AIAI 10-K & 10-Q changes, risk factors and insider trading

Our business has many risks. Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our common stock or senior notes are described below and in our Registration Statement S-1/A filed on May 1, 2026.

The following information updates the discussion of the Company's financial condition provided in our registration statement on Form S-1 declared effective on May 6, 2026, and the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 (“Q1 10-Q”), and analyzes the changes in the results of operations between the periods of May 7, 2026 through June 30, 2026 (the “Successor Period”), April 1, 2026 through May 6, 2026 (“Current Predecessor Quarter”), January 1, 2026 through May 6, 2026 (“Current Predecessor YTD Period”), the three months ended June 30, 2025 (“Prior Predecessor Quarter”) and the six months ended June 30, 2025 (“Prior Predecessor YTD Period”).

AIAI Holdings Corporation was formed as a Delaware corporation on July 19, 2024 for the purpose of completing a direct listing of the Company’s common equity on a U.S. stock exchange (“Direct Listing”) and creating an AI-powered ecosystem through acquiring, integrating, and scaling companies that have high potential for increased operating results through the application of AI. On May 6, 2026 (the “Closing Date”), AIAI Holdings Corporation completed the acquisitions of C.C. Carlton Industries, Ltd. (“CCCI”), Constellation Network, Inc. (“Constellation”), gTC MediGuide LP (“MediGuide”), Vanguard Health Solutions, LLC (“Vanguard”), AI Research Corporation (“AIR”), and Bond Street Limited, LLC (“Bond Street”) (each referred to individually as a “Portfolio Company” and collectively as the “Portfolio Companies”). The acquisitions of these companies are collectively referred to as “the Acquisitions” herein. AIAI Holdings Corporation, together with its consolidated subsidiaries, which initially consist solely of the Portfolio Companies and subsidiaries thereof, is referred to herein as the “Company” and “AIAI.” Prior to the Closing Date, AIAI had no substantive business operations other than incurring expenses incidental to identification and negotiation of merger agreements with the Portfolio Companies, negotiation of the AI License Agreement (as defined below), and preparation for the Direct Listing of AIAI Class A common stock on the Nasdaq Global Market which was completed on May 14, 2026. Following the Acquisitions, AIAI conducts substantially all of its operations through the following wholly owned Portfolio Companies:

CCCI: CCCI specializes in providing full-scope civil construction, project management, and estimating services. CCCI has served Central Texas for more than 30 years and possesses extensive experience in the development of single-family subdivisions, multi-family subdivisions, apartment complexes, commercial sites, hospitals, medical office buildings, industrial sites, educational facilities, and municipal projects.

Constellation: Constellation is a digital evidence ecosystem that provides products and services designed to create a trust-based exchange for a communications bridge. Constellation operates multiple revenue streams across hardware, software, and enterprise divisions and is advancing its mission to provide provable guarantees on the world's data through the application of its blockchain protocol to the United States military's digital infrastructure.

MediGuide: MediGuide provides a comprehensive suite of healthcare services, including telehealth solutions, a Medical Second Opinion (“MSO”) platform that connects patients to healthcare providers and specialists, preventative health programs focused on proactive care, and Medical Treatment Abroad (“MTA”) services.

AIR: AIR uniquely focuses on foundational and advanced mathematical and scientific research intended to overcome challenges that have historically limited artificial intelligence development activities supporting applications envisioned for U.S. defense, national security, and a multitude of commercial advanced technology applications.

Vanguard: Vanguard and its subsidiaries collaborate with physicians and healthcare providers, offering consulting services that improve patient experiences, streamline operations, and enhance healthcare delivery. Vanguard's principal services include case management services for accident victims and advisory services to clinics.

Bond Street: Bond Street markets scanners, software, copiers, printers, and subscription-based document solution services.

Effective as of the Closing Date the Company entered into a license agreement (the “AI License Agreement”) with Messier 42, LLC (“M42”), an affiliated entity under common control, Under the AI License Agreement, M42 granted the Company a license for the exclusive use of M42 AI Technology, consisting of data sources, object code, and APIs, along with industry specific template applications which the Company will use to implement AI-enabled solutions within the Portfolio Companies. Pursuant to the License Agreement, we obtained a right to perpetual use of the licensed technology.

