ATHR 10-K & 10-Q changes, risk factors and insider trading

Our secured indebtedness to Streeterville Capital, LLC, and the restrictive covenants, redemption provisions and default remedies contained in the related transaction documents, may restrict our business and operations, adversely affect our liquidity and permit Streeterville to foreclose on substantially all of our assets.

On May 13, 2026, we entered into a Note Purchase Agreement with Streeterville Capital, LLC, or Streeterville, pursuant to which we issued to Streeterville a secured promissory note in the original principal amount of $3.24 million, including a $240,000 original issue discount, for a purchase price of $3.0 million, which we refer to as the May Note. On August 5, 2026, we entered into a Note Purchase Agreement with Streeterville, pursuant to which we issued to Streeterville a secured promissory note in the original principal amount of $1.62 million, including a $120,000 original issue discount, for a purchase price of $1.5 million, which we refer to as the August Note and, together with the May Note, the Streeterville Notes. The aggregate original principal amount of the Streeterville Notes is $4.86 million, compared with aggregate purchase prices of $4.5 million, before giving effect to payments, accrued interest, monitoring fees, trigger-event balance increases, default interest and other amounts that may become payable under the Streeterville Notes and the related transaction documents. Certain of our subsidiaries have guaranteed our obligations under both Streeterville Notes.

Each Streeterville Note bears interest at 8% per annum, compounded daily, and matures 18 months after its applicable purchase price date. We may prepay either Streeterville Note in full only by paying 110% of its then-outstanding balance. In addition, if either Streeterville Note remains outstanding on the six-month anniversary of its applicable purchase price date, a one-time monitoring fee will be added to the outstanding balance of that Note, subject to specified forgiveness provisions. Accordingly, the stated interest rates do not reflect the full potential economic cost of the Streeterville Notes, which also includes the original issue discounts, prepayment premiums, potential monitoring fees and any balance increases or default interest that may become payable.

Beginning six months after the applicable purchase price date, Streeterville may require us to redeem up to $250,000 of the outstanding balance of the May Note and up to $125,000 of the outstanding balance of the August Note per calendar month. Once the redemption periods for both Streeterville Notes have commenced, Streeterville may therefore require scheduled redemptions of up to $375,000 in the aggregate per calendar month. Each Streeterville Note also permits additional limited redemptions if our common stock trades at or above the price threshold specified in the applicable Note, with the maximum limited-redemption amount determined by reference to trading volume. Under each Streeterville Note, limited redemptions do not reduce the otherwise applicable monthly redemption limit. Redemption amounts under each Streeterville Note, including limited redemptions, are payable in cash within three Trading Days following Streeterville’s delivery of the applicable redemption notice. Any redemption paid in cash would reduce the cash available for working capital, acquisitions, product development and other corporate purposes. Our operations may not generate sufficient cash to make required redemptions, pay monitoring fees or other amounts that may be added to the outstanding balances, repay the Streeterville Notes at maturity or satisfy accelerated payment obligations following an event of default. We may also be unable to refinance the Streeterville Notes on acceptable terms or at all. The payment obligations under the two Streeterville Notes may overlap, and additional limited redemptions or other balance adjustments could materially increase the amounts payable during a particular period.

Our obligations under the May Note are secured by a first-position lien, subject to permitted liens, on substantially all of our assets, including our intellectual property. The August Note is also secured by substantially all of our assets and intellectual property under the applicable security documents. Certain of our subsidiaries have guaranteed our obligations under both Streeterville Notes. If an event of default occurs, Streeterville may seek to foreclose on all or a portion of the collateral or pursue one or more guarantors. Any such action could result in the loss of assets necessary to operate our business and could adversely affect the liquidity and operations of our subsidiaries and force us to curtail or cease some or all of our operations.

In a bankruptcy, insolvency, liquidation or reorganization, Streeterville would generally have secured claims against the collateral, subject to applicable bankruptcy law, the validity and perfection of its liens, permitted liens and claims entitled to priority under applicable law. The value of our assets may not be sufficient to satisfy the amounts owing to Streeterville and our other creditors. As a result, holders of our common stock could receive little or no value in such a proceeding.

Each Note Purchase Agreement contains substantially similar affirmative and negative covenants that may restrict our business and financing activities. Subject to specified exceptions, these provisions restrict or require Streeterville’s prior consent with respect to our ability, and the ability of our subsidiaries, to, among other things:

Some of these covenants, including those relating to the continued listing and trading of our common stock, may be affected by market, regulatory or other circumstances that are not entirely within our control. The covenants may also limit our ability to obtain additional financing, negotiate favorable financing terms, conduct acquisitions or other strategic transactions, capitalize our subsidiaries, dispose of assets or respond to changes in our business and market conditions. A failure to comply with a covenant could result in a trigger event or event of default even if we are otherwise able to make scheduled payments under the Streeterville Notes.

