MTTN 10-K & 10-Q changes, risk factors and insider trading
Matternet, Inc. · OTC · Aircraft · CIK 2075109 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Comparison not available: Not available: fewer than two 10-K filings on EDGAR to compare (only one so far)..
What changed in the latest 10-Q
Risk Factors
New heading “Investing in our common stock involves a high degree of risk. You should carefully consider the risk factors discussed below when considering an investment in our common stock. If any of the following risks actually occur, our business, prospects, operating results and financial condition could suffer materially. In such event, the trading price of our common stock could decline, and you might lose all or part of your investment.”
New heading “Risk Factor Summary”
New heading “Risks Related to Our Business and Industry”
New heading “Our future growth depends on the demand for, and customers’ willingness to adopt, our products and drone delivery services.”
New heading “We may be unable to make timely product deliveries due to limited production capacity.”
New heading “We may have significant customer concentration, and the loss of one or more key customers contracts could materially harm our business.”
New heading “We may not be successful in competing in the drone delivery industry.”
New heading “An accident involving a drone delivery system provided by us or another manufacturer could harm the drone delivery industry.”
New heading “We are subject to extensive laws and regulations relating to various aspects of our business, including licensing by the U.S. Federal Aviation Administration. There can be no assurance that the necessary approvals and licenses will be granted on a timely basis, if at all, which could significantly delay or prevent the commercialization of our products.”
New heading “We are an early-stage company with a history of financial losses, and we expect to continue to incur financial losses for the foreseeable future. We cannot assure you that we can or will be able to operate profitably.”
New heading “If we fail to manage our growth effectively, we may be unable to execute our business plan, which could harm our business prospects, financial condition, results of operations and cash flows.”
New heading “Our future revenue plans rely on partnerships with strategic and government entities. There can be no assurance that we will be successful in entering into such needed partnerships.”
New heading “We depend on third-party FAA Part 135 operating partners to conduct commercial flight operations in the United States, and the loss or unreliability of these partners could materially harm our business.”
New heading “Our drone delivery operations depend on obtaining regulatory approvals for beyond visual line of sight operations, or BVLOS, and integration into low-altitude airspace management frameworks that are still being developed.”
New heading “Our operating and financial projections rely on management assumptions and analyses. If these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results.”
New heading “We have limited experience commercializing our products at a large scale and may not be able to do so efficiently or effectively.”
New heading “Our business is substantially dependent on a small number of key personnel, and the loss of any such personnel could adversely affect our operations.”
New heading “If we cannot protect, maintain and, if necessary, enforce our intellectual property rights, our ability to develop and commercialize products will be adversely impacted.”
New heading “We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial fees and costs.”
New heading “The benefits to customers of our products could be supplanted by other technologies or solutions or competitors’ products that utilize similar technology to ours in a more effective way.”
New heading “Our auditor has issued a “going concern” opinion.”
New heading “Our auditor identified a material weakness in our internal control over financial reporting.”
New heading “Our business plans require a significant amount of capital. Our future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders or contain terms unfavorable to us or our investors. Moreover, there can be no assurance that such capital will be available to us on a timely basis, if at all.”
New heading “Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by domestic and international financial institutions or transactional counterparties, could adversely affect our business, financial condition, and results of operations.”
New heading “Any acquisitions, partnerships, or joint ventures that we enter into could disrupt our operations and harm on our business, financial condition and results of operations.”
New heading “We may be unable to adequately control the costs associated with our operations.”
New heading “Security breaches and other disruptions could compromise our proprietary information and expose us to liability, which would cause our business and reputation to suffer.”
New heading “A cybersecurity incident affecting our drones, ground infrastructure or software platform could disrupt flight operations, compromise safety and harm our reputation.”
New heading “Current and future geopolitical and macroeconomic events outside of our control, including changes in interest rates, levels of inflation and foreign currency exchange rates, could adversely impact our business, results of operations, cash flows, financial condition and liquidity.”
New heading “Uncertain global macroeconomic and political conditions could harm our business prospects, financial condition, results of operations, and cash flows.”
New heading “Our ability to rely on global supply chains for source components and/or raw materials may be impacted by tariffs, trade disputes, or other changes in trade policy or trade regulation.”
New heading “Our customers could incur substantial costs as a result of violations of, or liabilities under, environmental laws.”
New heading “Litigation or legal proceedings could expose us to significant liabilities, occupy a considerable amount of our management’s time and attention, and damage our reputation.”
New heading “We are subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations. We can face criminal liability and other serious consequences for violations, which can harm our business, prospects, financial condition and operating results.”
New heading “Being a public company can be administratively burdensome and will significantly increase our legal and financial compliance costs.”
New heading “Our management as a group has limited experience operating a publicly traded company.”
New heading “Risks Related to Ownership of Our Common Stock”
New heading “The shares of common stock issued in the Merger and the Private Placement are “restricted securities” and, as such, may not be sold except in limited circumstances. If we are unable to register such securities in a timely manner, then the ability to re-sell shares of our common stock so issued will be delayed.”
New heading “There is currently no market for our common stock and there can be no assurance that any market will ever develop. You may therefore be unable to re-sell shares of our common stock at times and prices that you believe are appropriate.”
New heading “Our common stock may not be eligible for listing or quotation on any securities exchange or over-the-counter trading system.”
New heading “The market price and trading volume of our common stock may be volatile and could decline significantly following the Merger.”
New heading “The designation of our common stock as “penny stock” would limit the liquidity of our common stock.”
New heading “FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our common stock.”
New heading “Because we became a reporting company under the Exchange Act by means other than a traditional underwritten initial public offering, we may not be able to attract the attention of research analysts at major brokerage firms.”
New heading “As a result of the consummation of the Merger, we are now obligated to develop and maintain proper and effective internal control over financial reporting. If we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired. In addition, the presence of material weaknesses increases the risk of material misstatement of the consolidated financial statements.”
New heading “A majority of the voting power of our common stock is consolidated among our executive officers and directors, which may prevent you or any new investors from influencing significant corporate decisions.”
New heading “We are an emerging growth company and a smaller reporting company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies and smaller reporting companies could make our common stock less attractive to investors.”
