Filed Pursuant to Rule 424(b)(5)

Registration No. 333-297143

PROSPECTUS SUPPLEMENT NO. 1

(to Prospectus dated August 11, 2026)

Up to 48,055,843 Shares of Common Stock

Up to 3,535,082 Shares of Common Stock Issuable Upon Exercise of Warrants

This prospectus supplement supplements the prospectus dated August 11, 2026 (the “Prospectus”), which forms a part of our registration statement on Form S-1 (No. 333-297143). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 19, 2026 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement.

The Prospectus and this prospectus supplement relate to the offering and resale by the selling stockholders identified herein of up to 51,590,925 shares of common stock, par value $0.0001 per share, of Matternet, Inc. (fka Los Altos Ventures Corp.) (“Matternet” or the “Company”), consisting of:

We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders, except with respect to amounts that may be received by us upon the cash exercise of the Placement Agent Warrants, the Bridge Warrants and the Legacy Warrants. We have borne and will continue to bear the costs relating to the registration of these shares. We will bear all costs, expenses and fees in connection with the registration of these securities, including with regard to compliance with state securities or “blue sky” laws. The selling stockholders will bear all commissions and discounts, if any, attributable to their sale of shares of common stock.

There is not currently, and there has never been, any established public trading market for any of our securities. The common stock is not currently eligible for trading on any national securities exchange, including The Nasdaq Stock Market, LLC, or any over-the-counter markets, including the OTC Markets-OTCQB tier (the “OTCQB”). In connection with this offering, we applied to have the common stock quoted on the OTCQB or another OTC system. We cannot assure you that the common stock will become eligible for trading on any exchange or market. Until such time as the common stock is quoted on the OTCQB or another public trading market otherwise develops, the selling stockholders identified herein may only sell their shares of common stock pursuant to the Prospectus at a fixed price of $3.00 per share, the price per share in the Private Placement discussed above, for a total offering amount of approximately $154.5 million. At and after such time, the selling stockholders may sell all or a portion of their shares through public or private transactions at prevailing market prices or at privately negotiated prices.

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

We are an “emerging growth company” and a “smaller reporting company” as defined under the federal securities laws and, as such, are eligible for reduced public company reporting requirements.

Investing in our common stock involves a high degree of risk. Before making an investment decision, please read “Risk Factors” beginning on page 6 of the Prospectus, and under similar headings in any amendments or supplements to the Prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement is August 19, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026 

OR 

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________ 

Commission File Number 000-56769

Matternet, Inc.

(Exact name of Registrant as specified in its Charter) 

Registrant’s telephone number, including area code: (650) 260-2727 

Securities registered pursuant to Section 12(b) of the Act: None 

Securities registered pursuant to Section 12(g) of the Act: 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒ 

As of August 13, 2026, the registrant had 48,327,455 shares of common stock outstanding.

Table of Contents 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or “Exchange Act.” All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements, including statements regarding: 

Forward-looking statements include, but are not limited to, statements about:

These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance and achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. 

In some cases, you can identify forward-looking statements by terminology such as “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will,” or the negative of these terms or other comparable terminology. These forward-looking statements are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances, or otherwise. 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

We have common law trademark rights in the unregistered marks “Matternet, Inc.,” and the Matternet logo in certain jurisdictions. Solely for convenience, trademarks and tradenames referred to in this Quarterly Report on Form 10-Q appear without the ^® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks and tradenames.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MATTERNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Unaudited)

See accompanying notes to these condensed consolidated financial statements. 

MATTERNET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  

(Unaudited) 

See accompanying notes to these condensed consolidated financial statements. 

MATTERNET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) AND REDEEMABLE CONVERTIBLE PREFERRED STOCK 

(Unaudited)

See accompanying notes to these condensed consolidated financial statements. 

MATTERNET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Unaudited)

See accompanying notes to these condensed consolidated financial statements.

MATTERNET, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) 

1. Nature of Operations and Business

Matternet, Inc., consisting of Matternet Operations, Inc. and subsidiaries (collectively, the “Company”), is a Delaware corporation headquartered in Mountain View, California, founded in 2011 as a developer of commercial drone delivery systems for urban and suburban environments. The Company designs, builds, and operates autonomous drone networks that enable ultra-fast, low-cost, and zero-emission package delivery across healthcare, commerce, and logistics sectors.

The Company’s integrated platform includes autonomous drones, landing stations, and a cloud-based logistics platform that provides an end-to-end autonomous aerial delivery service for healthcare, e-commerce, and logistics organizations. In addition, the Company expanded into home delivery, launching a consumer drone delivery service.

Reverse Merger

On May 22, 2026, Matternet, Inc., a Delaware corporation (“Legacy Matternet”), Los Altos Ventures Corp. (“LAVC”) and Matternet Acquisition Co., a Delaware corporation and wholly owned subsidiary of LAVC (“Acquisition Sub”), consummated the closing of the transactions contemplated by the Agreement and Plan of Merger and Reorganization, dated May 22, 2026, by and among the Company, LAVC and Acquisition Sub (the “Merger Agreement”). The Merger Agreement and the consummation of the transactions contemplated thereby, including the merger (the “Merger”), were approved by all the stockholders of LAVC and the holders of a majority of the outstanding shares of common stock, preferred stock, and capital stock of the Company.

At the time the certificate of merger effectuating the Merger was filed with the Secretary of State of Delaware (the “Effective Time”), each share of Legacy Matternet Common Stock issued and outstanding immediately prior to the Effective Time was exchanged for the right to receive 2.0801 shares of our common stock rounded to the nearest whole share (the “Exchange Ratio”). Following the consummation of the Merger, LAVC changed its name to Matternet, Inc. and Legacy Matternet changed its name to Matternet Operations, Inc.