Each Note Purchase Agreement also contains a most-favored-nation provision. If, while the applicable Streeterville Note remains outstanding, we issue a debt security containing an economic term or condition more favorable to the holder, or another holder-favorable term that was not similarly provided to Streeterville, Streeterville may elect to incorporate that term into the applicable Streeterville financing documents. If we fail to provide the required notice and Streeterville subsequently becomes aware of the more favorable term, the incorporation may be retroactive to the date on which the term was granted. This provision could increase our obligations to Streeterville, make future debt financing more costly or difficult to negotiate, or discourage potential financing sources from providing capital on terms that would trigger the provision.

Each Streeterville Note contains broad trigger-event provisions. Following a trigger event, Streeterville may increase the outstanding balance of the affected Streeterville Note by applying a 15% adjustment for each major trigger event or a 5% adjustment for each minor trigger event, subject to the limits set forth in the applicable Note. Trigger events under each Streeterville Note include, among other matters, payment defaults, breaches of covenants or other material obligations, materially false or misleading representations, certain insolvency events, and the entry into or consummation of certain fundamental transactions without repayment of the applicable Streeterville Note or Streeterville’s consent. Each Streeterville Note also includes trigger events relating to certain reverse stock splits, certain judgments exceeding $500,000 and material breaches by us or our subsidiaries of certain other agreements. Because the definition of other agreements is broad, a breach of an agreement that is not itself a Streeterville financing document could result in an increase in the outstanding balance of the applicable Streeterville Note or the exercise of other remedies by Streeterville.

If a trigger event is not cured within the applicable cure period, it may become an event of default. Specified insolvency-related trigger events may result in an automatic event of default and acceleration. Following an event of default, the outstanding balance of the affected Streeterville Note and other amounts payable under the applicable financing documents may become immediately due and payable, and default interest may accrue at 15% per annum. Under each Note Purchase Agreement, Streeterville may also seek injunctive relief or specific performance. Following an event of default under the applicable Streeterville Note, Streeterville may seek an injunction prohibiting us from issuing common or preferred stock unless 50% of the gross proceeds from the issuance are simultaneously applied to that Note. Streeterville may also seek to prevent the consummation of certain fundamental transactions unless the applicable Streeterville Note is repaid in full at closing or Streeterville provides its written consent. The availability or exercise of these remedies could prevent or delay financings or strategic transactions that our board of directors otherwise believes would be in the best interests of our company and stockholders.

If we are unable to comply with the applicable covenants, make required redemptions or other payments, or repay accelerated amounts, Streeterville could exercise its contractual and secured-creditor remedies, including foreclosure on all or a portion of the collateral and enforcement of the subsidiary guarantees. Any such actions could materially impair our liquidity, restrict or prevent us from obtaining additional financing, disrupt our business and force us to curtail or cease some or all of our operations.

Board of Directors

On June 1, 2026, the Board of Directors increased the size of the Board from four to five directors and appointed Hon Nam Lee (Alvars) as an independent director to fill the newly created directorship. Mr. Lee was also appointed Chair of the Nominating and Corporate Governance Committee. On the same date, the Board approved the transition of Timothy William Murphy from an independent director to a director who also serves as the Company’s General Counsel. Mr. Murphy will continue to serve on the Board but will no longer be considered an independent director under the applicable Nasdaq listing standards, SEC rules, the Company’s committee charters, and corporate governance guidelines.

Formation of Subsidiaries

On May 29, 2026, the Company incorporated Alpha Edge Media (Hong Kong) Limited, a wholly owned subsidiary of Alpha Edge Media, Inc., under the laws of Hong Kong to support the Company’s expanding newsletter business. As of the reporting date, the subsidiary had not commenced material operations and its incorporation did not have a material impact on the Company’s condensed consolidated financial statements.

On June 15, 2026, the Company incorporated Aether Compute LLC, a wholly owned subsidiary organized under the laws of the State of Delaware. As of the reporting date, Aether Compute LLC had not commenced material operations and its incorporation did not have a material impact on the Company’s condensed consolidated financial statements.

At-the-Market Offering Program

On June 25, 2026, the Company entered into an At-The-Market Issuance Sales Agreement with Rodman & Renshaw LLC (“Rodman” or the “Sales Agent”) pursuant to which, the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, $0.001 par value per share, up to $10,998,532 through the Sales Agent. The offer and sale of the shares will be made pursuant to a previously filed shelf registration statement on Form S-3 (File No. 333-296182), originally filed with the SEC on May 22, 2026 and declared effective by the SEC on June 2, 2026, and the related prospectus supplement dated June 2, 2026 and filed with the SEC on such date pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”).

Under the Sales Agreement, Rodman may sell shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act. Rodman will use commercially reasonable efforts to sell the shares from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company agreed to pay Rodman a commission of upto 3.0% of the gross proceeds from the sales of shares sold under the Sales Agreement and has provided the Sales Agent with customary indemnification and contribution rights. The Company also agreed to reimburse Rodman for certain expenses incurred in connection with the Sales Agreement. The Company and Rodman may each terminate the Sales Agreement at any time upon specified prior written notice.

