Aether Holdings, Inc.: Form 10-Q for the period ended Jun 30, 2026

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this Report. In addition to unaudited condensed consolidated financial statements, the following discussions and other parts of this Report contain forward-looking statements that reflect our plans, objectives, expectations, intentions, and beliefs, which involve risks, uncertainties and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections titled “Cautionary Note on Forward-Looking Statements” and “Risk Factors” included elsewhere in this Report.

Overview of Our Company

We are an emerging financial technology platform company that offers proprietary research analytics, data and tools for both institutional and retail equity traders (who we refer to herein as “Users”) through our flagship platform, SentimenTrader.com. By integrating advanced technologies, including artificial intelligence (“AI”) tools, with the critical thinking and analytical abilities of our team of evidenced-based trading veterans, we aim to provide our Users with a powerful combination of technology and expertise, enabling them to make informed decisions and optimize their trading strategies in the markets.

Our platform is powered by an advanced data collection system that operates utilizing application programming interface (known as API) calls and web scraping, and fetching raw data (i.e., unprocessed, and non-personalized data) 24/7 from a wide array of authoritative sources, including industry leaders like Bloomberg, Chicago Board Options Exchange, Consensus, Commodity Futures Trading Commission, End of Day Historical Data and Intercontinental Exchange. This automated process allows us to remain abreast of the latest market trends, trading volumes, and essential financial indicators.

Starting with this continuous collection of data, our algorithms categorize and refine information into proprietary indicators which our Users can choose to use to develop or enhance their trading strategies. Additionally, our analysts apply their expertise to this data across various financial instruments, generating detailed reports for our Users’ consumption.

The integration of our technology, especially in stock index analysis, leverages advanced machine learning to refine and enhance signal detection continually. This synergy culminates in delivering User-centric tools and solutions, providing our Users with access to analytics and insights, and a foundation for all our AI-driven tools and services. This approach not only offers timely and accurate data directly to our Users but also fosters trust and transparency, minimizing User reliance on third-party sources in their development of trading strategies.

Our platform currently provides coverage of U.S. equity and option securities, evaluating the equities and options markets and conducting assessments through our analysts and technology daily. SentimenTrader utilizes technical indicators of market sentiment (meaning our proprietary gauge of the overall attitude of investors towards a particular market or security) as the cornerstone for our analyses and integrates technological advancements and the potential of deep learning techniques to analyze the market and facilitate our Users’ creation of trade ideas, strategies, and models. We intend to target a wider audience than our current User base by broadening the scope and variety of our products, expanding the types of securities our platform covers, and broadening our coverage to include more markets and exchanges.

Beginning in April 2025, we began a new initiative to expand our newsletter business through the incorporation of our wholly-owned subsidiary, Alpha Edge Media, Inc. (“AEM”). The newsletters published by AEM target both institutional and retail investors, focusing on topics such as macroeconomic trends, market insights, and market psychology, while broadening our overall coverage of securities, markets and exchanges. We believe the expansion of our newsletter business will complement the newsletters currently published through our SentimenTrader platform and enable us to continue to build brand authority, expand recurring engagement with our Users, generate new User engagement with SentimenTrader, and open new revenue streams through potential advertisements, sponsorships, and premium content.

We continue to focus on achieving our mission of establishing ourselves as a preeminent fintech information company dedicated to the acquisition and development of smart platforms tailored to empower the investing community with actionable strategic insights. To this end, in addition to our establishing AEM to further develop our newsletter business and expand the securities, markets, and exchanges we currently cover, we are also actively exploring research and development initiatives to focus on advancing proprietary analytics and AI-driven models, as well as the possibility of growth through acquisition of complementary tools and technologies that would enhance our platform’s capabilities and value to Users. Furthermore, in 2025 and 2026, we made acquisitions of online financial newsletters and related intellectual property (including subscriber lists) to add to our portfolio of titles.

Dispute with Former Director

As previously reported in our Annual Report, since July 18, 2025, our management has been engaged in a dispute with Mr. David Mandel, a former member of our board of directors. On March 19, 2026, Mr. Mandel filed a lawsuit against the Company and Mr. Nicolas Lin, our Chief Executive Officer and Chairman. See “Part II – Other Information - Item 1 – Legal Proceedings” below for more information and the section entitled “Risk Factors - Our management is currently in a dispute with one of our former directors. If he were to bring legal action against us, and we were to receive an adverse ruling, it could materially and adversely affect our reputation, dilute our stockholders’ equity interests in the Company, and adversely affect our stock price” contained in our Annual Report for a discussion of the risks associated with the dispute.

