DAIC 10-K & 10-Q changes, risk factors and insider trading
CID Holdco, Inc. (also DAICW) · Nasdaq · Services-Computer Integrated Systems Design · CIK 2033770 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Comparison not available: Not available: fewer than two 10-K filings on EDGAR to compare (only one so far)..
What changed in the latest 10-Q
Risk Factors
New heading “There are no assurances that our Common Stock will remain listed on Nasdaq, which could have a material adverse effect on the liquidity of our Common Stock.”
Removed heading “It is not possible to predict the actual number of shares we will sell to White Lion under the ELOC Agreement, or the actual gross proceeds resulting from those sales. We may not have access to the full amount available under the ELOC Agreement.”
Removed heading “Investors who buy shares at different times will likely pay different prices.”
Removed heading “The sale and issuance of our Common Stock to the Selling Securityholder will cause dilution to our existing stockholders, and the sale of the shares acquired by the Selling Securityholder, or the perception that such sales may occur, could cause the price of our Common Stock to decline.”
Removed heading “We have broad discretion in the use of the net proceeds we receive from the sale of shares to the Selling Securityholder and may not use them effectively.”
Removed heading “The convertible notes issuable to White Lion will be secured by substantially all of our assets, and a default could result in White Lion foreclosing on our assets.”
Removed heading “White Lion has the right to require us to apply a portion of our financing proceeds toward repayment of the convertible notes.”
Removed heading “The exercise price of the Commitment Warrant is subject to full ratchet anti-dilution adjustment, which could result in additional dilution to our stockholders.”
Largest changes
“The convertible notes issuable to White Lion will be secured by substantially all of our assets, and a default could result in White Lion foreclosing on our assets.”see in full comparison
“There are no assurances that our Common Stock will remain listed on Nasdaq, which could have a material adverse effect on the liquidity of our Common Stock.”see in full comparison
“The Company timely requested a hearing before the Nasdaq Hearings Panel (the “Hearings Panel”) with respect to the determination relating to the minimum market value of listed securities and paid the applicable $20,000 hearing fee (the “Hearing”). The Hearing request stayed the suspension of the Company’s securities and the filing of a Form 25-NSE with the Securities and Exchange Commission pending the issuance of a written decision by the Hearings Panel. …”see in full comparison
“The Company’s Common Stock is listed on the Nasdaq Global Market. On February 5, 2026, the Company received a deficiency notice from Nasdaq indicating that its Common Stock did not meet the minimum bid price and minimum market value of listed securities continued listing requirements. The Company received an additional deficiency notice from Nasdaq on February 10, 2026 indicating that its Common Stock did not meet the minimum publicly held share value requirement. …”see in full comparison
“The sale and issuance of our Common Stock to the Selling Securityholder will cause dilution to our existing stockholders, and the sale of the shares acquired by the Selling Securityholder, or the perception that such sales may occur, could cause the price of our Common Stock to decline.”see in full comparison
“On June 23, 2026, the Company received formal written notice from Nasdaq indicating that the Company had regained compliance with the minimum bid price requirement for continued listing on the Nasdaq Global Market, because the closing bid price of the Common Stock had been $1.00 per share or greater for the last 12 consecutive business days from June 8, 2026 to June 22, 2026. The Company, however, did not regain compliance with the minimum market value of listed securities by the August 4, 2026 deadline or the minimum publicly held share value requirement by the August 10, 2026 deadline. …”see in full comparison
Full comparison: every changed paragraph (32)
As of the date of this Quarterly Report, there have been no material
changes to the risk factors previously disclosed in our Form 10-K filed on March 11, 2026, and our Closing Form 8-K filed on June 26,
2025, other than as provided below. Any of these
factors could have a material adverse effect on our results of operations or financial
condition. Additional risks not currently known
to us or that we presently consider immaterial may also adversely affect our business
or results of operations.
The issuance of shares of our
Common Stock and Series C Convertible Nonredeemable Preferred Stock to Blade Ranger and Blink under the Term Sheet and the issuance of
shares of Common Stock toupon Whiteconversion Lionof under
the CommonH StockCapital Purchase AgreementNote will dilute the ownership interest of our existing stockholders.
