following the date that these consolidated financial statements are issued.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, and the reported amounts of revenue and expenses during the reporting periods.

Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, the estimation of anticipated costs to complete a contract, the valuation and recognition of stock-based compensation awards, the valuation of warrant liabilities, the valuation of convertible promissory notes, and the valuation of redeemable convertible preferred stock.

Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could be material to the Company’s consolidated financial position and results of operations.

Segments

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM, who is the Chief Executive Officer, reviews financial information on a consolidated basis to make operating decisions, assess performance, and make resource allocation decisions, leading to decisions related to resource allocations in relation to profit and loss. Accordingly, the Company has determined that it has one reportable segment.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents, which includes money market mutual funds. The Company has a cash management program, which provides for the investment of excess cash balances primarily in money market mutual funds.

Investments

Management determines the appropriate classification of investments in certificates of deposit at the time of purchase based upon management’s intent and ability with regard to such investments. For the periods presented, all investments have been classified as held to maturity.

The Company classifies investments as short-term when they have remaining contractual maturities of one year or less from the balance sheet date, and as long-term when the investments have remaining contractual maturities of more than one year from the balance sheet date. Investments are recorded at fair value, which approximates cost.

Accounts Receivable

Accounts receivable are recorded at the original invoiced amount less an allowance for credit losses. An allowance for credit losses is determined based on historical loss experience, current conditions, and future expectations. Receivables are written off when deemed uncollectible. The Company uses the aging method to determine lifetime expected credit losses on accounts receivable, relying on historical loss experience adjusted for current conditions and future forecasts. Adjustments consider factors such as past due receivables, customer creditworthiness, changes in receivable terms, and external factors like competition and regulatory requirements. The Company pools receivables with similar risk characteristics for estimating expected credit losses and evaluates these pooling decisions periodically as risk characteristics change. For receivables not sharing similar risk characteristics, individual measurement is applied.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

As of December 31, 2025 and 2024, the allowance for credit losses is immaterial to the consolidated financial statements.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with accredited financial institutions in amounts which at times exceed federally insured limits. The Company monitors the credit standing of such financial institutions in order to limit credit risk. The Company has not experienced any losses on its cash and cash equivalents and believes it is not exposed to any significant losses due to credit risk on cash and cash equivalents.

During the years ended December 31, 2025 and 2024, the Company generated $7,551 and $1,229 in revenue, with a significant amount (> 90%) of this revenue coming from the U.S. government. As of December 31, 2025 and 2024, accounts receivable from the U.S. government totaled $368 and $536, respectively.

Fair Value Measurements

The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2 - Inputs to the valuation methodology include:

●

Quoted prices for similar assets or liabilities in active markets;

●

Quoted prices for identical or similar assets or liabilities in inactive markets;

●

Inputs other than quoted prices that are observable for the asset or liability; and

●

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Property and Equipment

Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, as follows:

Property and Equipment		Estimated Useful Life
Aircraft		11-15 years
Aircraft equipment		3-8 years
Computer equipment		2-3 years
Leasehold improvements		Lesser of the useful life or life of lease
Office furniture & equipment		3-13 years
Motor vehicles		3-4 years

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Leases

The Company determines if an arrangement is, or contains, a lease at inception. An arrangement qualifies as a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is established if the Company has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

At the commencement date, the date on which the lessor makes the underlying asset available for use, leases are classified as either operating or finance leases based on their economic substance. Operating leases are presented in the consolidated balance sheets within operating lease right-of-use assets, net, operating lease liabilities, current, and operating lease liabilities, non-current. Finance leases, which are immaterial to the Company’s financial statements, are presented in the consolidated balance sheets within property and equipment, net and accrued expenses.

The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when determining its incremental borrowing rates.

For short-term leases, defined as leases with a term of twelve months or less, the Company elected the practical expedient to not recognize an associated lease liability and right-of-use asset. Lease payments for short-term leases are expensed on a straight-line basis over the lease term.

The Company has elected the policy to not separate lease and nonlease components for all classes of underlying assets. Lease right-of-use assets also include any lease payments made at or before commencement date, net of lease incentives and initial direct costs incurred. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

The Company leases office space, aircraft, motor vehicles, and airport hangar space in the United States and New Zealand.

Impairment of Long-Lived Assets

All long-lived assets are reviewed by the Company for possible impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company measures recoverability of assets to be held and used by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. As of December 31, 2025 and 2024, the Company determined that there have been no significant events or changes in circumstances that would cause the impairment of any of the Company’s long-lived assets.

Term Debt

The Company has elected to apply the fair value method of accounting in accordance with Accounting Standards Codification (“ASC”) 825, Financial Instruments (“ASC 825”), for certain of its term debt instruments. The Company initially records term debt accounted for under the fair value option at fair value and subsequently remeasures such instruments to fair value on each balance sheet date thereafter. The change in fair value of term debt accounted for at fair value, together with interest accrued thereon, is recorded in change in fair value of long-term debt in the consolidated statements of operations.

For term debt instruments not accounted for under the fair value method of accounting, the Company records such term debt obligations at amortized cost, net of any debt issuance costs, discounts, and premiums. Upon issuance, the Company evaluates whether identified embedded derivatives should be bifurcated and accounted for as a derivative at fair value under ASC 815, Derivatives and Hedging (“ASC 815”). Any embedded derivatives that meet the criteria for bifurcation and separate accounting are accounted for as a compound derivative recorded at fair value on the date of issuance and on each balance sheet date thereafter, with changes in fair value recorded in the consolidated statements of operations.

Convertible Debt

The Company has elected to apply the fair value method of accounting in accordance with ASC 825 for certain of its convertible debt instruments. The Company records convertible debt accounted for under the fair value option at fair value upon the date of issuance and subsequently remeasures such instruments to fair value on each balance sheet date thereafter. The change in fair value of convertible debt accounted for at fair value, together with interest accrued thereon, is recorded in change in fair value of convertible promissory notes in the consolidated statements of operations.

For convertible debt instruments not accounted for under the fair value method of accounting, the Company first assesses the balance sheet classification of its convertible debt instruments to determine whether the instrument should be classified as a liability under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). If convertible debt is not classified as a liability under ASC 480, the Company accounts for convertible debt in accordance with ASC 470-20, Debt with Conversion and Other Options, and ASC 815. Upon issuance, the Company evaluates whether the embedded conversion feature, as well as other identified embedded derivatives, should be bifurcated and accounted for as a derivative at fair value under ASC 815, and if not, whether any substantial premium must be recognized in additional paid-in capital. Any embedded derivatives that meet the criteria for bifurcation and separate accounting are accounted for as a compound derivative recorded at fair value on the date of issuance and on each balance sheet date thereafter, with changes in fair value recorded in the consolidated statements of operations.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Debt Issuance Costs

Costs incurred in connection with the issuance of debt instruments accounted for under the fair value method of accounting under ASC 825 are expensed as incurred.

Costs incurred in connection with the issuance of debt instruments accounted for at amortized cost are recorded as a direct deduction against the associated debt liability, consistent with debt discounts. These costs are included in long-term debt, current portion, net and long-term debt, non-current portion, net in the Company’s consolidated balance sheet and are amortized over the life of the associated debt as a component of interest expense using the effective interest method.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance included in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments (if they were issued with another instrument) pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and if not, whether the warrants meet the requirements for equity classification under ASC 815. This assessment requires the use of professional judgment and is conducted at issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

Warrants that meet all of the criteria for equity classification are recorded at fair value as a component of additional paid-in capital at the time of issuance and are not subsequently remeasured. Warrants that do not meet all the criteria for equity classification are recorded at fair value on the date of issuance and on each balance sheet date thereafter as a component of warrant liabilities in the Company’s consolidated balance sheets. Changes in the estimated fair value of the warrants are non-cash gain or loss recognized in change in fair value of warrant liabilities in the consolidated statements of operations.

Redeemable Convertible Preferred Stock

The Company evaluates its redeemable convertible preferred stock under ASC 480 to evaluate the classification of the redeemable convertible preferred stock. The Company’s redeemable convertible preferred stock does not require liability classification under ASC 480 and is classified in mezzanine equity as all classes may be subject to redemption upon the occurrence of an event that is not solely within the control of the Company. Upon issuance, the Company evaluates whether identified embedded derivatives should be bifurcated and accounted for as a derivative at fair value under ASC 815. The redeemable convertible preferred stock is initially recognized at the proceeds received, net of issuance costs and the fair value of any bifurcated derivatives, and is only subsequently remeasured to the extent it becomes currently redeemable or probable of becoming redeemable. Any embedded derivatives that meet the criteria for bifurcation and separate accounting are accounted for as a compound derivative recorded at fair value on the date of issuance and on each balance sheet date thereafter, with changes in fair value recorded in the consolidated statements of operations.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Revenue Recognition

The Company recognizes revenue under its contracts with customers in accordance with ASC 606, Revenue from Contracts with Customers. The Company derives its revenues primarily through its engineering and autonomy development programs with U.S. government agencies, including the Federal Aviation Administration, U.S. Special Operations Command, and the U.S. Air Force. These contracts focus on the design, demonstration, and integration of autonomous flight technologies. The Company also engages in limited commercial activities with foreign and private sector customers, including aviation advisory services in New Zealand.

The Company performs under various contract types, including firm-fixed-price, cost-plus-fixed-fee, and cost-share arrangements. These contracts are structured to support research and development efforts, prototype demonstrations, and system integration activities.

Revenue is recognized when control of the goods and services provided is transferred to the Company’s customers and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services using the following steps: 1) identification of the contract or contracts with a customer, 2) identification of performance obligations in the contract, 3) determination of the transaction price, 4) allocation of the transaction price to the performance obligations in the contract and 5) recognition of revenue when or as the Company satisfies the performance obligations.

The Company’s performance obligation consists of comprehensive engineering and development programs rather than distinct deliverables. Supporting activities such as system engineering, airworthiness certification, and technical data packages are not considered separate performance obligations, as they are highly interrelated and collectively contribute to the overarching deliverable. The Company provides engineering data and insights that inform the customer’s broader autonomy initiatives.

Contracts with U.S. government entities are governed by the Federal Acquisition Regulation, which defines allowable costs and pricing methodologies. Each contract is individually negotiated and variable consideration may arise in cost-share arrangements, where the Company is reimbursed for a portion of actual costs incurred, subject to a contractual ceiling. The Company includes variable consideration in the transaction price only when it is probable that a significant revenue reversal will not occur. Pricing for non-government customers, including commercial and foreign entities, is determined through direct negotiation. The Company’s contracts generally do not contain significant financing components, and taxes collected are excluded from the transaction price.

The Company recognizes revenue on its engineering and development contracts with the U.S. government primarily over time, as control of the services is continuously transferred throughout the performance period. This continuous transfer is supported by standard U.S. government contract clauses, including the right to terminate for convenience and the obligation to reimburse the contractor for costs incurred plus reasonable compensation. These provisions, along with the customer’s ability to benefit from the work-in-progress through monthly deliverables and technical reports, support over-time revenue recognition. The Company bills its customers on a monthly basis as services are provided throughout the contract. For these contracts, the Company generally uses a method that measures the extent of progress towards completion of the performance obligation, principally using a cost incurred input method. Under this method, revenue is recognized based on the proportion of total costs incurred to estimated total costs-at-completion. Anticipated losses on cost-share contracts are recognized in accordance with ASC 605-35 when total estimated costs are expected to exceed consideration.

In the case of a contract for which the total estimated costs is expected to exceed the total estimated revenue, a loss arises, and a provision for the entire loss is recorded in the period that it becomes evident. The unrecoverable costs on a loss contract that are expected to be incurred are recorded as expense in cost of revenue in the consolidated statements of operations and a provision is recorded in contract loss provision in the consolidated balance sheets. As costs related to the loss contract are incurred, the contract loss provision in the consolidated balance sheets is reduced. The Company recorded net losses related to contracts with customers of $1,451 and $6,347 for the years ended December 31, 2025 and 2024, respectively.

Contract Assets and Liabilities

The timing of revenue recognition, customer billings and cash collections for each contract results in a net contract asset or deferred revenue liability at the end of each reporting period.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Contract assets consist of unbilled receivables, which is the amount of revenue recognized that exceeds the amount billed to the customer. Contract liabilities consist of deferred revenue, which represents cash advances received prior to performance for programs and billings in excess of revenue recognized.

Cost of Revenue

Cost of revenue primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing operations, and professional services, as well as subcontractor expenses, field-service representatives, hardware costs, travel costs, allocated overhead, and other direct costs. Cost of revenue also includes provisions for loss contracts.

Research and Development Costs

Research and development expenses consist primarily of personnel-related costs for the Company’s development team, including salaries, benefits, bonuses, stock-based compensation expenses and allocated overhead costs. Research and development expenses also include contractor or professional service fees and software services dedicated for use by the Company’s research and development organization.

The Company will enter into research and development agreements with third-parties where the Company will be paid for research and development activities. The amounts received under these agreements are recorded as a reduction to research and development expense in the consolidated statements of operations. The Company recorded $450 and $0 as a reduction to research and development expense during the years ended December 31, 2025 and 2024, respectively.

Sales and Marketing Costs

Sales and marketing expenses consist primarily of personnel-related costs for the Company’s sales and marketing staff, including salaries, benefits, bonuses, commissions, stock-based compensation, and allocated overhead costs. Sales and marketing expenses also include advertising costs and other expenses associated with the Company’s marketing and business development programs.

Advertising Costs

The Company expenses advertising costs as incurred. During the years ended December 31, 2025 and 2024, the Company incurred advertising expense in the amounts of $1,238 and $1,328, respectively.

General and Administrative Costs

General and administrative expenses consist of personnel-related costs associated with the Company’s finance, legal, human resources and administrative personnel, including salaries, benefits, bonuses, stock-based compensation and allocated overhead costs. General and administrative expenses also include external legal, accounting, professional services fees, software services dedicated for use by the Company’s general and administrative functions, insurance, and other corporate expenses.

Stock-Based Compensation

The Company recognizes stock-based compensation on awards granted under the Merlin Labs 2018 Equity Incentive Plan (“the Plan”). These awards include incentive stock options (“ISOs”) granted to employees as well as nonqualified stock options (“NSOs”) or restricted stock awards (“RSUs”) granted to directors, consultants, employees, and officers of the Company. In addition to the Plan, the Company has historically issued common stock warrants to a vendor as compensation for services provided to the Company.

Stock-based compensation expense is recorded for awards issued to employees and nonemployees using the fair value method with a corresponding increase in additional paid-in capital in the consolidated balance sheets. The Company recognizes forfeitures as they occur.

Under the Plan, these awards generally vest over a four-year period, subject to the terms set forth in individual grant agreements and the discretion of the Plan administrator. Stock-based compensation awards are measured at the grant date fair value with compensation expense recognized on a straight-line basis over the requisite vesting period of the award.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Capitalized Transaction Costs

Capitalized transaction costs primarily consist of legal and accounting costs incurred that are direct and incremental to the Company’s planned Merger. Upon the completion of the planned Merger, capitalized transaction costs will be netted against the proceeds from the Merger and recorded as an offset to stockholders’ deficit. During the year ended December 31, 2025, the Company capitalized $7,562 of transaction costs in capitalized transaction costs on the consolidated balance sheets. In the event the planned Merger is terminated, the capitalized transaction costs will be expensed.

Income Taxes

The Company estimates its current tax expense together with assessing temporary differences resulting from differing treatment of items not currently deductible for tax purposes. These differences result in deferred tax assets and liabilities on the Company’s consolidated balance sheets, which are estimated based upon the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates that will be in effect when these differences reverse. In general, deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in the Company’s consolidated statements of operations become deductible expenses under applicable income tax laws or loss or credit carryforwards are utilized. Accordingly, the realization of the Company’s deferred tax assets is dependent on future taxable income against which these deductions, losses, and credits can be utilized.

The Company evaluates the realizability of its deferred tax assets on an annual basis. The Company records a valuation allowance when, based on the weight of available evidence, it expects future taxable income is not likely to support the use of a deduction or credit in that jurisdiction. If certain factors change and the Company determines that the deferred tax assets are realizable at a more-likely-than not level, it will adjust the valuation allowance in the period the determination is made. Changes in the valuation allowance, when recorded, would be included in the Company’s consolidated statements of operations. Management’s judgment is required in determining the Company’s valuation allowance recorded against its net deferred tax assets.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to uncertain tax positions, if any, in its provision for income taxes. No such interest or penalties were recognized during the periods presented and the Company had no accruals for interest and penalties as of December 31, 2025 and 2024. The Company is subject to the Global Intangible Low Taxed Income (“GILTI”) tax in the U.S. and has elected to treat taxes on future GILTI inclusions as current period expense if and when incurred.

Net Loss per Share

The Company calculates basic and diluted net loss per share using the two-class method. Under the two-class method, earnings are allocated to common stock and participating securities according to their participation rights in dividends and undistributed earnings. The Company’s net loss is fully attributable to its common stockholders for the periods presented.

Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Diluted earnings per share attributable to common stockholders adjusts basic earnings (loss) per share for the potentially dilutive impact of redeemable convertible preferred stock, restricted stock, stock options, common stock warrants, preferred stock warrants, and debt conversion features. As the Company has reported losses for all periods presented and all potentially dilutive securities are anti-dilutive, basic net loss per share equaled diluted net loss per share.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Determination of Fair Value of Common Stock

Since there has been no public market for our common stock, the estimated fair value of our common stock has been determined by the Board of Directors through the use of an annual valuation report prepared by an independent third-party specialist, supplemented by the Board’s and management’s assessments of any material changes between the valuation date and the date of each option grant approval.

The Company uses a hybrid method that is a combination of the probability-weighted expected return and option-pricing method when determining the fair value of the common stock. The hybrid method incorporates the weighted probability of multiple liquidity scenarios based on the probability of the scenario’s occurrence, while also utilizing the option-pricing method to estimate the allocation of value in one or more of the scenarios. Key inputs include volatility, a discount rate, a discount for lack of marketability, and the liquidity event scenario probability.

In addition to considering the results of the independent third-party valuations, our Board of Directors considers various objective and subjective factors when determining if the fair value of the common stock has changed between the valuation date and grant date including actual operating performance and financial results, current business conditions and projections, the market performance of comparable publicly traded companies, and the U.S. and global capital market conditions and may adjust the valuation accordingly.

Foreign Currency

The Company’s foreign operations related to MLNL are remeasured from New Zealand Dollars (“NZD”) into U.S. dollars. The remeasurement is based on the determination that the U.S. dollar is the functional currency of MLNL. Monetary assets and liabilities of MLNL’s foreign operations are remeasured into U.S. dollars at year-end exchange rates and nonmonetary assets, liabilities and equity accounts are remeasured using historical exchange rates. Income statement accounts are remeasured at the weighted average exchange rate prevailing during the year. During the years ended December 31, 2025 and 2024, the Company recognized foreign currency exchange losses of $281 and $197, respectively.

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity, which simplifies the accounting for convertible instruments. We adopted this standard effective on January 1, 2024, the beginning of the fiscal year ended December 31, 2024, and adoption did not have a material effect on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (“Topic 280”): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company adopted the guidance during the year ended December 31, 2024, and applied it retrospectively to the periods presented. Refer to Note 15. Segment and Geographic Information for more information.

In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures, requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company adopted the guidance during the year ended December 31, 2025 on a prospective basis. Refer to Note 13. Income Taxes for more information.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires the disclosure of additional information about specific expense categories in the notes to the consolidated financial statements on an annual and interim basis. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027 on either a prospective or retrospective basis, with early adoption permitted. The Company is currently evaluating the impacts of the new standard on its consolidated financial statements.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

3. Revenue Recognition from Contracts with Customers

Disaggregation of Revenue

The Company disaggregates revenues by customer-type. These categories represent how the nature, timing and uncertainty of revenues and cash flows are affected.

Disaggregated revenues by customer-type were as follows:

	Year Ended December 31,
	2025		2024
U.S. government agencies	$	7,342	$	1,145
Commercial and non-U.S. government customers		209		84
Total	$	7,551	$	1,229

Revenues from New Zealand during the twelve months ended December 31, 2025 and 2024 amounted to $209 and $84, respectively.

No revenue recognized during the years ended December 31, 2025 and 2024 was related to performance obligations satisfied in prior periods.