New heading “We may face risks related to securities litigation that could result in significant legal expenses and settlement or damage awards.”
New heading “Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.”
New heading “We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.”
New heading “If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our stock price and trading volume could decline.”
Largest changes
“Any violations of the laws and regulations described above may result in whistleblower complaints, adverse media coverage, investigations, substantial civil and criminal fines and penalties, damages, settlements, prosecution, enforcement actions, imprisonment, the loss of export or import privileges, suspension or debarment from government contracts, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences, any of which could adversely affect our business, prospects, financial condition and operating results. …”see in full comparison
“Actual events involving reduced or limited liquidity, defaults, non-performance or other adverse developments that affect domestic and international financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems. Investor concerns regarding the U.S. …”see in full comparison
“Our business could be subject to stringent U.S. export control laws and regulations as well. Unfavorable changes in these laws and regulations or U.S. government licensing policies, our failure to comply with or secure timely U.S. government authorizations under these laws and regulations could harm us and our ability to expand and thereby affect our business prospects, financial condition, results of operations and cash flows. …”see in full comparison
“We plan to rely on global supply chains to source components and materials essential for our business. The imposition of new or increased tariffs, trade restrictions, or other changes in trade policy by the United States or other countries could increase our costs of materials and components, require us to find additional or alternative suppliers, or force adjustments to our pricing structure and capital budget. These changes could reduce our profit margins, may impact our licenses or may require additional regulatory approval, or could otherwise disrupt our business operations. …”see in full comparison
“Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by domestic and international financial institutions or transactional counterparties, could adversely affect our business, financial condition, and results of operations.”see in full comparison
“As a result of the consummation of the Merger, we are now obligated to develop and maintain proper and effective internal control over financial reporting. If we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired. In addition, the presence of material weaknesses increases the risk of material misstatement of the consolidated financial statements.”see in full comparison
Full comparison: every changed paragraph (149)
Investing in our common stock involves a high degree of risk. You should carefully consider the risk factors discussed below when considering an investment in our common stock. If any of the following risks actually occur, our business, prospects, operating results and financial condition could suffer materially. In such event, the trading price of our common stock could decline, and you might lose all or part of your investment.
Risk Factor Summary
Risks Related to Our Business and Industry
Our future growth depends on the demand for, and customers’ willingness to adopt, our products and drone delivery services.
We operate in the new and evolving drone delivery industry. Our business and operating results depend in large part on the acceptance of and demand for our drone delivery systems. The success of these products and services are and will be subject to risks, including with respect to:
If we fail to manage the risks described above, we may discourage current or potential customers from purchasing our products or using our commercial solutions, and there may be downward price pressure on our products and commercial solutions. If the market for drone delivery solutions does not develop as we expect or develops more slowly than we expect, our business, prospects, financial condition and operating results will be materially and adversely affected.
We may be unable to make timely product deliveries due to limited production capacity.
Commercial production of our aircraft and ground infrastructure requires timely and adequate supply of various types of raw materials and components, as well as mass production capacity and efficient manufacturing and assembly. We have limited experience in high-volume manufacturing of our aircraft and ground infrastructure. We cannot assure you that we will be able to expand our production capacity efficiently and cost-effectively, or be able to procure sufficient raw materials and components to meet our production volume. While we are looking into expanding our manufacturing capacity through partnerships, such partnerships may not be successful, or we may not be able to do so in a timely manner to fulfill our backlog orders. While we obtain components from multiple sources whenever possible, some of the components used in our products are currently selected to be purchased from a single source to improve cost-efficiency or due to regulatory constraints. Disruption in the supply of components, whether or not from a single-source supplier, could temporarily disrupt commercial production of our products. We also outsource certain manufacturing activities to third party contract manufacturers. We may experience operational difficulties with our contract manufacturers, including reductions in the availability of production capacity, failure to comply with product specifications, insufficient quality control, failure to meet production deadlines, increases in manufacturing costs and longer lead time.
Any of the foregoing could result in our failure to make timely deliveries to our customers. Such failure would materially and adversely affect our business, results of operations, financial condition and prospects.
We may have significant customer concentration, and the loss of one or more key customers contracts could materially harm our business.
Our revenue and order backlog may be concentrated among a limited number of customers, commercial partners, or government entities that have contracted for drone delivery services or logistics infrastructure. The drone delivery market is at an early stage of commercialization, and a significant portion of our near-term revenue is likely to depend on a small number of anchor customers or pilot program agreements. If any such customer were to reduce delivery volumes, terminate its relationship with us, decline to renew a contract, shift to a competing drone delivery provider, or revert to conventional ground-based logistics, our revenues could decline materially and abruptly.
Government customers and publicly funded programs, which may represent a meaningful share of our early revenue, are subject to budgetary constraints, changes in procurement priorities, and shifts in policy toward drone delivery that are outside our control and that could result in the reduction, modification, or cancellation of contracts with limited notice. Commercial customers in the healthcare, retail, and logistics sectors, which are among the primary target markets for drone delivery, may also face industry-specific pressures that affect their willingness or ability to maintain or expand drone delivery programs.
Our reliance on a small number of customers also limits our negotiating leverage and may result in pricing pressure, route exclusivity demands, or service level commitments that increase our operating costs and constrain our network flexibility. Any loss of, or material reduction in business from, a key customer could materially and adversely affect our business, financial condition, and results of operations.
We may not be successful in competing in the drone delivery industry.
We operate in the drone delivery industry and in addition to competing with other drone delivery companies, we compete with traditional industry players providing on-demand delivery through road-based solutions. Many of our current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products.
We expect competition in our industry to intensify in the future in light of increased demand for cost-efficient on-demand and instant delivery. Factors affecting competition include, among others, ability to innovate, development speed, product quality, reliability, safety and features, pricing and customer service. Increased competition may lead to lower product unit sales and increased inventory, which may result in downward price pressure and adversely affect our business, financial condition, operating results and prospects.
Our ability to successfully compete in our industry will be fundamental to our future success in existing and new markets and will affect our market share. If our competitors introduce products or services that are superior in quality or performance and/or lower in price compared with our offerings, we may lose existing customers or be unable to attract new customers at prices that would allow us to generate attractive rates of return on our investment, if at all.