CCCI has been determined to be our accounting predecessor (the “Predecessor”), and accordingly, the results of operations discussed below reflect the operating results of CCCI for financial reporting periods prior to the Closing Date, with our results of operations following the Closing Date reflecting of the consolidated operations of AIAI.

Construction Services

Construction services represent our largest revenue stream with services performed under fixed-price contracts in the civil construction sector with a focus on construction of site utilities, roads, bridges, and concrete structures in Texas. We provide full-scope civil construction, project management, and estimating services, including but not limited to wet and dry utility installation, paving and concrete structures, site clearing and grading, lift and pump stations, and treatment plants. Additionally, we offer landscaping services including irrigation, revegetation, aquatic plantings, tree replacement, and decorative wall construction. This diverse expertise is essential for executing a variety of projects, including single-family subdivisions, multi-family subdivisions, commercial sites, hospitals, medical office buildings, industrial sites, schools, and municipal projects with efficiency and scalability.

We recognize construction revenue over time as work is completed, typically using an input measure such as costs incurred to date relative to total estimated costs at completion to measure progress. Costs that do not depict progress toward satisfaction of the performance obligation are included in contract costs but may not result in revenue being recognized, such as significant re-work.

Healthcare Services

Healthcare revenue is generated from subscription services which include healthcare navigation, telemedicine, medical second-opinion services, and preventive health programs. In addition, we provide case management services for accident victims and associated healthcare advisory services to medical clinics. Healthcare customers include both private-sector and public-sector participants, including insurance companies, corporate clients, healthcare providers, patients, and government healthcare programs. Healthcare services contracts generally contain a single performance obligation recognized over time as the Company satisfies its contractual performance obligations under customer contracts.

Technology Products and Services

Technology revenue is generated from blockchain-based enterprise data and technology solutions and associated equipment sales, digital asset rewards earned by operating validator nodes and participating in blockchain staking activities, and blockchain network licensing arrangements. Additionally, technology revenues include marketing and remarketing of printer, scanner, and copier products and subscription-based document solutions. Technology customers include both public-sector and private-sector customers, including government-related applications supporting defense and national security initiatives, as well as business-to-business and business-to-consumer commercial customers. Revenue for technology services is generally recognized over time as the Company satisfies its contractual performance obligations under customer contracts. Revenue associated with sales of hardware and supplies is recognized at a point in time which control of products passes to the customer.

We believe that future performance will be influenced by a number of factors, including those described in the section titled “Risk Factors” in AIAI's Registration Statement as well as the factors described below. While each of these factors presents significant opportunities for the Company, these factors also pose challenges that we must successfully address in order to sustain the growth of the Company’s business and enhance results of operations.

AIAI is a diversified holding company operating through subsidiaries across the construction, healthcare and technology sectors. On May 6, 2026, concurrently with the effectiveness of AIAI's Registration Statement, we completed the Acquisitions and began operating as an integrated platform of businesses. Our strategy is to enhance the operating performance our subsidiaries through the implementation of licensed artificial intelligence technology, operational improvements, and strategic acquisitions that complement and expand its platform.

Integration of the Acquisitions

The Acquisitions resulted in a new reporting entity and a new basis of accounting. CCCI was determined to be the accounting predecessor and, accordingly, periods prior to May 7, 2026 represent the historical operations of CCCI, while periods beginning May 7, 2026 represent our consolidated operations. Because the Acquisitions resulted in a new reporting entity and the application of acquisition accounting, the Successor and Predecessor periods are not directly comparable and should be evaluated in that context.

Our results for the quarter ended June 30, 2026 were significantly influenced by the acquisition and consolidation of the Portfolio Companies beginning May 7, 2026. As a result, the Successor period includes operations of all Portfolio Companies across the construction, healthcare and technology sectors, while the Predecessor period reflects only the historical operations of CCCI. Results were also affected by transaction-related costs associated with the Acquisitions and Direct Listing, incremental public company costs, share-based compensation expense, and amortization of acquired intangible assets and other purchase accounting adjustments recorded in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. In addition, the quarter ended June 30, 2026 reflects only a partial period of consolidated operations and does not yet reflect the full impact of anticipated integration initiatives and operational synergies.