As a result of the Merger, LAVC acquired the business of Legacy Matternet and continued the existing business operations as a public reporting company under the name Matternet, Inc. In accordance with “reverse merger” or “reverse acquisition” accounting treatment, Legacy Matternet was determined to be the accounting acquirer. LAVC’s historical financial statements before the Merger have been replaced with the historical financial statements of Legacy Matternet before the Merger in filings with the Securities and Exchange Commission (the “SEC”) since the Merger, unless otherwise noted. All of the outstanding shares of common stock and convertible securities of Legacy Matternet were exchanged for, or became exercisable, for shares of the Company’s common stock, par value $0.0001 per share. Accordingly, all historical common share and per-share amounts presented in these consolidated financial statements and accompanying notes have been retrospectively adjusted, where applicable, to reflect the exchange ratio of 2.0801 established in the Merger.

2. Summary of Significant Accounting Policies

Going Concern and Management Plans

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company sustained net losses of $15,092,017 and $6,871,117 during the nine months ended June 30, 2026 and 2025, respectively, and used $8,198,936 of cash in operating activities during the nine months ended June 30, 2026. The Company expects to continue to incur operating losses for at least the near term.

The Company’s current operating plan assumes a material increase in expenditures compared with its historical operating levels to support the development and commercialization of its next-generation platform and to advance business development and commercial deployment activities. Based on this operating plan, management’s forecast indicates that the Company’s existing cash resources are expected to be depleted during the one-year period following the issuance of these consolidated financial statements.

Management plans to seek additional capital through debt and/or equity financings. Management also has the ability to reduce or defer certain planned expenditures and slow certain development, commercialization and growth initiatives, which could materially extend the Company’s liquidity runway. However, management does not currently expect to implement reductions at the level necessary to fully fund the Company’s operations throughout the going concern evaluation period. Neither the receipt of additional financing nor the implementation of expenditure reductions sufficient to eliminate the forecasted liquidity shortfall is considered probable, and accordingly, the Company has concluded that substantial doubt exists about its ability to continue as a going concern within one year after the date these consolidated financial statements are issued.

There can be no assurance that additional financing will be available on acceptable terms, on a timely basis, or at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company’s ability to continue as a going concern until it reaches profitability is dependent upon its ability to generate cash from operating activities and to raise additional capital to fund operations. Management plans to raise additional capital to fund operations through debt and/or equity financings. Our failure to raise additional capital could have a negative impact on not only our financial condition but also our ability to execute our business plan. No assurance can be given that the Company will be successful in these efforts. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company may not be able to obtain financing on acceptable terms, or at all.

Basis of Presentation and Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position and the results of operations for the periods presented. These interim financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s registration statement on Form S-1. Interim results are not necessarily indicative of the results that may be expected for a full year.

Concentration of Credit Risk

Revenue Concentration Risk

The concentration of revenue on a percentage basis for major customers for the three and nine months ended June 30, 2026 and 2025 are as follows:

Customer A accounted for approximately 58% and 80% of revenue for the three and nine months ended June 30, 2026, respectively, and for approximately 53% and 76% of revenue for the three and nine months ended June 30, 2025, respectively.

Customer C accounted for approximately 42% and 20% of revenue for the three and nine months ended June 30, 2026.

Customer B accounted for approximately 47% and 24% of revenue for the three and nine months ended June 30, 2025, respectively.

Accounts Receivable Concentration Risk

A significant portion of our accounts receivable are concentrated with a limited number of customers. Customer C accounted for approximately 100% and 0% of accounts receivable for the periods ended June 30, 2026 and September 30, 2025, respectively. Customer B accounted for approximately 0% and 82% of accounts receivable for the periods ended June 30, 2026 and September 30, 2025, respectively

The loss of one more of these customers would have a material impact on the Company’s operations.

Cash and cash equivalents

The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.

Classification of Redeemable Convertible Preferred Stock

The Company has applied the guidance in ASC 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities and has therefore classified its redeemable convertible preferred stock as temporary equity for the year ended September 30, 2025. The redeemable convertible preferred stock was recorded outside of stockholders’ deficit because, in the event of certain deemed liquidation events considered not solely within the Company’s control, such as a merger, acquisition or sale of all or substantially all of the Company’s assets, the convertible preferred stock would have become redeemable at the option of the holders.

Revenue recognition

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company determines revenue recognition through the following steps:

Revenue is measured based on the amount that reflects the consideration we expect to receive, which is based on the amount specified in the contract with our customer. Revenue is recognized when the performance obligations under the terms of the contract are satisfied, which generally occurs as control of the promised goods or services is transferred to customers. If appropriate under ASC 606, we allocate the transaction price to individually distinct performance obligations based on the relative standalone selling prices of the distinct good or service. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

The Company recognizes revenue from its enterprise platform access over time based on the contract term. The Company accounts for its arrangements as a single, integrated performance obligation representing stand-ready access to and/or operation of a drone and a drone logistics network and related support services over the contractual service period. The Company primarily recognizes revenue over time, as the customer simultaneously receives and consumes the benefits of the Company’s stand-ready and operational services throughout the service term.

The Company recognizes revenue from its delivery as a service over time based on the contract term. The Company accounts for its managed delivery services as a single, integrated performance obligation representing the design, deployment, and operation of a drone delivery network, including related support activities such as maintenance, reporting, training, payload development, and planning.

Deferred Revenue

Service fees that have been invoiced or paid but performance obligations have not been met are recorded as deferred revenue. As of June 30, 2026 and September 30, 2025, the Company had $211,763 and $125,852, respectively, in deferred revenue pertaining to customer operated and managed delivery services.

Cost of Revenue

Cost of revenue consists primarily of depreciation allocated to drone assets, direct labor, and other direct costs related to data, software, and services required for the drones to operate as intended.

The Company allocates the portion of depreciation expense recognized during each period based on a straight line methodology over the life of the drone assets.

Direct labor costs are allocated to cost of revenue based on departments or resources with direct contact involvement. Each contract is assessed to determine which personnel will be directly involved in delivery of performance obligations. Direct labor typically includes roles in fleet management, hardware operations, and software engineering.

General and Administrative Expense

General and administrative expenses represent costs incurred for general and administrative functions, which 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. These costs are expensed as incurred.

Research and development

Research and development expenses represent costs incurred for research and development functions, which consist primarily 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 the Company’s research and development expenses are related to developing new products and services, improving existing products and services, and developing product production processes. These costs are expensed as incurred. Research and development costs were $964,846 and $3,135,689 for the three and nine months ended June 30, 2026, respectively and $666,262 and $2,297,255 for the three and nine months ended June 30, 2025, respectively.