Remaining performance obligations

As of December 31, 2025, the aggregate amount of the transaction price allocated to the remaining performance obligations was $7,469, all of which will be recognized over the next 12 months. Although remaining performance obligations reflect business that is considered to be legally binding, cancellations, deferrals, or scope adjustments may occur. Any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations, and project deferrals are reflected or excluded in the remaining performance obligation balance, as appropriate.

Contract balances

The following table presents contract balances:

	As of December, 31
	2025		2024		2023
Accounts receivable, net	$	368	$	536	$	21
Unbilled receivables	$	1,570	$	—	$	—
Deferred revenue	$	—	$	112	$	—
Contract loss provision	$	4,173	$	5,166	$	—

Revenue recognized during the year ended December 31, 2025 from amounts included in deferred revenue at the beginning of the period was $112. There was no revenue recognized during the year ended December 31, 2024 from amounts included in deferred revenue at the beginning of the period. The increase in unbilled receivables from December 31, 2024 to December 31, 2025 represents revenue earned and recognized during year ended December 31, 2025 for which the Company has not invoiced the customer as of December 31, 2025.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

4. Fair Value Measurements

The following table presents assets and liabilities measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation as follows:

	As of December 31, 2025
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market mutual funds	$	56,695	$	—	$	—	$	56,695
Total Assets	$	56,695	$	—	$	—	$	56,695
Liabilities:
Current liabilities:
2024 LSA Loans, current portion	$	—	$	—	$	19,175	$	19,175
Convertible promissory notes		—		—		29,107		29,107
Non-current liabilities:
2024 LSA Loans, non-current portion		—		—		12,207		12,207
Warrant liabilities		—		—		76,766		76,766
Total Liabilities	$	—	$	—	$	137,255	$	137,255

	As of December 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market mutual funds	$	29,773	$	—	$	—	$	29,773
Total Assets	$	29,773	$	—	$	—	$	29,773
Liabilities:
Warrant liabilities	$	—	$	—	$	3,586	$	3,586
Total Liabilities	$	—	$	—	$	3,586	$	3,586

Fair value measurements for cash equivalents are based on quoted market prices in active markets. There have been no changes in the fair value methodologies used for the years ended December 31, 2025 and 2024.

For all periods prior to December 31, 2024, fair value measurements for preferred stock warrant liabilities were estimated using an option pricing approach embedded within a Monte Carlo simulation using Level 3 inputs. The Monte Carlo simulation simulates the Company’s equity value from each respective valuation date to the expected financing event date, incorporating breakpoints at which various equity classes participate in distributions.

The following relevant assumptions were used in determining the fair value of the preferred stock warrant liabilities (refer to Note 9. Warrants) as of December 31, 2024:

	December 31, 2024
Equity value	$	309,613
Expected financing amount	$	100,000
Expected financing date		5/31/2025
Expected liquidity event		12/31/2026
Equity volatility		50.0-60.0 %
Risk-free rate		4.20-4.24%

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

For all periods after December 31, 2024, and in contemplation of the anticipated Merger, fair value measurements for warrant liabilities and convertible promissory notes (refer to Note 8. Debt and Note 9. Warrants) were estimated using a probability-weighted expected return method, considering scenarios in which the Merger does or does not occur. In all scenarios, the fair value of Pre-PIPE Bridge and Pre-Funded PIPE Notes and Warrants were determined by calibrating the aggregate fair value of instruments issued, as implied by the probability-weighted expected return method, to the proceeds received in each issuance therefrom in accordance with ASC 825, resulting in a calibrated discount rate of 500.0%.

In the scenario in which the Merger does not occur, the fair value of the 2019 LSA Warrants, 2021 LSA Warrants, and 2024 LSA Warrants were estimated using an option pricing approach embedded within a Monte Carlo simulation. The Monte Carlo simulation simulates the Company’s equity value from each respective valuation date to the expected financing event date, incorporating breakpoints at which various equity classes participate in distributions. In the scenario in which the Merger occurs, the fair value of the 2019 LSA Warrants, 2021 LSA Warrants, and 2024 LSA Warrants were estimated using a common stock equivalent method which incorporates the expected capital structure and distribution of proceeds in a public company context and allocated value among the Company’s equity classes assuming the Company successfully completes the Merger.

In both scenarios, the fair value of the 2024 LSA Amendment Warrants were estimated using a discounted cash flow method, calculating the present value of future cash flows based on the contractual terms thereof at the calibrated discount rate.

In both scenarios, the fair value of the Pre-PIPE Bridge Notes and Pre-Funded PIPE Notes were estimated using a discounted cash flow method, calculating the present value of future cash flows based on the contractual terms of such instruments at the calibrated discount rate.

In the scenario in which the Merger does not occur, the fair value of the Pre-PIPE Bridge Warrants and Pre-Funded PIPE Warrants were estimated using an option pricing approach embedded within a lattice model. The lattice model simulates the Company’s equity value from each respective valuation date to the expected financing event date, incorporating breakpoints at which various equity classes participate in distributions. In the scenario in which the Merger occurs, the fair value of the Pre-PIPE Bridge Warrants and Pre-Funded PIPE Warrants were estimated using the Black-Scholes option pricing formula.

The following relevant assumptions were used in determining the fair value of the warrant liabilities and convertible promissory notes as of December 31, 2025:

	December 31, 2025
Non-Merger scenario - Equity value	$	647,000
Non-Merger scenario - Expected financing amount	$	150,000
Non-Merger scenario - Expected financing date		6/30/2026
Non-Merger scenario - Expected liquidity event		9/30/2028
Non-Merger scenario - Equity volatility		60.0%-75.0	%
Merger scenario - Expected Merger date		3/31/2026
Merger scenario - Stock price	$	10.72
Merger scenario - Equity volatility		70.0	%
Calibrated discount rate		500.0	%
Risk-free rate		3.44%-4.78	%

Fair value measurements for the 2024 LSA Loans (refer to Note 8. Debt) were estimated using a discounted cash flow method and a lattice model. The lattice model was used to estimate the fair value measurement impact of various share- and cash-settled redemption features which only apply to a portion of the outstanding principal amount of 2024 LSA Loans and the discounted cash flow method was used to estimate the fair value measurement impact of the principal amount of 2024 LSA Loans not subject to such redemption features.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The following relevant assumptions were used in determining the fair value of the 2024 LSA Loans as of December 31, 2025:

	December 31, 2025
Fair value of Series B Prime redeemable convertible preferred stock	$	29.39
Equity volatility		75.0	%
Credit rating		CCC-
Discount rate		19.7	%

The Company’s fair value measurement activity, using unobservable inputs and associated unrealized losses (gains) with respect to warrant liabilities outstanding during the years ended December 31, 2025 and 2024 were as follows:

	Amount
Fair value as of December 31, 2023	$	2,825
Issuance of warrants		496
Change in fair value of warrants		265
Fair value as of December 31, 2024	$	3,586
Issuance of warrants		72,592
Exchange of warrants		(1,769	)
Change in fair value of warrants		2,357
Fair value as of December 31, 2025	$	76,766

The Company’s fair value measurement activity, using unobservable inputs and associated unrealized losses (gains) with respect to convertible promissory notes outstanding during the year ended December 31, 2025 were as follows:

	Amount
Fair value as of December 31, 2024	$	—
Issuance of convertible promissory notes		21,544
Change in fair value of convertible promissory notes		7,563
Fair value as of December 31, 2025	$	29,107

The Company’s fair value measurement activity, using unobservable inputs and associated unrealized losses (gains) with respect to 2024 LSA Loans outstanding during the year ended December 31, 2025 were as follows:

	Amount
Fair value as of December 31, 2024	$	—
Recognition at fair value at extinguishment date		31,549
Non-cash change in fair value of 2024 LSA Loans		(166	)
Fair value as of December 31, 2025	$	31,383

5. Target Bridge Notes

On June 7, 2024, the Company and a third party target entity executed a term sheet which established the general terms of a potential acquisition of the target by the Company, including the establishment of a binding 60-day exclusivity period during which period the target was prohibited from negotiating, discussing, or entering into any other alternative transaction. In connection with the signing of the term sheet and to finance the target’s ongoing operations prior to the consummation of the potential acquisition, the Company extended a bridge financing facility with an aggregate commitment amount of $3,000 to the target.

Between June 2024 and July 2024, the Company originated $2,250 of aggregate principal amount of bridge notes to the target (“Target Bridge Notes”). The Target Bridge Notes accrued interest at a rate equal to the higher of (a) 6.0% and (b) the then-current Applicable Federal Rate. The Target Bridge Notes were scheduled to mature upon the earlier of (a) 30 days following the end of the exclusivity period and (b) the closing of the proposed acquisition. At the maturity thereof, the Target Bridge Notes would be settled as a dollar-for-dollar reduction in the closing purchase price in the proposed acquisition. Additionally, if the proposed acquisition did not close, the Target Bridge Notes remained outstanding, and the target consummated any sale or other exit event, the Company would be entitled to receive two times the sum of Target Bridge Notes principal amount outstanding plus accrued unpaid interest thereon.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

On July 31, 2024, the target notified the Company that it was no longer pursuing an acquisition by the Company. In August 2024, the Company became aware that the former target violated the binding terms outlined in the term sheet and other agreements entered into therefrom. As a result, the former target repaid the outstanding principal amount of Target Bridge Notes of $2,250, plus accrued interest thereon, on September 3, 2024. The Company did not pursue litigation against the former target and did not receive any termination fees or penalty payments in connection with the breach of terms.

6. Property and Equipment

Property and equipment consisted of the following:

	As of December 31,
	2025		2024
Aircraft equipment	$	6,166	$	6,194
Aircraft		4,728		4,681
Computer equipment		528		515
Leasehold improvements		425		394
Office furniture & equipment		349		315
Motor vehicles		85		85
Total property and equipment		12,281		12,184
Less: Accumulated depreciation		5,173		3,595
Total property and equipment, net	$	7,108	$	8,589

Depreciation expense for the years ended December 31, 2025 and 2024 amounted to $1,582 and $1,466, respectively.

7. Leases

The Company leases office space, aircraft, and airport hangar space under noncancelable operating lease agreements, which require escalating monthly rental payments plus related operating costs and expire on various dates through 2033. These leases contain no provisions for renewal other than a certain New Zealand lease, which contains one renewal option for five years. The Company is not reasonably certain to elect the renewal option and has excluded it in the related right-of-use (“ROU”) asset.

Operating lease right-of-use assets, net and lease liabilities were as follows:

	As of December 31,
	2025		2024
Right-of-use assets, net:
Total Operating leases	$	979	$	1,348

Lease liabilities:
Current		657		709
Long-term		331		653
Total lease liabilities	$	988	$	1,362

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The components of lease expense for the years ended were as follows:

	Year Ended December 31,
Component	2025		2024
Operating lease expense	$	898	$	717
Short-term lease expense		131		264
Variable lease expense		7		20
Total lease expense	$	1,036	$	1,001

The weighted average remaining lease term and discount rate for operating leases were as follows:

	As of December 31,
	2025			2024
Weighted average remaining lease term (in years)		3.17			3.30
Weighted average discount rate		13.21	%		12.40	%

Future minimum operating lease payments as of December 31, 2025 are as follows:

Years ending December 31:	Amount
2026	$	736
2027		79
2028		79
2029		79
2030		79
Thereafter		172
Total future minimum lease payments		1,224
Less present value discount		236
Present value of lease liabilities		988
Less current portion		657
Long-term portion	$	331

On September 4, 2025, the Company entered into a lease agreement that has not commenced for hangar and corporate office space in Bedford, MA and thus no right-of-use asset or lease liability has been recorded. When the lease commences the lease arrangement will have estimated total future payments of approximately $34,247 through September 2035. The lease is expected to commence in 2027. Also on September 4, 2025, the Company entered into a side letter agreement with the landlord permitting the Company to install a temporary airplane hangar on land subject to the lease agreement until the subject premises are made available. As of December 31, 2025, the premises and the land for the temporary hangar have not yet been made available to the Company.

8. Debt

2021 LSA

During September 2021, the Company entered into a loan and security agreement (“2021 LSA”) with the lender thereto which provided for term loan commitments with a maximum potential borrowing amount of $10,000. The aggregate commitments under the 2021 LSA included (a) a term loan facility in an aggregate principal amount of $3,000 (the “2021 LSA First Tranche”), (b) a delayed draw term loan facility in an aggregate principal amount of $1,000 (the “2021 LSA Second Tranche”), and (c) the lender’s commitment to reserve $6,000 for future funding of loans (the “2021 LSA Reserve”). Pursuant to the terms of the 2021 LSA, term loans under 2021 LSA First Tranche were required to be drawn down within five business days following the execution of the 2021 LSA. As a condition precedent to issue term loans under the 2021 LSA Second Tranche, the Company was required to achieve certain operational milestones and the 2021 LSA Second Tranche expired unused in March 2022. Further, the Company had no enforceable right to issue term loans under the 2021 LSA Reserve as any binding commitment thereto was subject to the Company and lender agreeing to enter into a binding commitment to provide funding following the Company’s next equity financing round. No amounts were drawn under the 2021 LSA Reserve. In connection with the execution of the 2021 LSA, the Company issued the lender thereunder warrants to purchase the Company’s redeemable convertible preferred stock (refer to Note 9. Warrants for further information).

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

During September 2021, the Company entered into a term loan in an aggregate principal amount of $3,000 under the 2021 LSA First Tranche (“2021 LSA Loan”). The 2021 LSA Loan bore interest at 11% per annum. Pursuant to the terms of the 2021 LSA, the Company was required to make interest-only payments through June 2022, and subsequently, the aggregate principal amount of the 2021 LSA Loan was amortized and paid down in equal monthly installments, together with interest thereon, over the following by 36 months until the final maturity of the 2021 LSA Loan on July 1, 2025. All outstanding principal, plus interest accrued thereon, was repaid in accordance with the contractual terms of the 2021 LSA in July 2025.

In connection with the 2021 LSA and issuance of the 2021 LSA Loan, the Company incurred $29 in debt issuance costs and a debt discount of $74. Deferred financing costs related to the 2021 LSA Loan of $103 were amortized to interest expense over the life of the 2021 LSA Loan using the effective interest method. The effective interest rate of the 2021 LSA Loan was 12.6%.

All warrants to purchase the Company’s redeemable convertible preferred stock remain outstanding as of December 31, 2025.

New Zealand Provincial Growth Fund (“PGF”) Loan

In July 2022, MLNL entered into a loan agreement (“2022 PGF Agreement”) with the New Zealand Ministry of Business, Innovation and Employment (“Ministry”), securing a convertible loan commitment in an aggregate principal amount of NZD 1,000 ($660 USD at issuance). Under this agreement, MLNL received NZD 1,000 ($660 USD at issuance) in aggregate principal amount of convertible debt, referred to as the “2022 PGF Loan”. The 2022 PGF Loan bears interest at a fixed rate of 7.47%. Pursuant to the terms of the 2022 PGF Agreement, interest accrued on the 2022 PGF Loan prior to the third anniversary of the issuance thereof shall be paid in-kind on each anniversary of the issuance date. On each subsequent anniversary date until the maturity date of July 21, 2032, the Company shall make annual payments comprised of (a) equal amortizing payments of 2022 PGF Loan principal and (b) interest accrued during the anniversary year. All amounts due but not yet paid, including all interest paid in-kind, shall become payable on the maturity date.

The 2022 PGF Loan is collateralized by a security interest in certain assets of the Company and is subject to certain customary covenants, with which the Company was in compliance as of December 31, 2025.

MLNL has optional redemption rights of the 2022 PGF Loan. Additionally, the repayment of principal and accrued interest of the 2022 PGF Loan may be accelerated upon the occurrence of certain events, including events of default and receipt of insurance proceeds related to the operating assets of MLNL.Upon the occurrence of a qualifying equity financing round of the Company, the Ministry retains the right to convert the unpaid principal amount, together with unpaid interest thereon, into shares of common stock of the Company at a 15.0% discount to the issuance price of the Company’s equity in the financing round.

The Company did not incur any debt issuance costs in connection with the 2022 PGF Agreement. The Company accounts for the 2022 PGF Loan using the effective interest method. The effective interest rate of the 2022 PGF Loan is 7.5%.

As of December 31, 2025 and 2024, the fair value of the PGF Loan was $640 and $677, respectively. The fair value of the 2022 PGF Loan was estimated using Level 3 inputs in a discounted cash flow model.

2024 LSA

On February 22, 2024, the Company entered into a loan and security agreement (“2024 LSA”) with the lender thereto, which provided for delayed draw term loan commitments in an aggregate principal amount of $35,000. The aggregate commitments under the 2024 LSA included (a) a delayed draw term loan facility in an aggregate principal amount of $12,500 (the “2024 LSA First Tranche”), (b) a delayed draw term loan tranche in an aggregate principal amount of $12,500 (the “2024 LSA Second Tranche”), and (c) a delayed draw term loan facility tranche in an aggregate principal amount of $10,000 (the “2024 LSA Third Tranche”). As a condition precedent to issue term loans under the 2024 LSA Third Tranche, the Company achieved certain operational milestones as defined in the 2024 LSA. In connection with the entrance into the 2024 LSA, the Company issued the lender thereto warrants to purchase the Company’s redeemable convertible preferred stock (refer to Note 9. Warrants for further information).

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

On May 28, 2024, August 30, 2024, and October 23, 2024, the Company entered into term loans under the 2024 LSA First, Second, and Third Tranches, in aggregate principal amounts of $12,500, $12,500, and $10,000, respectively (collectively, the “2024 LSA Loans”). The 2024 LSA Loans accrue interest at a fixed rate per annum, compounded monthly, equal to the Prime Rate as of the issuance date thereof plus 5.0%. In addition to the fixed cash interest, the outstanding principal balance of the 2024 LSA Loans accrues interest paid in-kind at 1.5% per annum, compounded monthly. Inclusive of both cash interest and interest paid in-kind, the total nominal interest rate of the 2024 LSA Loans issued under the 2024 LSA First, Second, and Third Tranches was 15%.

Prior to the 2024 LSA Amendment (as defined below), the Company was required to make interest-only payments at the cash interest rate through February 2025, and subsequently, the aggregate principal amount of the 2024 LSA Loans would be amortized and paid down in equal monthly installments, together with cash interest thereon, over the following 24 months until final maturity on January 31, 2027. On the maturity date, all unpaid principal of 2024 LSA Loans, together with cash interest and all interest paid-in kind, was set to become due and payable.

In connection with the 2024 LSA, the Company recorded a debt discount of $622, related to the payment of lender fees and the issuance of preferred stock warrant liabilities which was amortized to interest expense over the life of the 2024 LSA Loans using the effective interest method. The effective interest rates of the 2024 LSA Loans for the First, Second, and Third Tranches was 14.5%, 14.7%, and 14.9%, respectively.

On July 1, 2025, the Company and the lender thereto entered into an amendment to the 2024 LSA (“2024 LSA Amendment”). Pursuant to the 2024 LSA Amendment, the maturity date of the 2024 LSA Loans was extended to June 1, 2027, with amortizing principal payments beginning on January 1, 2026 and continuing until the final maturity date. No other terms of the 2024 LSA Loans were modified pursuant to the 2024 LSA Amendment. In connection with the 2024 LSA Amendment and to induce the lender into making such amendment, the Company issued warrants to purchase the Company’s redeemable convertible preferred stock with a fair value of $759 (“2024 LSA Amendment Warrants,” refer to Note 9. Warrants).

The 2024 LSA Amendment was accounted for as an extinguishment under ASC 470-50, Modifications and Extinguishments, and accordingly, the Company recognized a loss on extinguishment of long-term debt of $2,157 which is comprised of the fair value of the 2024 LSA Amendment Warrants issued and the difference between the fair value of the amended 2024 LSA Loans and the existing carrying amount of the 2024 LSA Loans. In accordance with ASC 825 and following the 2024 LSA Amendment, the Company elected to account for the 2024 LSA Loans under the fair value option. The Company elected to record the 2024 LSA Loans under the fair value option to simplify the recordkeeping on an ongoing basis.

