WACB

On a mission to simplify the world of investing. Bringing you the latest news, insights, and tips. Not investment Advice.

[WACB @wacbinvesting]

https://t.co/p2jl6nJqjG

[WACB @wacbinvesting]

@ke0in Really appreciate the shoutout brotha and very grateful for your callout on the error. It’s awesome to have a community that is dedicated to getting to the right answer for the greater good!

[WACB @wacbinvesting]

@ke0in That is insane!!!

[WACB @wacbinvesting]

@gmpnavi It almost hallucinates immediately. You can get it to believe anything if you give it random numbers pretty much

[WACB @wacbinvesting]

@gmpnavi That’s awesome hahahaha and of course!! I always love your work

[WACB @wacbinvesting]

@gmpnavi Need to get X to get me an automatic translate button for your Article post’s!! They are so great but I wish I could just read them in the app. The translation does not take much time at all using a LLM.

[WACB @wacbinvesting]

$MRLN

After triple checking my math on Item 6 and speaking with @ke0in I feel like I need to make a correction as I had some math wrong in the initial calculation. I’m glad he called me out on it as it was a large oversight on my part due to misunderstanding the language.

I based the dividend on what investors paid for the Series A. That’s not how it works dividends accrue on the stated value of $12.00 per share. With 21,711,872 shares outstanding, that’s about $260M, not the $207M number I posted. The rate isn’t a flat 12% either it’s 12% if paid in stock, 10% if paid in cash, compounding twice a year. Call it $6.5-7.8M a quarter.

I also missed two things entirely. The anti-dilution ratchet has already fired for the separate Series A Warrants. This went from 21.2M shares at $12.00 to 38.1M at $6.67 and the preferred’s conversion price which is still $12.00 today now resets to the greater of the 20-day VWAP or $7.50 on the 21st trading day following the six-month anniversary

What this means is more shares get created than the current 93M count suggests, at lower prices than originally set. The warrant change alone adds ~17M potential shares for no additional cash.

Playing devil’s advocate though the warrants are contingent on a recovery to over 6.67, but the preferred’s economics compound either way.

This has become a key point for me heading into the print. Apologies for the oversight I take full accountability. Will be making a process change going forward.

[WACB @wacbinvesting]

$MRLN Q2 Checklist 🛩️

Ahead of the Aug 13 print (4:30pm ET), here's what I'm watching. These are my own targets built off the Q1 actuals as Merlin hasn't given formal guidance yet.

1 Revenue Performance – Target $1.1M - $1.6M

Q1 came in at $1.0M, up about 15% YoY, and most of it was recognized under the C-130J IDIQ as task orders got funded. With CDR completed June 4 and no new program announced in the quarter, I'd expect Q2 to track task-order cadence rather than jump. One thing I'm holding myself to is because revenue is recognized as task orders are funded, a down quarter is entirely possible on timing alone. A $0.8M print wouldn't automatically mean deterioration it could just be procurement cycle.

Stretch Goal - More than $2.0M

North of $2.0M would mean task-order funding genuinely accelerated, or a second program started contributing. With a $105M ceiling sitting there, a real step up in quarterly recognition is the clearest proof that ceiling is converting into dollars instead of staying a headline.

2 Adjusted EBITDA & Burn Target -Loss no wider than -$25.0M

Q1 adjusted EBITDA loss was $(23.3)M, more than double the $(10.4)M a year prior. What I care about is whether that was a one-time reset to a new base post-deSPAC or the start of something widening. Holding it to $(25.0)M or better tells me the cost structure has settled.

Stretch Goal - Loss narrower than -$21.0M

Narrower than $(21.0)M and I'd read Q1 as peak investment intensity, with spend managed against milestones rather than just growing with headcount. That extends runway and takes pressure off the next raise.

3 Balance Sheet & Runway – Target Cash above $160M

$122.8M at March 31, roughly $183M after the May 1 financing with no debt. Two months of burn at the Q1 rate puts $15-18M out the door before quarter end. Above $160M and burn is tracking what they disclosed. The wrinkle I'm watching is the 12% preferred dividend. This is a real claim on cash that doesn't show up in adjusted EBITDA (more in item 6), so I want to see how it's being settled before I take any runway number at face value.

Stretch Goal - Cash above $168M

Above $168M implies better cash conversion than I'm modeling. That's where the next raise becomes a choice rather than something they're forced into, which matters a lot at this stage.

4 Defense Execution & Commercial Traction - Confirm Task order value actually funded against the $105M ceiling

The USSOCOM C-130J IDIQ is described as the anchor of the entire defense revenue base, and CDR was completed June 4. We still don't know how much of that $105M has actually been funded into task orders I want that number, or at minimum a reaffirmed post-CDR timeline. On the commercial side, the World Star Aviation MOU for Condor was explicitly preliminary and non-binding, so I need to see it moving toward definitive terms before I treat Condor as a path rather than a product launch. One devil's advocate data point to remember is essentially all revenue currently comes from one customer (SOCOM).