Employee Retention Credit

During the nine months ended June 30, 2026, the Company recognized Employee Retention Credit (“ERC”) funds under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act totaling $1,088,324.

The Company accounted for the ERC as government assistance and recognized the funds when management determined that the qualifying conditions had been substantially met and collection was reasonably assured. Amounts recognized under the program are included in other income in the condensed statements of operation.

Net loss per share 

Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the weighted average number of shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities were anti-dilutive as of June 30, 2026 and 2025, diluted net loss per share is the same as basic net loss per share for each period presented. Potentially dilutive items outstanding as of June 30, 2026 and 2025 were stock options which were 11,164,284 and 9,260,917, respectively. Potentially dilutive items outstanding as of June 30, 2026 and 2025 were warrants which were 3,546,397 and 2,483,433, respectively. Also, for the nine months ended June 30, 2026 and 2025, the Company had convertible preferred stock of zero and 14,808,862, respectively, that is deemed potentially dilutive. Additionally, for the nine months ended June 30, 2026, there were no convertible notes outstanding. For the nine months ended June 30, 2025, the Company had convertible notes that were convertible into an indeterminate number of shares.

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (FASB), in the form of an Accounting Standards Updates (ASU), to the FASB’s ASC. The Company will adopt these changes according to the various timetables the FASB specifies. There were no recently adopted accounting standards that had a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires the disaggregation of certain expenses in the notes of the financial statements to provide enhanced transparency into the expense captions presented on the face of the statements of operations. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, and may be applied either prospectively or retrospectively. Early adoption is permitted. The adoption will require certain additional disclosure in the notes to the Company’s consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which provides a practical expedient for entities to estimate expected credit losses on current accounts receivable and current contract assets arising from revenue transactions accounted for under ASC 606. ASU 2025-05 is effective for the Company for annual periods beginning after December 15, 2025, and interim periods within those annual periods. The Company is evaluating the impact of this standard on its financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which removes all references to prescriptive and sequential software development stages and establishes new criteria for the capitalization of internal-use software costs. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements and disclosures.

3. Revenue

Revenue is generated from the Company’s operations in the United States and Europe. The following table presents our revenues disaggregated by service type. This level of disaggregation takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors:

Revenue by geographic area, based on the location of the Company’s customers, is as follows:

Enterprise Platform Access

The Company generates revenue by providing customers access to its integrated drone platform and related operational infrastructure, including aircraft availability, cloud-based software access, tooling and spare parts, maintenance, support, training, and reporting services, which enable customers to perform delivery operations using the Company’s technology.

4. Fair Value Measurements

Assets and liabilities Measured at Fair Value on a Recurring Basis

As of June 30, 2026, the Company had no financial assets or liabilities measured at fair value on a recurring basis. The following table presents the Company’s financial liabilities measured at fair value on a recurring basis as of September 30, 2025:

Valuation Techniques and Significant Unobservable Inputs (Level 3)

For the warrants described below the fair value of is determined using the Black-Scholes option-pricing model. For the Financing Warrants, which can be exercised after a qualified offering, management estimated the expected exercise date based on the anticipated transaction timeline. Key inputs for the Financing Warrants include the estimated fair value of common stock, exercise price, time to exercise, volatility based on guideline public companies, risk-free rate, and expected dividend yield.

Financing Warrants

The Company’s financing warrants were classified as derivative liabilities under ASC 815-40 because the settlement share counts were variable, causing the instruments to fail the fixed-for-fixed criteria required for equity classification. In April 2026, the number of shares issuable upon exercise of the financing warrants became fixed. As a result, the financing warrants met the criteria for equity classification under ASC 815-40 and were reclassified from derivative liabilities to additional paid-in capital. Immediately prior to reclassification, the financing warrants were remeasured at fair value, with the change in fair value recognized in earnings. Fair value is determined at each measurement date using the probability weighted scenario model, which is considered to be a Level 3 fair value measurement. Key assumptions described below are the range of assumptions used during the nine months ended June 30, 2026 and the assumptions as of September 30,2025 include:

Expected volatility is estimated using annualized historical volatility of a selected peer group of comparable publicly traded companies.

Level 3 Roll-Forward

The following table presents the changes in Level 3 financial liabilities measured at fair value using significant unobservable inputs on a recurring basis for the nine months ended June 30, 2026 and year ended September 30, 2025:

Changes in fair value related to the warrant liabilities are reported as separate line items on the statements of operations. Gains and losses attributable to instruments still held at period end are included within this line item for each period presented.

5. Property, Plant and Equipment, net

Property and equipment, net consists of the following:

Depreciation expense was $31,058 and $157,561 for the three and nine months ended June 30, 2026, respectively, and $56,151 and $107,577 for the three and nine months ended June 30, 2025, respectively.

Construction in process consists of parts inventory for drone manufacturing and is not subject to amortization until the finished good drone is placed into service.

6. Convertible Notes and Non-Convertible Promissory Notes

The Company accounts for convertible promissory notes in accordance with ASC 470, Debt. Upon issuance of convertible notes with detachable warrants or other freestanding instruments, the Company allocates the total proceeds among the individual instruments based on their relative fair values at the date of issuance if all instruments are classified as equity or using the residual method if any instrument is classified as a liability.

Unamortized debt discount is presented as a direct reduction of the related notes payable on the consolidated balance sheet and is amortized to interest expense over the term of the note using the effective interest method.

2023 Convertible Notes

On July 31, 2023, the Company entered into a Note and Warrant Purchase Agreement (the “July 2023 NPA”) with multiple accredited investors. The July 2023 NPA authorized the issuance of convertible promissory notes (the “2023 Notes”) in an aggregate principal amount not to exceed $8,000,000, together with freestanding warrants to purchase shares of the Company’s common stock (the “Change of Control” and the “Conversion Warrants”). The Company issued $8,000,000 in total principal. The 2023 Notes are unsecured obligations of the Company.

The 2023 Notes bore interest at 8% per annum, and were originally scheduled to mature on July 31, 2025. The 2023 Notes were convertible into shares of the Company’s preferred stock upon certain triggering events, including a qualified financing, a change of control, an initial public offering, or at maturity at the election of the holders.