Formation of AetherHub Joint Venture

On March 25, 2026, our subsidiary Aether Labs, Inc. (“Aether Labs”) and OorTech Inc. (“Oort”) formed Aether DataHub, LLC, a Delaware limited liability company (“AetherHub”), as a joint venture to develop and commercialize the “AetherHub Platform,” a white-labeled deployment of Oort’s proprietary DataHub technology, for use exclusively in the field of financial media and financial education data labeling and annotation services (the “Field”). AetherHub was established pursuant to three executed agreements: (i) a Limited Liability Company Operating Agreement, (ii) a Technology License and Services Agreement (the “Technology Agreement”), and (iii) an IP Option Agreement, each dated March 25, 2026 (or March 23, 2026 in the case of the Technology Agreement). AetherHub’s business model is based on third-party customers providing their own datasets for labeling and processing. Our company has no obligation to contribute any of our proprietary datasets to AetherHub.

Membership interests in AetherHub are held 70% by Aether and 30% by Oort. Aether’s contribution consists of commercialization leadership, go-to-market strategy, the “AetherHub” brand and related resources, and initial working capital as approved by the AetherHub’s board of managers. Oort’s contribution consists of the DataHub technology and related documentation, at least two dedicated software developers, and ongoing support and maintenance services. No cash license or development fees are payable to Oort; Oort’s equity interest constitutes its sole consideration. AetherHub is governed by a three-manager board, with Aether designating two managers (including the Chair) and Oort designating one, giving Aether effective operational and strategic control of AetherHub. Profits, losses, and distributions are allocated pro rata in accordance with each member’s percentage interest.

Pursuant to the Technology Agreement, Oort granted AetherHub a worldwide, royalty-free, exclusive license (within the Field) to use and operate the DataHub Platform. Oort is prohibited during the term from providing its DataHub platform or any substantially similar technology to third parties for use in the Field and must refer any Field-related commercial opportunities to AetherHub. Oort has committed to deliver an initial launch-ready version of the AetherHub Platform within 120 days of March 23, 2026. Intellectual property developed specifically for the AetherHub Platform is assigned to AetherHub; general-purpose platform enhancements remain owned by Oort subject to a perpetual royalty-free license to AetherHub within the Field. Each party’s aggregate liability under the Technology Agreement is capped at $5,000,000, subject to customary exceptions.

AetherHub had no transactions during the three months ended June 30, 2026, and AetherHub did not have a material impact on the Company’s consolidated financial position or results of operations for the period then ended. However, the related accounting implications were insignificant to the Company’s condensed unaudited consolidated financial statements for the period ended June 30, 2026.

SentimenTracker

The Company has developed an internally generated software platform, SentimenTracker, an analytics tool designed to process and analyze financial and market data to generate actionable insights. In February 2026, SentimenTracker completed the application development stage and was placed into service for its intended use. The platform was commercially launched and deployed within the Company’s production environment.

The software’s core functionality, system architecture, data ingestion pipelines, sentiment analysis models, integrations, and infrastructure were fully developed and tested. Accordingly, capitalization of development costs ceased upon completion of the application development stage, and subsequent costs are expensed as incurred.

Acquisition of PublicView.ai

On January 15, 2026, we closed the acquisition of PublicView.ai (“Public View”), an AI-driven market intelligence platform designed to simplify and accelerate equity research. Public View serves a diverse user base of retail and professional investors, financial analysts and researchers, fintech platforms, and data-driven investment teams. Its core capabilities include AI-powered parsing and summarization of SEC filings, insight extraction from earnings releases, natural-language research workflows that reduce manual document review, and tools to ease access to public market data. While relatively small, by integrating Public View into the toolset of Aether Grid, we intend to deliver a more complete research experience that connects technical signals and sentiment indicators with fundamental equity research. Aether Grid acquired the source code, repositories, databases, intellectual property, and other assets for a cash purchase price of $9,000.

Board of Directors

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

Formation of Subsidiaries

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

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

At-the-Market Offering Program

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

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

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

Recent Developments

Grant of Stock Options

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

Definitive Agreement (Virtual Grid)

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

Acquisition of Noviant Inc.

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

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

Note Purchase Agreement with Streeterville Capital, LLC

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

Financial Highlights

The following table presents the revenue, cost of sales, gross margin and the net cash provided by or used in operating activities for the nine months ended June 30, 2026 and 2025.

Factors and Trends Affecting Our Business and Results of Operations

We believe the most significant factors that affect our business and results of operations including the following:

Increasing Usage by Our Existing Customers

Our existing Userbase presents a significant opportunity for further sales expansion through increased usage of our platform and adoption of additional product offerings. We are highly focused on gaining a better understanding of the needs and growth plans of our existing Users. This deeper relationship with our Users will help us identify opportunities to educate our customer base on ways to utilize the platform more effectively for their individual use cases, as well as provide a feedback loop to inform our product roadmap. We are focusing on our sales and support teams to prevent user churn by ensuring that our products and services can provide a high level of value. Our goal is to continue to increase our revenue from existing users through the introduction of new products and features tailored to our customer base in addition to expanded user outreach focused on larger Users and specific use cases.