The Acquisitions also significantly changed our capital structure and liquidity profile. In connection with the acquisitions, we assumed indebtedness of the acquired businesses and issued equity interests of AIAI in exchange for all outstanding equity of the Portfolio Companies.

Our performance in a given period can be impacted by adverse weather conditions, severe weather events, natural disasters or other emergencies, which include, among other things, heavy or prolonged snowfall, icing, or rainfall, hurricanes, tropical storms, tornadoes, floods, extreme temperatures, wildfires, and pandemics. These conditions and events can negatively impact our financial results due to, among other things, the termination, deferral or delay of projects, reduced productivity and exposure to significant liabilities. See “Risk Factors.”

Our construction operations are typically affected more by weather conditions during the first and fourth quarters of the fiscal year, because cold, snowy or wet conditions can create challenging working environments that are more costly for our customers or cause delays on projects. This may alter the Company’s construction schedules and can create variability in revenues, profitability and the required number of employees. Second and third quarter revenues are typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. See “Risk Factors.”

Ability to Obtain New Construction Projects

We bid on projects that we believe offer an opportunity to meet the company’s profitability objectives or that offer the opportunity to enter promising new markets. The potential customers often conduct rigorous competitive processes for awarding contracts. We will potentially face strong competition and pricing pressures for any additional contract awards from other government agencies, and may be required to qualify or continue to qualify under various multiple award task order contract criteria. See “Risk Factors.”

Ability to Obtain Approval of Change Orders and Successfully Pursue Claims

We are subject to variation in scope and cost of construction projects from the Company’s original projections. In certain circumstances, we seek to collect or assert claims against customers, engineers, consultants, subcontractors or others involved in a project for additional compensation exceeding the contract price or for amounts not included in the original contract scope. Our experience has often been that customers have been willing to negotiate equitable adjustments to the contract compensation or completion time provisions if unexpected circumstances arise. However, this process may result in disputes over whether the work performed is beyond the scope of the work included in the original project plans and specifications or, if the customer agrees that the work performed qualifies as extra work, the price that the customer is willing to pay for the extra work. See “Risk Factors.”

Ability to Estimate and Control Construction Costs

Construction costs primarily consist of payroll, equipment, materials, subcontractors, and other project related expenses. Construction contracts are typically fixed price, and if we are unable to accurately estimate the overall risks, requirements or costs when we bid on or negotiate a contract that is ultimately awarded, the Company may achieve a lower than anticipated profit or incur a loss on the contract due to higher than estimated costs. Additionally, our costs and profitability can be adversely affected by factors such as inflation, tariffs, supply chain and other operational inefficiencies. Our future growth also depends on the Company’s ability to accurately estimate and control construction costs, a major part of which consists of implementing our licensed AI technology in contract estimating and operational processes going forward. Also, our labor and training expenses may increase as a result of a shortage in the supply of skilled personnel. We strive to minimize exposure to labor and material price increases in the company’s project bids and the manner in which we execute work. In fixed price contracts, we attempt to insulate the Company from the unfavorable effects of inflation, when possible, by incorporating escalating wage and price assumptions into construction cost estimates, by obtaining firm fixed price quotes from major subcontractors and material suppliers, by securing purchase commitments for materials early in the project schedule and by including contingency for these risks in the bid price. Construction and other materials used in construction activities are generally available locally from multiple sources. See “Risk Factors.”

We are often required to provide surety bonds securing the Company’s performance under construction contracts with customers. Our ability to obtain surety bonds primarily depends on company’s working capital, past performance, capitalization, credit rating, management expertise, overall capacity of the surety market and other factors. If we are unable to obtain reasonably priced surety bonds in the future, it could significantly affect our ability to be awarded new contracts and could, consequently, have a material adverse effect on our business, results of operations and financial condition. See “Risk Factors.”