The Company concluded that the embedded conversion feature in the 2023 Notes required bifurcation as a derivative liability under ASC 815-15. The bifurcated derivative was recorded at fair value at issuance, with the resulting debt discount amortized to interest expense using the effective interest method. Subsequent changes in fair value were recognized in the statements of operations prior to extinguishment as described below.

Each 2023 Note was issued with a freestanding Change of Control and Conversion Warrant to purchase shares of the Company’s common stock at an exercise price of $0.01 per share. The Change of Control and Conversion Warrants were classified as derivative liabilities and measured at fair value through earnings. See Note 7 — Derivative Liabilities. 

On July 18, 2025, the Company and the holders of more than 50% of the aggregate outstanding principal amount of the 2023 Notes executed an Omnibus Amendment to the July 2023 NPA. The 2023 NPA Amendment restructured the conversion mechanics of the 2023 Notes including reducing the threshold for automatic conversion from $20,000,000 to $1,000,000 in preferred stock proceeds.

On July 28, 2025, the Company and the Majority in Interest of Investors executed Omnibus Amendment No. 2 to Convertible Promissory Notes (the “July 28 Amendment”), effective as of that date. The July 28 Amendment’s sole substantive modification was to extend the maturity date of all 2023 Notes from July 31, 2025 to September 15, 2025.

The Company evaluated the July 18 Amendment and July 28 Amendment (collectively, the “July 2025 Amendments”) under ASC 470-60 and concluded that the amendments constitute a troubled debt restructuring. At the time of the amendments, the Company was experiencing recurring operating losses, negative operating cash flows, and was unable to repay the 2023 Notes in cash at maturity without the benefit of the amended conversion terms. The Company determined that the reduction in the conversion threshold from $20,000,000 to $1,000,000, together with the maturity extension to September 15, 2025, represented a concession that would not have been available from a market-rate lender given the Company’s financial condition. Because the aggregate undiscounted future cash flows under the restructured terms exceeded the carrying amount of the 2023 Notes at the amendment date, no gain on debt restructuring was recognized.

On September 2, 2025, upon consummation of the qualifying Series B-3 financing (Note 9), the outstanding principal of $8,000,000 and accrued interest of $1,191,035 on the 2023 Notes automatically converted into 3,419,398 shares of Series B-4 Preferred Stock. The Company did not accrue interest from the period June 20, 2025 to the date of the qualifying preferred stock financing as per the Series B-3 financing agreement. Upon conversion, the associated fair value of the embedded derivative liability of $21,302,850 was converted to the carrying value of the preferred stock. No balance remains as of September 30, 2025.

2024 Convertible Notes

On June 14, 2024, the Company entered into a Note Purchase Agreement (the “June 2024 NPA”) with multiple accredited investors, authorizing the issuance of convertible promissory notes (the “2024 Notes”) in an aggregate principal amount not to exceed $10,000,000. The Company issued $1,581,192 in aggregate principal under the June 2024 NPA through the period ended September 30, 2024 and an additional $400,000 in October 2024. The 2024 Notes bore interest at 8% per annum, and were originally scheduled to mature on June 14, 2027. The 2024 Notes were convertible into shares of the Company’s preferred stock upon certain triggering events, including a qualified financing, a change of control, an initial public offering, or at maturity at the election of the holders.

The Company concluded that the embedded conversion feature in the 2024 Notes requires bifurcation as a derivative liability under ASC 815-15. The bifurcated derivative was recorded at fair value at issuance, with the resulting debt discount amortized to interest expense using the effective interest method. Subsequent changes in fair value are recognized in the statements of operations. 

On July 18, 2025, the Company and the holders of more than 50% of the aggregate outstanding principal amount of the 2024 Notes executed an Omnibus Amendment to Note Purchase Agreement and Convertible Promissory Notes and Warrant Agreement (the “2024 NPA Amendment”). The 2024 NPA Amendment restructured the conversion mechanics of the 2024 Notes on substantially the same terms as the 2023 NPA amendment, including reducing the threshold for automatic conversion from $20,000,000 to $1,000,000 in preferred stock proceeds. In connection with the 2024 NPA Amendment, the Company issued freestanding warrants to purchase shares of the Company’s Voting Common Stock to each investor (the “Conversion Warrants”). The Conversion warrants have the same mechanics as the previous ones issued in connection with the July 2023 NPA. These warrants have an exercise price of $0.01 per share, a variable share count based on the lowest price per share in the triggering financing, and expire on July 18, 2035. They are classified as derivative liabilities and measured at fair value through earnings. See Note 7 — Derivative Liabilities.

The 2024 NPA Amendment was accounted for as an extinguishment under ASC 470-50 as the present value of modified debt’s cash flows exceeded the present value of the original debt’s remaining cash flows by more than 10% at the time of the amendment.

On September 2, 2025, upon consummation of a qualifying preferred stock financing, the outstanding principal of $1,981,192 and accrued interest of $138,193 on the 2024 Notes automatically converted into 551,935 shares of Series B-5 Preferred Stock. The Company did not accrue interest from the period June 20, 2025 to the date of the qualifying preferred stock financing as per the September 2, 2025 agreement. Upon conversion, the associated fair value of the embedded derivative liability of $3,438,555 was converted to the carrying value of the preferred stock.

Non-Convertible Promissory Notes

On January 3, 2025, the Company entered into the Note and Warrant Purchase Agreement (“January 2025 NPA”) pursuant to which it agreed to issue secured promissory notes (the “2025 Notes”) and accompanying warrants (see Note 7) to purchase shares of Common Stock to a series of accredited investors. The Company issued $2,000,000 in aggregate principal under the January 2025 NPA and an additional $2,176,510 through August 2025. The 2025 Notes bore interest at 20% per annum, and were originally scheduled to mature on December 31, 2025.

On August 8, 2025, the Company and the holders of more than 50% of the aggregate outstanding principal amount of the 2025 Notes executed an Omnibus Amendment to the January 2025 NPA. The Amendment increased the interest rate to 25% for all the promissory note holders. Also, it added an investor cancellation right in which if an Equity Financing occurs on or prior to the maturity date, each investor has the right, at the investor’s option, to cancel the outstanding principal and all accrued interest in exchange for shares of preferred stock at the per-share price paid by other new money purchasers in the equity financing.