Growing Our Base of Higher Spend Customers

We believe there is a substantial opportunity to further expand our Userbase to attract more businesses that can scale on our platform. We are investing in strategies that we believe will attract enterprise users, including new marketing and partnership initiatives that further optimize our self-service revenue funnel and help users expand their usage. We are also acquiring online newsletters (including, since our IPO, Whale Tales, Altcoin Investing, 21Bitcoin.xyz, Coinstack and Publicview.ai) as a means of growing our subscriber base.

Investing in Our Platform and Product Offerings

We have a history of and will continue to invest significantly in delivering innovative products, features and functionality targeted at our core Userbase. The market opportunity for our core services of providing proprietary research analytics, data, and tools for equity traders through a flagship platform continues to expand and we are making targeted investments to expand this revenue. Beyond the SentimenTrader and SentimenTracker platforms, we continue to see large growth opportunities in U.S. markets and, accordingly, we have expanded our portfolio of products and offerings over the last few years, including through acquisitions in 2025 and 2026. In addition, we may pursue both strategic collaborations such as AetherHub and additional acquisitions that we believe will be complementary to our business, accelerate User acquisition, increase usage of our platform and/or expand our product offerings in our core markets. Our results of operations may fluctuate as we make these investments to drive usage and take advantage of our market opportunity.

Increasing Importance of AI

Our future success depends in large part on the continuing adoption of AI, proliferation of retail investors and the increasing importance of research, all of which we believe can drive the adoption of our equity research platform. We believe our market opportunity is large and that these factors will continue to drive our growth.

Research and Development

During the quarter, the Company’s research and development activities were primarily focused on building and testing the core components of the XYZ Terminal platform. Key efforts included:

• Platform Architecture and Data Integration: Development of the system framework and integration of real-time market data feeds, automated aggregation of regulatory and corporate disclosures, and the implementation of third-party financial data services.
• AI and Quantitative Modeling: Design and prototyping of large language model (LLM)–based tools for conversational financial queries, as well as predictive analytics modules to assist users in identifying market opportunities.
• User Interface Development: Enhancement of the web-based dashboard for speed, navigation, and customization, with parallel design work for mobile platforms.
• Administrative and Monetization Systems: Integration of subscription billing capabilities, role-based access controls, and administrative analytics dashboards.

Research and development expenditures for the period primarily consisted of fees charged by third-party service providers. Management expects research and development work on XYZ Terminal and SentimenTracker to continue in subsequent periods, with commercialization targeted following the completion of the initial feature set.

Macroeconomic Conditions

Unfavorable conditions in the economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, supply chain disruptions, inflationary pressures, interest rates, financial and credit market fluctuations, volatility in the capital markets, liquidity concerns at, and failures of, banks and other financial institutions, international trade relations, political turmoil, political instability, natural catastrophes, outbreaks of contagious diseases, warfare and terrorist attacks on the United States, Europe or elsewhere, including military actions affecting Russia, Ukraine, the Middle East or elsewhere, could cause a decrease in business investments in information technology and negatively affect the growth of our business and our results of operations. While our business model provides some resilience against these factors, we will continue to monitor the impacts of these or similar circumstances on our business and will take appropriate measures to minimize potential risk exposure.

Key Business Metrics

We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies who may calculate similarly titled metrics in a different way.

SentimenTrader

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Alpha Edge Media (AEM)

As of June 30, 2026, Alpha Edge Media had a negligible number of paid subscribers. Subscriber activity commenced on August 14, 2025. Accordingly, there were no subscribers for the nine months ended June 30, 2025.

Free Subscribers

“Free Subscribers” are defined as Users who subscribe to our free investment publications using a valid email address and remain directly opted in, excluding Paid Subscribers (as defined below) who also receive free subscription materials. These free subscriptions often feature daily publications with commentary on the stock market, investment ideas, and other specialized topics. Our free publications include advertisements and editorial support for our current marketing campaigns. Through these publications, Free Subscribers become acquainted with our editors and analysts, explore our products and services, and discover how we could help them become better investors.

The number of new Free Subscribers for SentimenTrader decreased by 392, or 30.43%, from 1,288 for the nine months ended June 30, 2025 to 896 for the nine months ended June 30, 2026. The number of new Free Subscribers decreased by 451, or 64.89 %, from 695 for the three months ended June 30, 2025, to 244 for the three months ended June 30, 2026. The decrease in Free Subscribers reflects reduced customer acquisition and increased attrition.

The number of free subscribers for Alpha Edge Media as of June 30, 2026, was 402,086. Alpha Edge Media did not have operations as of June 30, 2025.