The Company has optional redemption rights of the 2024 LSA Loans, subject to an in-kind interest make whole premium plus a prepayment premium of 100% of future foregone cash interest payments, which reduces to 85% and 75% after December 31, 2025 and December 31, 2026, respectively. Additionally, the repayment of principal and accrued interest of the 2024 LSA Loans may be accelerated upon the occurrence of certain events, including events of default. The lender also retains the right to convert up to $5,000 of the outstanding loan balance into shares of the Company’s Series B Prime redeemable convertible preferred stock at any time through June 30, 2027 (the “2024 LSA Conversion Feature”).

Borrowings under the 2024 LSA are collateralized by substantially all of the Company’s assets and are subject to certain customary covenants, with which the Company was in compliance as of December 31, 2025.

Pre-PIPE Bridge

On July 2, 2025, the Company entered into a convertible note purchase agreement (“Pre-PIPE Bridge Agreement”) with the purchasers thereto, pursuant to which the Company may issue up to $23,445 in aggregate principal amount of unsecured convertible promissory notes (“Pre-PIPE Bridge Notes”). Additionally, pursuant to the Pre-PIPE Bridge Agreement, the Company issued common stock warrants (“Pre-PIPE Bridge Warrants”) to the purchasers thereto and, accordingly, the proceeds received in connection with each issuance were allocated between the Pre-PIPE Bridge Notes and Warrants (refer to Note 9. Warrants).

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The Company entered into a series of Pre-PIPE Bridge Notes in an aggregate principal amount of $23,445 between July and August 2025. The Company accounts for the Pre-PIPE Bridge Notes under the fair value option and, accordingly, all issuance costs incurred in connection with the entrance into the Pre-PIPE Bridge Agreement and the issuance of Pre-PIPE Bridge Notes thereunder were expensed as incurred. The purchase price received by the Company for the first closing of the Pre-PIPE Bridge approximated the aggregate fair value of the Pre-PIPE Bridge Notes and Warrants issued and, therefore, no gain or loss on issuance was recognized. The purchase price received by the Company for the second closing of the Pre-PIPE Bridge was below the aggregate fair value of the Pre-PIPE Bridge Notes and Warrants issued and, therefore, the Company recognized a loss of $585 as a component of loss on issuance of financial instruments in the consolidated statements of operations. The Company elected to record the Pre-PIPE Bridge Notes under the fair value option based on the short-term maturity of the Pre-PIPE Bridge Notes.

Prior to the Pre-PIPE Bridge Amendment (as defined below), the Pre-PIPE Bridge Notes accrued interest at a fixed rate of 12.0% per annum, compounded annually. All principal and accrued interest thereon was set to become due and payable upon demand by the purchasers thereof on or after July 2, 2026, unless earlier converted or repaid.

On August 13, 2025, and in connection with the Pre-Funded PIPE transaction (as defined below), the Company and the holders of the Pre-PIPE Bridge Notes amended the terms of the Pre-PIPE Bridge Notes to more closely align with those of the Pre-Funded PIPE Notes (“Pre-PIPE Bridge Amendment”). As the Pre-PIPE Bridge Notes are accounted for under the fair value option, all amendment costs were expensed as incurred.

Following the Pre-PIPE Bridge Amendment, the Pre-PIPE Bridge Notes accrue interest at 12.0% per annum, compounded semi-annually, until the principal amount of Pre-PIPE Bridge Notes and all interest accrued thereon is repaid or converted. The Pre-PIPE Bridge Amendment did not change the maturity date of the Pre-PIPE Bridge Notes. At the maturity date thereof, the principal amount of Pre-PIPE Bridge Notes and all accrued unpaid interest thereon shall be due and payable on demand or converted, at the holders’ discretion, into a new senior series of the Company’s redeemable convertible preferred stock at a conversion price per share of $23.3634, subject to certain customary adjustments.

Pursuant to the Pre-PIPE Bridge Amendment, on the day prior to the closing of the Merger, the unpaid principal amount of Pre-PIPE Bridge Notes, together with accrued unpaid interest thereon, shall automatically convert into shares of 12.0% Series A cumulative convertible preferred stock of the SPAC (“PubCo Series A”) at a conversion price of $10.20, which represents a 15% discount to the original issue price of such PubCo Series A shares.

In the event that the BCA is terminated without the Merger having closed, and the Company effectuates a Qualified Financing (as defined in the Pre-PIPE Bridge Amendment) prior to repayment or conversion of the Pre-PIPE Bridge Notes, the unpaid principal amount of Pre-PIPE Bridge Notes, together with accrued unpaid interest thereon, shall automatically convert into shares of capital stock of the Company sold in such Qualified Financing at a conversion price equal to 85% of the lowest price paid in cash by the purchasers thereof in the Qualified Financing.

In the event that the BCA is terminated without the Merger having closed, and the Company effectuates a Change of Control (as defined in the Pre-PIPE Bridge Amendment), the unpaid principal amount of Pre-PIPE Bridge Notes, together with accrued unpaid interest thereon, shall automatically convert into shares of common stock of the Company immediately prior to the Change of Control. As an alternative to conversion into common stock, the Company retains the option to either (i) deem the outstanding Pre-PIPE Bridge Notes as converted, entitling the holders thereof to receive the consideration it would have otherwise received as a common stockholder in the Change of Control or (ii) redeem the Pre-PIPE Bridge Notes in an amount equal to two times the outstanding principal amount thereof, plus accrued unpaid interest thereon.

The Company does not retain any optional redemption rights with respect to the Pre-PIPE Bridge Notes. The Pre-PIPE Bridge Notes may be accelerated upon the occurrence of certain events, including events of default. The Pre-PIPE Bridge Notes are subordinated to the Company’s senior debt obligations under the 2024 LSA and are subject to customary covenants, with which the Company was in compliance as of December 31, 2025.

Pre-Funded PIPE

On August 13, 2025, the Company entered into a securities purchase agreement (“Pre-Funded PIPE Agreement”) with the purchasers thereto, pursuant to which the Company agreed to sell, and the purchasers agreed to purchase, unsecured convertible promissory notes and common stock warrants (refer to Note 9. Warrants).

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Pursuant to the Pre-Funded PIPE Agreement, the Company issued $64,706 in aggregate principal amount of unsecured convertible promissory notes (“Pre-Funded PIPE Notes”) and common stock warrants (“Pre-Funded PIPE Warrants”) for total proceeds of $55,000 which were allocated between the Pre-Funded PIPE Notes and Warrants. The Company accounts for the Pre-Funded PIPE Notes under the fair value option and, accordingly, all issuance costs incurred in connection with the entrance into the Pre-Funded PIPE Agreement and the issuance of Pre-Funded PIPE Notes thereunder were expensed as incurred. The purchase price received by the Company approximated the aggregate fair value of the Pre-Funded PIPE Notes and Warrants issued and, therefore, no gain or loss on issuance was recognized. The Company elected to record the Pre-Funded PIPE Notes under the fair value option based on the short-term maturity of the Pre-Funded PIPE Notes.

Additionally, the Pre-Funded PIPE Agreement contains a provision that provides a purchaser thereunder, who is an affiliate of the SPAC, the right (“Purchaser Right”) to require the Company to issue and sell up to approximately $29,412 in aggregate principal amount of additional Pre-Funded PIPE Notes and accompanying Pre-Funded PIPE Warrants (“Purchaser Right Notes”). The Purchaser Right was exercisable at any time prior to December 31, 2025 so long as the BCA is not terminated and expired unexercised on December 31, 2025. The Purchaser Right was a written call option accounted for initially and subsequently at fair value, with changes in fair value recognized in the consolidated statements of operations. The Purchaser Right had a de minimis fair value as of the execution of the Pre-Funded PIPE Agreement and had a de minimis fair value at its expiration on December 31, 2025.

On November 17, 2025, the Pre-Funded PIPE Agreement was amended to permit the issuance of incremental Pre-Funded PIPE Notes and Warrants under the original terms of the Pre-Funded PIPE Agreement (“Pre-Funded PIPE Amendment”). No terms of the issued and outstanding Pre-Funded PIPE Notes and Warrants were modified in connection with the Pre-Funded PIPE Amendment. On November 18, 2025 and pursuant to the Pre-Funded PIPE Amendment, the Company issued incremental Pre-Funded PIPE Notes to an existing holder of Pre-Funded PIPE securities in an aggregate principal amount of $10,893, together with accompanying Pre-Funded PIPE Warrants, for total proceeds of $9,259 which were allocated between the Pre-Funded PIPE Notes and Warrants. The Company accounts for the incremental Pre-Funded PIPE Notes under the fair value option and, accordingly, all amendment costs were expensed as incurred. The purchase price received by the Company approximated the aggregate fair value of the Pre-Funded PIPE Notes and Warrants issued and, therefore, no gain or loss on issuance was recognized. The Company elected to record the incremental Pre-Funded PIPE Notes under the fair value option based on the short-term maturity of the Pre-Funded PIPE Notes.

The Pre-Funded PIPE Notes accrue interest at a fixed rate of 12.0% per annum, compounded semi-annually, until the principal amount of Pre-Funded PIPE Notes and all interest accrued thereon is repaid or converted. The Pre-Funded PIPE Notes are scheduled to mature on August 13, 2026. At the maturity date thereof, the principal amount of Pre-Funded PIPE Notes and all accrued unpaid interest thereon shall be due and payable on demand or converted, at the holders’ discretion, into a new senior series of the Company’s redeemable convertible preferred stock at a conversion price per share of $27.4863.

On the day prior to the closing of the Merger, the unpaid principal amount of Pre-Funded PIPE Notes, together with accrued unpaid interest thereon, shall automatically convert into shares of PubCo Series A preferred stock at a conversion price of $12.00, which represents the original issue price of such PubCo Series A shares.

In the event that the BCA is terminated without the Merger having closed, and the Company effectuates a Qualified Financing (as defined in the Pre-Funded PIPE Agreement) prior to repayment or conversion of the Pre-Funded PIPE Notes, the unpaid principal amount of Pre-Funded PIPE Notes, together with accrued unpaid interest thereon, shall, at the holders’ option, convert into shares of capital stock of the Company sold in such Qualified Financing at a conversion price equal to the lowest price paid in cash by the purchasers thereof in the Qualified Financing.

In the event that the BCA is terminated without the Merger having closed, and the Company effectuates a Change of Control (as defined in the Pre-Funded PIPE Agreement), the unpaid principal amount of Pre-Funded PIPE Notes, together with accrued unpaid interest thereon, shall automatically convert into shares of common stock of the Company immediately prior to the Change of Control. As an alternative to conversion into common stock, the Company retains the option to either (i) deem the outstanding Pre-Funded PIPE Notes as converted, entitling the holders thereof to receive the consideration it would have otherwise received as a common stockholder in the Change of Control or (ii) redeem the Pre-Funded PIPE Notes in an amount equal to two times the outstanding principal amount thereof, plus accrued unpaid interest thereon.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The Company does not retain any optional redemption rights with respect to the Pre-Funded PIPE Notes. The Pre-Funded PIPE Notes may be accelerated upon the occurrence of certain events, including events of default. The Pre-Funded PIPE Notes are subordinated to the Company’s senior debt obligations under the 2024 LSA and are subject to customary covenants, with which the Company was in compliance as of December 31, 2025.

The following table summarizes the Company’s outstanding debt as of December 31, 2025:

	As of December 31,
	2025		2024
2021 LSA Loan	$	—	$	500
2022 PGF Loan		672		654
2024 LSA Loans		31,383		35,192
Total long-term debt		32,055		36,346
Less current maturities of long-term debt		19,271		14,157
Less unamortized deferred financing costs		—		516
Total long-term debt, net	$	12,784	$	21,673

Maturities of debt outstanding, in principal amounts, as of December 31, 2025 are as follows:

Year Ended December 31,	Amount
2026	$	19,271
2027		10,708
2028		96
2029		96
2030		96
Thereafter		192
Total	$	30,459

9. Warrants

The warrants issued in connection with the 2019 loan and security agreement (“LSA”), 2021 LSA, and 2024 LSA (the “2019 LSA Warrants”, “2021 LSA Warrants”, and “2024 LSA Warrants,” respectively) were determined to meet the criteria for liability classification pursuant to ASC 480 as the underlying warrant shares, the Company’s redeemable convertible preferred stock, are redeemable outside the control of the Company and are accordingly classified as mezzanine equity (refer to Note 10. Redeemable Convertible Preferred Stock and Stockholders’ Deficit for further information). The 2019 LSA Warrants, 2021 LSA Warrants, and 2024 LSA Warrants are therefore required to be initially and subsequently measured at fair value with changes in fair value presented in the consolidated statements of operations.

The 2024 LSA Amendment Warrants were determined to meet the criteria for liability classification pursuant to ASC 480 as the terms thereof permit the holder to exchange the 2024 LSA Amendment Warrants for instruments issued in any bridge financing occurring after the issuance date thereof, which includes the issuance of convertible debt instruments. The 2024 LSA Amendment Warrants are therefore required to be initially and subsequently measured at fair value with changes in fair value presented in the consolidated statements of operations.

The Pre-PIPE Bridge Warrants and Pre-Funded PIPE Warrants were determined to meet the criteria for liability classification pursuant to ASC 815 because certain settlement adjustments prevent them from meeting the fixed-for-fixed equity classification criteria. The Pre-PIPE Bridge Warrants and Pre-Funded PIPE Warrants are therefore required to be initially and subsequently measured at fair value with changes in fair value presented in the consolidated statements of operations.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

In August 2025 and in accordance with the terms thereof, the holder of 2024 LSA Warrants elected to exchange all of the 2024 LSA Warrants with a fair value of $1,769 for Pre-PIPE Bridge Notes and accompanying Pre-PIPE Bridge Warrants with fair values of $1,131 and $3,957, respectively. The loss of $3,320 was recognized in loss on exchange of warrant liabilities in the consolidated statements of operations.

During the years ended December 31, 2025 and 2024, the Company recorded a loss on the change in fair value of warrant liabilities of $2,357 and $265, respectively. Refer to Note 4. Fair Value Measurements for further information.

As of December 31, 2025, the outstanding warrants to purchase the Company’s redeemable convertible preferred stock and common stock were as follows:

	Shares Underlying Warrants		Class of Underlying Warrant Shares	Exercise Price Per Share		Expiration Date
2019 LSA Warrants⁽¹⁾		144,926	Series Seed Prime or Series A Prime	$	1.035		January 31, 2030
2021 LSA Warrants		81,188	Series B Prime	$	4.927		March 31, 2037
2024 LSA Amendment Warrants⁽²⁾		—	Series Next or Series Subsequent	$	—		November 1, 2039
Pre-PIPE Bridge Warrants⁽³⁾		3,063,248	Common Stock	$	12.000		—
Pre-Funded PIPE Warrants⁽³⁾		6,549,931	Common Stock	$	12.000		—

(1)

The number of shares underlying the 2019 LSA Warrants assumes that the holders choose to exercise their warrants into shares of Series Seed Prime redeemable convertible preferred stock, as this exercise scenario is most beneficial to the warrant holders.

(2)

The number of shares underlying the 2024 LSA Amendment Warrants and their exercise price per share cannot currently be determined because the warrants are not exercisable and remain contingent upon the pricing of the next round of preferred stock financing or any subsequent round.

(3)

The Pre-PIPE Bridge and Pre-Funded PIPE Warrants only become exercisable upon the termination of the BCA and expire on the fifth anniversary of the termination of the BCA.

All warrants issued by the Company may be exercised, at the holders’ option, via the delivery of cash or on a cashless basis.

10. Redeemable Convertible Preferred Stock and Stockholders’ Deficit

Common Stock

As of December 31, 2025, the Company has 44,705,861 shares of $0.0001 par value common stock authorized. The voting, dividend and liquidation rights of the common stockholders are subject to, and qualified by, the rights, powers and preferences of the preferred stockholders and as designated by resolution of the Board of Directors. The holders of the common stock are entitled to one vote for each share of common stock held.

As of December 31, 2025, 39,399,611 shares of common stock are reserved for the conversion of preferred stock and exercise of stock options and warrants.

Redeemable Convertible Preferred Stock

On July 2, 2025, and in connection with the Pre-PIPE Bridge Agreement, the Company entered into exchange agreements (“Exchange Agreements”) with the holders of the redeemable convertible preferred stock to effectuate a recapitalization of the Series Seed, Series A, Series A-1, Series B, and Series B-1 redeemable convertible preferred stock (collectively, “Legacy Preferred Stock”) into shares of Series Seed Prime, Series A Prime, Series A-1 Prime, Series B Prime, and Series B-1 Prime redeemable convertible preferred stock, respectively (collectively, “Prime Preferred Stock”).

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

To effectuate the conversions contemplated by the Exchange Agreements, the Company amended and restated its Certificate of Incorporation to add a contingent mandatory conversion feature to its redeemable convertible preferred stock (“Special Mandatory Conversion”) whereby if a holder of redeemable convertible preferred stock failed to purchase a minimum investment amount of Pre-PIPE Bridge Notes and Warrants, such redeemable convertible preferred stock held by the non-participating investor would automatically convert, on a ten-to-one basis, into shares of the Company’s common stock; otherwise, if the holder of redeemable convertible preferred stock satisfied its applicable minimum investment threshold contemplated by the Pre-PIPE Bridge Agreement, shares of redeemable convertible preferred stock held by such holder would be exchanged for shares of Prime Preferred Stock, as described below.

All holders of Legacy Preferred Stock participating in the Pre-PIPE Bridge satisfied the minimum investment requirements under the Pre-PIPE Bridge Agreement and, therefore, pursuant to the Exchange Agreements, every ten shares of Legacy Preferred Stock held by the holders of Legacy Preferred Stock were converted into one share of the Company’s common stock and then converted on a one-to-ten basis into corresponding shares of Prime Preferred Stock. The exchange of Legacy Preferred Stock for Prime Preferred Stock was accounted for as an extinguishment, resulting in a deemed dividend of $345,717 being recognized.

During the year ended December 31, 2025, 541,846 shares of Series A Prime redeemable convertible preferred stock were converted pursuant to the contractual terms thereof into 541,846 shares of common stock. Immediately following the conversion, the holders thereof returned the 541,846 shares of common stock to the Company for no consideration.

Other than the Special Mandatory Conversion feature, the rights and preferences of the Legacy Preferred Stock are substantially similar to those of the Prime Preferred Stock.

As of December 31, 2025, the Company has authorized the following shares of $0.0001 par value redeemable convertible preferred stock:

	Shares
Series Seed redeemable convertible preferred stock		3,357,483
Series A redeemable convertible preferred stock		8,034,960
Series A-1 redeemable convertible preferred stock		928,217
Series B redeemable convertible preferred stock		6,420,288
Series B-1 redeemable convertible preferred stock		1,028,819
Total redeemable convertible preferred stock		19,769,767

The redeemable convertible preferred stock has the following rights and preferences:

Voting Rights

On all matters subject to the authorization of the holders of common stock, the holders of Preferred Stock are entitled to vote together with holders of common stock on an as-converted basis.

Dividends

The holders of redeemable convertible preferred stock are entitled to receive, on a pari passu basis and prior and in preference to holders of the Company’s common stock, an annual dividend in the amount of 8% of the applicable original issuance price. Such dividends are payable only if and when declared and are noncumulative. Holders of redeemable convertible preferred stock shall also be entitled to receive participating dividends, if and when declared on the Company’s common stock, on an as-converted basis. No dividends have been declared as of December 31, 2025.

Liquidation

In the event of liquidation, dissolution or winding up of the Company or upon the occurrence of a Deemed Liquidation Event (as defined in the Company’s Amended and Restated Certificate of Incorporation), the holders of the redeemable convertible preferred stock shall be entitled to receive, in preference to all common stockholders, an amount equal to the greater of (i) the applicable original issue price plus any declared but unpaid dividends thereon and (ii) the amount that would have been payable to the holder had all shares of redeemable convertible preferred stock been converted into common stock prior to such event. After payment has been made to the holders of the redeemable convertible preferred stock, the remaining assets available for distribution shall be distributed solely among the common stockholders on a pro rata basis based upon the number of shares held by each common stockholder.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Conversion

Each share of redeemable convertible preferred stock is convertible, at the holder’s option or mandatorily upon the occurrence of certain events (including qualifying public offerings, direct listings, and De-SPAC transactions, and upon the request of the majority holders of the redeemable convertible preferred stock voting together on an as-converted basis) into a fixed number of common stock at a conversion rate equal to (i) the applicable original issue price divided by (ii) the conversion price then in effect. The conversion price is subject to customary antidilution and down-round adjustments.