An accident involving a drone delivery system provided by us or another manufacturer could harm the drone delivery industry.
An accident involving a drone delivery system provided by us or another manufacturer could cause regulatory agencies around the world to tighten restrictions on the use of drone delivery systems, particularly over-populated areas, and could cause the public to lose confidence in our products and drone delivery systems generally. There are risks associated with autopilot, flight control, communications and other advanced technologies, and, from time to time, there have been accidents associated with these technologies. The safety of certain cutting-edge technologies depends in part on user interaction, and users may not be accustomed to using such technologies. We could face unfavorable and tightened regulatory control and intervention on the use of drone delivery systems and be subject to liability and government scrutiny to the extent accidents associated with our systems occur. Should a high-profile accident occur resulting in substantial casualty or damages, either involving our products or products offered by other companies, public confidence in and regulatory attitudes toward drone delivery could deteriorate. Any of the foregoing could materially and adversely affect our results of operations, financial condition and growth prospects.
We are subject to extensive laws and regulations relating to various aspects of our business, including licensing by the U.S. Federal Aviation Administration. There can be no assurance that the necessary approvals and licenses will be granted on a timely basis, if at all, which could significantly delay or prevent the commercialization of our products.
We are subject to a wide variety of laws and regulations relating to various aspects of our business, including with respect to the design, manufacture, operations, and marketing of drone delivery solutions; employment and labor; tax; data security of the operational and information technology we use; health and safety; and zoning and environmental issues. Laws and regulations at the foreign, federal, state and local levels may change and may be interpreted in different ways, especially in relation to new and emerging industries, and we cannot always reasonably predict the impact from, or the ultimate cost of compliance with, current or future regulatory or administrative changes. We cannot guarantee that our measures to monitor these developments and the time and resources we spend to comply with these laws, regulations and guidelines will be satisfactory to regulators or other third parties, such as our customers, who may also be subject to extensive governmental regulation.
We may need to expend substantial efforts to comply with any new and evolving laws and regulations applicable to our business, which may result in increased general and administrative expenses and a diversion of management time and attention. Moreover, changes in laws, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate and could have a material adverse effect on our sales, profitability, cash flows and financial condition, and lead to regulatory delays that could impact our ability to obtain licenses, certificates, authorizations, permits, and other types of regulatory approvals. Similarly, changes in the priorities, mandates and funding levels of the governmental entities with which we interact could impact our relationships with such entities; reduce the number of staff available to review and issue the requisite regulatory approvals, permits and licenses; influence the public’s perception of our company and our industry; and influence decisions by clients, governmental agencies or other industry participants with whom we do business. Any such change thus carries the possibility of reducing demand for our services or increasing our costs of operations, which could have a negative impact on our financial position, results of operations or cash flows, but we cannot reasonably or reliably estimate whether such changes will occur, when they will occur or if they will impact us.
If we fail to comply with the laws applicable to our business and operations, we may be subject to civil and criminal penalties or private lawsuits, or the suspension or revocation of regulatory approvals, which would prevent us from operating our business. Regulatory approval processes may be subject to change, can be technically challenging to address, may result in the imposition of conditions that impact the financial viability of our facilities, and may also provide opportunities for third parties to lodge objections or file petitions against the licensing of our facilities. Failure to comply with these laws, obtain the required regulatory approvals, or receive exemptions from such regulations, as needed, could result in regulatory enforcement, violations, fines, penalties, or the inability to operate our commercial deployments. Any delays in regulatory approvals could also adversely affect our ability to meet commercialization timelines and thereby affect our financial performance and future growth objectives.
We must also comply with extensive government laws and regulations related to, among other things, health, safety and the environment. We may be unable to meet the compliance standards of such laws and regulations, and our inability to do so may cause us to lose prospective business and adversely affect our financial condition and results of operations. Further, environmental, health and safety laws change frequently, and we may not be able to anticipate such changes or the impact of such changes. There is no assurance that we can avoid significant costs, liabilities and penalties imposed as a result of such governmental regulation in the future.
Our business could be subject to stringent U.S. export control laws and regulations as well. Unfavorable changes in these laws and regulations or U.S. government licensing policies, our failure to comply with or secure timely U.S. government authorizations under these laws and regulations could harm us and our ability to expand and thereby affect our business prospects, financial condition, results of operations and cash flows. Moreover, the inability to secure and maintain required export licenses or authorizations could negatively impact our ability to compete successfully or market our technology outside the United States. Similarly, if export control laws and regulations prevent us from sharing certain export controlled information with suppliers we intend to partner with to operate our business or develop and produce our products, we may not be able to work with our preferred suppliers, which may impact our finances, business plans, and the competitiveness of our offerings. Failure to comply with export control laws and regulations could expose us to civil or criminal penalties, fines, investigations, more onerous compliance requirements, loss of export privileges, debarment from government contracts or limitations on our ability to enter into contracts with the U.S. government. Any changes in export control regulations or U.S. government licensing policy, such as that necessary to implement U.S. government commitments to multilateral control regimes, may restrict our market size.
We are an early-stage company with a history of financial losses, and we expect to continue to incur financial losses for the foreseeable future. We cannot assure you that we can or will be able to operate profitably.
We are an early-stage company formed in 2011. We face all the risks commonly encountered by newer companies, as well as risks related to the nature of the emerging drone logistics industry, and we may experience unforeseen expenses, difficulties, complications, delays and effects caused by other known and unknown factors.
We have not been profitable to date, and we expect to incur operating losses for the near future. During the fiscal year ended September 30, 2025 and nine months ended June 30, 2026, we incurred net losses of $31.0 million and $15.1 million, respectively, on a consolidated basis. There can be no assurance that we will not continue to incur net losses in the future. We may not succeed in expanding our customer base, and market acceptance of our technology and products may never occur. Even if we are successful in generating a broader customer base or promoting market acceptance of our offerings, we may never generate revenue that is significant enough to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress our value and could impair our ability to raise capital, expand our business, diversify our product offerings, or even continue our operations.
If we fail to manage our growth effectively, we may be unable to execute our business plan, which could harm our business prospects, financial condition, results of operations and cash flows.