We acknowledge that Free Subscribers play a critical role in our business ecosystem, serving as the foundation of the customer acquisition funnel. They represent a low-barrier entry point for potential Users, allowing them to explore and engage with the platform without financial commitment. This group often acts as a pipeline for converting Users into Paid Subscribers, which directly drives revenue growth.

Paid Subscribers

“Paid Subscribers” are defined as the number of monthly average users with paid subscriptions during the period or year. We view the number of Paid Subscribers at the end of a given period as a key indicator of the attractiveness of our products and services, as well as the efficacy of our marketing in converting Free Subscribers to Paid Subscribers and generating direct-to-paid Paid Subscribers. We intend to grow our Paid Subscriber base through performance marketing directly to prospective and existing users across a variety of media, channels, and platforms. Management anticipates the conversion rate will increase when the business becomes more mature in the future.

Paid Subscribers for SentimenTrader decreased by 214, or 9.08%, from 2,356 for the nine months ended June 30, 2025 to 2,142 for the nine months ended June 30, 2026. The number of Paid Subscribers decreased by 276, or 11.73 %, from 2,352 for the three months ended June 30, 2025, to 2,076 for the three months ended June 30, 2026.

Paid Subscribers for AEM were negligible as of June 30, 2026. AEM did not have operations as of June 30, 2025.

The average conversion rate from Free Subscribers to Paid Subscribers on our SentimenTrader platform was approximately 34.27% and 19.26% for the nine months ended June 30, 2026 and 2025, respectively. The average conversion rate from Free Subscribers to Paid Subscribers on our SentimenTrader platform was approximately 32.32% and 11.68% for the three months ended June 30, 2026 and 2025, respectively. The higher conversion rates for the nine months ended June 30, 2026, was attributable to a promotional campaign.

The average conversion rate from Free Subscribers to Paid Subscribers of AEM was negligible for the nine months ended June 30, 2026. AEM did not have operations as of June 30, 2025.

We are actively incorporating new features and improvements into SentimenTrader to enhance user experience and increase conversion rates. This includes introducing advanced analytical tools, expanding data sources, and refining our platform’s design to improve accessibility and ease of use. Additionally, we are exploring targeted marketing strategies to attract new Paid Subscribers while retaining existing ones. We intend to focus on growing our Free Subscriber count with AEM to drive traffic to our subscription-based platforms. Through these efforts, we are confident in our ability to enhance user engagement and improve both subscriber growth and conversion rates in the coming periods.

Average Revenue Per User (“ARPU”)

The ARPU is calculated based on the total revenue divided by the number of monthly average Paid Subscribers over that period or year. We believe ARPU is a key indicator of how successful we are in attracting Users to higher-value content. We believe that our high ARPU is indicative of the trust we build with our Users and of the value they see in our products and services.

ARPU for SentimenTrader increased by $23, or 5.22%, to $464 for the nine months ended June 30, 2026, as compared to $441 for the nine months ended June 30, 2025.

ARPU for SentimenTrader increased by $11, or 7.53%, to $157 for the three months ended June 30, 2026, as compared to $146 for the three months ended June 30, 2025.

ARPU for SentimenTracker was not significant for the three and nine months ended June 30, 2026. No comparable ARPU existed for the three and nine months ended June 30, 2025, as the platform was not yet operational during that period.

Revenue

Revenue is generated from providing online subscription services. Revenue is generally recognized ratably over the contract term, starting from the commencement date of each contract, which is the date our cloud-based software is made available to customers and collection is reasonably assured.

Total revenue decreased marginally by $35,410, or 3.41%, from $1,038,960 for the nine months ended June 30, 2025, to $1,003,550 for the nine months ended June 30, 2026.

Total revenue decreased by $13,706, or 4%, from $342,411 for the three months ended June 30, 2025 to $328,705 for the three months ended June 30, 2026.

Results of Operations

For Nine Months Ended June 30, 2026 and 2025

The following table summarizes the results of unaudited condensed consolidated statements of operations and comprehensive loss for the nine months ended June 30, 2026 and 2025 in U.S. dollars and provides information regarding the dollar and percentage increase or (decrease) during such periods. The operating results in any historical period are not necessarily indicative of the results that may be expected for any future period.

Revenue

Our revenue decreased by $35,410, or 3.41%, from $1,038,960 for the nine months ended June 30, 2025, to $1,003,550 for the nine months ended June 30, 2026 due to a decrease in the number of Paid Subscribers.

We are actively incorporating new features and improvements into SentimenTrader to enhance User experience and increase conversion rates. This includes introducing advanced analytical tools, expanding data sources, and refining our platform’s design to improve accessibility and ease of use. Additionally, we are exploring targeted marketing strategies to attract new Paid Subscribers while retaining existing ones. Through these efforts, we are confident in our ability to enhance User engagement and improve both subscriber growth and conversion rates in the coming periods.

