Merlin, Inc.

Investing in our common stock involves a high degree of risk. In addition to the other information set forth in this Quarterly Report and in other documents that we file with the SEC, you should carefully consider the factors described in the section titled “Risk Factors” in our Prospectus. Other than as disclosed below, there have been no material changes to the risk factors described in the Prospectus. If any of the risk factors described in the Prospectus actually materializes, our business, financial condition and results of operations could be materially adversely affected. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

We depend on aircraft manufacturers and other third parties for proprietary technical data, interface specifications, and software necessary to integrate our autonomy systems onto their aircraft, and our access to this information may be limited, delayed, or withdrawn.

Integrating our autonomy software onto a given aircraft platform generally requires access to proprietary information controlled by the aircraft's manufacturer, including interface control documents, avionics and flight control software specifications, wiring and systems data, and in some cases source code or object code for systems our software must interface with. In many cases, a single manufacturer controls all of this information for a given aircraft type, and we have no alternative source for such information. Our ability to obtain this information, and the terms on which we obtain it, are governed by negotiated agreements, government contracting data rights frameworks, or the manufacturer's own discretion, none of which guarantee continued or timely access.

Our access to this data may be limited or withdrawn. Such limitations may occur if a manufacturer views our autonomy capabilities as competitive with its own current or future offerings, if commercial terms cannot be agreed, if a program contract or teaming arrangement terminates or is not renewed, or if the manufacturer becomes unable or unwilling to support integration work for other reasons. Because this data is often subject to export control restrictions (including ITAR and EAR) and, in government programs, to specific technical data rights allocations under DFARS or FAR, our access can also be affected by regulatory determinations outside our control or the manufacturer's control.

If we lose access to this information for any aircraft type on which we depend, we may be unable to complete, certify, maintain, or update our integration for that aircraft, which could delay or terminate programs, require costly and time-consuming redesign or reverse engineering efforts (which may themselves be legally or practically unavailable), and damage our relationships with customers who have selected that aircraft type. Our dependence on a limited number of manufacturers for this access also gives those manufacturers significant leverage over the commercial terms, timing, and scope of our integration work, which could materially adversely affect our business, financial condition, and results of operations.

We have identified material weaknesses in our internal control over financial reporting. If not remediated, or if we experience additional material weaknesses in the future or otherwise fail to maintain effective internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

In the course of preparing our consolidated financial statements as of and for the years ended December 31, 2025 and 2024, and the condensed consolidated financial statements for the three months ended March 31, 2026 and June 30, 2026, our management determined that we have material weaknesses and significant deficiencies in our internal controls over financial reporting. These material weaknesses primarily relate to (i) non-routine and complex transactions, (ii) segregation of duties, and (iii) information technology general controls (ITGCs) over logical access to key systems tested supporting financial reporting.

These deficiencies, individually and in the aggregate, could result in a misstatement of one or more account balances or disclosures, potentially leading to a material misstatement to the annual or interim consolidated financial statements which may not be prevented or timely detected and, accordingly, management determined that these control deficiencies constitute material weaknesses.

In order to remediate these material weaknesses, we have taken and plan to take the following actions:

•Personnel and training: We have hired and continue to hire personnel with public company accounting experience and are providing targeted training on internal control requirements, complex transaction accounting, and financial reporting obligations.

•Control design and implementation: We are implementing additional controls and processes designed to operate at a sufficient level of precision and frequency, and that appropriately evidence the performance of the control, particularly with respect to the accounting and reporting of revenue and non-routine, unusual, or complex transactions.

•Segregation of duties: We have begun to implement processes and controls to better identify and manage segregation of duties risks within our accounting and financial reporting functions.

•Systems and automation: We are evaluating system enhancements to reduce our reliance on manual processes in key areas of our financial close and reporting process.

•External advisor engagement: We have engaged an external advisor to assist with evaluating and documenting the design and operating effectiveness of our internal controls and to assist with remediation of identified deficiencies.

We will not be able to fully remediate these material weaknesses until these steps have been completed, have been operating effectively for a sufficient period of time and management has concluded, through testing, that these controls are effective. We were not required to, and did not, perform an evaluation of our internal control over financial reporting as of December 31, 2025 or any period in accordance with the provisions of the Sarbanes-Oxley Act. Accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses. Material weaknesses may still exist when we first report on the effectiveness of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act.

If not remediated, these material weaknesses could result in material misstatements to our annual or interim consolidated financial statements that might not be prevented or detected on a timely basis, or in delayed filing of required periodic reports. If we are unable to assert that our internal control over financial reporting is effective when required, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or investigations by Nasdaq, the SEC, or other regulatory authorities, which could require additional financial and management resources. Our remediation efforts may be complicated by our recent transition to operating as a public company and by the accounting, valuation and disclosure requirements associated with our capital structure, including our Series A Preferred Stock, Series A Warrants and other non-routine transactions.