We intend to invest significantly in order to expand our business from an early-stage company to a company capable of supporting large-scale commercial activities. Any failure to manage our growth effectively could harm our business, prospects, financial condition, and operating results. We expect our expansion to include:
If our operations continue to grow, of which there can be no assurance, we will need to continue to expand our sales and marketing, research and development, commercial strategy, permitting and licensing, products and services, manufacturing, supply and operations functions. These efforts will require us to invest significant financial and other resources. There is no guarantee that we will be able to scale our business as currently planned or within the planned timeframe. The continued expansion of our business may in the future require additional operational facilities, as well as space for administrative support, and there is no guarantee that we will be able to find suitable locations for such facilities if needed.
Our continued growth could increase the strain on our resources, and we could experience operating difficulties, including difficulties in hiring and training employees, delays in production, challenges in scaling-up operations, and difficulty sourcing adequate production materials. These difficulties may divert the attention of management and key employees and impact financial and operational results. If we are unable to drive commensurate growth, these costs could result in decreased margins, which could harm our business, financial condition, and results of operations.
Our future revenue plans rely on partnerships with strategic and government entities. There can be no assurance that we will be successful in entering into such needed partnerships.
Our largest stream of projected revenue comes from maximizing adoption of our drone delivery products and services. We may be unable to maximize utilization due to a variety of reasons, including, inability to timely enter into desirable strategic partnerships and failure to obtain necessary regulatory approvals and permits. Our services are new solutions in the delivery industry and as such, represent an unproven model. If we are unable to realize these sales, our business model and go-to-market strategy will be jeopardized.
We depend on third-party FAA Part 135 operating partners to conduct commercial flight operations in the United States, and the loss or unreliability of these partners could materially harm our business.
Our commercial strategy in the United States relies on FAA Part 135-certificated operators – including UPS Flight Forward and Ameriflight – to conduct commercial drone delivery flights using our M2 platform. We do not currently hold our own Part 135 certificate in the United States, and certain customer programs are served by a single operator. Our ability to deliver revenue from our DaaS model, and to scale commercial operations in the United States more broadly, depends on the continued availability, performance and economic terms of these partners.
A partner may experience operational, financial, regulatory or safety issues that limit its ability to operate our platform, including suspension or revocation of its Part 135 certificate. A partner may elect to reduce or terminate operations using our systems, to prioritize competing platforms, or to be acquired by or aligned with a competitor. Commercial terms, including operator margins, revenue share and minimum commitments, may become less favorable to us or make our DaaS offering uneconomic. A partner may also fail to achieve targeted utilization, on-time performance or service-level metrics, harming our customer relationships and reputation. The loss or material underperformance of any single operator, or our inability to identify and onboard additional qualified operators on acceptable terms, could disrupt or terminate customer programs, delay new program launches, require us to expend significant resources to transition operations or to develop our own operating capability, and result in lost or delayed revenue. Any of the foregoing could materially and adversely affect our business, prospects, financial condition and results of operations.
Our drone delivery operations depend on obtaining regulatory approvals for beyond visual line of sight operations, or BVLOS, and integration into low-altitude airspace management frameworks that are still being developed.
The commercial viability of our drone delivery systems depends on our ability to conduct routine delivery operations BVLOS at scale in urban and suburban environments. BVLOS operations currently require case-by-case FAA waivers or exemptions and there is no assurance that we or our partners will obtain such approvals for our target delivery corridors on a timely basis, on acceptable terms, or at all.
In addition, the FAA’s UAS Traffic Management, or UTM, framework, which is intended to manage low-altitude drone traffic and enable scalable BVLOS operations, remains under development. The rules, technical standards, and operational requirements that ultimately emerge from this framework may impose certification burdens, equipage mandates, or operational constraints that require significant modification to our delivery systems or ground infrastructure.
Delays in the development or implementation of UTM frameworks or BVLOS regulatory pathways could prevent us from operating in the delivery areas and service frequencies required to achieve commercial viability and meet the commitments we have made to customers and strategic partners. State, county, and municipal governments may also impose restrictions on low-altitude drone operations over populated areas, noise-sensitive zones, or critical infrastructure, creating a fragmented regulatory environment that increases compliance costs and limits the geographic scope of our delivery network. Any failure to obtain or maintain the regulatory approvals necessary for scalable BVLOS drone delivery operations could materially and adversely affect our business, financial condition, and results of operations.
Our operating and financial projections rely on management assumptions and analyses. If these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results.
We have limited experience commercializing our products and services. Our projected financial and operating information reflect estimates of future performance and is based on multiple financial, technical, and operational assumptions, including the level of demand for our products and services, cost of manufacturing, cost of components and availability of adequate supply, the nature and length of the sales cycle, and the costs of maintaining and operating our network. However, given our limited commercial experience and the fact that many of the factors on which these assumptions are based are outside of our control, it is possible that many of these assumptions will prove incorrect. The projections are forward-looking statements that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Whether actual operating and financial results and business developments will be consistent with our expectations and assumptions as reflected in our forecast depends on a number of other factors, many of which are outside our control, including, but not limited to:
Unfavorable changes in any of these or other factors, most of which are beyond our control, could cause us to fail to meet our operating and financial projections and could harm our business, prospects, financial condition and operating results.
We have limited experience commercializing our products at a large scale and may not be able to do so efficiently or effectively.
We have limited experience commercializing our products and services at a large scale and may not be able to do so efficiently or effectively. A key element of our long-term business strategy is the success of our product and service offerings in facilitating adoption of our solutions, continued testing of our technologies, engagement with key stakeholders and collaboration with leaders in the drone delivery industry. Commercialization of our operations will also require growth in sales, marketing, training, customer relations and maintenance and servicing operations, including hiring select personnel with the necessary experience and expertise. Managing and maintaining these operations is expensive and time consuming, and an inability to leverage such an organization effectively or at all could inhibit potential sales or subscriptions and the penetration and adoption of our products into new markets. In addition, certain decisions we make regarding staffing in these areas in our efforts to maintain an adequate spending level could have unintended negative effects on our revenues, such as by weakening the sales, marketing and maintenance and servicing infrastructures or lowering the quality of customer service.
Our business is substantially dependent on a small number of key personnel, and the loss of any such personnel could adversely affect our operations.