Gross profit and Costs of Sales

Cost of sales mainly include the hosting costs for the Sentiment Trader platform, Bloomberg access for the analysts’ use in research, and the analyst salaries. Cost of sales decreased by $124,688, or 38.92%, from $320,360 for the nine months ended June 30, 2025, to $195,672 for the nine months ended June 30, 2026 due to decrease in analyst salaries.

Gross profit increased by $89,278, or 12.42%, from $718,600 for the nine months ended June 30, 2025 to $807,878 for the nine months ended June 30, 2026. The increase in gross profit was mainly due to the decrease in cost of sales, as discussed above.

Gross profit margin increased from 69.17% for the nine months ended June 30, 2025, to 80.50% for the nine months ended June 30, 2026. The increase in gross profit margin was primarily attributable to the combined impact of the decrease in subscription revenue and decrease in cost of sales.

Our cost and gross profit are as follows:

Selling and marketing expenses

Our selling and marketing costs primarily consist of expenses related to advertising and marketing consultants. These costs increased by $314,107 or 141.59%, from $221,848 for the nine months ended June 30, 2025, to $535,955 for the nine months ended June 30, 2026, representing 53.41% and 21.35% of our total revenue for the nine months ended June 30, 2026 and 2025, respectively. The increase was mainly driven by higher advertising and marketing expenses incurred in the current period compared to the nine months ended June 30, 2025.

General and administrative expenses

Our general and administrative expenses primarily include salaries and benefits, legal and professional fees, insurance expenses, office expenses, travel and entertainment expenses, utility expenses, depreciation expenses and amortization expenses. Our general and administrative expenses represented 369.77% and 217.79% of our revenue for the nine months ended June 30, 2026 and 2025, respectively. General and administrative expenses increased by $1,447,994, or 63.99%, from $2,262,801 for the nine months ended June 30, 2025, to $3,710,795 for the nine months ended June 30, 2026. The increase was mainly due to the increase in legal fees, consulting fees, insurance expense, amortization expense, depreciation expense and membership and subscription charges.

Research and development expenses

Our research and development expenses primarily consist of costs incurred in the development of artificial intelligence and machine learning tools for our platform. The expenses incurred amounted to $231,773 for the nine months ended June 30, 2026, and there were no expenses for the nine months ended June 30, 2025. Research and development expenses represented approximately 23.10% and 0% of our revenue for the respective periods.

The increase in research and development expenses was driven by continued investment in enhancing our AI-driven capabilities and platform functionality. We expect research and development expenses to increase in future periods as we remain committed to expanding our AI-related features to deliver enhanced functionality and value to our users.

Interest income (expense), net

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

Loss before income tax

We had a loss before income taxes of $3,668,941 and $1,718,204 for the nine months ended June 30, 2026 and 2025, respectively. The loss was primarily attributable to the increase in selling expenses, research and development expenses and general and administrative expenses.

Provision for income taxes

We had no provision for income taxes for the nine months ended June 30, 2026, as we had no assessable profits for the period.

Net loss and comprehensive loss

We had a net comprehensive loss of $3,668,941 and $1,718,204 for the nine months ended June 30, 2026 and 2025, respectively. The loss was primarily attributable to the increase in selling expenses, research and development expenses and general and administrative expenses. The discussion regarding the increase in selling expenses, research and development expenses and general and administrative expenses are discussed in the sections above.

For The Three Months ended June 30, 2026 and 2025

The following table summarizes the results of unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended June 30, 2026 and 2025 in U.S. dollars and provides information regarding the dollar and percentage increase or (decrease) during such periods. The operating results in any historical period are not necessarily indicative of the results that may be expected for any future period.

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Revenue

Our revenue decreased by $13,706, or 4%, from $342,411 for the three months ended June 30, 2025, to $328,705 for the three months ended June 30, 2026 due to a decrease in the number of Paid Subscribers.

We are actively incorporating new features and improvements into SentimenTrader to enhance User experience and increase conversion rates. This includes introducing advanced analytical tools, expanding data sources, and refining our platform’s design to improve accessibility and ease of use. Additionally, we are exploring targeted marketing strategies to attract new paid subscribers while retaining existing ones. Through these efforts, we are confident in our ability to enhance User engagement and improve both subscriber growth and conversion rates in the coming periods.

Gross profit and Costs of Sales

Cost of sales mainly includes the hosting costs for the Sentiment Trader platform, Bloomberg access for the analysts to research tools, and the analyst salaries. Cost of sales decreased by $38,718, or 37.52%, from $103,186 for the three months ended June 30, 2025, to $64,468 for the three months ended June 30, 2026, attributable to the decrease in analyst salaries.

Gross profit increased by $25,012, or 10.46%, from $239,225 for the three months ended June 30, 2025, to $264,237 for the three months ended June 30, 2026. The increase in gross profit was mainly due to the decrease in cost of sales, as discussed above.