Stretch Goal - New task order, ceiling expansion, a named second airframe, or a binding Condor deal

A new funded task order, a bigger ceiling, or a defined program on a second airframe. KC-135 is the one I'm most focused on as it would show the autonomy stack actually transferring across platforms. That's the core claim behind the Condor thesis and it's currently an assertion, not a contract. A binding Condor agreement with disclosed economics would be the single best outcome of the quarter.

5 Certification – Confirm SOI 3 and a timeline for SOI 4

SOI 1 and SOI 2 are done with the NZ CAA alongside the FAA, and they announced SOI 3 under CAANZ Part 23 on Aug 6 it's worth noting that's after the June 30 quarter close, so it's a subsequent event, not Q2 execution. I would like it reconfirmed in context plus a timeline for SOI 4 and the first certified takeoff-to-touchdown. Certification is the moat they keep pointing to, so cadence here matters more to me than any single quarter's revenue.

6 Capital Structure - Confirm How the 12% preferred is being settled, and the post-ratchet conversion price

This is the one I'd have missed. At the deSPAC close there were 21.7M Series A Preferred shares against 84.3M common, carrying a 12% cumulative dividend. At roughly $9.55/share issue that's ~$207M call it $6.2M a quarter, which is larger than the entire revenue line, and it doesn't show up in adjusted EBITDA. If paid in cash it drains runway; accrued or paid in kind it compounds dilution. I also want the adjusted conversion price, since the May 1 financing was disclosed as triggering anti-dilution adjustments to the preferred and certain warrants meaning it may now convert into more common than it did in March.

Stretch Goal - Provide Fully diluted share count and lockup timing

Two numbers would clear up most of the uncertainty. One clean fully diluted share count, and the actual lockup expiry date. The deal closed March 16 with 75.8M shares to legacy holders, so a standard six-month lock lifts around mid-September. That's real supply, and I'd rather have the date than the surprise

Closing

Overall I'm looking forward to seeing how the team speaks on the call and what level of confidence they have. @NotMattGeorge has done a good job getting out with the media and telling the story of the company but the same needs to be done for the retail and institutional investors on the call. This will provide them with exactly that opportunity. Q/A will be especially important for me as I remain holding over 3K shares.

Let me know your thoughts

[WACB @wacbinvesting]

@pennycheck $NRGV has been a dark horse all year for me. No position but very intrigued by the name. Same as $VELO as well

[WACB @wacbinvesting]

@pharmdaz 🎯🎯🎯

[Matheus Lonning @mathlonning]

I’m expecting $HAWK to crush revenue estimates for Q2 26 as demand for their maritime business likely skyrocketed due to the Iran conflict and the need to track ships.

I wouldn’t be surprised if EPS misses by a lot as they work out post IPO and acquisition costs.

I continue to see them company as well positioned for many years to come.

[WACB @wacbinvesting]

@mathlonning Very excited. Going to out together a short checklist tmrw. Price action into the print has been encouraging

[WACB @wacbinvesting]

@pharmdaz Thanks for the call out Daz!!

[WACB @wacbinvesting]

@ShawarmaCapital @MerlinAero Thanks @ShawarmaCapital ! means a lot coming from you

[WACB @wacbinvesting]

$MRLN Q2 Checklist 🛩️

Ahead of the Aug 13 print (4:30pm ET), here's what I'm watching. These are my own targets built off the Q1 actuals as Merlin hasn't given formal guidance yet.

1 Revenue Performance – Target $1.1M - $1.6M

Q1 came in at $1.0M, up about 15% YoY, and most of it was recognized under the C-130J IDIQ as task orders got funded. With CDR completed June 4 and no new program announced in the quarter, I'd expect Q2 to track task-order cadence rather than jump. One thing I'm holding myself to is because revenue is recognized as task orders are funded, a down quarter is entirely possible on timing alone. A $0.8M print wouldn't automatically mean deterioration it could just be procurement cycle.

Stretch Goal - More than $2.0M

North of $2.0M would mean task-order funding genuinely accelerated, or a second program started contributing. With a $105M ceiling sitting there, a real step up in quarterly recognition is the clearest proof that ceiling is converting into dollars instead of staying a headline.

2 Adjusted EBITDA & Burn Target -Loss no wider than -$25.0M

Q1 adjusted EBITDA loss was $(23.3)M, more than double the $(10.4)M a year prior. What I care about is whether that was a one-time reset to a new base post-deSPAC or the start of something widening. Holding it to $(25.0)M or better tells me the cost structure has settled.

Stretch Goal - Loss narrower than -$21.0M

Narrower than $(21.0)M and I'd read Q1 as peak investment intensity, with spend managed against milestones rather than just growing with headcount. That extends runway and takes pressure off the next raise.