The Company evaluated the August 8, 2025 amendment and concluded a substantive conversion option was added, which was the Investor Cancellation Right. This right allows investors to convert their debt into equity upon an equity financing. This feature benefits the investors by providing optionality. It does not reduce the debtor’s interest burden, extend time to payment, or otherwise improve the debtor’s financial position. The feature was entirely absent at issuance. Its addition fundamentally changes the character of the instrument from pure debt to debt with an equity conversion pathway. Given at the time of the amendment, the Company was closing it’s B-3 preferred round, it was determined the cancellation right is a substantive conversion option and under ASC 470-50-40-10, the modification is treated as an extinguishment.

The carrying value of the 2025 Notes was $4,176,510 as of September 30, 2025. The notes were originally due on December 31, 2025 and later extended to April 30, 2026. In March 2026, the Company and the noteholders agreed to further extend the maturity date of the promissory notes to the earlier of (i) the Closing of the Merger and (ii) the maturity date of the Bridge Notes. Upon the closing of the Merger and Private Placement, the Company repaid in full the principal balance and all accrued interest due under the January 2025 NPA.

Interest expense recognized on the convertible notes and promissory notes, including amortization of debt discount, was $669,402 and $847,421 for the nine months ended June 30, 2026 and 2025, respectively. Interest expense recognized on the convertible notes and promissory notes, including amortization of debt discount, was $148,752 and $339,821 on the convertible notes and promissory notes for the three months ended June 30, 2026 and 2025, respectively.

2026 Convertible Promissory Notes 

On March 3, 2026, the Company issued senior secured convertible promissory notes (the “Bridge Notes”) in an aggregate principal amount of $6,000,000 to accredited investors. The Bridge Notes bear interest at 10% per annum (accruing, payable at maturity), mature on September 3, 2026, and are secured by a first-priority lien on all of the Company’s assets. The notes contain a mandatory conversion feature triggered upon the closing of a specified transaction and a forgiveness of accrued interest upon conversion. The Bridge Notes also entitle holders to contingently issuable warrants upon certain closing conditions.

Upon the closing of a specified transaction (as defined in the Bridge Note agreements), the outstanding principal amount of the Bridge Notes will automatically convert into equity securities of the Company (or a successor entity) at a conversion price equal to 80% of the offering price applicable to such transaction (the “Conversion Price”). Accrued and unpaid interest is forgiven upon conversion and will not be settled in cash or equity. If the specified transaction does not close, the Bridge Notes remain outstanding and are repayable in cash at maturity.

The conversion feature is classified as derivative liability and measured at fair value through earnings. See Note 7 — Derivative Liabilities.

Upon the closing of the specified transaction described above, each Bridge Note holder will receive warrants (the “Bridge Warrants”) to purchase a number of shares of common stock equal to 100% of the shares initially issuable upon conversion of such holder’s Bridge Notes, at an exercise price equal to the offering price of the specified transaction, with a five-year term. The Bridge Warrants include price-based weighted average anti-dilution protection, subject to customary exceptions, and customary adjustment provisions. The obligation to issue Bridge Warrants is contingent on closing of the specified transaction and does not give rise to a separately recognized liability.

Upon the closing of the Merger, all accrued interest under the Bridge Notes was forgiven, and the Bridge Notes were converted into an aggregate of 2,499,998 shares of common stock at a conversion rate of $2.40 per share.

In addition, the Company issued the holders of the Bridge Notes, warrants to purchase an aggregate of 2,499,998 shares of common stock, with an exercise price per share of $3.00. Immediately prior to conversion, the associated bifurcated derivative liability was remeasured to fair value, with the resulting change in fair value recognized in earnings. The remaining unamortized debt discount and debt issuance costs were recognized as interest expense. The Company valued the warrants on a relative fair value to the debt which was $2,524,851 charged to interest expense and the carrying amounts of the Bridge Notes and related derivative liability were reclassified to equity. As a result, no Bridge Notes remained outstanding following the Merger.

Interest expense recognized on the Bridge Notes, including amortization of debt discount and accretion of warrant expense, was $4,672,700 and $5,126,345 for the three and nine months ended June 30, 2026, respectively.

7. Derivative Liabilities

Freestanding Warrants

The Company has issued convertible promissory notes and freestanding warrants in connection with several financing transactions. Certain of these instruments are required to be classified and measured as derivative liabilities under ASC 815, Derivatives and Hedging. All derivatives are classified as current or non-current liabilities based on the anticipated settlement date and are remeasured at fair value at each balance sheet date, with changes in fair value recognized in the statement of operations.

The Company has issued four series of freestanding warrants in connection with its note financing arrangements, each classified as a derivative liability and measured at fair value at each reporting date, with changes recognized in the statement of operations.

In connection with the July 2023 NPA, the Company issued Change of Control warrants (“CoC Warrants”) to noteholders. The number of shares issuable under each CoC Warrant was variable, determined by a formula based on the implied equity value of the Company upon a Change of Control, causing the warrants to fail the fixed-for-fixed test under ASC 815-40-15. The initial fair value of the CoC Warrants recorded as a discount to the note was $71,822. The CoC Warrants expired on January 31, 2025 without being exercised, and the related derivative liabilities were derecognized with a corresponding gain recognized in the period ended September 30, 2025.

Concurrently with the July 2023 NPA notes, the Company issued Conversion Financing warrants (the “CW-Series Warrants”) to each noteholder. Each CW-Series Warrant entitled the holder to receive shares of common stock upon a Qualified Financing, with the number of shares determined by dividing a fixed dollar amount by the Qualified Financing share price — a variable quantity contingent on a future financing event. The variable share count caused these warrants to fail the fixed-for-fixed test under ASC 815-40-15, requiring derivative liability classification from inception. The initial fair value of the CW-Series Warrants recorded as a discount to the note was $641,592. On September 2, 2025, upon conversion of the July 2023 NPA notes into Preferred Stock, the CW-Series Warrants were net exercised into common stock shares and the related warrant liabilities were derecognized with reclassification to additional paid-in capital.