We are an early-stage company with a small management team and a concentrated base of technical expertise. Our success depends in large part on the continued contributions of our executive officers, key engineers, and other technical personnel who have specialized knowledge of our drone delivery systems, autonomous flight software, logistics network design, and regulatory strategy specific to the drone delivery industry. The loss of any of these individuals, whether due to resignation, illness, retirement, or competition from other employers, could significantly disrupt our operations, delay our product development and commercialization timelines, and impair our ability to execute our business plan.
Competition for qualified personnel with experience in drone delivery, logistics technology, and autonomous systems is intense, and we may not be able to attract or retain the personnel we need on acceptable terms, or at all. Additionally, certain institutional knowledge regarding our delivery network architecture, customer relationships, and regulatory approvals resides with a limited number of individuals, and the departure of any such person could result in the loss of capabilities that would be difficult and time-consuming to replace. Any failure to retain or attract key personnel could materially and adversely affect our business, financial condition, and results of operations.
If we cannot protect, maintain and, if necessary, enforce our intellectual property rights, our ability to develop and commercialize products will be adversely impacted.
Our success, in large part, depends on our ability to protect and maintain the proprietary nature of our technology. We rely upon a combination of the intellectual property protections afforded by patents, trademarks/service marks and trade secret laws in the United States and other jurisdictions, as well as commercial agreements, such as confidentiality agreements, assignment agreements, and license agreements to establish, maintain and enforce rights associated with our proprietary technologies. Our success depends in part on our ability to obtain and enforce patent protection for such solutions and technologies, but our patent applications may not result in issued patents, given the complexity of questions around patentability and the large number of patents and patent applications in related fields. Failure to obtain additional patent protection in connection with currently pending or future patent applications may impair our ability to prevent others from commercially exploiting products similar to ours.
Further, our existing issued patents may be contested, challenged, circumvented, invalidated or limited in scope in the future. The rights granted under our issued patents may not provide us with meaningful protection or competitive advantages, and some foreign countries provide significantly less effective patent enforcement as compared to the United States. In addition, the claims of our existing patents and any patents that issue from our currently pending or any future patent applications may be narrowed in scope during prosecution, challenged as invalid, or may simply not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours (for example, if competitors can “design around” our patents). We cannot assure you that our means of protecting our proprietary rights will suffice in affording the desired protection.
We also rely upon unpatented trade secret protection, unpatented know-how and continuing technological innovation to develop our business and competitive position. We may not be able to prevent the unauthorized disclosure or use of our trade secrets, know-how or information that we consider to be confidential by our contractual counterparties, despite our efforts. If any of the suppliers, subcontractors, venture partners, employees or consultants, or other third parties with whom we do business or otherwise collaborate breach or violate the terms of any of our agreements, we may not have adequate remedies for any such breach or violation, and we could lose the protections afforded by our trade secrets as a result. It is also possible that our trade secrets, know-how or other proprietary information could be obtained by third parties as a result of breaches of our physical or electronic security systems. Even where remedies are available, enforcing a claim that a party illegally disclosed or misappropriated our trade secrets is expensive and time consuming, and the outcome is unpredictable. Courts outside the United States are sometimes less willing to protect trade secrets. Additionally, our trade secrets could become known or be independently discovered by potential or existing competitors. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them, or those with whom they communicate, from using that technology or information to compete with us.
We do not have worldwide patent rights for our proprietary technologies because worldwide patent or “international patent rights” currently do not exist. We also do not have worldwide trademark protection for our brand for similar reasons.
Accordingly, we may not be able to protect our intellectual property rights in certain jurisdictions and their legal systems. Our competitors may operate in countries where we do not have patent protection and can freely use our technologies and discoveries in such countries to the extent such technologies and discoveries are publicly known or disclosed in countries where we do have patent protection.
We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial fees and costs.
Companies, organizations or individuals, including any existing and potential competitors, may hold or obtain patents, trademarks/service marks or other intellectual property rights that would prevent, limit or interfere with our ability to develop our intellectual property and make, use, develop, import, offer or sell our products and services and related equipment, which could make it more difficult for us to operate our company. From time to time, we may receive inquiries from holders of patents or trademarks/service marks inquiring whether we are infringing their proprietary rights. Companies, organizations or individuals, including any existing and future competitors, may also seek court declarations that they do not infringe our intellectual property rights. Companies holding patents or other intellectual property rights similar to our technology may bring proceedings alleging infringement of such rights or otherwise asserting their rights and seeking licenses. In addition, if it is determined that we have infringed a third party’s intellectual property rights, we may be required to do, among other things, one or more of the following:
In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology, our business, prospects, operating results, and financial condition could be harmed. In addition, any litigation, or claims, whether or not valid, could result in substantial costs and diversion of resources and management’s focus and attention.
We also license the patents and intellectual property of third parties and anticipate continuing to do so in the future, and we may face claims that the use of this intellectual property infringes the rights of other third parties. Our rights to indemnification or damages under our license contracts may be unavailable or insufficient to cover our costs and losses, depending on our use of the technology, whether we choose to retain control over conduct of the litigation and other factors.
Additionally, our confidentiality and intellectual property assignment agreements with our employees, consultants and contractors generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive intellectual property. Those agreements may not be honored and obligations to assign intellectual property may be challenged or breached. Moreover, there may be some circumstances where we are unable to negotiate for such ownership rights or where others misappropriate those rights.