Redemption

The redeemable convertible preferred stock is not redeemable except upon the occurrence of the liquidation, dissolution or winding up of the Company or upon the occurrence of a Deemed Liquidation Event.

11. Net Loss Per Share

The Company uses the two-class method to calculate basic and diluted net loss per share. Unvested restricted stock awards are considered participating securities because they entitle holders to non-forfeitable rights to dividends during the vesting term. Under the two-class method, earnings of the Company are allocated between common stockholders and these participating securities based on the weighted-average number of shares of common stock and participating securities outstanding during the relevant period. The participating securities do not have a contractual obligation to share in the losses of the Company. Therefore, net loss is fully attributable to the Company’s common stockholders for the years ended December 31, 2025 and 2024.

Basic net loss per share is computed by dividing net loss attributable to the Company’s common stockholders by the weighted-average number of shares outstanding during the period. As of periods beginning after March 31, 2024, the Company no longer had participating securities other than common stock, as all outstanding restricted stock had fully vested.

Diluted net loss per share is computed by dividing net loss attributable to the Company’s common stockholders by the weighted-average number of shares after adjusting for potential dilution related to the conversion of all dilutive securities into common stock.

The numerators and denominators of the basic and diluted net loss computations for the Company’s common stock were calculated as follows:

	Year Ended December 31,
	2025			2024
Numerator:
Net loss	$	(74,778	)	$	(55,253	)
Deemed dividend on exchange of redeemable convertible preferred stock		(345,717	)		—
Net loss attributable to common stockholders	$	(420,495	)	$	(55,253	)

Denominator:
Weighted average shares outstanding, basic and diluted		5,211,618			5,118,223

Net loss per share, basic and diluted	$	(80.68	)	$	(10.80	)

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share for the periods presented due to their anti-dilutive effect:

	Year Ended December 31,
	2025		2024
Redeemable convertible preferred stock		17,154,902		17,696,748
Stock options		2,094,080		2,904,261
Common stock warrants		8,119		7,104
2019 LSA Warrants		144,296		144,926
2021 LSA Warrants		81,188		81,188
2024 LSA Warrants		—		224,710
2024 LSA Conversion Feature		214,010		214,010
Pre-PIPE Bridge Notes		1,127,531		—
Pre-Funded PIPE Notes		3,077,192		—
Total		23,901,318		21,272,947

12. Stock-Based Compensation

On October 24, 2018, the Board of Directors adopted the Plan. Under the terms of the Plan, incentive stock options (“ISOs”) may be granted to employees of the Company and nonqualified stock options or restricted stock awards may be granted to directors, consultants, employees and officers of the Company.

Restricted Stock

On October 10, 2018, the Company entered into a Restricted Stock Purchase Agreement (the “Restricted Stock Agreement”) with its CEO, pursuant to which the Company granted its CEO the right to purchase 5,000,000 shares of $0.0001 par value restricted stock at a purchase price of $0.001 per share. As part of the Restricted Stock Agreement, the CEO also agreed to assign certain proprietary information and inventions to the Company. The restricted stock has all of the rights of Common Stock, including voting and dividend rights.

Pursuant to the Restricted Stock Agreement, 25% of the shares vested on January 1, 2019. Thereafter, 104,166 shares of restricted stock vested each month, such that the restricted stock became fully vested on January 1, 2022. The monthly vesting of restricted stock was contingent upon the CEO’s continued employment, consulting, advisor, director, or officer relationship with the Company at that date.

On March 10, 2022, in connection with the issuance of the Series B redeemable convertible preferred stock, the Company entered into Amendment No. 1 to the Restricted Stock Agreement (“Amendment No. 1”) to amend the vesting schedule for the restricted stock. Pursuant to Amendment No. 1, 3,350,000 shares of restricted stock were vested as of March 10, 2022, and thereafter, 68,750 shares of restricted stock vested each month. Amendment No. 1 did not modify the service requirements for the vesting of restricted stock. As of December 31, 2025 and December 31, 2024 there was no restricted stock outstanding, as the restricted stock fully vested during the year ended December 31, 2024.

During the year ended December 31, 2024, the Company did not recognize stock-based compensation expense related to the restricted stock, as the expense measured at the grant date was fully recognized over the original vesting period and there was no incremental fair value as a result of Amendment No. 1.

Stock Options

The exercise price of ISOs cannot be less than the fair value of the Company’s common stock on the date of grant or less than 110% of the fair value in the case of employees holding 10% or more of the voting stock of the Company. The options vest over a period determined by the Board of Directors, generally four years, and expire not more than 10 years from the date of grant.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

As of December 31, 2025, the Company’s authorized common stock includes 3,348,975 shares of common stock reserved for the issuance of options under the Plan, of which 948,645 shares are available for future grants.

Stock option activity under the Plan during the year ended December 31, 2025 was as follows:

	Number of Options			Weighted Average Exercise Price (Per Share)		Weighted- Average Remaining Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2024		2,904,261		$	5.19			$	7,083
Granted		227,193			12.88
Exercised		(136,438	)		2.86				2,196
Expired		(489,169	)		5.12
Forfeited		(411,767	)		7.50
Outstanding at December 31, 2025		2,094,080			5.73		6		34,460
Exercisable at December 31, 2025		1,647,121		$	4.72		5	$	28,779

The weighted-average grant-date fair value of options granted during the years ended December 31, 2025 and 2024 amounted to $6.17 and $3.77, respectively.

During the years ended December 31, 2025 and 2024, option holders of the Company exercised 136,438 and 80,845 common stock options, respectively, in exchange for cash proceeds of $391 and $66, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2025 and 2024 amounted to $2,196 and $537, respectively.

During the years ended December 31, 2025 and 2024, stock-based compensation expense amounted to approximately $1,695 and $1,739, respectively, which is included in the consolidated statements of operations.

As of December 31, 2025, there is approximately $2,006 of unrecognized compensation expense related to unvested stock-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.15 years.

The Company uses the Black-Scholes option-pricing model to value option grants on the date of grant and to determine the related compensation expense. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimations. The Company bases its expected volatility on the volatilities of certain publicly-traded peer companies. The Company is a privately-held company and therefore lacks company-specific historical and implied volatility information. The Company intends to continue to consistently use the same group of publicly traded peer companies to determine volatility in the future until such time that sufficient information regarding the volatility of the Company’s share price becomes available or that the selected companies are no longer suitable for this purpose. The risk-free interest rate used for each grant is equal to the U.S. Treasury yield curve in effect at the time of grant for instruments with a similar expected life.

The expected term of options granted is determined based on the average of the vesting term and the contractual lives of all options awarded. The expected dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

In determining the exercise prices for options granted, the Company has considered the fair value of the common stock as of the measurement date. The fair value of the common stock has been determined by management with consideration to a third-party valuation, which contemplates a broad range of factors, including the illiquid nature of the investment in the Company’s common stock, the Company’s historical financial performance and financial position, the Company’s future prospects and opportunity for liquidity events and recent sale and offer prices of common and redeemable convertible preferred stock, if any, in private transactions negotiated at arm’s length.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The following table provides the assumptions used in determining the fair value of the stock-based awards:

	Year Ended December 31,
	2025		2024
Risk-free interest rate	3.69%-4.06%		3.59%-4.65%
Expected dividend yield	—	%	—	%
Expected volatility	41.76%-47.48%		42.12%-47.06%
Expected life in years	5.12-6.06		5.00-6.06
Fair value of Common Stock	$3.60-$11.05		$7.41-$7.63

Expense related to stock-based compensation is recognized over the vesting period of the options. The Company has elected to recognize forfeitures as they occur.

Total stock-based compensation expense as presented within the consolidated statements of operations was as follows:

	Year Ended December 31,
	2025		2024
Cost of revenue	$	364	$	61
Research and development		1,068		1,315
General and administrative		250		325
Selling and marketing		13		38
Total	$	1,695	$	1,739

13. Income Taxes

Loss before provision for income taxes consisted of the following:

	Year Ended December 31,
	2025			2024
United States	$	(74,882	)	$	(56,130	)
Foreign		154			1,228
Loss before provision for income taxes	$	(74,728	)	$	(54,902	)

Provision for income taxes consisted of the following:

	Year Ended December 31,
	2025		2024
Current:
Foreign	$	48	$	332
Federal		—		—
State		2		19
Total current provision		50		351
Deferred:
Foreign		—		—
Federal		—		—
State		—		—
Total deferred provision		—		—
Total provision for income taxes	$	50	$	351

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

A reconciliation of the federal statutory income tax rate to the Company’s effective tax rate for the year ended December 31, 2025, after the adoption of ASU 2023-09 on a prospective basis, is as follows:

	Year Ended December 31, 2025
	Amount			Percent
U.S. federal statutory income tax (benefit) at 21%	$	(15,693	)		21.00	%
Domestic federal:
Tax credits
Research and development credits		(1,269	)		1.70	%
Nontaxable or nondeductible items
Other		1,610			(2.16	)%
Changes in valuation allowance		15,676			(20.98	)%
Other reconciling items		(291	)		0.39	%
Domestic state:
State income taxes, net of federal effect		2			—	%
Foreign tax effects:
Other		15			(0.02	)%
Income tax provision	$	50			(0.07	)%

Massachusetts and California make up the majority (greater than 50 percent) of the state taxes, net of federal benefit category.

A reconciliation of the federal statutory income tax rate to the Company’s effective tax rate for the year ended December 31, 2024, prior to the adoption of ASU 2023-09, is as follows:

	Year Ended December 31,
	2024
U.S. federal statutory income tax rate		21.00	%
Effect of:
State and local income taxes		(0.03	)%
Permanent differences		(0.84	)%
Valuation allowance		(23.54	)%
Federal NOL		(0.33	)%
Tax credits		2.84	%
Other		0.26	%
Effective tax rate		(0.64	)%

For the year ended December 31, 2025, the Company paid income taxes, net of refunds received, as follows:

	Year Ended December 31,
	2025
Income taxes paid, net of refunds
Foreign	$	48
U.S. state and local		2
Total	$	50

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Significant components of the Company’s deferred tax liabilities and assets were as follows:

	As of December 31,
	2025			2024
Deferred tax assets:
Net operating loss carryforwards	$	28,684		$	17,160
Capitalized research and development expenses		18,258			11,358
Credit carryforwards		5,415			3,933
Other accrued liabilities		49			44
Contract loss provision		1,144			1,165
Fair value temporary differences		2,499			—
Operating lease liabilities		171			222
Stock-based compensation		621			320
Intangible assets		8			7
Unrealized foreign exchange gains and losses		333			186
Issuance of financial instruments		160			—
Contribution carryforward		32			22
Total deferred tax assets		57,374			34,417

Deferred tax liabilities:
Right-of-use assets		(169	)		(217	)
Depreciation		(237	)		(194	)
Total deferred tax liabilities		(406	)		(411	)
Net deferred tax assets, before valuation allowance		56,968			34,006
Less: deferred tax asset valuation allowance		(56,968	)		(34,006	)
Net deferred taxes	$	—		$	—

The valuation allowance totaled $56,968 and $34,006 for the years ended December 31, 2025 and 2024, respectively, because the future realization of such benefits is uncertain. The valuation allowance increased by $22,962 and $15,626 during the years ended December 31, 2025 and 2024, respectively, primarily due to a full valuation allowance against deferred tax assets associated with net operating loss carryforwards, capitalized research and develop costs, and tax credit carryforwards. All movement in the valuation allowance has been captured in the consolidated statements of operations.

As of December 31, 2025, the Company has federal and state net operating loss carryforwards totaling approximately $115,953 and $72,501, respectively, which are available to reduce the Company’s future taxes. The federal net operating loss carryforwards can be carried forward indefinitely. The state net operating loss carryforwards will expire at various dates beginning in 2038 through 2045 if not utilized.

Additionally, as of December 31, 2025, the Company has federal and state research and development credit carryforwards of $4,486 and $929, respectively. The federal and state research and development credits will begin to expire in the years 2034 through 2045 if not utilized. In the event of any significant changes in ownership of the Company, utilization of the net operating losses and research and development credit carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986 and similar state provisions.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

As of December 31, 2025 and 2024, the Company has not recognized any liabilities for uncertain tax positions in its consolidated financial statements. The Company does not expect any material change in uncertain tax benefits within the next 12 months. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates.

In the normal course of business, the Company is subject to examination by federal and state authorities, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from 2022 to the present. The resolution of tax matters is not expected to have a material effect on the Company’s consolidated financial statements.

On July 4, 2025, bill H.R. 1, commonly referred to as the “One Big Beautiful Bill Act” or “OBBBA,” was signed into law, with certain provisions effective in 2025 and others in 2026. The OBBBA significantly revises U.S. corporate income tax laws by, among other things, restoring the option for immediate expense recognition for U.S.-based research and development expenditures and making permanent the ability to claim first-year bonus depreciation on qualified property. The Company was not materially impacted by OBBBA tax law changes of taxation of foreign operations. Pursuant to ASC 740, changes in tax rates and tax law are required to be recognized in the period in which the legislation is enacted. The Company evaluated the impact of this Act on its annual consolidated financial statements and related disclosures and concluded that the Act does not have a material impact on its consolidated financial statements as of and for the year ended December 31, 2025, as any impact was offset by a valuation allowance.

14. Commitments, Contingencies, and Indemnification

Liabilities for loss contingencies arising from claims, disputes, legal proceedings, fines and penalties, and other sources are recorded when it is probable that a liability has been or will be incurred and the amount of the liability can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Recoveries of such legal costs from insurance policies are recorded as an offset to legal expenses in the period they are received.

In the ordinary course of business, the Company enters into various agreements containing standard indemnification provisions. The Company’s indemnification obligations under such provisions are typically in effect from the date of execution of the applicable agreement through the end of the applicable statute of limitations. The aggregate maximum potential future liability of the Company under such indemnification provisions is uncertain. As of December 31, 2025 and 2024, no amounts have been accrued related to such indemnification provisions.

15. Segment and Geographic Information

The Company operates as a single operating and reportable segment. The CODM uses consolidated net loss to evaluate performance, allocate resources, set incentive compensation targets, and plan for future periods. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The following table presents the significant segment expenses, which were regularly provided to the CODM:

	Year Ended December 31,
	2025			2024
Revenue	$	7,551		$	1,229
Significant segment expenses:
Personnel		(29,006	)		(26,554	)
Travel and entertainment		(2,551	)		(2,408	)
Consulting and professional services		(21,798	)		(12,041	)
Aircraft expense		(2,397	)		(1,181	)
Software		(2,706	)		(261	)
Facilities		(1,560	)		(1,482	)
Other expenses		(2,913	)		(4,695	)
Depreciation		(1,582	)		(1,466	)
Contract loss provision		(1,451	)		(6,347	)
Benefit from contract loss provision		2,444			1,181
Benefit from research and development agreement		450			—
Total significant segment expenses		(63,070	)		(55,254	)
Other segment expenses:
Interest income		1,443			2,005
Interest expense		(2,957	)		(2,420	)
Other expense		(159	)		(197	)
Change in fair value of warrant liabilities		(2,357	)		(265	)
Change in fair value of convertible promissory notes		(7,563	)		—
Loss on exchange of warrant liabilities		(3,320	)		—
Loss on issuance of financial instruments		(585	)		—
Loss on extinguishment of long-term debt		(2,157	)		—
Change in fair value of long-term debt		(1,554	)		—
Total other segment expenses		(19,209	)		(877	)
Loss before provision for income taxes		(74,728	)		(54,902	)
Provision for income taxes		50			351
Net loss	$	(74,778	)	$	(55,253	)

Property and equipment, net and operating lease right-of-use assets, net by geographic area were as follows:

	As of December 31,
	2025		2024
United States	$	4,541	$	6,231
New Zealand		3,546		3,706
Total	$	8,087	$	9,937

16. Defined Contribution Plan

The Company sponsors a defined contribution plan covering substantially all of its employees who meet certain eligibility requirements. The Company, at the discretion of the Board of Directors, may make contributions to the plan. During the years ended December 31, 2025 and 2024, the Company made contributions to the plan in the amounts of $212 and $180, respectively.

MERLIN LABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

17. Subsequent Events

The Company evaluated subsequent events through March 20, 2026, the date the consolidated financial statements were available to be issued. Other than as disclosed below, the Company is not aware of any subsequent events which would require recognition or disclosure in the consolidated financial statements.

On February 24, 2026, and in anticipation of the Closing (as defined below), the Company exercised its unilateral right to prepay the entire issued and outstanding principal amount of the 2022 PGF Loan of approximately NZD 1,157 at a redemption price of NZD 1,296 (approximately $774 USD). The redemption price includes the repayment of outstanding principal and accrued unpaid interest thereon (including accrued interest paid in-kind).

On March 16, 2026, the Merger was consummated pursuant to the terms of the BCA (refer to Note 1. Organization and Description of Business) (the “Closing”). Pursuant to the BCA and at the Closing, the Merger Sub merged with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of the Purchaser. Additionally, at the Closing, the Purchaser was renamed “Merlin, Inc.” (after the Closing, “New Merlin”).

Immediately prior to the effectiveness of the Merger, and pursuant to the terms of the BCA:

(1)

Each convertible security of the Company (other than the Pre-PIPE Bridge Notes and Pre-Funded PIPE Notes) automatically converted into full shares of preferred stock or common stock, as applicable, of the Company;

(2)

Each of the Company’s outstanding and unexercised preferred stock warrant liabilities were automatically exercised on a cashless basis;

(3)

After giving effect to the conversions described at (1) and (2) above, each issued and outstanding share of the Company’s redeemable convertible preferred stock automatically converted into shares of the Company’s common stock; and

(4)

Each of the Company’s outstanding and unexercised common stock warrants (other than the Pre-PIPE Bridge Warrants and Pre-Funded PIPE Warrants) were automatically exercised on a cashless basis.

At the effective time of the Merger, and pursuant to the terms of the BCA:

(1)

Each share of the Company’s common stock owned by it, Merger Sub, or the Purchaser was canceled without consideration exchanged therefor;

(2)

Each other issued and outstanding share of the Company’s common stock was canceled and converted into the right to receive shares of New Merlin common stock;

(3)

Each option to purchase equity securities of the Company was converted into an option to acquire New Merlin common stock;

(4)

Each Pre-PIPE Bridge Note and Pre-Funded PIPE Note was converted into shares of New Merlin 12.0% Series A Cumulative Convertible Preferred Stock, par value $0.0001 per share; and

(5)

Each Pre-PIPE Bridge Warrant and Pre-Funded PIPE Warrant was converted into a warrant to purchase New Merlin common stock.

In connection with the Closing, the Company exercised its unilateral right to voluntarily prepay the entire issued and outstanding principal amount of 2024 LSA Loans of approximately $25,225 at a redemption price of $28,333. The redemption price includes the repayment of outstanding principal, accrued unpaid interest thereon, cash and in-kind interest make-whole payments (refer to Note 8. Debt), and the lender’s direct and incremental legal costs incurred in connection with such prepayment.

Following the Closing, New Merlin remains as the publicly traded parent company and its common stock will continue to be listed on Nasdaq under the ticker symbol “MRLN.”

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS OF MERLIN LABS, INC.

Unless the context otherwise requires, all references in this section to “we”, “us”, “our”, “Merlin”, or the “Company” refer to Merlin Labs, Inc. and its subsidiaries prior to the consummation of the Business Combination and after the consummation of the Business Combination, Merlin, Inc. and its subsidiaries.

The following discussion and analysis of the financial condition and results of operations of Merlin includes information that Merlin’s management believes is relevant to an assessment and understanding of Merlin’s consolidated results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements for the years ended December 31, 2025 and 2024 together with the respective notes thereto, attached as Exhibit 99.1 to this Form 8-K. This discussion and analysis should also be read together with the unaudited pro forma financial information as of and for the year ended December 31, 2025 attached as Exhibit 99.3 to this Form 8-K. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs, involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. You should review the sections elsewhere in this Form 8-K titled “Cautionary Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements, and “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

Our vision is to be at the forefront of advancing autonomous flight technology and positioning ourself as the leading U.S.-based developer of autonomy solutions for fixed-wing aircraft. Our non-human pilot system, Merlin Pilot, integrates cutting-edge hardware and software to deliver a comprehensive autonomous flight solution that spans the entire flight process, from takeoff to touchdown. By operating with reduced crew or autonomously, we believe Merlin Pilot can significantly enhance flight efficiency, enabling more flights per day or optimized routes, thereby reducing operational costs. This translates to potential savings of millions of dollars per aircraft annually, offering substantial financial benefits to large fleet operators.

