SCHEDULE: Quiet Capital Discloses 16.2% Stake in Merlin, Inc.

Quiet Capital Management has reported a significant 16.24% beneficial ownership stake in Merlin, Inc., following a recent PIPE transaction and price adjustments.

Summary

• Quiet Capital Management, LLC disclosed a beneficial ownership of 13,839,884 shares of Merlin, Inc. common stock.
• The total ownership includes 12,896,007 shares of common stock, 464,534 shares from the conversion of 12.0% Series A Cumulative Convertible Preferred Stock, and 479,343 shares from Series A Warrants.
• The ownership percentage is calculated at 16.24% based on 84,262,886 shares outstanding as of March 16, 2026.
• A PIPE transaction on May 1, 2026, triggered an automatic adjustment of the conversion and exercise prices for the Series A Preferred Stock and Warrants from $12.00 down to $6.67.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as moderately positive; while the PIPE transaction suggests a need for capital and causes dilution, the substantial 16.2% stake held by an institutional manager provides significant validation of the company's long-term prospects.

Positives

• Significant institutional backing from Quiet Capital Management, indicating strong investor confidence.
• The conversion price for preferred shares and warrants was significantly reduced to $6.67, providing the reporting person with a more favorable entry point for equity conversion.
• The reporting person holds sole voting and dispositive power over the entire 13.8 million share block.

Negatives

• The adjustment in conversion price was triggered by a PIPE transaction, which typically indicates the company needed to raise capital at a price lower than previous rounds, potentially signaling valuation pressure.
• Existing common shareholders face potential dilution from the 943,877 shares issuable upon conversion of preferred stock and warrants.

Risks

• High concentration of ownership (16.24%) by a single entity could lead to volatility if the reporting person decides to exit the position.
• The downward adjustment of the conversion price from $12 to $6.67 suggests a decline in the company's market valuation or a highly dilutive recent financing event.

Future Outlook

The reporting person has certified that the securities were acquired for investment purposes and not with the intent to change or influence the control of Merlin, Inc. However, the significant 16.24% stake positions Quiet Capital as a major stakeholder in future corporate actions.

Management Comments

• Kabir Masson, General Counsel for Quiet Capital Management, certified that the information set forth in the statement is true, complete, and correct.

Industry Context

StockSavvy.ai notes that large-scale passive investments by venture and private equity-linked firms like Quiet Capital often precede strategic shifts or provide a floor for stock valuation during periods of dilutive capital raises like PIPE transactions.

Comparison to Industry Standards

• A 16.24% stake is significantly higher than the typical 5-10% threshold for major institutional holders in the technology sector.
• The use of a 12.0% cumulative dividend on Series A Preferred Stock is on the higher end of industry standards, suggesting a high cost of capital for Merlin, Inc. compared to peers with lower-yield preferred instruments.

Corporate Governance

Related Party Transactions

• Quiet Capital Management manages the Quiet Direct Holders (Quiet ML, Quiet V1, and Quiet V2), which are the direct owners of the reported securities.

Stakeholder Impact

• Common shareholders may experience dilution due to the lowered conversion price of the Series A Preferred Stock.
• Quiet Capital Management gains significant voting influence as a 16.24% owner.

Next Steps

• Monitor for any future Schedule 13D filings if Quiet Capital changes its intent from passive to active management.
• Watch for the impact of the PIPE transaction on the company's next quarterly financial results.

Key Dates

Recommendation

The disclosure of a 16% institutional holder is generally positive for price support, but the downward adjustment of conversion prices and the recent PIPE transaction suggest the company is navigating a challenging valuation environment. Investors should hold until the full impact of the PIPE financing on the balance sheet is clarified.

Keywords

Merlin Inc, Quiet Capital Management, Schedule 13G, Beneficial Ownership, Series A Preferred Stock, Warrants, PIPE Transaction, Institutional Investment, Equity Dilution