Amaero Inc. 424B4final IPO prospectus

Executive Summary

Amaero manufactures specialty titanium and refractory metal powders and large powder-based components for defense, aerospace and industrial customers. Commercial production is accelerating: H1 2026 revenue rose 507% Y/Y to $7.40M, but underused capacity and rising overhead produced a $13.4M net loss. Its all-primary $20.0M U.S. IPO values the company at an implied $121M, or 19.2 times FY2025 revenue, with buyers acquiring 16.5% of outstanding shares. Investors are funding a manufacturing scale-up—not a proven profitable franchise—and management expects the financing to extend runway only into Q2 2027.

The Offering

• Size and valuation: 4,705,883 primary shares at $4.25 raise $20.0M gross. Based on 28,539,063 post-offering shares, implied market capitalization is $121M, buyers’ stake is 16.5%, and valuation is 19.2 times FY2025 revenue. Including disclosed outstanding options and warrants, fully diluted shares reach 31.3M, implying $133M capitalization and a 15.0% buyer stake, before new awards.
• Proceeds: ≈$15.7M net goes to Amaero, not selling stockholders; up to ≈$10.0M funds capital equipment over 12 months, with the remainder supporting operations, working capital and R&D. A 30-day option for 705,882 additional primary shares increases gross proceeds to $23.0M and estimated net proceeds to $18.5M.
• Dilution: each $4.25 share is backed by $2.23 of net tangible assets after the IPO, a $2.02 gap. Existing holders paid an average $5.04 per share. The 4.00M-share equity-plan reserve adds further potential issuance; including that entire reserve and outstanding instruments gives 35.3M shares and $150M implied capitalization.
• Capitalization: after the IPO means the June 30 balance sheet adjusted for issuance and offering costs. Cash rises $15.7M to $29.3M and equity rises equally to $63.8M; long-term debt, net, stays $19.6M. Separately, July’s ≈$3.3M borrowing raises adjusted cash to ≈$32.6M and long-term debt, net, to ≈$22.9M.
• Execution: final prospectus dated 10/14/2026; delivery expected on or about 10/16/2026. Baird and Lake Street underwrite the Nasdaq Capital Market listing, AMRO. Australian depositary interests continue trading as 3DA; 40 represent one common share.
• Resale supply: company lock-up is 90 days; directors, officers and Pegasus generally face 180 days. Existing holders’ 15.7M shares are immediately sale-eligible, subject to affiliate restrictions; another 8.17M become eligible beginning day 181, creating potential selling pressure.

Key Financial Highlights

$M except percentages; historical unless labeled otherwise. Net losses are attributable to Amaero.

• Margin improvement reflects higher production, better yields and input-cost absorption, but sales remain below the level needed to cover manufacturing costs. Staffing, professional fees and public-company preparation widened operating losses.
• Cash consumption exceeds operating losses once equipment purchases are included. H1 stock-based compensation of $1.69M partly offsets noncash expenses in OCF, while working-capital movements also affect conversion.
• Preliminary, unreviewed Q3 2026 revenue is $3.96M–$4.12M, up 30%–35% Y/Y, but estimated net loss is $9.07M–$9.50M vs $4.10M. Titanium-production interruptions constrained output and margins.
• Financing remains essential: ≈$16.5M is needed to finish the current buildout, beyond continuing operating needs. June debt principal was $22.4M; the secured facility was fully drawn by July.
• Tangible equity equals reported equity; the dilution calculation separately removes ≈$0.8M of deferred offering costs before issuance, explaining its lower pre-IPO asset backing.

Business Model and Growth Drivers

Metal powders generated 84% of H1 2026 revenue; powder-metallurgy hot isostatic pressing components supplied the remainder. Powder revenue generally follows shipment, while customized components generate revenue as work progresses.

Three commissioned atomizers provide 680 metric tons of annual powder capacity at the expected product mix. Management plans a fourth for June 2027, raising capacity to 920 metric tons. Its contamination-limiting process supports demanding alloy specifications; an argon-recovery system planned for Q1 2027 is projected to reduce recurring argon expense by at least 77%, not yet realized.

Backlog—contracted work expected to generate revenue within 12 months—reached ≈$13.4M across 18 customers at 9/30/2026. Powder orders are firm; some component contracts permit termination. Continuum’s $5.5M minimum commitment for July 2026–June 2027 and a ≈$4.5M, 13-month government development contract support demand visibility. Naval and aerospace development work must still become repeat production orders.

Governance and Control

• Voting influence: one vote per common share; Pegasus owns 26.1% after issuance, controlled by CEO and chairman Hank Holland. His beneficial stake is 26.2%; directors and executives collectively hold 29.7%, overlapping these holdings.
• Board accountability: four of five directors are independent, with a lead independent director, but staggered terms and restrictions on shareholder action can impede leadership changes.
• Incentives and dilution: Holland’s agreement provides awards equivalent to 1.50M common shares plus $1.50M of offering-contingent restricted stock units; the finance chief receives $0.900M of offering-contingent units. Vesting is over time, not immediate cash payment; the equity plan also permits annual reserve increases.

Risk Assessment

• Going concern: the auditor and management flag substantial doubt, and even IPO proceeds are not expected to remove it; funding only into Q2 2027 leaves further financing necessary.
• Financial controls: accounting-system access and segregation-of-duty weaknesses remained unremediated at 6/30/2026, increasing reporting-error risk.
• Single-facility execution: a May flash fire injured two employees and interrupted titanium production for six weeks; further outages or commissioning failures could delay sales and consume cash.
• Concentrated commercialization: Titomic and Continuum supplied 68% of H1 revenue and ≈75% of June backlog; qualifications and government procurement can delay conversion.
• Feedstock exposure: most titanium-bar inputs come from Chinese suppliers without long-term agreements, exposing domestic-defense positioning to trade restrictions, availability and cost shocks.
• Valuation: 19.2 times FY2025 revenue requires substantial commercial scaling and margin recovery despite negative gross margins and slower preliminary Q3 growth.

Investor Actionables

At $4.25, buyers must accept that installed capacity and qualified products can become profitable demand before repeated financing overwhelms returns. Proceeds principally fund equipment and the operating ramp.

• Backlog conversion: test ≈$13.4M September backlog against subsequent shipments and replenishment; sustained revenue growth validates demand, while delays or cancellations weaken it.
• Manufacturing economics: track the H1 gross margin of (42%) and management’s Q1/June 2027 equipment milestones; improving margins validate utilization and savings, while recurring disruptions undermine them.
• Component adoption: H1 component revenue was $1.20M; repeat naval and aerospace production orders would validate development programs, while continuing qualification-only sales would not.
• Funding: compare the stated Q2 2027 runway with cash consumption and remaining buildout spending; financing that supports commercial progress strengthens the case, while emergency dilution before meaningful margin improvement weakens it.