We believe that Merlin Pilot not only addresses the global pilot shortage but also enhances flight safety, offering a compelling economic model with diverse revenue streams, including hardware integration and recurring, high-margin software support. Our extensive portfolio of proprietary intellectual property combines artificial intelligence with traditional high-assurance flight controls, positioning us to capitalize on the growing trends of autonomous systems and next-generation aviation.

We are currently growing our team of engineers with deep expertise in autonomy and certified software for both military and civilian applications. We are a prime contractor on a $105 million Indefinite Delivery, Indefinite Quantity (“IDIQ”) contract and we have identified approximately $3.0 billion pipeline of opportunities, supporting robust growth in both military and civilian markets. Our mature certification program includes an issued certification basis and a certification-conformed system with approved military airworthiness plans, underscoring our commitment to delivering reliable and safe autonomous flight solutions.

The Merlin Pilot is an advanced automation system designed to enable full autonomous flight from takeoff to touchdown. It utilizes a comprehensive array of sensor technologies to assess the aircraft’s state and its surrounding environment, allowing it to navigate effectively and recommend trajectory adjustments as necessary.

Our go-to-market strategy is designed around mastering traditional aircraft markets and building a solid foundation of revenue and expertise. Our short-term focus is to sell primarily to the military sector, with a goal to transition into the civilian sector in the long-term once our technology and solutions have been widely adopted and deployed in the military sector.

We have been chosen as the sole prime contractor for a $105 million IDIQ contract to integrate autonomous capabilities into the C-130J for the U.S. Air Force, which is the most widely used military transport aircraft globally. This contract covers the initial adaptation of the platform and can be extended to both low-rate and full-rate production for all Air Force Special Operations Command (“USSOCOM”) fixed-wing aircraft.

We plan to deploy the first Merlin Pilot on either commercial or military aircraft within the next three years. We incurred net losses of $74,778 thousand and $55,253 thousand for the fiscal years ended December 31, 2025 and 2024, respectively. We expect to continue to generate losses over the next few years as we continue to invest in research and development, expand our facilities and expand the technical capabilities of our engineering function. We expect that our existing cash and cash equivalents, including the net proceeds from this Merger, will be sufficient to meet our capital expenditure and working capital requirements for a period of at least twelve months from the date of this prospectus/proxy statement.

Our Business Model

We intend to deploy a hybrid hardware installation and software integration business model whereby we expect to generate revenue from the sale and installation of Merlin Pilot to flight operators necessary for autonomous flight and from the fees associated with providing software support to such operators. We also expect to generate additional revenue from the sale of ancillary services related to operating a fleet of autonomous aircraft. Below is a summary of each of these revenue streams:

●

Merlin Pilot Sale and Installation Fees: The anticipated revenue stream from the sale and installation of Merlin Pilot includes licensing or technology fees for the installation and implementation of our technology on an aircraft. This type of revenue is incurred a single time and is non-recurring and varies based on the aircraft type. Over time, we expect to be able to scale our engineering and technical installation and implementation capabilities to reduce costs and increase our margins on this type of revenue.

●

Software Support Fees: The anticipated revenue stream from software support includes fees generated from providing ongoing technical and operational support to the Merlin Pilot. Under our business model, software license agreements typically include a lifetime right of use and do not provide for any support or maintenance to be provided by the Company for the term of the agreement. However, we will offer these services to our customers for additional fees, which we intend to invoice either monthly or annually, depending on the agreement reached with each customer. As such, revenue incurred from support and maintenance will be categorized separately from the revenue originally incurred in selling and implementing the Merlin Pilot on each aircraft.

●

Ancillary Fees: We also intend to offer ancillary services designed to meet the needs of our customers. In doing so, we intend to take advantage of the insights we’re able to generate from the deployment of our technology to generate additional income with minimal incremental cost. The ancillary services we currently intend to offer include software upgrades and support, which are designed to enhance the autopilot experience, enhanced customer assistance and trainings and data insights which can further optimize routes and individual aircraft performance. We will continue to analyze the possibility of offering additional services as we scale, and the pricing of such services will be dependent on their wide scale acceptability, regulatory approvals and the costs associated with offering such services.

While we expect to generate revenues from each of the three revenue streams discussed above, we do not expect to generate revenues from all three simultaneously until we’ve achieved scale in our business. Rather, our growth strategy is structured around a phased implementation approach to ensure efficient deployment and scalability of our business model:

Phase 1 — Adapt: During this phase, our engineers are tailoring the core Merlin Pilot system to specific platforms and mission profiles. This phase involves non-recurring engineering funding for each aircraft type with a scalable engineering process over time.

Phase 2 — Integrate: During this phase, the Merlin Pilot system will be integrated onto customer platforms. We may include the use of integration partners which allows us to scale our programs effectively.

Phase 3 — License: During this phase, we will offer “Autonomy as a Service” to our installed base of aircraft at a pre-negotiated annual rate, which includes software updates and ongoing support for the Merlin software.

Once we’ve achieved scale, we expect to generate concurrent revenue from all three of the revenue streams listed above as we deploy our technology across both military and civilian sectors, including both in the United States and globally.

Key Factors Affecting Our Performance

We believe that our future success and financial performance depend on a number of factors that present significant opportunities for our business, but also pose risks and challenges, including those discussed below and in the section of this prospectus entitled “Risk Factors.”

Our ability to commence and expand commercial operations

We are a development stage company with no commercial operations to date. As such, our business model is dependent on our commencing and expanding commercial operations. We currently anticipate initial customer deliveries within the next year pursuant to the IDIQ production contract to integrate autonomous capabilities into the C-130J for the U.S. Air Force. This, in turn, is dependent upon successfully testing and finalizing the Merlin Pilot for integration on the C-130J aircraft. Our team of engineers, developers and other staff is highly motivated and committed to accomplishing these challenges ahead. Failure to test and finalize the Merlin Pilot in a timely manner could result in us being unable to commercialize our technology on our anticipated timeframe.

We are developing a pipeline of potential customers and partners that we expect will play an integral role in bringing our technology to market. We currently depend on the U.S. government for funding given that they’re our single and largest customer. If the U.S. government were to stop the support of the initial development of our technology for military aircraft, our ability to commence and expand commercial operations, including across the civilian sector, would be significantly impaired. Additionally, global conflicts, such as the Russia-Ukraine conflict and ongoing U.S. and Israeli operations in Iran, have created and may continue to create significant global economic uncertainty. While this uncertainty has resulted in a greater need for our technology in the military sector, it may ultimately impact the deployment of our technology across the civilian sector, particularly if it results in a decrease in global travel and airfare. See “Risk Factors.”

Widespread acceptance of autonomous flight

Our growth and future success are dependent on public support for autonomous, non-human flight in the United States and other countries where we intend to market and sell our technology. Over time, we expect autonomous flight solutions to gain widespread acceptance and become an integral part of the aviation and travel industries worldwide. However, today it is an unproven and nascent technology. As a result, consumers’ demand for, and willingness to accept, autonomous flight will significantly impact our financial performance. We believe that our leadership status in autonomous flight positions us to continue to set the standard for advanced autonomous solutions and will help us benefit from increasing consumer confidence in, and demand for, autonomous technology over time.

Our ability to capitalize on government expenditures in military defense

Our future growth is largely dependent on our ability to continue to capitalize on increased government support and corporate investment in military technology, including autonomous aircraft. Military technological advancements are garnering significant bipartisan support from U.S. government initiatives, including as evidenced by our IDIQ award. Government expenditures and private sector investments have fueled our growth in recent years, which has resulted in our continued ability to secure increasingly valuable contracts for products and services.

Over time, we expect political support for military innovation and technology to increase, particularly as the military adopts cutting edge technologies such as autonomous flight. If political support for the prioritization of the development of military technology decreases, including due to policy changes by current or future administrations and changing congressional funding priorities, we may be unable to secure continued government funding, which would adversely affect our business, development timeline, and financial condition.

Our ability to obtain and maintain regulatory approvals at federal, state and local levels

Our capacity for continued growth and ability to achieve and maintain profitability depends in large part on our ability to operate effectively in multiple jurisdictions, including on an international, federal and local level. The federal government, along with each local jurisdiction (such as states, counties and townships) in which we operate, has unique regulatory dynamics. These include laws and regulations that can directly or indirectly affect our ability to operate across various jurisdictions, particularly as it relates to autonomous commercial aircraft, as well as matters related to insurance requirements and community support. We believe that we have an industry-leading licensing team of professionals who are in regular communication with the U.S. Federal Aviation Authority and other regulators, and our success will depend on our licensing team’s ability to continue to obtain and maintain regulatory approvals in the ordinary course of business.

Our ability to expand our product services offerings

We intend to offer customers a diversified suite of services throughout the life of the autonomous aircraft, beginning at the time in which we’ve successfully installed the Merlin Pilot and it starts to be deployed by our customers. Our suite of services is envisioned to include multifaceted offerings, whereby we intend to provide customers with critical services related to the deployment of our technology across the life of the aircraft. We expect that, as we refine our services offering as it is deployed by the U.S. Air Force, the number of services we offer and the percentage of revenue we generate from our service offerings will continue to grow. We anticipate that our service offering will have high penetration rates across our future clients and will provide consistent, recurring revenues throughout the expected life of an aircraft. If we are unable to expand our product services offerings, it would adversely affect our business, development timeline, and financial condition.

Our ability to obtain additional capital

We expect to continue to incur operating losses for the foreseeable future as we continue to expand and develop our technology, and we may need to raise additional capital in future periods. If we are unable to raise additional capital, we may have to significantly delay, scale back or discontinue one or more of our research and development programs. We may be required to cease operations or seek partners for Merlin Pilot at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available. In the absence of additional capital, we may also be required to relinquish, license or otherwise dispose of rights to technologies or products that we would otherwise seek to develop or commercialize on terms that are less favorable than might otherwise be available. If we are unable to secure additional capital, we may be required to take additional measures to reduce costs to conserve our cash in amounts sufficient to sustain operations and meet our obligations. These measures may significantly alter our future business plans and could cause significant delays in the development of our products and ultimately our financial condition and ability to operate as a going concern in future periods.

Macroeconomic considerations

Macroeconomic conditions, such as high inflation and elevated interest rates, continue to be sources of volatility and uncertainty for global economic activity, and may affect our project costs and operations, as well as demand for the Merlin Pilot. Ongoing geopolitical conflicts in Ukraine, the Middle East, and tensions in United States-China relations may drive further economic instability and inflationary pressures, as well as increase risks for commercial and military aircraft. In the case of the military sector, these geopolitical conflicts have and may continue to impact the need for technological advances to keep the U.S. military at the forefront of the industrial world, which are generally beneficial for our business. However, such conflicts could also significantly impact commercial airline operations, which could negatively impact us in the future.

Components of Our Results of Operations

Revenue

We generate revenue from long-term contracts for the delivery of our Merlin Pilot software and supporting hardware. In order to satisfy these contracts we undertake engineering for research, design, development, manufacturing, integration and sustainment of advanced auto-piloting technology.

Cost of Revenue

Our cost of revenue consists primarily of labor, materials, travel, subcontractor costs and other expenses incurred directly in the execution of specific contracts.

We expect the cost of revenue to increase as revenue grows. As a percentage of revenue, cost of revenue may fluctuate from period to period based on the mix, timing, and execution of our contracts. Over the longer term, we expect cost of revenue to increase at a slower rate than revenue as we continue to scale our operations.

Research and Development

Research and development expenses consist primarily of personnel-related costs for our development team, including salaries, benefits, bonuses, allocated overhead costs, and stock-based compensation expenses. Research and development expenses also include contractor or professional services fees, and third-party cloud infrastructure expenses incurred in developing our product offerings. In the near term, we expect that our research and development expenses will increase as we continue to invest in our product offerings and development capabilities, although these expenses may fluctuate as a percentage of our revenue from period to period. Research and development expense is reduced for amounts received by the Company in connection with research and development agreements with third-parties, where the Company is paid for research and development activities.

General and Administrative

General and administrative expenses consist primarily of personnel-related costs associated with our finance, legal, human resources and administrative personnel, including salaries, benefits, bonuses, allocated overhead costs, and stock-based compensation. General and administrative expenses also include external legal, accounting and other professional services fees, software services dedicated for use by our general and administrative functions, insurance and other corporate expenses.

Selling and Marketing

Selling and marketing expenses consist primarily of personnel-related costs directly associated with our sales and marketing staff, including salaries, benefits, bonuses, commissions, allocated overhead costs, and stock-based compensation. Sales and marketing expenses also include advertising costs and other expenses associated with our marketing and business development programs. In addition, sales and marketing expenses consist of travel-related expenses, software services dedicated for use by our sales and marketing organizations and outside services contracted for sales and marketing purposes.

Interest Income

Interest income consists of interest income earned on cash and cash equivalents balances held in interest bearing time and money market accounts.

Interest Expense

Interest expense consists of interest on our term borrowings and amortization of debt issuance costs.

Other Expense

Other expense consists of gains and losses on the disposal of assets and gains and losses from foreign currency transactions and remeasurements of foreign currency-denominated monetary assets and liabilities to the U.S. dollar.

Change In Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities consists of gains and losses resulting from a change in fair value of our warrant liabilities.

Change in Fair Value of Convertible Promissory Notes

Change in fair value of convertible promissory notes consists of gains and losses resulting from a change in fair value of our convertible promissory notes, together with interest accrued on those instruments.

Loss on Exchange of Warrant Liabilities

Loss on exchange of warrant liabilities consists of the loss resulting from the exchange of preferred stock warrant liabilities for our convertible promissory notes and common stock warrant liabilities.

Loss on Issuance of Financial Instruments

Loss on issuance of financial instruments consists of the loss resulting from the issuance of convertible promissory notes and common stock warrant liabilities when it was determined that the gross proceeds received were less than the fair value of the instruments issued.

Loss on Extinguishment of Long-Term Debt

Loss on extinguishment of long-term debt consists of the loss resulting from the extinguishment of our long-term debt.

Change in Fair Value of Long-Term Debt

Change in fair value of long-term debt consists of gains and losses resulting from a change in fair value of our long-term debt, together with interest accrued on those instruments.

Provision For Income Taxes

Provision for income taxes consist primarily of income taxes related to foreign and state jurisdictions in which we conduct business. We maintain a valuation allowance on our federal and state deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be utilized.

Results of Operations

The following tables set forth our results of operations for the fiscal periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.

	Year Ended December 31,
($ in thousands)	2025			2024
Revenue	$	7,551		$	1,229
Cost of revenue		9,182			8,500
Gross loss		(1,631	)		(7,271	)

Operating expenses:
Research and development		32,477			27,146
General and administrative		20,093			17,864
Selling and marketing		1,318			1,744
Total operating expenses		53,888			46,754
Loss from operations		(55,519	)		(54,025	)

Other (expense) income:
Interest income		1,443			2,005
Interest expense		(2,957	)		(2,420	)
Other expense		(159	)		(197	)
Change in fair value of warrant liabilities		(2,357	)		(265	)
Change in fair value of convertible promissory notes		(7,563	)		—
Loss on exchange of warrant liabilities		(3,320	)		—
Loss on issuance of financial instruments		(585	)		—
Loss on extinguishment of long-term debt		(2,157	)		—
Change in fair value of long-term debt		(1,554	)		—
Total other expense		(19,209	)		(877	)
Loss before provision for income taxes		(74,728	)		(54,902	)
Provision for income taxes		50			351
Net loss	$	(74,778	)	$	(55,253	)

Comparison of the Years Ended December 31, 2025 and 2024

Revenue

	Year Ended December 31,
($ in thousands)	2025		2024		Change		% Change
U.S. government agencies	$	7,342	$	1,145	$	6,197		541.2	%
Commercial and non-U.S. government customers		209		84		125		148.8	%
Total	$	7,551	$	1,229	$	6,322		514.4	%

Revenue for the year ended December 31, 2025, increased by $6,322 thousand, or 514.4%, to $7,551 thousand compared to $1,229 thousand for the year ended December 31, 2024. This increase was primarily due to our USSOCOM Contract being in effect for the full year ended December 31, 2025 and only in effect for a portion of the year ended December 31, 2024. We expect it to be a key driver of revenue growth in future periods.

Cost of Revenue

	Year Ended December 31,
($ in thousands)	2025		2024		Change		% Change
Cost of revenue	$	9,182	$	8,500	$	682		8.0	%

Cost of revenue for the year ended December 31, 2025, increased by $682 thousand, or 8.0%, to $9,182 thousand compared to $8,500 thousand for the year ended December 31, 2024. This increase was primarily the result of the establishment of a $1,451 thousand loss contract reserve, contractor costs incurred, and other direct charges to cost of revenue associated with our USSOCOM Contract which was in effect for the full year ended December 31, 2025 and only in effect for a portion of the year ended December 31, 2024.

Operating Expenses

Research and Development

	Year Ended December 31,
($ in thousands)	2025		2024		Change		% Change
Research and development	$	32,477	$	27,146	$	5,331		19.6	%

Research and development expenses for the year ended December 31, 2025, increased by $5,331 thousand, or 19.6% to $32,477 compared to $27,146 thousand in the year ended December 31, 2024, due to increasing personnel related expenses from hiring of new and highly-skilled engineering talent, outsourcing to subject matter experts identified specifically to solve unique engineering challenges, and increased equipment and material costs. We expect our personnel related research and development expenses to increase as we continue to expand our operations.

General and Administrative

	Year Ended December 31,
($ in thousands)	2025		2024		Change		% Change
General and administrative	$	20,093	$	17,864	$	2,229		12.5	%

General and administrative expenses for the year ended December 31, 2025, increased by $2,229 thousand, or 12.5% to $20,093 compared to $17,864 thousand in the year ended December 31, 2024. This was primarily due to an increase in legal, accounting, and other consulting expenses in preparation for a potential de-SPAC transaction. We expect our general and administrative expenses to increase as we hire additional personnel and professional services as we grow our business and prepare to operate as a public company.

Selling and Marketing

	Year Ended December 31,
($ in thousands)	2025		2024		Change			% Change
Selling and marketing	$	1,318	$	1,744	$	(426	)		(24.4	)%

Selling and marketing expenses for the year ended December 31, 2025, decreased by $426 thousand, or 24.4%, to $1,318 compared to $1,744 thousand in the year ended December 31, 2024. This was primarily due to a decrease in personnel and digital marketing related expenses.

Interest Income

	Year Ended December 31,
($ in thousands)	2025		2024		Change			% Change
Interest income	$	1,443	$	2,005	$	(562	)		(28.0	)%

Interest income for the year ended December 31, 2025 decreased by $562 thousand, or 28.0%, to $1,443 thousand, compared to $2,005 thousand for the year ended December 31, 2024, primarily due to lower average cash and cash equivalent balances held in interest-bearing bank accounts during 2025 as cash was used to fund operating expenses. Although interest rates may have fluctuated between periods, the decrease in interest income was primarily driven by lower average cash balances in 2025 relative to 2024.

Interest Expense

	Year Ended December 31,
($ in thousands)	2025		2024		Change		% Change
Interest expense	$	2,957	$	2,420	$	537		22.2	%

Interest expense for the year ended December 31, 2025, increased by $537 thousand, or 22.2%, to $2,957 thousand compared to $2,420 thousand in the year ended December 31, 2024. The increase was primarily driven by an additional $668 thousand of interest expense related to the 2024 LSA term loans, which were outstanding for a longer portion of 2025. This increase was partially offset by the repayment in July 2025 of the 2021 LSA term loans, which had been outstanding for the full year ended December 31, 2024. In addition, beginning in July 2025, the Company elected the fair value option for the 2024 LSA term loans. As a result, $1,720 thousand of cash interest costs related to those loans was recognized as a change in fair value of long-term debt rather than in interest expense.

Other Expense

	Year Ended December 31,
($ in thousands)	2025			2024			Change		% Change
Other expense	$	(159	)	$	(197	)	$	38		(19.3	)%

Other expense for the year ended December 31, 2025, decreased by $38 thousand, or 19.3%, to $159 thousand compared to $197 thousand in the year ended December 31, 2024, primarily driven by the recognition of a gain upon the receipt of insurance proceeds related to damaged aircraft of $120 thousand, offset by an increase in foreign currency losses of $84 thousand.