Management's Discussion & Analysis (MD&A)
New heading “The Private Placement”
New heading “Accounting Considerations”
New heading “Components of Results of Operations”
New heading “Operating Expenses”
New heading “Research and Development Expenses”
New heading “Other Income (Expense)”
New heading “Comparison of the Three Months Ended June 30, 2026 and 2025”
New heading “Comparison of the Nine Months Ended June 30, 2026 and 2025”
New heading “Nine Months Ended June 30, 2026 and 2025”
New heading “Contractual Obligations and Commitments”
New heading “2025 Promissory Notes”
New heading “2026 Bridge Notes”
New heading “Stock-Based Compensation”
New heading “Classification of Redeemable Convertible Preferred Stock”
New heading “Convertible Instruments”
New heading “Recent Accounting Pronouncements”
Largest changes
“We believe we will be able to meet these costs through use of funds to be loaned by or invested in us by our stockholders, management or other investors. There are no assurances that such funds will be advanced or that the Company will be able to secure any additional funding as needed. As of March 31, 2026, the Company had cash of $13,011. On June 2, 2025, in connection with advances made in connection with costs incurred by the Company, the Company issued a promissory note to Mark Tompkins, a stockholder and director of the Company, pursuant to which the Company agreed to repay Mr. …”see in full comparison
“On June 2, 2025, in connection with advances made in connection with costs incurred by the Company, the Company issued a promissory note to Mark Tompkins, a stockholder and director of the Company, pursuant to which the Company agreed to repay Mr. Tompkins the sum of any and all amounts that Mr. Tompkins may advance to the Company on or before the date that the Company consummates a business combination with a private company or reverse takeover transaction or other transaction after which the Company would cease to be a shell company (as defined in Rule 12b-2 under the Exchange Act). …”see in full comparison
“As of March 31, 2026, the Company had $13,011 of cash and has not earned any revenues from operations to date. In the next 12 months, we expect to incur expenses equal to approximately $40,000 related to legal, accounting, audit, and other professional service fees incurred in relation to the Company’s Exchange Act filing requirements. …”see in full comparison
“In the next 12 months, we expect to incur expenses equal to approximately $40,000 related to legal, accounting, audit, and other professional service fees incurred in relation to the Company’s Exchange Act filing requirements. …”see in full comparison
“We are actively evaluating potential financing sources to provide additional liquidity. We also have meaningful discretion over the timing and amount of certain expenditures contemplated by our operating plan and could reduce or defer certain development, commercialization and other growth-related expenditures if necessary. Such actions could materially reduce our cash requirements and extend our liquidity runway. However, we do not currently expect to implement spending reductions at the level necessary to fully fund our operations throughout the twelve-month evaluation period. …”see in full comparison
“The Company anticipates that the selection of a business combination will be complex and extremely risky. While the Company is in a competitive market with a small number of business opportunities, through information obtained from industry professionals including attorneys, investment bankers, and other consultants with experience in the reverse merger industry, our management believes that there are opportunities for a business combination with firms seeking the perceived benefits of becoming a publicly traded corporation. …”see in full comparison
Full comparison: every changed paragraph (133)
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the unaudited interim condensed financial statements for the three and nine months ended June 30, 2026 and 2025 and the related notes thereto, included elsewhere in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements involving risks and uncertainties as described under the heading “Forward-Looking Statements” elsewhere in this Quarterly Report. You should review the section titled “Risk Factors” in this Quarterly Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements and could otherwise affect our intended plans of operations.
Overview of our Business
We are an autonomous aerial logistics technology company. We design, develop and manufacture commercial drone delivery systems for urban and suburban environments, comprising an integrated platform of unmanned aircraft, ground infrastructure and cloud-based software that together enable highly automated, battery-powered package delivery. Our systems are expected to be operated on a delivery as a service, or “DaaS,” basis by us directly or by third-party logistics operators certified and trained to operate our technology. Founded in 2011 and headquartered in Mountain View, California, we are a leading technology platform for drone delivery.
Los Altos Ventures Corp. was incorporated in the
State of Delaware on June 2, 2025. Since inception, the Company has been engaged in organizational efforts and obtaining initial financing.
The Company was formed as a vehicle to pursue a business combination and has focused its efforts to identify a possible business combination.
No revenue has been generated by the Company since inception. It is unlikely the Company will have any revenues unless it is able to effect
an acquisition or merger with an operating company, of which there can be no assurance. The Company’s plan of operation for the
remainder of the fiscal year shall be to continue its efforts to locate suitable acquisition candidates. Our principal business objective
for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather
than immediate, short-term earnings. The Company will not restrict our potential candidate target companies to any specific business,
industry or geographical location and, thus, may acquire any type of business.
The Company is currently considered to be a “blank
check” company. The SEC defines those companies as “any development stage company that is issuing a penny stock, within the
meaning of Section 3(a)(51) of the Exchange Act, and that has no specific business plan or purpose, or has indicated that its business
plan is to merge with an unidentified company or companies.” Many states have enacted statutes, rules and regulations limiting the
sale of securities of “blank check” companies in their respective jurisdictions. Rule 419 under the Securities Act imposes
certain restrictive requirements on offerings of securities by blank check companies. However, we have no present intention of engaging
in an offering of our securities that would be subject to Rule 419 while we remain a blank check company. We anticipate raising funds
through an offering of our securities only upon completion of a business combination as a result of which we would no longer be a blank
check company. Therefore, we do not anticipate that the provisions of Rule 419 will deter a potential target company from entering into
a business combination transaction with us.
The Company is also a “shell company,”
defined in Rule 12b–2 under the Exchange Act as a company with no or nominal assets (other than cash) and no or nominal operations.
Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have
successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange
Act for so long as we are subject to those requirements. Some of the consequences of being a shell company are as follows:
In addition, the Company is an “emerging
growth company,” as defined in the JOBS Act, and may take advantage of certain exemptions from various reporting requirements that
are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being
required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements
of Sections 14A(a) and (b) of the Exchange Act to hold a nonbinding advisory vote of shareholders on executive compensation and any golden
parachute payments not previously approved.
The Company has also elected to use the extended
transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows
us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until
those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies
that comply with public company effective dates.
We will remain an “emerging growth company”
until the earliest of (1) the last day of the fiscal year during which our revenues exceed $1.235 billion, (2) the date on which we issue
more than $1 billion in non-convertible debt in a three year period, (3) the last day of the fiscal year following the fifth anniversary
of the date of the first sale of our common equity securities pursuant to an effective registration statement filed pursuant to the Securities
Act, or (4) when the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day
of our most recently completed second fiscal quarter. To the extent that we continue to qualify as a “smaller reporting company,”
as such term is defined in Rule 12b-2 under the Exchange Act, after we cease to qualify as an emerging growth company, certain of the
exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including:
(1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive
compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years.
The Company has not conducted any active operations
since inception, except for its efforts to locate suitable acquisition candidates. No revenue has been generated by the Company since
inception. It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company,
of which there can be no assurance. The Company’s plan of operation for the remainder of the fiscal year shall be to continue its
efforts to locate suitable acquisition candidates. Our principal business objective for the next 12 months and beyond such time will be
to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will
not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire
any type of business.