Growth in New Products and Services

We believe that we have a sizable opportunity to grow our business through the introduction of new products and services utilizing the multi-tenant blockchain integration platform acquired on connection with the Acquisitions. Future growth depends on our ability to successfully implement an organic growth strategy, a major part of which consists of scaling acquired SaaS and digital evidence technology going forward and growing SaaS and data verification fee revenue. We anticipate that competition across its products and services will intensify as both existing and new competitors introduce innovative solutions or enhance their offerings for clients. As the industry matures, pricing pressures may arise over time. We are committed to continuous innovation to develop new blockchain solutions while delivering a superior user experience and strengthening the company’s reputation as a trusted partner to mitigate the impact of these competitive challenges. See “Risk Factors.”

Price and Volatility of Digital Assets

Our financial results can be impacted by the highly volatile nature of digital assets (such as Constellation “DAG” and Lattice Token “LTX”). Changing consumer confidence and resultant fluctuations in the price of various digital assets may cause uncertainty in the market and could negatively impact trading volumes of digital assets, which would negatively impact our business and operating results. See “Risk Factors.”

Liquidity Constraints and Trading Limitations

Unlike traditional financial instruments, crypto currencies are not universally accepted as legal tender and may have limited liquidity in certain markets. Our ability to convert digital asset holdings into fiat currency or other digital assets may be constrained by market conditions, exchange trading volumes, or operational restrictions. A lack of liquidity could impact our ability to monetize the acquired digital assets efficiently. See “Risk Factors.”

Regulation in U.S. and International Markets

Financial prospects and continued growth of our technology solutions depend in part on the Company’s ability to continue to operate in a manner compliant with regulations. We operate in an industry characterized by rapid technological change, evolving business models, and a complex regulatory landscape. As the AI and digital evidence industry matures, we may experience fluctuations in our operations as a result of change in laws and regulations that are applicable to the Company’s business. See “Risk Factors.”

We regularly review the following key business metrics to evaluate the business, measure performance, identify trends affecting our business, formulate financial projections and make strategic decisions. In assessing the performance of our business, net income (loss) is the primary measure that management uses to assess performance. In addition to net income (loss), we also consider a variety of other key performance measures, including non-GAAP measures. The key performance measures used for determining how our business is performing are total revenue, income (loss) from operations, net income (loss), gross profit, and Adjusted EBITDA, which is a non-GAAP measure.

We believe that these key financial measures provide useful information to users of the financial statements in understanding and evaluating AIAI’s results of operations in the same manner as AIAI’s management team. The presentation of these key performance measures, including Adjusted EBITDA, which is a non-GAAP financial measure, is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. See “Non-GAAP Measures” below.

The following table sets forth AIAI's key performance measures for the period indicated below:

Adjusted EBITDA is calculated as net income (loss) adjusted to exclude interest income (expense), net income tax benefit, and depreciation and amortization, further adjusted to exclude state franchise tax expense, share-based compensation, non-core costs related to strategic initiatives, and certain other non-recurring charges. AIAI uses Adjusted EBITDA to supplement U.S. GAAP measures of performance in the evaluation of the effectiveness of AIAI’s business strategies, to make budgeting decisions and to compare AIAI’s performance against that of other peer companies using similar measures. See “Non-GAAP Measures” below for a reconciliation of Adjusted EBITDA to net income (loss).

Services revenue

The substantial majority of our services revenue is generated by providing comprehensive civil construction, project management, and estimating services in Texas. Construction contracts are typically fixed-price, and we generally recognize related revenue over time as performance obligations are satisfied and control over promised goods or services are transferred to customers, in accordance with Accounting Standard Codification (“ASC”) Topic 606. This method assesses the extent of progress based on the ratio of costs incurred to date against the total estimated costs at completion of the performance obligation. Estimating total costs to complete requires us to make informed estimates regarding material costs and availability, labor costs and productivity, as well as overhead expenses. Services revenue derived from our technology offerings include blockchain-based enterprise data and technology solutions and digital asset rewards earned by operating validator nodes and participating in blockchain staking activities, and blockchain network licensing arrangements. Services revenue also includes revenue earned in connection with healthcare subscription services which include healthcare navigation, telemedicine, medical second-opinion services, and preventive health programs. In addition, we provide case management services for accident victims and associated healthcare advisory services to medical clinics.

Products revenue

Product revenues are derived from hardware sold in connection with our blockchain-based enterprise data and technology solutions, as well as marketing and remarketing of printer, scanner, and copier products.