For the three and nine months ended June 30, 2026, the amount of proceeds generated from the sale of common stock under the Sales Agreement was $10,674 from the sale of 2,500 shares.

Grant of Stock Options

On July 10, 2026, the Board of Directors of the Company approved, by unanimous written consent, the grant of stock options to purchase an aggregate of 920,000 shares of the Company’s common stock under the Aether Holdings, Inc. 2024 Equity Incentive Plan, at an exercise price of $4.24 per share, to the Company’s executive officers, directors, employees and certain consultants, including incentive stock options and nonqualified stock options as applicable. The Board also ratified the filing and effectiveness of the Company’s Registration Statement on Form S-8 (File No. 333-296549), filed with the SEC on June 5, 2026, registering shares issuable under the Plan, including shares underlying the Option Grants. The Company is evaluating the resulting stock-based compensation expense and does not expect this event to require adjustment to the financial statements for the period covered by this Quarterly Report.

Definitive Agreement (Virtual Grid)

On July 17, 2026, the Company and its subsidiary, Aether Compute LLC, entered into definitive agreements with Virtual Grid Inc. (“Virtual Grid”), a related party establishing a strategic partnership and equity investment. Under an Exclusive White Label Supply and Distribution Agreement and a related FOMA license agreement, Aether Compute became Virtual Grid’s exclusive reseller for the AetherPod™ VG100 across ten Southeast Asian countries for an initial 10-year term (with a 10-year renewal option), with certain non-exclusive U.S. rights, subject to royalties of 6% (direct deployments) or an effective 3% (operator deployments) of gross compute revenue. Separately, the Company invested $360,000 in Virtual Grid via issuance of 82,606 shares of Company common stock, in exchange for 176,412 Virtual Grid Class A shares and a warrant for 176,412 additional shares (exercise price C$2.864692, expiring July 17, 2031), subject to a 12-month lock-up and down-round protection. The Company is evaluating the accounting treatment of this transaction and does not expect it to require adjustment to the financial statements for the period covered by this Quarterly Report.

Acquisition of Noviant Inc.

On August 4, 2026, Aether Compute LLC, a wholly owned subsidiary of the Company, entered into a Stock Purchase Agreement with Noviant Inc., a New York corporation, and its four selling stockholders, pursuant to which Aether Compute LLC acquired 60% of the fully diluted equity interests of Noviant for an aggregate purchase price of $3,600,000, consisting of $900,000 in cash and $2,700,000 in restricted shares of the Company’s common stock (based on the 20-day VWAP preceding closing). Of the cash consideration, $50,000 was placed into a working capital support account and $540,000 of the stock consideration was placed into an 18-month indemnity holdback, in each case pursuant to related escrow arrangements. Following the closing, the Company has the right to designate a majority of Noviant’s board of directors and retains various governance and transfer-restriction rights over the Sellers’ retained 40% interest.

The initial accounting for the business combination is incomplete as of the date these condensed consolidated financial statements were available to be issued because the Company has not yet completed the valuation of the assets acquired, the liabilities assumed, the non-controlling interest, and the resulting goodwill. Accordingly, the Company is unable to present the provisional amounts of consideration transferred and of the identifiable assets and liabilities recognized at the acquisition date. The amounts recognized are provisional and may be adjusted during the measurement period, which will not exceed one year from the acquisition date, as the Company obtains the information necessary to identify and measure the acquisition-date fair values of the assets acquired and liabilities assumed.

Note Purchase Agreement with Streeterville Capital, LLC

On August 5, 2026, the Company entered into a Note Purchase Agreement with Streeterville Capital, LLC pursuant to which the Company issued a Secured Promissory Note in the original principal amount of $1,620,000, reflecting a purchase price of $1,500,000 after a $120,000 original issue discount. The note bears interest at 8% per annum, matures 18 months from the purchase price date, and is secured by substantially all of the Company’s assets, its intellectual property, and guaranties from the Company’s subsidiaries. This note is in addition to a prior secured note issued to the same investor on May 13, 2026 in the original principal amount of $3,240,000, and contains customary redemption rights, trigger/default provisions, and restrictive covenants (including limitations on additional liens and variable-rate financings) in favor of the investor. Accounting treatment for same is under evaluation and will be finalized and reflected in our Annual Report on Form 10-K for the fiscal year ending September 30, 2026.

Interest income (expense), net

Interest expense was $69,968 for the nine months ended June 30, 2026, compared to $0 for the same period in 2025, while interest income was $40,868 and $47,845, respectively. The increase in interest expense was primarily due to the issuance of the Company’s secured note payable in May 2026. Interest expense for the nine months ended June 30, 2026 included contractual interest at the stated rate and non-cash amortization of the original issue discount, debt issuance costs and brokerage costs.

Interest income (expense), net