Gross profit margin increased from 69.86% for the three months ended June 30, 2025, to 80.39% for the three months ended June 30, 2026. The increase in gross profit margin was primarily due to decrease in cost of sales.

Our cost and gross profit are as follows:

Selling and marketing expenses

Our selling and marketing costs primarily consist of expenses related to advertising and marketing consultants. These costs increased by $7,216 or 5.04%, from $143,181 for the three months ended June 30, 2025, to $150,397 for the three months ended June 30, 2026, representing 45.75% and 41.82% of our revenue for the three months ended June 30, 2026 and 2025, respectively. The increase was mainly driven by higher advertising and marketing expenses incurred in the current period compared to three months ended June 30, 2025.

General and administrative expenses

Our general and administrative expenses primarily include salaries and benefits, legal and professional fees, insurance expenses, office expenses, travel and entertainment expenses, utility expenses, depreciation expenses and amortization expenses. Our general and administrative expenses represented 397.57% and 335.77% of our revenue for the three months ended June 30, 2026 and 2025, respectively. General and administrative expenses increased by $157,126, or 13.67%, from $1,149,713 for the three months ended June 30, 2025, to $1,306,839 for the three months ended June 30, 2026. The increase was mainly due to the increase in legal fees, consulting fees, insurance expense, amortization expense, depreciation expense and membership and subscription charges.

Research and development expenses

Our research and development expenses primarily consist of costs incurred in the development of artificial intelligence and machine learning tools for our platform. These expenses incurred amounted to $100,654 for the three months ended June 30, 2026 and there were no expenses for the three months ended June 30, 2025. Research and development expenses represented approximately 30.62% and 0% of our revenue for the respective periods.

The increase in research and development expenses was driven by continued investment in enhancing our AI-driven capabilities and platform functionality. We expect research and development expenses to increase in future periods as we remain committed to expanding our AI-related features to deliver enhanced functionality and value to our users.

Interest income (expense), net

Interest expense was $69,968 for the three months ended June 30, 2026, compared to $0 for the same period in 2025, while interest income was $9,114 and $47,845, respectively. The increase in interest expense was primarily due to the issuance of the Company’s secured note payable in May 2026. Interest expense for the three months ended June 30, 2026 included contractual interest at the stated rate and non-cash amortization of the original issue discount, debt issuance costs and brokerage costs.

Loss before income tax

We had a loss before income taxes of $1,342,740 and $1,005,824 for the three months ended June 30, 2026 and 2025, respectively. The loss was primarily attributable to the increase in selling expenses, research and development expenses and general and administrative expenses.

Provision for income taxes

We had no provision for income taxes for the three months ended June 30, 2026 as we had no assessable profits for the period.

Net loss or comprehensive loss

We had a net comprehensive loss of $1,342,740 and $1,005,824 for the three months ended June 30, 2026 and 2025, respectively. The loss was primarily attributable to the increase in selling expenses, research and development expenses and general and administrative expenses. The discussion regarding the increase in selling expenses, research and development expenses and general and administrative expenses are discussed in the sections above.

Cash Flows

For the Nine months ended June 30, 2026 and 2025

The following table sets forth summary of our cash flows for the periods indicated:

Operating Activities

Net cash used in operating activities was $3,115,850 for the nine months ended June 30, 2026, as compared to net cash used in operating activities of $1,998,095 for the nine months ended June 30, 2025. The increase in net cash used in operating activities was mainly attributable to the following factors:

• Net loss of $3,668,941 for the nine months ended June 30, 2026, compared to a net loss of $1,718,204 for the nine months ended June 30, 2025;
• Non-cash service expense for stock issuances incurred $103,297 for the nine months ended June 30, 2026, compared to $0 for the nine months ended June 30, 2025;
• Amortization of debt discount and issuance costs for note payable incurred $69,968 for the nine months ended June 30, 2026, compared to $0, for the nine months ended June 30, 2025;

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• Prepaid expenses decreased by $153,560 for the nine months ended June 30, 2026, compared to an increase of $260,880 for the nine months ended June 30, 2025;
• Payables and accrued liabilities increased by $161,697 for the nine months ended June 30, 2026, compared to an increase of $150,332 for the nine months ended June 30, 2025;
• The amounts due to related party decreased by $32,019 for the nine months ended June 30, 2026, compared to a decrease of $186,786 for the nine months ended June 30, 2025;
• Contract liabilities increased by $22,541 for the nine months ended June 30, 2026, compared to the increase of $15,786 for the nine months ended June 30, 2025.

Investing Activities

Net cash used in investing activities was $1,670,412 for the nine months ended June 30, 2026 and $9,575 for June 30, 2025.