3 Balance Sheet & Runway – Target Cash above $160M

$122.8M at March 31, roughly $183M after the May 1 financing with no debt. Two months of burn at the Q1 rate puts $15-18M out the door before quarter end. Above $160M and burn is tracking what they disclosed. The wrinkle I'm watching is the 12% preferred dividend. This is a real claim on cash that doesn't show up in adjusted EBITDA (more in item 6), so I want to see how it's being settled before I take any runway number at face value.

Stretch Goal - Cash above $168M

Above $168M implies better cash conversion than I'm modeling. That's where the next raise becomes a choice rather than something they're forced into, which matters a lot at this stage.

4 Defense Execution & Commercial Traction - Confirm Task order value actually funded against the $105M ceiling

The USSOCOM C-130J IDIQ is described as the anchor of the entire defense revenue base, and CDR was completed June 4. We still don't know how much of that $105M has actually been funded into task orders I want that number, or at minimum a reaffirmed post-CDR timeline. On the commercial side, the World Star Aviation MOU for Condor was explicitly preliminary and non-binding, so I need to see it moving toward definitive terms before I treat Condor as a path rather than a product launch. One devil's advocate data point to remember is essentially all revenue currently comes from one customer (SOCOM).

Stretch Goal - New task order, ceiling expansion, a named second airframe, or a binding Condor deal

A new funded task order, a bigger ceiling, or a defined program on a second airframe. KC-135 is the one I'm most focused on as it would show the autonomy stack actually transferring across platforms. That's the core claim behind the Condor thesis and it's currently an assertion, not a contract. A binding Condor agreement with disclosed economics would be the single best outcome of the quarter.

5 Certification – Confirm SOI 3 and a timeline for SOI 4

SOI 1 and SOI 2 are done with the NZ CAA alongside the FAA, and they announced SOI 3 under CAANZ Part 23 on Aug 6 it's worth noting that's after the June 30 quarter close, so it's a subsequent event, not Q2 execution. I would like it reconfirmed in context plus a timeline for SOI 4 and the first certified takeoff-to-touchdown. Certification is the moat they keep pointing to, so cadence here matters more to me than any single quarter's revenue.

6 Capital Structure - Confirm How the 12% preferred is being settled, and the post-ratchet conversion price

This is the one I'd have missed. At the deSPAC close there were 21.7M Series A Preferred shares against 84.3M common, carrying a 12% cumulative dividend. At roughly $9.55/share issue that's ~$207M call it $6.2M a quarter, which is larger than the entire revenue line, and it doesn't show up in adjusted EBITDA. If paid in cash it drains runway; accrued or paid in kind it compounds dilution. I also want the adjusted conversion price, since the May 1 financing was disclosed as triggering anti-dilution adjustments to the preferred and certain warrants meaning it may now convert into more common than it did in March.

Stretch Goal - Provide Fully diluted share count and lockup timing

Two numbers would clear up most of the uncertainty. One clean fully diluted share count, and the actual lockup expiry date. The deal closed March 16 with 75.8M shares to legacy holders, so a standard six-month lock lifts around mid-September. That's real supply, and I'd rather have the date than the surprise

Closing

Overall I'm looking forward to seeing how the team speaks on the call and what level of confidence they have. @NotMattGeorge has done a good job getting out with the media and telling the story of the company but the same needs to be done for the retail and institutional investors on the call. This will provide them with exactly that opportunity. Q/A will be especially important for me as I remain holding over 3K shares.

Let me know your thoughts

[Patrick OShaughnessy @patrick_oshag]

My conversation with @ericvishria of Benchmark.

Eric has spent a decade investing across software and hardware, backing companies like Fireworks, Sierra, Sunday Robotics, and Cerebras.

This one is about what history teaches us about the current moment, and a dispatch from inside the AI buildout through his companies.

We discuss:
- What AWS tells us about how big AI can get
- How the goalposts have moved for every software company
- Lessons from a decade with Cerebras
- China and the energy bottleneck
- Benchmark's return to growth investing
- Robotics

Enjoy!

TIMESTAMPS
0:00 Intro
3:36 What Cloud Teaches Us About AI
12:52 Sierra, Sandcastles, and AI Products
17:35 The New SaaS Competitive Frontier
28:28 AI Demand and the Energy Bottleneck
31:28 The Cerebras Story and AI Chips
45:10 The Future of Robotics
52:53 Eric’s Venture Investing Philosophy
1:07:30 Going Public, AI Value, and Jobs

[WACB @wacbinvesting]

$MRLN

Will be posting my @MerlinAero Q2 checklist shortly....

[WACB @wacbinvesting]

@gmpnavi Awesome! Excited to read it

[WACB @wacbinvesting]

@MWPutters Ur gonna kill it brotha!

[WACB @wacbinvesting]

@loco_dela_bolsa @kap_investings @Kaizen_Investor Thanks loco! Learned from the best in you @loco_dela_bolsa!