Change In Fair Value Of Warrant Liabilities

	Year Ended December 31,
($ in thousands)	2025			2024			Change			% Change
Change in fair value of warrant liabilities	$	(2,357	)	$	(265	)	$	(2,092	)		789.4	%

Change in fair value of warrant liabilities for the year ended December 31, 2025, resulted in an increased loss of $2,092 thousand, or 789.4%, to $2,357 thousand compared to $265 thousand in the year ended December 31, 2024, primarily due to the issuance of liability classified warrants related to the Pre-PIPE Bridge and the Pre-Funded PIPE.

Change in Fair Value of Convertible Promissory Notes

	Year Ended December 31,
($ in thousands)	2025			2024		Change			% Change
Change in fair value of convertible promissory notes	$	(7,563	)	$	—	$	(7,563	)		—	%

Change in fair value of convertible promissory notes for the year ended December 31, 2025, increased to $7,563 thousand compared to the year ended December 31, 2024, due the issuance of convertible promissory notes related to the Pre-PIPE Bridge and the Pre-Funded PIPE.

Loss on Exchange of Warrant Liabilities

	Year Ended December 31,
($ in thousands)	2025			2024		Change			% Change
Loss on exchange of warrant liabilities	$	(3,320	)	$	—	$	(3,320	)		—	%

Loss on exchange of warrant liabilities for the year ended December 31, 2025, increased to $3,320 thousand, compared to the year ended December 31, 2024, due to the exchange of 2024 LSA Warrants for Pre-PIPE Bridge Notes and Warrants in August 2025.

Loss on Issuance of Financial Instruments

	Year Ended December 31,
($ in thousands)	2025			2024		Change			% Change
Loss on issuance of financial instruments	$	(585	)	$	—	$	(585	)		—	%

Loss on issuance of financial instruments for the year ended December 31, 2025, increased to $585 thousand compared to the year ended December 31, 2024, due to the Company receiving gross proceeds that were less than the fair value of Pre-PIPE Bridge Notes and Warrants issued.

Loss on Extinguishment of Long-term Debt

	Year Ended December 31,
($ in thousands)	2025			2024		Change			% Change
Loss on extinguishment of long-term debt	$	(2,157	)	$	—	$	(2,157	)		—	%

Loss on extinguishment of long-term debt for the year ended December 31, 2025, increased to $2,157 thousand compared to the year ended December 31, 2024, related to the extinguishment of our term loans (2024 LSA).

Change in Fair Value of Long-term Debt

	Year Ended December 31,
($ in thousands)	2025			2024		Change			% Change
Change in fair value of long-term debt	$	(1,554	)	$	—	$	(1,554	)		—	%

Loss on change in fair value of long-term debt for the year ended December 31, 2025, increased to $1,554 thousand compared to the year ended December 31, 2024, due to the election of the fair value option for our amended term loans (2024 LSA).

Provision For Income Taxes

	Year Ended December 31,
($ in thousands)	2025		2024		Change			% Change
Provision for income taxes	$	50	$	351	$	(301	)		(85.8	)%

Provision for income tax expense for the year ended December 31, 2025, decreased by $301 thousand, or 85.8%, to $50 compared to $351 thousand in the year ended December 31, 2024. This decrease in provision for income taxes is primarily driven by a decrease in foreign tax expenses for the Merlin Labs NZ Limited entity, which decreased by $284 thousand.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe that EBITDA and Adjusted EBITDA, non-GAAP financial measures, provide investors with additional useful information in evaluating our performance. We define EBITDA as net loss before interest expense or income, income tax expense or benefit, and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for stock-based compensation and other non-cash, one-time, and non-recurring items, as determined by management.

We believe that each of these non-GAAP financial measures provide additional metrics to evaluate our operations and, when considered with both our U.S. GAAP results and the reconciliation to the closest comparable U.S. GAAP measures, provide a more complete understanding of our business than could be obtained absent this disclosure. We use the non-GAAP financial measures, together with U.S. GAAP financial measures, such as net revenue, gross profit margins and cash flow from operations, to assess our historical and prospective operating performance, to provide meaningful comparisons of operating performance across periods, to enhance our understanding of our operating performance, and to compare our performance to that of our peers and competitors.

The non-GAAP financial measures are presented here because we believe they are useful to investors in assessing the operating performance of our business without the effect of non-cash items, and other items as detailed below. The non-GAAP financial measures should not be considered in isolation or as alternatives to net income (loss), income (loss) from operations or any other measure of financial performance calculated and prescribed in accordance with U.S. GAAP. Our non-GAAP financial measures may not be comparable to similarly titled measures in other organizations because other organizations may not calculate non-GAAP financial measures in the same manner as we do.

The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net loss, the most directly comparable financial measure presented in accordance with U.S. GAAP.

	Year Ended December 31,
($ in thousands)	2025			2024

Net loss	$	(74,778	)	$	(55,253	)
Depreciation		1,582			1,466
Amortization of right-of-use assets		746			568
Interest income		(1,443	)		(2,005	)
Interest expense		2,957			2,420
Provision for income taxes		50			351
EBITDA		(70,886	)		(52,453	)
Stock-based compensation		1,695			1,739
Change in fair value of warrant liabilities		2,357			265
Change in fair value of convertible promissory notes		7,563			—
Change in fair value of long-term debt		1,554			—
Loss on exchange of warrant liabilities		3,320			—
Loss on issuance of financial instruments		585			—
Loss on extinguishment of long-term debt		2,157			—
Transaction costs		3,673			—
Adjusted EBITDA	$	(47,982	)	$	(50,449	)

Liquidity and Capital Resources

We have incurred operating losses and negative cash flows, primarily from the production of our proprietary Merlin Pilot technology. Certain contracts have become loss-making due to variable consideration constraints and contract costs exceeding the contract price. Concurrently, our general and administrative expenses have risen due to business growth, increased headcount, expanded corporate functions, higher proposal activity, and increased fees for professional services.

Our ability to fund our operations and meet our obligations depends on achieving anticipated revenue and cash flow levels, managing costs, and successfully managing working capital. Our ability to generate cash is also subject to economic, financial, competitive, legislative, regulatory, and other factors beyond our control. We cannot guarantee that our business will generate sufficient cash flow to meet our liquidity needs.

To meet these capital requirements, we expect to rely on our current borrowing capacity and access to debt and equity markets. However, our ability to obtain additional funding is subject to market conditions, our operating performance, market perception of our growth, and compliance with financial covenants under our existing debt agreements. Our capital needs may also vary materially from current plans if, for example, revenues do not meet expectations, or we incur unforeseen expenditures.

Should our current and future liquidity sources prove insufficient, we may need to seek additional equity or debt financing, which could involve shareholder dilution or restrictive operational covenants. There can be no assurance that we will be able to raise additional capital. An inability to do so would adversely affect our ability to achieve our business objectives.

The following table summarizes our cash flows for the periods indicated:

	Year Ended December 31,
($ in thousands)	2025			2024			Change			% Change
Net cash (used in) provided by:
Operating activities	$	(59,868	)	$	(45,466	)	$	(14,402	)		32	%
Investing activities		(368	)		(1,764	)		1,396			(79	)%
Financing activities		82,384			33,940			48,444			143	%
Net (decrease) increase in cash and cash equivalents	$	22,148		$	(13,290	)	$	35,438			(267	)%

Operating Activities

Net cash used in operating activities for the year ended December 31, 2025, was $59,868 thousand, an increase of $14,402 thousand from net cash used in operating activities of $45,466 thousand for the year ended December 31, 2024. The change in cash used in operations was primarily due to an increase in net loss of $19,525 thousand, a decrease in the contract loss provision accrual of $4,896 thousand, a change in prepaid expenses and other current assets of $2,757 thousand, a change in capitalized transaction costs of $7,562 thousand, a change in deposits of $1,549 thousand, and an increase in contract loss provision amortization of $1,263 thousand. These changes are offset by an increase in change in fair value of warrant liabilities of $2,092 thousand, an increase in change in fair value of convertible promissory notes of $7,563 thousand, an increase in loss on exchange of warrant liabilities of $3,320 thousand, an increase in loss on extinguishment of long-term debt of $2,157 thousand, and changes in accounts payable and accrued expenses of $1,961 thousand and $4,397 thousand, respectively.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2025, was $368 thousand, a decrease of $1,396 thousand from net cash used in investing activities of $1,764 thousand for the year ended December 31, 2024. The change in cash used in investing activities was primarily due to a decrease in acquired property and equipment of $1,477 thousand.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025, was $82,384 thousand, an increase of $48,444 thousand from net cash used in financing activities of $33,940 thousand for the year ended December 31, 2024. The change in cash flows provided by financing activities was primarily due to an increase in proceeds from issuance of warrants and convertible promissory notes related to the Pre-PIPE Bridge and the Pre-Funded PIPE of $66,796 thousand and $20,413 thousand, respectively, offset by an a decrease of proceeds from issuance of long-term debt of $34,378 thousand and an increase in repayments of long-term debt of $4,712 thousand.

Contractual Obligations and Commitments

As of December 31, 2025, our debt obligations are comprised of our 7.47% Convertible Loan due in 2032 (the “PGF Loan”) with a principal amount outstanding of $672 thousand, our Term Loans (LSA 2024) due in 2027 with a principal amount outstanding of $29,788 thousand, our Pre-PIPE Bridge Notes due in 2026 with a principal amount outstanding of $28,695 thousand, and our Pre-Funded PIPE Notes due in 2026 with a principal amount outstanding of $75,599 thousand. As of December 31, 2025, we paid off the principal amount outstanding of our Term Loan (LSA 2021).

As of December 31, 2024, our debt obligations are comprised of our PGF Loan with a principal amount of $660 thousand due in 2032, $500 thousand principal amount outstanding under our Term Loan (LSA 2021) that matures in July 2025, and $35,000 thousand principal amount outstanding under our Term Loan (LSA 2024) that was set to mature in January 2027. During the year ended December 31, 2024, we repaid $1,143 thousand in principal amount of our Term Loan (LSA 2021).

As of December 31, 2025, and December 31, 2024, our non-cancelable operating lease commitments are $979 thousand and $1,348 thousand, respectively, of which $657 thousand and $709 thousand, respectively, are due in less than one year. Our operating leases relate to our office space, aircraft, motor vehicles, and airport hangar space.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts in the consolidated financial statements and related footnote disclosures. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We re-evaluate our estimates on an on-going basis.

The accounting estimates we use in the preparation of our consolidated financial statements will change as new events occur, more experience is acquired, additional information is obtained and our operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in our reported results of operations and, if material, the effects of changes in estimates are disclosed in the notes to our financial statements. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates.

Revenue Recognition

We recognize revenue from our contracts in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). The majority of our revenue is generated from cost-plus-fixed-fee, fixed-price, and cost-share arrangements for designing and integrating autonomous flight technologies.

Revenue is recognized over time based on the extent of progress towards completion. This process requires significant judgment around the following:

Measuring Progress: We use a cost-incurred input method to measure progress. This method relies on our ability to reliably estimate the total costs required to complete our long-term contracts.

These estimates are critical in determining the amount and timing of revenue recognized and are monitored and updated as our projects progress

Warrants

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and, if not whether the warrants meet all of the requirements for equity classification under ASC 815. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance and are measured to fair value at each balance sheet date thereafter.

Valuations of instruments convertible to our Common Stock and Preferred Stock

Our preferred stock are classified as temporary equity, as they include liquidation provisions that are outside our control.

The fair value of our common stock was determined by our board of directors, after considering contemporaneous third-party valuations and input from management. In the absence of a public trading market, our board of directors, with input from management, exercised significant judgment and considered various objective and subjective factors to determine the fair value of our equity including the following factors:

●

Probability of an IPO scenario (including de-SPAC transaction);

●

Probability of other liquidation events;

●

Expected time to liquidation; and

●

Expected return on equity.

The resulting equity value was then allocated to each share class based on differences in liquidation preferences of the various share classes using an Option Pricing Model (“OPM”) through the use of a series of call options and a Monte Carlo simulation. The OPM is appropriate to use when the range of possible future outcomes is difficult to predict. For the IPO scenario (including de-SPAC transaction) we utilized a probability-weighted expected return method (“PWERM”) to allocate value among the various share classes. The PWERM involves the estimation of the value of our company under multiple future potential outcomes and estimates the probability of each potential outcome. After the value of each applicable class of shares was determined, a discount for lack of marketability (“DLOM”) was applied to arrive at the fair value of the ordinary shares on a non-marketable basis. A DLOM is applied in order to reflect the lack of a recognized market for a closely held interest and the fact that a non-controlling equity interest may not be readily transferable. A market participant purchasing this share would recognize this illiquidity associated with the shares, which would reduce the overall fair market value.

For periods prior to December 31, 2024, the fair value of the warrants for the purchase of preferred stock was calculated using the OPM as part of the allocation of the equity value to the various share classes (as described above). The critical accounting estimates for the valuation of those warrants include (a) the fair value of the underlying preferred stock, as mentioned above (b) expected financing amount, (c) expected financing date, (d) expected liquidity event, (e) risk-free rate and (f) volatility — based on peer companies’ volatility.

For periods after December 31, 2024 and in light of a potential de-SPAC transaction, the fair values of the warrants for the purchase of preferred and common stock were determined using PWERM, which considers both a Non-SPAC and a SPAC scenario and probabilities. The critical accounting estimates for the valuation of those warrants include (a) the fair value of the underlying preferred or common stock, as applicable, (b) the expected financing amount, (c) expected financing date, (d) expected liquidity event date, (e) equity volatility, (f) expected SPAC date, (g) a calibrated discount rate, and (h) risk-free rate.

The fair value of convertible notes was calculated using PWERM, which considers both a Non-SPAC and a SPAC scenario and probabilities. The fair value of the notes was estimated using Discounted Cash Flow (“DCF”).

Stock-based Compensation

We recognize stock-based compensation expense by estimating the fair value of stock options on the grant date using the Black-Scholes option-pricing model. The grant-date fair value is recognized on a straight-line basis over the service period.

This model requires subjective assumptions, which involve significant judgment. Our key assumptions are:

●

Fair Value of Common Stock: As our stock is not publicly traded, the fair value is determined by our board of directors, considering factors such as contemporaneous third-party valuations, company performance, and industry outlook.

●

Expected Volatility: Derived from the historical volatility of comparable public companies, as our shares have no trading history.

●

Expected Term: Calculated using the simplified method.

●

Risk-Free Interest Rate: Based on the U.S. Treasury yield curve.

●

Expected Dividend: Assumed to be zero, as we have no plans to pay dividends.

Because these assumptions are subjective, particularly the fair value of our common stock, our stock-based compensation expense could be materially different if we used different assumptions.

Emerging Growth Status Company

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Merlin elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, Merlin, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard, until such time Merlin is no longer considered to be an emerging growth company. At times, Merlin may elect to early adopt a new or revised standard.

In addition, Merlin intends to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company, Merlin intends to rely on such exemptions, Merlin is not required to, among other things: (a) provide an auditor’s attestation report on Merlin’s system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosures that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

Merlin will remain an emerging growth company under the JOBS Act until the earliest of (a) the last day of Merlin’s first fiscal year following the fifth anniversary of the offering, (b) the last date of Merlin’s fiscal year in which Merlin has total annual gross revenue of at least $1.235 billion, (c) the date on which Merlin is deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which Merlin has issued more than $1.0 billion in non-convertible debt securities during the previous three years.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies of the notes to our consolidated financial statements in the sections titled “Recently Adopted Accounting Pronouncements” and “Recently Issued Accounting Pronouncements Not Yet Adopted” included elsewhere in this prospectus - for a discussion about new accounting pronouncements adopted and not yet adopted as of the date of this report.

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(in thousands, except share and per share amounts)

The following unaudited pro forma condensed combined balance sheet as of December 31, 2025 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025 present the combined financial information of Inflection Point and Merlin after giving effect to the Business Combination and related adjustments described in the accompanying notes.

Inflection Point was incorporated on June 24, 2024 in the Cayman Islands and is a publicly traded special purpose acquisition company listed on the Nasdaq under the symbols “BACQU,” “BACQ,” and “BACQR.” Inflection Point was incorporated for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The Sponsor is Inflection Point Acquisition Corp. IV (f/k/a Bleichroeder Sponsor I LLC). Prior to the closing of the Business Combination, Inflection Point will domesticate as a Delaware corporation and be renamed “Merlin, Inc.”, pursuant to the terms of the Business Combination Agreement.

Merlin was incorporated on October 10, 2018 as a Delaware corporation under the name Apollo Flight Research, Inc. and changed its name to Merlin Labs, Inc. on October 27, 2020. Merlin Labs, Inc. is the parent company of two wholly-owned subsidiaries: Merlin Labs NZ Limited (“MLNL”), a New Zealand limited company, was incorporated on August 17, 2020 and Merlin Labs Securities Corporation (“MLSC”), a Massachusetts Securities Corporation, was incorporated on December 13, 2022 (MLNL, MLSC and Merlin Labs Inc., collectively, “Merlin” or the “Company”).

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined balance sheet as of December 31, 2025 combines the historical audited condensed balance sheet of Inflection Point as of December 31, 2025 with the historical audited condensed consolidated balance sheet of Merlin as of December 31, 2025, giving effect to the Business Combination and related transactions as if they had been consummated on December 31, 2025. Inflection Point and Merlin have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025 combines the historical audited condensed statement of operations of Inflection Point for the year ended December 31, 2025 with the historical audited condensed consolidated statement of operations of Merlin for the year ended December 31, 2025, giving effect to the Business Combination as if it had been consummated on January 1, 2025, the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial information is based on and should be read in conjunction with the audited historical financial statements of each of Merlin and Inflection Point and the related notes thereto as of and for the year ended December 31, 2025, and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Inflection Point” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Merlin”.

On August 13, 2025, Inflection Point and Merlin entered into the Business Combination Agreement, pursuant to which the following occurred: (i) at least one day prior to the closing of the Business Combination, Inflection Point domesticated as a Delaware corporation, and (ii) on the day of the Closing, Merger Sub merged with and into Merlin, with Merlin surviving the Merger as a wholly owned subsidiary of Inflection Point, resulting in a combined company whereby Merlin is a wholly-owned subsidiary of New Merlin. On March 13, 2026, the Merger was approved by an Inflection Point shareholder vote. The Merger was completed on March 16, 2026 (the “Closing”). Following the Closing, New Merlin is the publicly traded parent company, and its common stock is listed on Nasdaq under the ticker symbol “MRLN.” The consideration payable to Merlin’s equity holders consists entirely of shares of New Merlin Common Stock.

The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what New Merlin’s financial condition or results of operations would have been had the Business Combination occurred on the date indicated. Further, the unaudited pro forma condensed combined financial information may not be useful in predicting the future financial condition and results of operations of New Merlin. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.