The increase in net cash used in investing activities for the nine months ended June 30, 2026 was primarily due to purchase of property and equipment of $1,175,098, payment for intangible assets for $417,166, and advances for development XYZ Terminal and Tradrithm of 78,148 which are capitalized as Internally developed software WIP for the nine months ended June 30, 2026, compared to no such amount for the nine months ended June 30, 2025.

Financing Activities

Net cash provided by financing activities was $2,778,174 for the nine months ended June 30, 2026 as compared to $7,681,331 for the nine months ended June 30, 2025.

The increase in net cash provided by financing activities for the nine months ended June 30, 2026 was primarily due to the issuance of note payable of $2,790,000 and proceeds from issuance of shares (under ATM offering) of $ 10,674 which is offset by offering cost paid of $22,500 compared to no such amount for the nine months ended June 30, 2025.

Liquidity, Capital Resources and Going Concern

Overview

Our primary capital management strategy is to preserve sufficient capital to continue providing benefits to our stakeholders and adequate investment returns to our shareholders by selling our products at prices commensurate with our operating risks.

We determine the total amount of capital required to be consistent with risk levels. This capital structure is adjusted on a timely basis depending on changes in the economic environment and risks of the underlying assets. We are not subject to any externally imposed capital requirements.

Working Capital

As of June 30, 2026, our current assets were $2,668,297 which includes cash of $2,410,081 and prepaid expenses of $258,216. Our current liabilities were $791,606 which includes accounts payables and accrued liabilities of $405,263, amounts due to related parties of $5,174, and contract liabilities of $381,169. The resulting positive working capital was $1,876,691. No dividends were declared and paid to the shareholders for the nine months period ended June 30, 2026.

As of September 30, 2025, our current assets totaled $4,783,242, which included cash of 4,418,169 and prepaid expenses of $365,073. Our current liabilities amounted to $519,078, which consisted of accounts payables and accrued liabilities of 123,257, amounts due to related parties of $37,193, and contract liabilities of $358,628. This resulted in positive working capital of $4,264,164. No dividends were declared or paid to shareholders for the nine months ended June 30, 2025.

Our available cash resources currently consist of the net proceeds from our April 2025 IPO, Note Payable in May 2026, ATM offering in June 2026 and cash generated from our business. We completed our IPO on April 11, 2025 and the closing of the underwriters’ over-allotment option on April 16, 2025, which collectively generated aggregate gross proceeds of approximately $8,901,000 (before underwriting discounts and offering expenses). We continue to incur operating losses and expect to require additional capital in the near term to fund operations and execute our business plan. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date these condensed consolidated financial statements are issued.

Management intends to fund operating costs over the next twelve months primarily through the use of remaining IPO proceeds and, most likely, through additional financing from public or private offerings of equity or debt securities. However, there can be no assurance that such financing will be available on acceptable terms, or at all. Accordingly, management has concluded that substantial doubt about our ability to continue as a going concern has not been alleviated. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Capital Expenditures

During the nine months ended June 30, 2026 we paid $1,175,098 towards purchase of property and $417,166 towards acquisition of intangible assets.

SentimenTracker

In February 2026, the Company launched its internally developed software platform, SentimenTracker, upon completion of the application development stage and readiness for intended use. As of that date, the Company had capitalized $118,016 of development costs related to the platform.

Note Purchase Agreement with Streeterville Capital, LLC

On May 13, 2026, the Company entered into a Note Purchase Agreement with Streeterville Capital, LLC (the “Investor”), pursuant to which the Company issued a Secured Promissory Note in the original principal amount of $3,240,000, including an original issue discount of $240,000. The purchase price for the Note was $3,000,000 and, after deducting a $30,000 transaction expense amount payable to the Investor and other debt issuance costs of $204,070, net proceeds to the Company were $2,765,930., which the Company intends to use for working capital and general corporate purposes. The Note bears interest at 8% per annum, compounding daily based on a 360-day year of twelve 30-day months and matures 18 months from issuance (November 13, 2027). The Note is secured by a first-position lien on substantially all of the Company’s assets and intellectual property, subject to permitted liens, and is guaranteed by the Company’s subsidiaries that are party to the related guaranty. No warrants were issued in connection with this transaction.

Beginning on the six-month anniversary of the Purchase Price Date, the Investor has the right, exercisable in its sole discretion, to redeem up to $250,000 per calendar month in cash, and may redeem additional amounts based on the trading price and volume of the Company’s common stock upon the occurrence of a Limited Redemption Event, each payable within three (3) business days of notice. These redemption rights may result in recurring cash payment obligations if and to the extent the Investor delivers redemption notices beginning on the six-month anniversary of the Purchase Price Date, which would be November 13, 2026 if the Purchase Price Date is May 13, 2026, and the Company must maintain sufficient liquidity to satisfy such notices as they arise. If the Note remains outstanding on the six-month anniversary of the Purchase Price Date, a one-time monitoring fee will be automatically added to the outstanding balance, calculated as the outstanding balance on that date divided by 0.85 less such outstanding balance. If calculated based solely on the initial principal amount of $3,240,000 and assuming no payments, accrued unpaid interest or other adjustments to the outstanding balance, the fee would be approximately $571,765. The Company may prepay the Note in full at any time at 110% of the then-outstanding balance.