The Company does not currently engage in any business
activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such
time will be paid with funds to be loaned to or invested in us by our stockholders, management or other investors.
During the next twelve months we anticipate incurring costs related
to:
We believe we will be able to meet these costs
through use of funds to be loaned by or invested in us by our stockholders, management or other investors. There are no assurances that
such funds will be advanced or that the Company will be able to secure any additional funding as needed. As of March 31, 2026, the Company
had cash of $13,011. On June 2, 2025, in connection with advances made in connection with costs incurred by the Company, the Company issued
a promissory note to Mark Tompkins, a stockholder and director of the Company, pursuant to which the Company agreed to repay Mr. Tompkins
the sum of any and all amounts that Mr. Tompkins may advance to the Company on or before the date that the Company consummates a business
combination with a private company or reverse takeover transaction or other transaction after which the Company would cease to be a shell
company (as defined in Rule 12b-2 under the Exchange Act). The Company has used the proceeds from the promissory note to cover its expenses.
Although Mr. Tompkins has no obligation to advance funds to the Company under the terms of the note, it is anticipated that he may advance
funds to the Company as fees and expenses are incurred in the future. As a result, the Company issued the note in anticipation of such
advances. Interest shall not accrue on the outstanding principal amount of the note except if an Event of Default (as defined in the promissory
note) has occurred. In the event of an Event of Default, the entire note shall automatically become due and payable (the “Default
Date”) and starting from five (5) days after the Default Date, the interest rate on the note shall accrue at the rate of eighteen
percent (18%) per annum. As of March 31, 2026, the total amount due under the note was $45,000. The promissory note was filed as Exhibit
10.1 to the Company’s registration statement on Form 10, filed with the SEC on August 1, 2025. Except as disclosed herein, we currently
have no other agreements or specific arrangements in place with our stockholders, management or other investors.
Our ability to continue as a going concern is
dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and
repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going concern is also dependent
on our ability to find a suitable target company and enter into a possible reverse merger with such company. Management’s plan includes
obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances, however there is no
assurance of additional funding being available.
As of March 31, 2026, the Company had $13,011
of cash and has not earned any revenues from operations to date. In the next 12 months, we expect to incur expenses equal to approximately
$40,000 related to legal, accounting, audit, and other professional service fees incurred in relation to the Company’s Exchange
Act filing requirements. The costs related to the acquisition of a business combination target company vary widely and are dependent on
a variety of factors including, but not limited to, the amount of time it takes to complete a business combination, the location of the
target company, the size and complexity of the business of the target company, whether stockholders of the Company prior to the transaction
will retain equity in the Company, the scope of the due diligence investigation required, the involvement of the Company’s auditors
in the transaction, possible changes in the Company’s capital structure in connection with the transaction, and whether funds may
be raised contemporaneously with the transaction. Therefore, we believe such costs are unascertainable until the Company identifies a
business combination target. These conditions raise substantial doubt about our ability to continue as a going concern. The Company is
currently devoting its efforts to locating merger candidates. The Company’s ability to continue as a going concern is dependent
upon our ability to develop additional sources of capital, locate and complete a merger with another company, and ultimately, achieve
profitable operations.
The Company may consider acquiring a business
that has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets,
is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties
and is in need of additional capital. Our management believes that the public company status that results from a combination with the
Company will provide such company greater access to the capital markets, increase its visibility in the investment community, and offer
the opportunity to utilize its stock to make acquisitions. There is no assurance that we will in fact have access to additional capital
or financing as a public company. In the alternative, a business combination may involve the acquisition of, or merger with, a company
which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding,
among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
Any target business we select for a potential
business combination may be a financially unstable company or an entity in its early stages of development or growth, including entities
without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations
of financially unstable and early stage or potential emerging growth companies. In addition, we may affect a business combination with
an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent
in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
Our management anticipates that it will likely
be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective
stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business
in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us,
because it will not permit us to offset potential losses from one venture against gains from another.
The Company anticipates that the selection of
a business combination will be complex and extremely risky. While the Company is in a competitive market with a small number of business
opportunities, through information obtained from industry professionals including attorneys, investment bankers, and other consultants
with experience in the reverse merger industry, our management believes that there are opportunities for a business combination with firms
seeking the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation
include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity
for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees,
and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available
business combinations may occur in many different industries and at various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities extremely difficult and complex.
We do not currently intend to retain any entity
to act as a “finder” to identify and analyze the merits of potential target businesses. However, we contemplate that Montrose
Capital may introduce business combination opportunities to us. There are currently no agreements or preliminary agreements between us
and Montrose Capital.
We have not established a specific timeline, nor
have we created a specific plan to identify an acquisition target and consummate a business combination. We expect that our management
and the Company, through its various contacts and affiliations with other entities, including Montrose Capital, will locate a business
combination target. We expect that funds in the amount of approximately $40,000 will be required in order for the Company to satisfy its
Exchange Act reporting requirements during the next 12 months, in addition to any other funds that will be required in order to complete
a business combination. Such funds can only be estimated upon identifying a business combination target. Our management and stockholders
have indicated an intent to advance funds on behalf of the Company as needed in order to accomplish its business plan and comply with
its Exchange Act reporting requirements, however, there are no agreements in effect between the Company and our management or stockholders
specifically requiring they provide any funds to the Company. Therefore, there are no assurances that the Company will be able to obtain
the required financing as needed in order to consummate a business combination transaction.
As
of the date of this Form 10-Q, the Company has not entered into any definitive agreement with any party. While the Company has engaged
in discussions regarding a potential business combination with one candidate in particular, as of the date of this report, the Company
has not entered into any letter of intent or other agreement with that party, neither party is bound by any contractual obligations with
respect to a potential business combination involving the Company, and there can be no assurance that these discussions will result in
a definitive acquisition agreement or a completed transaction.