The Business Combination between Merlin and Inflection Point is expected to be accounted for as a reverse recapitalization, as Inflection Point does not meet the definition of a business under accounting principles U.S. generally accepted accounting principles. For financial reporting purposes, Merlin is identified as the accounting acquirer, and Inflection Point as the accounting acquiree. This determination is based on Merlin’s majority voting rights, control over board appointments, and dominance of senior management in the post-combination entity. Since Inflection Point lacks substantive inputs, processes, and outputs, the transaction does not qualify as a business combination under Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). For accounting purposes, the financial statements of New Merlin will represent a continuation of the financial statements of Merlin, with the Business Combination being treated as the equivalent of Merlin issuing stock for the net assets of Inflection Point, accompanied by recapitalization. The net assets of Inflection Point will be stated at historical carrying values, and no goodwill or other intangible assets will be recorded.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF DECEMBER 31, 2025
(in thousands, except share amounts)

	Inflection Point (Historical)			Merlin (Historical)			Actual Redemptions: Transaction Accounting Adjustments					Pro Forma Combined
ASSETS
Current assets:
Cash and cash equivalents	$	704		$	59,343		$	112,671		3	(a)	$	172,718
Short-term investments		—			330			—					330
Accounts receivable, net		—			368			—					368
Prepaid expenses and other current assets		210			3,328			—					3,538
Capitalized transaction costs		—			7,562			(7,562	)	3	(b)(1)		—
Total current assets		914			70,931			105,109					176,954
Property and equipment, net		—			7,108			—					7,108
Operating lease right-of-use assets		—			979			—					979
Deposits		—			1,564			—					1,564
Investments held in trust account		262,236			—			(262,236	)	3	(a)(1)		—
Total assets	$	263,150		$	80,582		$	(157,127	)			$	186,605
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable		—			3,154			(478	)	3	(b)(2)		2,676
Accrued expenses		2,330			7,937			(4,848	)	3	(b)(3)		5,419
Long-term debt, current portion, net		—			19,271			—					19,271
Convertible promissory notes		—			29,107			(29,107	)	3	(c)(8)		—
Cash underwriting fee payable		1,000			—			(1,000	)	3	(a)(2)		—
Contract loss provision		—			4,173			—					4,173
Operating lease liabilities, current		—			657			—					657
Total current liabilities		3,330			64,299			(35,433	)				32,196
Long-term debt, non-current portion, net		—			12,784			—					12,784
Operating lease liabilities, non-current		—			331			—					331
Warrant liabilities		—			76,766			65,411		3	(c)(6)(7)(8)		142,177
Deferred underwriting fee		8,750			—			(8,750	)	3	(a)(2)		—
Total liabilities		12,080			154,180			21,228					187,488

Class A ordinary shares subject to possible redemption, $0.0001 par value; 500,000,000 shares authorized; 25,000,000 shares issued and outstanding, at redemption value of approximately $10.49 per share		262,236			—			(262,236	)	3	(c)(1)		—
Redeemable convertible preferred stock		—			461,963			(461,963	)	3	(c)(4)		—
New Merlin Series A redeemable convertible preferred stock		—			—			65,528		3	(c)(8)		65,528

Stockholders’ equity (deficit):
Preferred shares, $0.0001 par value; 5,000,000 shares authorized; none issued or outstanding		—			—			—					—
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 425,000 shares issued and outstanding (excluding 25,000,000 shares subject to possible redemption)		—			—			—		3	(c)(1)		—
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 8,333,333 shares issued and outstanding		1			—			(1	)	3	(c)(2)		—
Common Stock: $0.0001 par value; 44,705,861 and 29,500,000 shares authorized; 5,306,250 and 5,169,812 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively		—			1			(1	)	3	(c)(5)		—
New Merlin Class A common stock		—			—			8		3	(c)(1)(2)(3)(4)(5)(6)(7)		8
Additional paid-in capital		—			15,491			452,340		3	(c)(1)(4)(5)(9)(10)		467,831
Accumulated deficit		(11,167	)		(551,053	)		27,970		3	(c)(8)(9)(10)		(534,250	)
Total stockholders’ equity (deficit)		(11,166	)		(535,561	)		480,316					(66,411	)
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)	$	263,150		$	80,582		$	(157,127	)			$	186,605

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2025
(in thousands, except share and per share amounts)

	Inflection Point (Historical)			Merlin (Historical)			Actual Redemptions: Transaction Accounting Adjustments				Pro Forma Combined
Revenue	$	—		$	7,551		$	—			$	7,551
Cost of revenue		—			9,182			—				9,182
Gross loss		—			(1,631	)		—				(1,631	)
Operating expenses:
Research and development		—			32,477			—				32,477
General and administrative		4,528			20,093			1,366		4(a)		25,987
Selling and marketing		—			1,318			—				1,318
Total operating expenses		4,528			53,888			1,366				59,782
Loss from operations		(4,528	)		(55,519	)		(1,366	)			(61,413	)
Interest income		10,536			1,443			(10,536	)	4(b)		1,443
Interest expense		—			(2,957	)		—				(2,957	)
Other expense		—			(159	)		—				(159	)
Change in fair value of warrant liabilities		—			(2,357	)		2,357		4(c)(1)		—
Change in fair value of convertible promissory notes		—			(7,563	)		7,563		4(c)(2)		—
Loss on exchange of warrant liabilities		—			(3,320	)		3,320		4(c)(3)		—
Loss on issuance of financial instruments		—			(585	)		585		4(c)(4)		—
Loss on extinguishment of long-term debt		—			(2,157	)		—				(2,157	)
Change in fair value of long-term debt		—			(1,554	)		—				(1,554	)
Total other (expense) income		10,536			(19,209	)		3,289				(5,384	)
Loss before provision for income taxes		6,008			(74,728	)		1,923				(66,797	)
Provision for income taxes		—			50			—				50
Net (loss) income		6,008			(74,778	)		1,923				(66,847	)
Deemed dividend on exchange of redeemable convertible preferred stock		—			(345,717	)		345,717		4(d)(1)		—
Cumulative Series A Preferred Stock dividends		—			—			(31,270	)	4(d)(2)		(31,270	)
Net (loss) income attributable to common stockholders	$	6,008		$	(420,495	)	$	316,370			$	(98,117	)
Net (loss) income per share:
Basic and diluted, Class A	$	0.18		$	(80.68	)					$	(1.17	)
Basic and diluted, Class B	$	0.18
Weighted-average shares outstanding:
Basic and diluted, Class A		25,425,000			5,211,618							84,134,682
Basic and diluted, Class B		8,333,333

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(in thousands, except share and per share amounts)

NOTE 1. DESCRIPTION OF THE BUSINESS COMBINATION

On August 13, 2025, Inflection Point, Merlin and Merger Sub entered into the Business Combination Agreement, under the terms of which (i) at least one day prior to Closing, Inflection Point domesticated as a Delaware corporation, and (ii) at Closing, Merger Sub merged with and into Merlin, with Merlin surviving the Merger as a wholly-owned subsidiary of Inflection Point, resulting in a combined company whereby Merlin is a wholly-owned subsidiary of New Merlin. On March 13, 2026, the Merger was approved by an Inflection Point shareholder vote. The Merger was completed on March 16, 2026. After giving effect to the Merger, New Merlin owns, directly or indirectly, all of the issued and outstanding equity interests of Merlin and its subsidiaries.

Immediately prior to the Domestication, all outstanding Inflection Point Class B Shares converted on a one-to-one basis to Inflection Point Class A Shares. Upon the Domestication, all outstanding Inflection Point Class A Shares converted on a one-to-one basis into shares of New Merlin Common Stock.

Immediately prior to the Merger, all existing warrants to purchase shares of Merlin Common Stock and warrants to purchase shares of Merlin redeemable convertible preferred stock (except the Pre-Funded Convertible Warrants) were exercised on a cashless basis. Further, all shares of Merlin redeemable convertible preferred stock (including shares received from exercised warrants) converted into shares of Merlin Common Stock. As a result, immediately prior to the Merger, the only Merlin equity instruments outstanding were shares of common stock and stock options issued to employees as compensation.

In connection with the transactions contemplated by the Business Combination Agreement, on July 2, 2025, and on August 13, 2025, Merlin entered into the Signing Pre-Funded PIPE Agreements with Pre-Funded Investors. Pursuant to the Signing Pre-Funded PIPE Agreements, the Pre-Funded Investors agreed, among other things, to purchase, and Merlin issued and sold, an aggregate of approximately $87,704 of Pre-Funded Convertible Notes and Pre-Funded Convertible Warrants, substantially concurrently with the execution and delivery of the Business Combination Agreement.

At the Effective Time, the consideration paid in, or in connection with, the Merger to each holder of a Pre-Funded Convertible Note was a number of shares of Series A Preferred Stock equal to the quotient, rounded up to the nearest whole share, of (i) the total outstanding principal and accrued and unpaid interest on each Pre-Funded Convertible Note as of one day prior to the Closing, divided by (ii) $10.20 (with respect to the Pre-Funded Convertible Notes sold pursuant to the Pre-Funded NPAs), as may be adjusted pursuant to the terms and conditions of such Pre-Funded Convertible Notes, or $12.00 (with respect to the Pre-Funded Convertible Notes sold pursuant to the Pre-Funded SPAs). The consideration paid in, or in connection with, the Merger to a holder in respect of each Pre-Funded Convertible Warrant was one or more New Merlin Series A Warrants to purchase a number of shares of New Merlin Common Stock (on otherwise the same terms as applicable to the New Merlin Series A Warrants issued to the Series A Preferred Stock Investors in the Series A Preferred Stock Investment (each as defined below)) equal to the quotient of (i) the aggregate exercise price of such Pre-Funded Warrant immediately prior to the Effective Time, divided by (ii) $12.00.

Also in connection with the transactions contemplated by the Business Combination Agreement, on August 13, 2025, and November 17, 2025, Inflection Point, Merlin and certain investors entered into the Signing Series A SPA and Additional Series A SPAs (collectively, “Series A SPAs”). Pursuant to the Series A SPAs, the Closing PIPE Investor and Additional Closing PIPE Investors agreed, among other things, to purchase, at Closing, an aggregate of 11,470,590 shares of New Merlin Series A Preferred Stock and New Merlin Series A Warrants, for an aggregate purchase price of $120,000. In aggregate, the Pre-Funded Investors, the Closing PIPE Investor, and the Additional Closing PIPE Investors (collectively, “PIPE Investors”) received 21,715,451 shares of Series A Preferred Stock and New Merlin Series A Warrants to purchase an aggregate of 21,157,300 shares of New Merlin Common Stock in exchange for an aggregate commitment of $207,704.

At the Effective time, holders of the Merlin Common Stock received shares of New Merlin Common Stock based on the Exchange Ratio. The holders of Merlin Options, issued under employee incentive plans, received New Merlin Options, based on the Exchange Ratio, and are subject to the same vesting restrictions as the Merlin Options.

At the Effective Time, the Post-Domestication Rights automatically converted ten-to-one to shares of New Merlin Common Stock. Fractional shares were rounded down to the nearest whole share.

The following summarizes the pro forma shares outstanding of New Merlin Common Stock and Series A Preferred Stock, on an as-converted basis as of the Closing, excluding the potential dilutive effect of warrants to purchase shares of New Merlin Common Stock and the New Merlin Options:

	Shares		% Ownership
Public Shareholders		2,449,449		2.3	%
Public Rightsholders*		2,499,999		2.4	%
Sponsor⁽¹⁾		8,800,833		8.3	%
Series A Holders⁽²⁾		21,715,451		20.5	%
Merlin Stockholders⁽³⁾		70,512,611		66.5	%
Total		105,978,343		100.0	%

Potential Sources of Dilution
New Merlin Series A Warrants⁽⁴⁾		21,157,300		20.0	%
New Merlin Options⁽⁵⁾		7,631,497		7.2	%

Rounded to account for units held in multiples of less than ten.

(1)

Consists of (i) 8,333,333 shares of New Merlin Common Stock issued upon conversion of Founder Shares, (ii) 425,000 shares of New Merlin Common Stock issued upon conversion of Inflection Class A Shares not subject to redemption, and (iii) 42,500 shares of New Merlin Common Stock, in exchange for 425,000 Private Placement Units.

(2)

Consists of (i) 9,204,084 shares of Series A Preferred Stock issued upon conversion of Pre-Funded Convertible Notes sold in the Pre-Funded Note Investment, (ii) 1,040,777 shares of Series A Preferred Stock issued upon conversion of the 2024 LSA Warrants and the 2024 LSA Amendment Warrants issued to WTI FUND X, LLC, and (iii) 11,470,590 shares of Series A Preferred Stock issued pursuant to the Series A SPAs.

(3)

Based on the Purchase Price, $800,000, divided by the estimated per-share Redemption Price of approximately $10.49 per share from the Trust Account based on funds in the Trust Account as of December 31, 2025. The Redemption Price is expected to continue to increase prior to Closing, which will result in the Aggregate Consideration being a reduced number of shares of New Merlin Common Stock. Excludes shares of New Merlin Common Stock that would be issuable upon exercise of the New Merlin Options that will be outstanding as a result of New Merlin’s assumption of the outstanding Merlin Options.

(4)

Consists of (i) New Merlin Series A Warrants exercisable for an aggregate of 10,103,376 shares of New Merlin Common Stock issuable in exchange for Pre-Funded Warrants exercisable for 10,103,376 shares of Merlin Common Stock, (ii) New Merlin Series A Warrants exercisable for 11,053,924 shares of New Merlin Common Stock to be issued pursuant to the Series A SPA.

(5)

Consists of 7,631,497 options to purchase New Merlin Common Stock issued in exchange for 2,460,597 options to purchase Merlin Common Stock (“Merlin Options”), based on an expected Exchange Ratio of approximately 3.1015. The New Merlin Options have a weighted-average exercise price of $3.30, based on the weighted-average exercise price of Merlin Options divided by an expected Exchange Ratio of approximately 3.1015. The vesting requirements of the New Merlin Options are identical to those of the exchanged Merlin Options (i.e., generally vest over a four year period and expire not more than 10 years from grant). Includes 5,108,562 New Merlin Options exercisable as of December 31, 2025, with a weighted-average exercise price of $1.53, based on the weighted-average exercise price of Merlin Options divided by an expected Exchange Ratio of approximately 3.1015.

The following summarizes the pro forma shares outstanding of New Merlin Common Stock on a fully diluted basis as of the Closing Date, assuming the exercise of all New Merlin Series A Warrants to purchase shares of New Merlin Common Stock and the vesting and exercise of all New Merlin Options:

	Shares		% Ownership
Public Shareholders		2,449,449		1.8	%
Public Rightsholders*		2,499,999		1.9	%
Sponsor⁽¹⁾		8,800,833		6.5	%
Series A Holders⁽²⁾		42,872,751		31.8	%
Merlin Stockholders⁽³⁾		70,512,611		52.3	%
Merlin Option holders⁽⁴⁾		7,631,497		5.7	%
Total		134,767,140		100.0	%

Rounded to account for units held in multiples of less than ten.

(1)

(2)

Consists of (A) (i) 9,204,084 shares of Series A Preferred Stock issued upon conversion of Pre-Funded Convertible Notes sold in the Pre-Funded Note Investment (ii) 1,040,777 shares of Series A Preferred Stock issued upon conversion of the 2024 LSA Warrants and 2024 LSA Amendment Warrants issued to WTI FUND X, LLC, and (iii) 11,470,590 shares of Series A Preferred Stock issued pursuant to the Series A SPAs, plus (B) (i) New Merlin Series A Warrants exercisable for an aggregate of 10,103,376 shares of New Merlin Common Stock issuable in exchange for Pre-Funded Warrants exercisable for 10,103,376 shares of Merlin Common Stock, and (ii) New Merlin Series A Warrants exercisable for 11,053,924 shares of New Merlin Common Stock issued pursuant to the Series A SPAs.

(3)

(4)

Consists of 7,631,497 options to purchase New Merlin Common Stock issued in exchange for 2,460,597 Merlin Options, based on an expected Exchange Ratio of approximately 3.1015.

Expected Accounting Treatment for the Business Combination

The Business Combination will be accounted for as a reverse capitalization, with no goodwill or other intangible assets recorded, in accordance with U.S. GAAP. Under this method of accounting, Inflection Point is the accounting acquiree, but does not meet the definition of a business under ASC 805. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Merlin issuing stock for the net assets of Inflection Point. The net assets of Inflection Point will be stated at historical cost, with no goodwill or other intangible assets recorded.

NOTE 2. RECLASSIFICATIONS

As part of the preparation of these unaudited pro forma condensed combined financial statements, certain reclassifications were made to align Inflection Point’s and Merlin’s financial statement presentation. Upon consummation of the Business Combination, the management team of New Merlin (“New Merlin Management”) will perform a comprehensive review of Inflection Point’s and Merlin’s accounting policies. As a result of the review, New Merlin Management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of New Merlin. Based on its initial analysis, Inflection Point has identified the presentation differences that would have an impact on the unaudited pro forma condensed financial information and recorded the necessary adjustments:

Balance Sheet as of December 31, 2025

Amount (In thousands)		Presentation in Inflection Point Financial Statements	Presentation in Unaudited Pro Forma Condensed Combined Financial Information
$	704	Cash	Cash and cash equivalents
	6	Prepaid expenses	Prepaid expenses and other current assets
	204	Short-term prepaid insurance	Prepaid expenses and other current assets

Statement of Operations for the year Ended December 31, 2025

Amount (In thousands)		Presentation in Inflection Point Financial Statements	Presentation in Unaudited Pro Forma Condensed Combined Financial Information
$	56	Interest earned on bank account	Interest income
	10,480	Interest earned on investments held in Trust Account	Interest income
	670	Compensation expense	General and administrative

NOTE 3. TRANSACTION ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Business Combination. No tax adjustment has been computed for the Merlin pro forma financial results, as it expects to remain in a net loss position and maintain a full valuation allowance against its U.S. deferred tax assets. The pro forma transaction adjustments included in the unaudited pro forma condensed combined balance sheet as of December 31, 2025 are as follows:

Cash. Reflects the impact of the Business Combination on the cash balance of Merlin. The table below represents the sources and uses of funds as it relates to the business combination:

(in thousands)	Note	Amount
Inflection Point historic cash and cash equivalents balance	(1)	$	704
Merlin historic cash and cash equivalents balance			59,343
Total pre-adjustment cash and cash equivalents balance			60,047
Proceeds from cash, cash equivalents, and investments held in Trust Account	(1)		262,236
Payment of deferred underwriter fees	(2)		(8,750	)
Payment of cash underwriter fees	(2)		(1,000	)
PIPE investment, net	(3)		120,000
Payment of transaction costs	(4)		(23,273	)
Payment to redeeming Inflection shareholders	(5)		(236,542	)
Cash adjustment in connection with the business combination			112,671
Ending cash and cash equivalents balance		$	172,718

Represents $704 and $262,236 of Inflection Point’s cash and investments held in Trust Account as of December 31, 2025, respectively.

Represents the payment of $8,750 of deferred underwriting fees and $1,000 of cash underwriting fees from Inflection Point’s IPO payable upon consummation of the Business Combination.

Represents the net proceeds of $120,000 from the issuance of Series A Preferred Stock and Series A Warrants to the PIPE Investors, based on total proceeds of $207,704 less proceeds of $87,704 already received and included in Merlin’s cash and cash equivalents as of December 31, 2025.

Represents the payment of $23,273 of net estimated Business Combination transaction costs incurred by Inflection Point and Merlin, based on total estimated Business Combination transaction costs of $29,177 less transaction costs of $5,905 already paid by Merlin. This includes an estimated $8,392 of issuance costs related to the PIPE Investment.

Represents $236,542 paid to holders of Inflection Class A Shares subject to possible redemption who exercised their redemption rights.

Transaction costs. The following adjustments represent the impact of transaction costs associated with the Business Combination on capitalized transaction costs, accounts payable, and accrued expenses:

Represents the removal of $7,562 of transaction costs incurred and capitalized in capitalized transaction costs as of December 31, 2025.

Represents the removal of $478 of transaction costs incurred and payable in accounts payable as of December 31, 2025.

Represents the removal of $4,848 of transaction costs incurred and accrued in accrued expenses as of December 31, 2025.

Convertible notes, warrants, and equity. The following adjustments represent the impact of the Business Combination on convertible promissory notes, warrant liabilities, Series A Preferred Stock, New Merlin Common Stock, additional paid-in capital, and stockholders’ deficit:

Represents the redemption of 22,550,551 Inflection Class A Shares and the reclassification of 2,449,449 Inflection Class A Shares subject to potential redemption and 425,000 Inflection Class A Shares not subject to redemption into 2,874,449 shares of New Merlin Common Stock and additional paid-in-capital of $25,693.

Represents the reclassification of 8,333,333 shares of Inflection Class B Shares into 8,333,333 shares of New Merlin Common Stock.

Represents the issuance of 2,542,500 shares of New Merlin Common Stock in connection with the conversion of the Inflection Point Rights.

Represents the conversion of 17,154,902 shares of Merlin redeemable convertible preferred stock into 53,206,098 shares of New Merlin Common Stock, based on an expected Exchange Ratio of approximately 3.1015. In connection with the conversion, there is a $461,958 increase in additional paid-in-capital.

Represents the conversion of 5,306,250 shares of Merlin Common Stock into 16,457,387 shares of New Merlin Common Stock, based on an expected Exchange Ratio of approximately 3.1015. In connection with this conversion there is a $1 decrease in additional paid-in capital.

Represents the cashless exercise of warrants to purchase shares of Merlin Common Stock and the conversion of the Merlin Common Stock to 19,623 shares of New Merlin Common Stock, based an expected Exchange Ratio of approximately 3.1015.