The Note and Note Purchase Agreement impose material restrictions on the Company’s financing flexibility, including, subject to specified exceptions, restrictions on additional indebtedness, liens, and subsidiary equity transfers and issuances, subsidiary indebtedness, and variable-price or resettable securities issuances without the Investor’s prior written consent. The Note also contains trigger event provisions pursuant to which the Investor may increase the outstanding balance by up to 15% per major trigger event or 5% per minor trigger event (capped at three occurrences each), with most uncured trigger events becoming events of default after a five-trading-day cure period, and certain insolvency, bankruptcy, receivership and similar trigger events becoming automatic events of default, in each case subject to acceleration of the outstanding balance and default interest of 15% per annum. The occurrence of any such event could have a material adverse effect on the Company’s liquidity and financial condition.

Contractual Obligations

As of June 30, 2026, other than obligations under the Secured Promissory Note described above and ordinary-course operating obligations, we did not have any material contractual obligations. As of September 30, 2025, we did not have any contractual obligations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources for the three and nine months ended June 30, 2026 and 2025.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, each as of the date of the financial statements, and revenues and expenses during the periods presented. On an ongoing basis, management evaluates their estimates and assumptions, and the effects of any such revisions are reflected in the financial statements in the period in which they are determined to be necessary. Management bases their estimates on historical experience and on various other factors that they believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our consolidated financial statements.

Our significant accounting policies are discussed in Note 2 of the consolidated financial statements that are included elsewhere in this filing. We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. There have been no changes to estimates during the periods presented in the filing. Historically changes in management estimates have not been material.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this Report, our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, we are voluntarily providing risk factor updates as described in this Item 1A.

For our current risk factors relating to our operations, other than as set forth below, see the section entitled “Risk Factors” contained in our Annual Report.

Our management is currently involved in litigation proceedings with one of our former directors who has brought claims against us for breach of contract and promissory fraud. If we were to receive an adverse ruling, it could materially and adversely affect our reputation, cause us to incur significant judgment or settlement costs in cash or equity securities, and adversely affect our stock price.

On March 19, 2026, Mr. David Mandel, a former member of our board of directors, filed a complaint against us, Nicolas Lin, our Chief Executive Officer and Chairman, and certain Doe defendants in the Superior Court of the State of California, County of Los Angeles, Case No. 26STCV08877. On April 24, 2026, we removed the action to the United States District Court for the Central District of California, Case No. 2:26-cv-04423. On June 3, 2026, the District Court remanded the action back to the Superior Court of Los Angeles County. The complaint alleges breach of oral contract and promissory fraud based on allegations that we and Mr. Lin offered Mr. Mandel the position of our Chief Executive Officer for a three-year term at an annual salary of $220,000 and an equity interest equal to 7.5% of our equity, vesting in tranches over a three-year period. Mr. Mandel seeks damages in excess of $11.46 million, punitive damages and such other relief as the court may deem appropriate. We believe the claims are without merit and intend to defend the action vigorously. The action is in the discovery phase.

Defending against Mr. Mandel’s legal action could cause us to incur significant expenses and consume large amounts of our management’s time and attention. If Mr. Mandel were to prevail, an adverse ruling on such a claim could materially and adversely affect our reputation, cause us to incur significant judgment or settlement costs in cash or equity securities and could adversely affect our stock price. See the section above entitled “Item 1. Legal Proceedings – Mandel v. Aether Holdings, Inc., et. al.” and the sections in our Annual Report on Form 10-K filed with the SEC on December 17, 2025, entitled “Business - Recent Developments - Dispute with Former Director” and “Business – Recent Developments – Removal of Director” for additional information regarding the legal action, dispute and Mr. Mandel’s removal.

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

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

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

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

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

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

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

• incur, issue or guarantee certain additional indebtedness or make certain restricted issuances, including issuances of variable-price or resettable securities;
• create liens, security interests, guarantees, pledges or other encumbrances;
• sell, transfer or issue equity interests or voting rights in our subsidiaries;
• permit our subsidiaries to incur indebtedness other than in the ordinary course of business;
• enter into or consummate certain mergers, asset sales, changes of control or other fundamental transactions without repaying the applicable Streeterville Note or obtaining Streeterville’s consent;
• enter into agreements that restrict our ability to engage in variable-rate transactions with Streeterville or issue securities to Streeterville or its affiliates; and
• terminate our Exchange Act reporting status or fail to maintain the listing or quotation and continued trading of our common stock on an eligible securities exchange.

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

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

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

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

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