Recent Development - Proposed MergerDevelopments
The Merger
On May 22, 2026, Los Altos Ventures Corp. (“LAVC”), Matternet Acquisition Co., a Delaware corporation, and privately held Matternet, Inc. (“Legacy Matternet”), entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, pursuant to the terms of which Matternet Acquisition Co. merged with and into Legacy Matternet (the “Merger”), with Legacy Matternet continuing as the surviving corporation. As a result of the Merger, Legacy Matternet became our wholly owned subsidiary and continues its existing business operations. Additionally, we changed our name to Matternet, Inc. and continue to be a public reporting company. At the effective time of the Merger, we issued 33,464,495 shares of our common stock to existing holders of Legacy Matternet common stock. LAVC’s existing stockholders continued to hold an aggregate of 2,700,000 shares.
The Private Placement
Following the effective time of the Merger, we sold 9,552,427 shares of our common stock at a purchase price of $3.00 per share in a private placement to certain accredited and institutional investors, or the Private Placement. In connection with the Private Placement, we also issued to the placement agents warrants to purchase an aggregate of 677,260 shares of common stock at an exercise price of $3.00 per share. Net of offering expenses, we received approximately $26.2 million in net proceeds from the Private Placement. We used $4.2 million of the net proceeds to immediately retire outstanding indebtedness under certain promissory notes as discussed below under “Indebtedness - 2025 Promissory Notes.” We expect to use the balance of the net proceeds for operating expenses, capital expenditures, working capital, and other general corporate purposes. These uses are expected to include the commercial deployment of our drone platform, expansion of our active drone fleet and related launch, landing, and operational infrastructure, geographic expansion into additional domestic and international markets, and increased headcount to support engineering, flight operations, regulatory compliance, and commercial partnerships. The proceeds will also support investments in software, autonomy, and systems required to scale delivery volumes over time.
Accounting Considerations
For financial reporting purposes, the Merger was treated as a recapitalization and reverse acquisition. Legacy Matternet is considered the acquiror for accounting purposes, meaning that the historical financial results of Legacy Matternet prior to the Merger are considered our historical financial results under applicable accounting principles. Thus, a discussion of the past financial results of LAVC is not pertinent.
Components of Results of Operations
Revenue
We generate revenue through the following principal streams:
Operating Expenses
General and Administrative Expenses
General and administrative expenses primarily consist of personnel compensation costs, including stock-based compensation for executive management and administrative functions, including finance and accounting, legal, and human resources, as well as general corporate expenses and general insurance.
Research and Development Expenses
Research and development, or R&D, expenses primarily represent costs incurred to develop our technology. These costs consist of personnel compensation costs, including stock-based compensation, for employees in engineering, design and product development, and prototype materials (hardware and software) costs incurred during the product design process. Substantially all of our R&D expenses are related to developing new products and services, improving existing products and services, and developing product production processes. We expense all R&D costs in the periods in which they are incurred.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of compensation and related costs for personnel, including stock-based compensation, employee benefits, and associated travel costs. We expense sales and marketing expenses as incurred.
Other Income (Expense)
Other income (expense), net consists primarily of interest expense associated with our convertible notes and non-cash gains and losses resulting from changes in the fair value of our derivative liabilities and warrant liabilities.
Certain amounts included herein have been rounded for ease of presentation. Accordingly, numbers presented may not sum precisely due to rounding.
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table sets forth our consolidated financial data for the periods indicated (in thousands):
Revenues
Revenues did not change materially in the three months ended June 30, 2026, compared to the three months ended June 30, 2025.
Cost of Revenues
Cost of revenues increased $0.1 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to an increase of labor costs and depreciation expense as additional drones were placed into service.
Operating Expenses
R&D expenses increased by $0.3 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by additional headcount, which resulted in a $0.2 million increase in salaries and benefits. In addition, R&D expenses increased $0.1 million due to higher prototype drone costs.
General and administrative expenses increased by $1.5 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily driven by legal and accounting fees of $0.7 million. Salaries and related benefits increased $0.2 million due to an increase in headcount. Consulting expenses increased by $0.5 million related to the costs associated with the Merger.
Sales and marketing expenses increased by $48,000 in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was driven by higher marketing consulting expenses during the three months ended June 30, 2026.
Other Income (Expense)
Interest expense (non cash) increased by $4.7 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was due to the non-cash interest expense recognized in connection with the conversion of the Bridge Notes. The non-cash interest expense primarily consisted of the recognition of the remaining unamortized debt discount and debt issuance costs upon conversion and the allocation of a portion of the Bridge Notes to warrants issued in connection with the conversion.
Interest expense decreased by $0.2 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease is related to promissory notes issued in January 2025 and March 2026 and were no longer outstanding as of June 30, 2026.
Change in fair value of derivative liabilities increased by $0.5 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025 due to the remeasurement of the derivative liability associated with the Bridge Notes during the period.
Other income (expense) increased by $0.2 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025 primarily due to the receipt of $87,000 grant funding and an $84,000 insurance recovery.
Comparison of the Nine Months Ended June 30, 2026 and 2025
The following table sets forth our consolidated statements of operations data for the periods indicated (in thousands):
Revenues
MTTN insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 58,333 shares, about $175.0K) and open-market sales in 0 filings. Net open-market shares: 58,333 (purchases minus sales); net value about $175.0K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-05-22 | Ranjan Saurabh |
Grant/award | 784,545 | — | — |
| 2026-05-22 | Ranjan Saurabh |
Grant/award | 413,902 | — | — |
| 2026-05-22 | Ranjan Saurabh |
Grant/award | 782,426 | — | — |
| 2026-05-22 | Ranjan Saurabh |
Open-market purchase | 58,333 | $3.00 | $175.0K |
| 2026-05-22 | Ranjan Saurabh |
Grant/award | 368,041 | — | — |
| 2026-05-22 | Tompkins Mark N. |
Other | 5,125,000 | — | — |
| 2026-05-22 | Jacobs Ian Seth |
Other | 2,175,000 | — | — |
| 2026-05-22 | Marton Laurence |
Grant/award | 52,003 | — | — |
| 2026-05-22 | Secore Jason Benjamin |
Grant/award | 105,682 | — | — |
| 2026-05-22 | Raptopoulos Andreas |
Grant/award | 5,928,335 | — | — |
Well-known investors holding MTTN (13F)
None of the 59 investors we track reported a position in their latest 13F.