On July 18, 2025, in connection with the July 2025 Omnibus Amendment to the July 2024 NPA, the Company issued additional warrants (the “Conversion Warrants”) to noteholders as consideration for the amendment. Each warrant entitles the holder to receive shares of common stock equal to 50% of the holder’s outstanding principle divided by the price per share in a future Qualified Financing, at an exercise price of $0.01 per share. The variable share count requires derivative liability classification under ASC 815-40-15, consistent with the CW-Series Warrants. The initial fair value of the Conversion Warrants recorded as a discount to the note was $152,121. These warrants were net exercised on September 2, 2025 concurrently with the note conversion, and the related warrant liabilities were derecognized with reclassification to additional paid-in capital.

In connection with the January 3, 2025 Note and Warrant Purchase Agreement (the “January 2025 NPA”), the Company issued freestanding warrants (the “Financing Warrants”) to noteholders across multiple closings from January through August 2025, with aggregate notes of approximately $4,176,510 issued. Each Financing Warrant entitles the holder to receive shares of common stock with a value equal to a specified multiple of the holder’s note principal, determined based on the price per share in a future Qualified Financing, at an exercise price of $0.01 per share. The variable share count causes these warrants to fail the fixed-for-fixed test under ASC 815-40-15, requiring derivative liability classification. The initial fair value of the Financing Warrants recorded as a discount to the note was $354,800. All of the discount was accreted or eliminated during the year ended September 30, 2025, due to the modification of the notes that was treated as an extinguishment, as described in Note 6. On April 30, 2026, the Company and the holders of the Financing Warrants entered into an omnibus amendment that amended the provisions governing the number of shares subject to the Financing Warrants and their exercise period. As a result of the amendment, the number of shares issuable upon exercise of the Financing Warrants became fixed. Accordingly, the Financing Warrants met the criteria for equity classification under ASC 815-40. The Company remeasured the Financing Warrants to fair value immediately prior to the amendment, with the resulting change in fair value recognized in earnings, and subsequently reclassified the carrying amount of the Financing Warrant liability to additional paid-in capital. As of June 30, 2026, the Financing Warrants were net exercised and reclassified to additional paid-in capital.

The fair value measurements of the Company’s freestanding warrants, including the valuation methodology, significant unobservable inputs, and Level 3 roll-forward, are disclosed in Note 4— Fair Value Measurements.

Embedded Derivative Liabilities

The Company’s convertible promissory notes issued under the July 2023 NPA and June 2024 NPA contained embedded conversion features that required bifurcation as derivative liabilities under ASC 815-15. Each conversion feature functioned as a share-settled redemption feature — the holder received a variable number of shares with an aggregate value in excess of principal, which meets the definition of a derivative. Each bifurcated derivative was recognized at fair value at issuance, with the residual proceeds allocated to the debt host at amortized cost, and remeasured at fair value at each reporting date with changes recognized in the statement of operations.

The July 2023 NPA notes bore interest at 8% per annum and provided for conversion into Preferred Stock upon a Qualified Financing, Non-Qualified Financing, Change of Control, or IPO. The conversion price was the lesser of (i) 80% of the lowest price per share in the applicable financing (a 20% discount) or (ii) $100,000,000 divided by the Fully Diluted Capitalization immediately prior to such financing. The variable conversion price and resulting variable share count require bifurcation of the conversion feature as a derivative liability under ASC 815-15.

The June 2024 NPA notes bear interest at 8% per annum, mature June 14, 2027, and provide for conversion into Shadow Preferred Stock upon a Qualified Financing, Non-Qualified Financing, Change of Control, or IPO. The conversion price is the lesser of (i) 85% of the lowest price per share in the applicable financing (a 15% discount) or (ii) $125,000,000 divided by the Fully Diluted Capitalization immediately prior to such financing. Consistent with the July 2023 NPA analysis, the variable conversion price required bifurcation of the conversion feature as a derivative liability under ASC 815-15.

On July 28, 2025, the Qualified Financing threshold was reduced from $20.0 million to $1.0 million as part of the July 2025 Omnibus Amendment, which affected the fair value of the embedded derivative but did not change the bifurcation conclusion. On September 2, 2025, the notes converted into Shadow Preferred Stock in connection with a Qualified Financing, and the embedded derivative liability was derecognized with reclassification to additional paid-in capital.

In connection with the Bridge Notes issued on March 3, 2026, a conversion feature exists that will automatically convert into equity securities of the Company (or a successor entity) at a conversion price equal to 80% of the offering price applicable to such transaction. Accrued and unpaid interest is forgiven upon conversion and will not be settled in cash or equity. The mandatory conversion feature and the associated 20% discount to the transaction offering price represent an embedded derivative that is not clearly and closely related to the debt host instrument and requires bifurcation under ASC 815-15. As discussed in Note 6, upon closing of the Merger, the Bridge Notes were converted into an aggregate of 2,499,998 shares of common stock at a conversion rate of $2.40 per share and the associated embedded derivative liability was revalued as of the Merger date that resulted in a gain of $544,109, after which the derivative liability was derecognized with reclassification to additional paid-in-capital.

8. Stock-based Compensation

2026 Equity Incentive Plan

The 2026 Equity Incentive Plan (the “2026 Plan”) permits the grant of stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards, cash awards and stock bonus awards. Subject to adjustments as set forth in the 2026 Plan, the maximum aggregate number of shares of common stock that may be issued under the 2026 Plan will not exceed 3,825,000 shares.

2011 Equity Incentive Plan

The Company assumed 11,166,364 options issued pursuant to Legacy Matternet’s 2011 Equity Incentive Plan (the “2011 Plan”). The exercise price per share of each assumed option is equal to the exercise price of the option immediately prior to the Merger as effected for the Exchange Ratio. Each Assumed Option is subject to the terms and conditions of the 2011 Plan until such outstanding options are exercised or until they terminate or expire by their terms.