Represents the cashless exercise of the 2019 LSA Warrants and 2021 LSA Warrants to purchase shares of Merlin redeemable convertible preferred stock, the one-to-one conversion of the Merlin redeemable convertible preferred stock to Merlin Common Stock, and the conversion of Merlin Common Stock to 701,293 shares of New Merlin Common Stock, based on an expected Exchange Ratio of approximately 3.1015.

Represents the aggregate issuance to the PIPE Investors of 21,715,451 shares of Series A Preferred Stock and 21,157,300 warrants to purchase New Merlin Common Stock in exchange for (i) the Pre-Funded Convertible Notes and the Pre-Funded Warrants and (ii) pursuant to the Series A SPAs, including an associated decrease of $18,169 to accumulated deficit.

The shares of $0.0001 par value Series A Preferred Stock have the following rights and preferences:

Voting Rights - On all matters subject to the authorization of the holders of common stock, the holders of Series A Preferred Stock are entitled to vote together with holders of New Merlin Common Stock on an as-converted basis.

Protective Provisions - For as long as 20% of the shares of Series A Preferred Stock issued as of the Closing are outstanding, New Merlin shall not, without the affirmative vote or action by the Requisite Holders, take any of the following actions: (i) liquidate, dissolve or wind up the affairs of New Merlin; (ii) amend, alter, or repeal any provision of the Certificate of Designation or any similar document of New Merlin in a manner adverse to the Series A Preferred Stock; (iii) create or authorize the creation of or issue any other security convertible into or exercisable for any equity security unless such security ranks junior to the Series A Preferred Stock with respect to its rights, preferences and privileges, or increase the authorized number of shares of Series A Preferred Stock; (iv) purchase or redeem or pay any cash dividend on any capital stock ranking junior to the Series A Preferred Stock, other than stock repurchased at cost from former employees and consultants in connection with the cessation of their service; (v) enter into any transaction with an affiliate, other than the issuance of equity or awards to eligible participants under New Merlin’s incentive plan, equity plan or equity-based compensation plan, or with respect to employment, consulting or award agreements with respect to executive officers of New Merlin, in each case regardless of whether such person (or such person’s affiliates) would be considered an affiliate of New Merlin; or (vi) incur or guarantee any indebtedness, other than equipment leases or trade payables incurred in the ordinary course of business, if the aggregate indebtedness of New Merlin and its subsidiaries for borrowed money following such action would exceed $5,000; provided, however, that the Series A Preferred Stock shall not be considered indebtedness for purposes of this calculation.

Dividends - The holders of Series A Preferred Stock are entitled to receive, on a pari passu basis and prior and in preference to holders of the New Merlin Common Stock, an annual dividend in the amount of 12% of the Accrued Value (defined as the $12 stated value per share plus any accrued and unpaid dividends). Such dividends are payable only if and when declared and are cumulative, accruing daily and compounded semi-annually. No dividends shall be declared, paid, or set aside for New Merlin Common Stock without the holder of the Series A Preferred Stock receiving the aggregate amount of accrued dividends thereon at such time. Holders of Series A Preferred Stock shall also be entitled to receive participating dividends, if and when declared on the New Merlin Common Stock, on an as-converted basis.

Liquidation - In the event of liquidation, dissolution or winding up of New Merlin or upon the occurrence of a Deemed Liquidation Event (as defined in the Business Combination Agreement), the holders of the Series A Preferred Stock shall be entitled to receive, in preference to all holders of New Merlin Common Stock, an amount per share equal to the greater of (i) 100% of the Accrued Value or (ii) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into New Merlin Common Stock immediately prior to the liquidation, dissolution, winding up or Deemed Liquidation Event.

Conversion - Each share of Series A Preferred Stock is convertible at the holder’s option into a fixed number of New Merlin Common Stock at a conversion rate equal to (i) the Accrued Value at the time of conversion divided by (ii) the Conversion Price, defined as an initial conversion price of $12 per share, subject to customary antidilution and down-round adjustments.

Redemption - The Series A Preferred Stock is redeemable by New Merlin on or after the Closing at a redemption price per share equal to (i) 150% of the Accrued Value if redeemed within one year, (ii) 140% of the Accrued Value if redeemed after one year but within two years, (iii) 130% of the Accrued Value if redeemed after two years but within three years, (iv) 120% of the Accrued Value if redeemed after three years but within four years, (v) 110% of the Accrued Value if redeemed after four years but within five years, and (vi) 100% of the Accrued Value if after five years.

Each share of Series A Preferred Stock is redeemable by the holder thereof at any time following the fifth anniversary of the Closing. The redemption price is equal to the Accrued Value of the Series A Preferred Stock at the time of redemption.

The Series A Preferred Stock is classified as temporary equity because it is redeemable for cash at the option of the holder. The Series A Preferred Stock is initially recognized at issuance date fair value. Since the Series A Preferred Stock becomes redeemable by the holder solely upon the passage of time, New Merlin will subsequently recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the Series A Preferred Stock to its redemption value at each reporting date as if it were redeemable at that date.

Represents the payment of $24,142 of legal, advisory, and other transaction costs to be capitalized in additional paid-in capital, and $1,366 of legal, advisory, and other transaction costs to be expensed in accumulated deficit.

Represents the reclassification of $11,167 of Inflection Point’s accumulated deficit to additional paid-in capital.

NOTE 4. TRANSACTION ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2025

The pro forma transaction adjustments included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2025 and are as follows:

Transaction costs. Represents $1,366 of additional legal, advisory, and other transaction expenses which Merlin expects to incur and expense in connection with the Business Combination. Transaction costs are not expected to continue beyond 12 months after the Closing.

Interest on cash, cash equivalents, and investments held in the Trust Account and interest from bank account. Represents the elimination of an immaterial amount of interest earned on cash, cash equivalents, and $10,480 of interest earned on investments held in the Trust Account during the year ended December 31, 2025.

Losses on convertible promissory notes and warrants. The following adjustments represent the impact of the Business Combination on historical losses recognized related to the convertible promissory notes and warrant liabilities exchanged in the Business Combination:

Represents the removal of $2,357 of losses in change in fair value of warrant liabilities recognized during the year ended December 31, 2025.

Represents the removal of $7,563 of losses in change in fair value of convertible promissory notes recognized during the year ended December 31, 2025.

Represents the removal of $3,320 of losses in loss on exchange of warrant liabilities recognized during the year ended December 31, 2025.

Represents the removal of $585 of losses in loss on the issuance of financial instruments recognized during the year ended December 31, 2025.

Net loss per share. The following adjustments represent the impact of the Business Combination on net loss available to common stockholders related to the deemed dividend on exchange of preferred shares and the cumulative dividends on Series A Preferred Stock:

Represents the removal of the deemed dividend on exchange of redeemable convertible preferred stock of $345,717 during the year ended December 31, 2025.

Represents the cumulative dividends on Series A Preferred stock of $31,270 during the year ended December 31, 2025.

NOTE 5. NET LOSS PER SHARE

Basic and diluted net loss per share are calculated using the two-class method. The Series A Preferred Stock is a participating security because it entitles holders thereof to cumulative dividends. Under the two-class method, earnings are allocated between holders of New Merlin Common Stock and these participating securities based on their contractual rights and obligations.

Basic net loss per share is computed by dividing loss attributable to holders of New Merlin Common Stock by the weighted-average shares of New Merlin Common Stock outstanding. Diluted net loss per share is computed by dividing net loss attributable to common shareholders by the weighted-average number of shares of New Merlin Common Stock outstanding, after adjusting for potential dilution related to the conversion of all dilutive securities into New Merlin Common Stock. As the Business Combination is being reflected as if it had occurred at the beginning of the periods presented, the calculation of weighted-average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire periods presented. If Public Shares are redeemed, this calculation is retroactively adjusted to eliminate such shares for the entire periods.

The numerator and denominator of the basic and diluted historical earnings per share for Inflection Point were calculated as follows:

	Year Ended December 31, 2025
	Class A		Class B
Basic and diluted net income per Inflection Point Ordinary Share Numerator:
Allocation of net income	$	4,525	$	1,483
Denominator:
Weighted-average shares outstanding		25,425,000		8,333,333
Basic and diluted net income per Inflection Point Ordinary Share	$	0.18	$	0.18

The numerator and denominator of the basic and diluted historical net loss per share of Merlin were calculated as follows:

	Year Ended December 31, 2025
Numerator:
Net loss	$	(74,778	)
Deemed dividend on exchange of redeemable convertible preferred stock		(345,717	)
Net loss attributable to common stockholders	$	(420,495	)
Denominator:
Weighted average shares outstanding, basic and diluted		5,211,618
Net loss per share, basic and diluted	$	(80.68	)

The numerator and denominator of the basic and diluted pro forma net loss per share of New Merlin was calculated as follows:

	Year Ended December 31, 2025
	Pro Forma Combined
Numerator:
Net loss	$	(66,847	)
Cumulative Series A Preferred Stock dividends		(31,270	)
Net loss attributable to holders of New Merlin Common Stock	$	(98,117	)
Denominator:
Weighted average shares outstanding of New Merlin Common Stock		84,134,682
Net loss per share of New Merlin Common Stock	$	(1.17	)

Pro forma weighted average shares outstanding - basic and diluted
Public Shareholders and Rightsholders		4,949,448
Sponsor		8,800,833
Total Inflection Point		13,750,281
Merlin		70,384,401
Pro forma weighted average shares outstanding - basic and diluted		84,134,682

For the purposes of calculating diluted earnings per share, the following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share due to their anti-dilutive effect: (i) 21,715,451 shares of Series A Preferred Stock, (ii) warrants to purchase 21,157,300 shares of New Merlin Common Stock, and (iii) New Merlin Options exercisable for 7,631,497 shares of New Merlin Common Stock.

Exhibit 99.4

Merlin and Inflection Point Acquisition Corp. IV Announce Closing of Business Combination

Transaction provides more than $200M in gross proceeds to accelerate commercialization of AI-powered autonomous aviation

Merlin to Begin Trading on March 17th on the NASDAQ Under Ticker Symbol “MRLN”

Boston, Mass. — March 16, 2026 — Merlin, Inc., an aerospace and defense technology company building the operating system of record for autonomous flight, today announced the closing of its business combination with Inflection Point Acquisition Corp. IV, a SPAC led and backed by the management team of Inflection Point Asset Management (Inflection Point). The Business Combination was approved by Inflection Point Acquisition Corp. IV stockholders in a special meeting held on March 12, 2026 and formally closed on March 16, 2026. On March 17, 2026, the combined company will begin trading on NASDAQ under the ticker symbol “MRLN.”

The transaction provides approximately $200 million in gross proceeds, including a fully committed PIPE anchored by Inflection Point, existing Merlin investors, including Baillie Gifford, and several new institutional investors. The capital further strengthens the company’s balance sheet. As a leading defense prime contractor for AI-powered autonomous aviation. The deal values Merlin at $800 million pre-money.

Merlin believes the future of flight is autonomous and with the completion of this transaction, the company is positioned to scale deployment of the Merlin Pilot, an AI-powered autonomous flight system designed from first principles for the purpose of flying any aircraft — military or civilian — from takeoff to touchdown, with or without a human crew on board. Every aircraft equipped with the Merlin Pilot generates data that can make the system smarter. Each new aircraft type, environment, and mission can expand the platform’s capabilities - creating compounding advantages that grow with every flight. Autonomy replaces legacy constraints with possibilities across aircraft design, flight economics, mission profiles, and the role of humans. Merlin is built from the ground up to anticipate these possibilities, and to pioneer this autonomous future’s certified, regulated and replicable commercial solutions.

“At Merlin, we are rethinking what flight can be. Aviation up to now was defined by the humans who fly aircraft — and so aviation design, engineering, and operations reflected a human focus. Merlin was founded on the insight that, when you challenge that core human-centricity and all its related assumptions, the nature and possibilities of aviation change. We believe those shifts create a massive economic and industrial opportunity,” said Matt George, CEO and founder of Merlin. “We are working with our customers and partners to identify all the ways that assured autonomy can solve real problems and meaningfully improve mission execution and outcomes. We hope our investors will appreciate and understand our methodical approach to innovating and building for the long term.”

“We believe Merlin is building the world’s leading AI-enabled autonomous pilot, with applications capable of transforming national security and civil aviation,” said Michael Blitzer, CEO of Inflection Point. “Today’s public listing strengthens the company’s first-mover advantage, opens new opportunities for partnerships with many of the world’s leading aerospace companies, and provides a platform to consolidate a fragmented, high-growth industry. Merlin is a strategically important asset at an inflection point of growth, and is uniquely positioned to lead the next era of aviation autonomy.”

Inflection Point is an experienced SPAC sponsor that seeks to identify, take public, and scale high-impact and strategically important technology companies. Its prior transactions are Intuitive Machines (Nasdaq: LUNR) and USA Rare Earth (Nasdaq: USAR).

Advisors

TD Cowen acted as exclusive Financial and Capital Markets Advisor to Merlin. TD Cowen, Cantor Fitzgerald and Cohen & Company Capital Markets, a division of Cohen & Company Securities, LLC, served as joint placement agents on the PIPE in connection with the Business Combination. Raymond James and Canaccord Genuity served as Capital Market Advisors to Merlin and Inflection Point, respectively. Latham & Watkins LLP served as legal counsel to Merlin. White & Case LLP served as legal counsel to Inflection Point. Greenberg Traurig, LLP served as legal counsel to TD Cowen, Cantor Fitzgerald, Raymond James and Canaccord Genuity.

About Merlin

Merlin is an aerospace and defense technology company building the operating system of record for autonomous flight. Through a first-principles approach, the company is redefining what’s possible across aviation, aerospace, and defense with the goal of delivering full-stack autonomy for any aircraft, military or civilian, from takeoff to touchdown. The Merlin Pilot system powers a growing range of aircraft and mission profiles, proven through hundreds of autonomous flights from test facilities across the globe. With $100M+ total in awarded contracts from military customers, Merlin is advancing American leadership in autonomous aviation by helping to solve national security challenges through safe, reliable autonomy. To learn more, visit www.merlinlabs.com or follow us on X @merlinaero.

Media Contact

Kristen Georgette

617-842-6064

merlin@pluckpr.com

Investor Relations Contact

investor.relations@merlinlabs.com

Forward-Looking Statements

Certain statements made herein are not historical facts but may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook” or the negatives of these terms or variations of them or similar terminology or expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding future events, the estimated or anticipated future results and benefits of the combined company following the business combination, future opportunities for the combined company and other statements that are not historical facts.

These statements are based on the current expectations of Merlin’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on, by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Merlin. These statements are subject to a number of risks and uncertainties regarding Merlin’s business, and actual results may differ materially. These risks and uncertainties include, but are not limited to: general economic, political and business conditions; the outcome of any legal proceedings that may be instituted against the parties following the announcement of the closing of the business combination; failure to realize the anticipated benefits of the business combination; the risk that the business combination disrupts current plans and operations as a result of the consummation of the business combination; the risks related to the rollout of Merlin’s business and the timing of expected business milestones; the effects of competition on Merlin’s business; the ability of the combined company to execute its growth strategy, manage growth profitably and retain its key employees; the ability of the combined company to obtain or maintain the listing of its securities on a U.S. national securities exchange following the business combination; costs related to the business combination; and other risks that will be detailed from time to time in filings with the U.S. Securities and Exchange Commission (the “SEC”). The foregoing list of risk factors is not exhaustive. There may be additional risks that Merlin does not know or that Merlin currently believes are immaterial that could also cause actual results to differ from those contained in forward-looking statements. In addition, forward-looking statements provide Merlin’s expectations, plans or forecasts of future events and views as of the date of this communication. Merlin anticipates that subsequent events and developments will cause their assessments to change. However, while Merlin may elect to update these forward-looking statements in the future, Merlin specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Merlin’s assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements. Nothing herein should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or results of such forward-looking statements will be achieved.

Photos accompanying this announcement are available at:

https://www.globenewswire.com/NewsRoom/AttachmentNg/edca0328-818f-4824-b649-bac06cb6ace7

https://www.globenewswire.com/NewsRoom/AttachmentNg/43ab92ed-ed07-4125-9df2-0ab697b23f60

Attachments:

Merlin’s aircraft flying overhead at the company’s Quonset, RI hangar

A C-130J flying overhead at Merlin’s Quonset, RI hangar

Source: View Original Filing on SEC EDGAR

FAQ

What did the Merlin, Inc. (MRLN) business combination with Inflection Point accomplish?

The transaction converted Inflection Point from a SPAC into operating company Merlin, Inc. Legacy Merlin became a wholly owned subsidiary, Inflection Point ceased being a shell company, and the combined entity now trades on Nasdaq under ticker MRLN, with Legacy Merlin’s financials becoming Merlin’s historical results.

How many Merlin, Inc. shares were issued to Legacy Merlin equity holders in the merger?

Legacy Merlin equity holders received 75,764,313 shares of New Merlin common stock. This aggregate consideration was based on an $800,000,000 purchase price divided by a redemption price of $10.55906094, then allocated using an exchange ratio of 3.1015099176506644 per fully diluted Legacy Merlin share.

What PIPE financing did Merlin, Inc. (MRLN) raise in connection with the business combination?

Merlin, Inc. completed a total PIPE investment of $120.0 million. Investors purchased 9,803,922 Series A Preferred shares and Series A warrants for $100.0 million, plus an additional 1,666,668 Series A Preferred shares and upsized warrants for $20 million, all under securities purchase agreements.

What is Merlin, Inc.’s post‑closing capital structure after the SPAC merger?

At closing, Merlin, Inc. had 84,262,886 common shares and 21,715,451 Series A Preferred shares outstanding. Significant stakes are held by venture investors and the SPAC sponsor, and additional warrants and equity incentive plans create further potential share issuance over time.

Who leads Merlin, Inc. after the Inflection Point business combination?

Matt George serves as Chief Executive Officer, President, and Chairman of the Board. Other key officers include Ryan Carrithers as Chief Financial Officer and Leslie Ravestein as Chief Legal Officer and Secretary, with a reconstituted board featuring independent directors meeting Nasdaq independence requirements.

What new compensation and equity plans did Merlin, Inc. adopt at closing?

Merlin adopted a 2026 Incentive Award Plan and a 2026 Employee Stock Purchase Plan. It reserved 14,943,232 shares for the incentive plan and 2,241,484 shares for the ESPP, and also approved an executive severance plan plus a non‑employee director compensation program, including RSU awards for directors.

Which auditor is responsible for Merlin, Inc.’s post‑combination financial statements?

BDO USA, P.C. was appointed as Merlin, Inc.’s independent registered public accounting firm. BDO previously audited Legacy Merlin’s 2025 and 2024 financial statements, which now serve as Merlin’s historical financials. WithumSmith+Brown, PC, the SPAC’s former auditor, was dismissed upon completion of the transaction.

Merlin, Inc. (Nasdaq: MRLN) closes SPAC deal and issues $120M PIPE preferred

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What did the Merlin, Inc. (MRLN) business combination with Inflection Point accomplish?

How many Merlin, Inc. shares were issued to Legacy Merlin equity holders in the merger?

What PIPE financing did Merlin, Inc. (MRLN) raise in connection with the business combination?

What is Merlin, Inc.’s post‑closing capital structure after the SPAC merger?

Who leads Merlin, Inc. after the Inflection Point business combination?

What new compensation and equity plans did Merlin, Inc. adopt at closing?

Which auditor is responsible for Merlin, Inc.’s post‑combination financial statements?

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Merlin, Inc. (Nasdaq: MRLN) closes SPAC deal and issues $120M PIPE preferred

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SPAC and capital-structure analyst neutral

FAQ

What did the Merlin, Inc. (MRLN) business combination with Inflection Point accomplish?

How many Merlin, Inc. shares were issued to Legacy Merlin equity holders in the merger?

What PIPE financing did Merlin, Inc. (MRLN) raise in connection with the business combination?

What is Merlin, Inc.’s post‑closing capital structure after the SPAC merger?

Who leads Merlin, Inc. after the Inflection Point business combination?

What new compensation and equity plans did Merlin, Inc. adopt at closing?

Which auditor is responsible for Merlin, Inc.’s post‑combination financial statements?

Filing Exhibits & Attachments

Press Releases

Agreements & Contracts

Financial & Certifications

Other Documents

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