{"url_path":"/sec/mrln/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/2028707/0001213900-26-057138-index.html","accession_number":"0001213900-26-057138","cik":"0002028707","ticker":"MRLN","issuer_name":"Merlin, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/2028707/0001213900-26-057138-index.html","primary_entity_key":"0002028707","primary_entity_name":"Merlin, Inc."},"word_count":809,"has_tables":true,"body_markdown":"Item 1A. Risk Factors\n\n \n\nInvesting in our common stock involves a high\ndegree of risk. In addition to the other information set forth in this Quarterly Report and in other documents that we file with the SEC,\nyou should carefully consider the factors described in the section titled “Risk Factors” in our Prospectus. Other than as\ndisclosed below, there have been no material changes to the risk factors described in the Prospectus. If any of the risk factors described\nin the Prospectus actually materializes, our business, financial condition and results of operations could be materially adversely affected.\nIn such an event, the market price of our common stock could decline and you may lose all or part of your investment. We may disclose\nchanges to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.\n\n \n\n*We have identified material weaknesses in\nour internal control over financial reporting. If not remediated, or if we experience additional material weaknesses in the future or\notherwise fail to maintain effective internal controls in the future, we may not be able to accurately or timely report our financial\ncondition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Common Stock.*\n\n* *\n\nIn the course of preparing our consolidated financial\nstatements as of and for the years ended December 31, 2025 and 2024, and the condensed consolidated financial statements for the three\nmonths ended March 31, 2026, our management determined that we have material weaknesses and significant deficiencies in our internal controls\nover financial reporting. These material weaknesses primarily relate to (i) non-routine and complex transactions, (ii) segregation of\nduties, and (iii) information technology general controls (ITGCs) over logical access to key systems tested supporting financial reporting.\n\n \n\nThese deficiencies, individually and in the aggregate, could result\nin a misstatement of one or more account balances or disclosures potentially leading to a material misstatement to the annual or interim\nconsolidated financial statements which may not be prevented or timely detected and, accordingly, management determined that these control\ndeficiencies constitute material weaknesses. \n\n \n\n45\n\n \n\n \n\nIn order to remediate these material weaknesses,\nwe have taken and plan to take the following actions:\n\n \n\n \n●\nPersonnel and training: We have hired and continue to hire personnel with public company accounting experience and are providing targeted training on internal control requirements, complex transaction accounting, and financial reporting obligations.\n\n \n\n \n●\nControl design and implementation: We are implementing additional controls and processes designed to operate at a sufficient level of precision and frequency, and that appropriately evidence the performance of the control, particularly with respect to the accounting and reporting of revenue and non-routine, unusual, or complex transactions.\n\n \n\n \n●\nSegregation of duties: We have begun to implement processes and controls to better identify and manage segregation of duties risks within our accounting and financial reporting functions.\n\n \n\n \n●\nSystems and automation: We are evaluating system enhancements to reduce our reliance on manual processes in key areas of our financial close and reporting process.\n\n \n\n \n●\nExternal advisor engagement: We have engaged an external advisor to assist with evaluating and documenting the design and operating effectiveness of our internal controls and to assist with remediation of identified deficiencies.\n\n* *\n\nWe will not be able to fully remediate these material weaknesses until\nthese steps have been completed, have been operating effectively for a sufficient period of time and management has concluded, through\ntesting, that these controls are effective. We were not required to, and did not, perform an evaluation of our internal control over financial\nreporting as of December 31, 2025 or any period in accordance with the provisions of the Sarbanes-Oxley Act. Accordingly, we cannot\nassure you that we have identified all, or that we will not in the future have additional, material weaknesses. Material weaknesses may\nstill exist when we first report on the effectiveness of our internal control over financial reporting as required under Section 404\nof the Sarbanes-Oxley Act.\n\n \n\nIf not remediated, these material weaknesses could\nresult in material misstatements to our annual or interim consolidated financial statements that might not be prevented or detected on\na timely basis, or in delayed filing of required periodic reports. If we are unable to assert that our internal control over financial\nreporting is effective when required, investors may lose confidence in the accuracy and completeness of our financial reports, the market\nprice of our common stock could be adversely affected and we could become subject to litigation or investigations by Nasdaq, the SEC,\nor other regulatory authorities, which could require additional financial and management resources. Our remediation efforts may be complicated\nby our recent transition to operating as a public company and by the accounting, valuation and disclosure requirements associated with\nour capital structure, including our Series A Preferred Stock, Series A Warrants and other non-routine transactions.\n\n* *\n\n**\n\n46"}