Stock-based compensation expense is classified based on the cost center to which the award holder belongs. The Company recorded stock-based compensation expense in the consolidated statements of operations as follows:

Stock-based compensation expense for stock options of $228,945 and $678,317 for the three and nine months ended June 30, 2026, respectively, and $130,296 and $492,055 for the three and nine months ended June 30, 2025, respectively. Total unrecognized compensation cost related to non-vested stock option awards amounted to approximately $1,782,372 as of June 30, 2026, which will be recognized over a weighted average period of 2.41 years.

A summary of information related to stock options for the nine months ended June 30, 2026 is as follows:

As of June 30, 2026, the weighted average duration to expiration of outstanding options was 6.67 years.

The stock options granted during the nine months ended June 30, 2026 were valued using the Black-Scholes pricing model using the range of inputs as follows:

The weighted average grant date fair value of options granted during the nine months ended June 30, 2026 was $0.71.

9. Redeemable Convertible Preferred Stock

All series of the Company’s redeemable convertible preferred stock are classified as mezzanine (temporary) equity for the fiscal year ended September 30, 2025, pursuant to ASC 480-10-S99, as redemption is contingent upon deemed liquidation events that are outside the Company’s control. No accretion has been recorded as redemption is not probable.

On September 2, 2025, the Company entered into a Series B-3 Preferred Stock and Warrant Purchase Agreement (the “Series B-3 financing”) which involved the issuance of three classes of preferred stock (Series B-3, Series B-4, and Series B-5), Non-Voting Common Stock warrants (see Note 10), and the conversion of previously outstanding convertible promissory notes (See Note 6). The financing involved 3 components: 1) issuance of B-3 preferred stock which resulted in proceeds of $1,339,478; 2) issuance of Series B-4 preferred stock through the conversion of the 2023 convertible notes of $9,191,035; 3) issuance of Series B-5 preferred stock through the conversion of the 2024 convertible notes of $2,119,385. As part of the Series B-3 financing, an entity affiliated with a member of the Company’s Board of Directors invested $744,999 in the offering.

In connection with the financing, the Company amended its certificate of incorporation to include a pay-to-play provision. Holders of existing preferred stock who did not participate in the financing were automatically converted into non-voting common stock at a 15:1 ratio (prior to the Exchange Ratio). The Company determined this provision was substantive for non-participating holders and accounted for the conversion as an extinguishment. For participating holders, the modification was not substantive. For participating holders whose preferred stock was not converted, the Company determined that the modification did not result in a substantive change because the pay-to-play condition was satisfied and is now moot for these holders. On November 1, 2025, certain holders of the Series Seed through Series B-2 converted their convertible preferred shares to non-voting common stock at a 15:1 ratio (prior to the Exchange Ratio).

Subsequent to September 2, 2025, in connection with the Series B-3 financing, the Company issued an additional 701,349 shares of Series B-3 preferred stock which resulted in proceeds of $3,899,698, net of debt issuance costs. Of the aggregate $3,899,698 investment, approximately $2,140,992 related to investments made by parties determined to be related parties.

As of September 30, 2025, redeemable preferred stock was made up of the following:

Upon a liquidation, dissolution, or deemed liquidation event, each holder receives the greater of (i) the Original Issue Price plus declared but unpaid dividends, or (ii) the as-converted value, with all series ranking pari passu. Dividends are non-cumulative and none have been declared or paid in any period presented. Each share auto-converts into fully-paid, non-assessable shares of Voting Common Stock at the applicable conversion rate being either; (1) Immediately before a qualified IPO in which the Company raises at least $40 million in gross proceeds and its shares are listed on Nasdaq, the NYSE, or another approved exchange; or (2) Upon written request by holders of a majority of the outstanding Preferred Stock (on an as-converted basis), effective at the time specified in the request.

On May 22, 2026, in connection with the Merger, all series of redeemable convertible preferred stock converted into shares of voting common stock at the conversion ratio of 2.0801.

As all redeemable convertible preferred stock converted into shares of voting common stock there was no redeemable preferred stock outstanding as of June 30, 2026.

10. Equity

Common Stock

The Company is authorized to issue 500,000,000 shares of common stock, $0.0001 par value per share. As of June 30, 2026, 48,325,123 shares were issued and outstanding. Each share of common stock entitles the holder to one vote per share. Holders of common stock are entitled to receive dividends if and when declared by the Board of Directors. No dividends were declared or paid during the nine months ended June 30, 2026 and fiscal year ended September 30, 2025.  

In connection with the Merger, each outstanding share of Legacy Matternet Common Stock was canceled and converted into the right to receive 2.0801 shares of common stock.

In connection with the Merger, an aggregate of 7,300,000 shares (out of the 10,000,000 shares then issued and outstanding) of LAVC common stock owned by stockholders prior to the Merger were forfeited and cancelled and 2,700,000 shares of common stock were then held by such stockholders immediately after the Merger.

In connection with the Merger, the Company converted the Bridge Notes (see Note 6) into an aggregate of 2,499,998 shares of common stock at a conversion date of $2.40 per share.

In connection with the Merger, the Company issued 104,166 shares of common stock in consideration for services rendered pursuant to advisory agreements at a conversion price of $3.00.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.0001 par value per share. As of June 30, 2026, there were no shares were issued and outstanding. The board of directors is authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, vesting, powers (including voting powers), preferences, and relative, participating, optional or other rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further vote or action by the Company’s stockholders.

Common Warrants

In connection with the September 2, 2025 Series B-3 financing, the Company issued CWNV warrants equal to 33% of Series B-3 shares purchased by each pro rate purchaser at an exercise price of $0.01 per share. The warrants expire at the earlier of (a) June 20, 2035; (b) change of control; (c) IPO. There were up to 1,000,000 warrant shares authorized. The warrants were determined to be equity-classified instruments in accordance with ASC 815-40, as they are indexed to the Company’s own stock and meet all equity classification conditions. The warrants were converted to Common Warrants as part of the Merger at a conversion ratio of 2.0801. There were 369,139 Common Warrants outstanding as of June 30, 2026.

Bridge Warrants

In connection with the Merger and conversion of the Bridge Notes to common stock, the Company issued warrants to purchase a number of shares of Common Stock equal to the number of shares of Common Stock into which the Bridge Notes are converted (2,499,998 shares), with an exercise price per share of $3.00, with a term of five years (the “Bridge Warrants”). The Company allocated a portion of the $6,000,000 principal amount of the Bridge Notes to the warrants using a relative fair value methodology based on the respective fair values of the Bridge Notes and the warrants. The fair value of the warrants was $4,359,269, resulting in $2,524,851 of the Bridge Notes being allocated to the warrants and recognized in additional paid-in capital. All Bridge Warrants were outstanding as of June 30, 2026.

Redeemable Convertible Preferred Stock

For the period ended September 30, 2025, the Company’s Series Seed, Series A, Series B-1, Series B-2, Series B-3, Series B-4, and Series B-5 redeemable convertible preferred stock are classified outside of permanent stockholders’ equity (deficit) on the consolidated balance sheets in accordance with ASC 480-10-S99 and SEC Staff guidance (ASR 268), as the shares are redeemable upon the occurrence of certain deemed liquidation events outside the Company’s control. See Note 9 on Redeemable Convertible Preferred Stock.

Upon the closing of the Merger, each share of redeemable convertible preferred stock convertible preferred stock (Series Seed through Series B-5) was exchanged for the right to receive 2.0801 shares of common stock. There were 8,688,830 shares of redeemable convertible stock that converted to 18,073,773 shares of common stock.

Private Placement

Immediately following the Merger on May 22, 2026 (see Note 1), in two separate closings, the Company issued and sold 9,552,427 shares of common stock, par value $0.0001 per share, in a private placement pursuant to a subscription agreement by and between the Company and certain accredited and institutional investors at a purchase price of $3.00 per share, for aggregate gross proceeds of approximately $28,657,324 before deducting placement agent fees and offering costs.

Placement Agent Warrants

In connection with the Private Placement, the Company paid the placement agents an aggregate cash fee of $2,167,796 and issued the Placement Agents warrants to purchase an aggregate of 677,260 shares of common stock. The Placement Agent Warrants expire on the earlier of (i) five years after the date of issuance and (ii) three years after our shares of common stock are listed on a national securities exchange, and have an exercise price of $3.00 per share. The fair value of the warrants was determined using the Black-Scholes option-pricing model. The significant assumptions used in the valuation were developed on a basis consistent with the assumptions used in the option valuations described in Note 8 - Stock-based Compensation. The warrants were considered offering costs to an equity raise and accordingly, the value was both an increase and decrease to additional paid-in capital for no net effect.

11. Commitments and contingencies

Lease – Right of Use Asset and Liability

The Company leases its facilities, which include office and R&D space, under non-cancelable lease agreements with terms expiring in November 2026. Certain of these arrangements have free rent and escalating rent payment provisions. Under such arrangements, the Company recognizes an ROU asset and lease liability on the consolidated balance sheets. Lease costs are recognized on a straight-line basis over the non-cancelable lease term.

The following summarizes the cash flow and noncash information related to the operating leases:

Weighted average lease terms and discount rates were as follows:

Other Commitments

From time to time, the Company is a party to litigation and subject to claims incidental to its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of ongoing matters will not have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense and settlement costs, diversion of management resources, and other factors. At each reporting period, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable, requiring recognition of a loss accrual, or whether the potential loss is reasonably possible, requiring disclosure. Legal fees are expensed as incurred.

12. Segment information

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. For reviewing the operational performance of the Company and for the purpose of allocating resources, the Chief Operating Decision Maker (“CODM”) of the Company, identified as the Chief Executive Officer, reviews the consolidated results as a whole. The CODM considers the Company a single operating and reportable segment, when monitoring operations, making decisions on capital and investment allocations and evaluating performance.

The accounting policies of the Segment are the same as those described in the summary of significant accounting policies. Financial information for the Segment is consistent with the financial information presented in these consolidated financial statements. Significant segment expenses that are provided to CODM on a regular basis and are included within reported measure of segment profit or loss are research and development and general and administrative. Other segment items are represented by change in fair value of derivative and warrant liabilities and interest expense.

The Statements of Operations for the three and nine months ended June 30, 2026 and 2025, reflect the significant segment expenses and other segment items, as well as the balance sheets as of June 30, 2026 and September 30, 2025, for the one reportable segment.

Disaggregation of Long-lived Assets

Long-lived assets consist of property and equipment and ROU assets. Long-lived assets by geographical region are as follows:

13. Related Party 

In connection with the January 2025 NPA, the Company issued secured promissory notes and warrants to Emmanuel Raptopoulos in an arms-length transaction during the year ended September 30, 2025. The principal amount of the notes was $726,510 in aggregate with an initial interest rate of 20% and maturity date of December 31, 2025. The note issued to Emmanuel Raptopoulos has similar terms as the other note holders of the January 2025 NPA. In addition, the warrants issued were the financing warrants as described in Note 7 with similar terms as other warrant holders. As of September 30, 2025, the notes were outstanding in full. Upon the closing of the Merger and Private Placement, the Company repaid in full the principal balance and all accrued interest due under the January 2025 NPA.

In connection with the July 2023 NPA, the Company issued convertible notes and warrants to Olympic Investments, Inc. and 5G Ventures S.A., 5% holders, for $1,500,000, which bore interest at 8% per annum and was originally scheduled to mature on July 31, 2025 (See Note 6). The note and warrants had similar terms as the other note holders of the July 2023 NPA. The note and warrant converted to redeemable convertible preferred stock on September 2, 2025.

Refer to Note 9 for additional information regarding the related party equity investment associated with the Series B-3 financing. 

14. Subsequent events

The Company has evaluated subsequent events through August 19, 2026, the date the financial statements were available to be issued.

In July 2026, the Company entered into an amendment to its existing office lease in Mountain View, California. The amendment extends the lease term for 38 months, from its previous expiration date of November 30, 2026 through January 31, 2030. Total undiscounted base rent obligations during the extended term are $2,660,353, with aggregate net base rent payments of approximately $2,554,370 after taking into account $105,983 in base rent abatement during the first two months of the extended term. Pursuant to the Amendment, the landlord will also provide an improvement allowance of up to $63,845 for tenant renovations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 

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 

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. 

Recent Developments

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.

Results of Operations 

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