We have entered into the binding Term Sheet to acquire 100% of Envoy’s outstanding common stock in consideration for which the Company will issue shares equal to an aggregate of 10,833,333 shares of Common Stock consisting of 233,543 shares Common Stock to BladeRanger and shares of newly authorized Series C Convertible Preferred Stock, of which 2,166,667 shares will be issued to Blink Charging Co. and 8,433,123 shares will be issued to BladeRanger. The Series C Preferred has a $6.00 stated value per share and generally will convert one-for-one basis into Common Stock automatically upon stockholder approval, subject to a 19.99% conversion limitation. In connection with the Term Sheet, we issued the H Capital Note that is convertible into shares of our Common Stock subject to a 19.99% conversion limitation and other beneficial ownership limitations. Accordingly, the transaction to acquire Envoy and the conversion of the H Capital Note will result in dilution to the holders of our Common Stock, and such dilution could cause the trading price of our Common Stock to decline.
We may sell up to $10,000,000 of our Common Stock to White Lion Capital,
LLC (“White Lion” or the “Selling Securityholder”) under the Common Stock Purchase Agreement. The shares will
be sold to White Lion at a discount to the then-prevailing market price. To the extent we sell shares to White Lion under the Common Stock
Purchase Agreement dated April 17, 2026 between us and White Lion (the “Common Stock Purchase Agreement” or “ELOC Agreement”),
additional shares of our Common Stock will be issued, which will result in dilution to the holders of our Common Stock. In addition, the
lower our stock price is at the time we elect to sell shares, the more shares we would need to issue for any given dollar amount of proceeds,
resulting in greater dilution to our existing stockholders. Our existing stockholders may experience substantial dilution as a result
of issuances of shares under the Common Stock Purchase Agreement, and such dilution could cause the trading price of our Common Stock
to decline.
It is not possible to predict the actual number of shares we
will sell to White Lion under the ELOC Agreement, or the actual gross proceeds resulting from those sales. We may not have access to the
full amount available under the ELOC Agreement.
On April 17, 2026, we entered into the Common Stock Purchase Agreement
with White Lion, pursuant to which White Lion committed to purchase up to $10,000,000 of our Common Stock, subject to certain limitations
and conditions set forth in the Common Stock Purchase Agreement. The Common Stock that may be issued under the Common Stock Purchase Agreement
may be sold by us to White Lion at our discretion, from time to time, over a period ending December 31, 2028, commencing on the date of
the ELOC Agreement. We generally have the right to control the timing and amount of any sales of our Common Stock to White Lion under
the ELOC Agreement. Sales of our Common Stock to White Lion under the ELOC Agreement will depend upon market conditions as well as other
factors to be determined by us. We may ultimately decide to sell to White Lion all or a portion of the shares of our Common Stock that
may be available pursuant to the ELOC Agreement, or decide to terminate the ELOC Agreement or not sell to White Lion any Common Stock
that may be available for us to sell to White Lion thereunder.
Because the purchase price per share to be paid by the White Lion for
the shares of Common Stock that we may elect to sell to White Lion under the ELOC Agreement will fluctuate based on the market prices
of our Common Stock during the applicable pricing period for each purchase, it is not possible for us to predict the number of Common
Stock that we will sell to White Lion under the ELOC Agreement, the purchase price per share that the White Lion will pay for shares purchased
from us under the ELOC Agreement, or the aggregate gross proceeds that we will receive from those purchases by the White Lion under the
ELOC Agreement.
Although the ELOC Agreement provides that we may sell up to an aggregate
of $10,000,000 of shares of Common Stock to White Lion, only 15,000,000 shares of Common Stock that may be issued to White Lion under
the ELOC Agreement are registered for resale by White Lion.
If we elect to sell to White Lion all of the 15,000,000 shares of Common
Stock registered for resale by White Lion, depending on the market prices of our Common Stock during the applicable pricing period for
each purchase made pursuant to the ELOC Agreement, the actual gross proceeds from the sale of all such shares may be substantially less
than the $10,000,000 total commitment originally available to us under the ELOC Agreement.
In addition, White Lion will not be required to purchase any shares
of Common Stock if such sale would result in White Lion’s beneficial ownership exceeding 4.99% of the then-outstanding voting power
or shares of Common Stock; provided, that the beneficial ownership limitation may be increased to 9.99% upon the mutual written agreement
of the Company and White Lion, effective not less than sixty-one (61) days after such mutual written agreement. Any issuance and sale
by us under the ELOC Agreement of a substantial amount of shares of our Common Stock in addition to the 15,000,000 shares of Common Stock
registered for resale by White Lion could cause additional substantial dilution to our stockholders. The number of shares of Common Stock
ultimately offered for resale by White Lion is dependent upon the number of shares of Common Stock we ultimately sell to White Lion under
the ELOC Agreement. Our inability to access a portion or the full amount available under the ELOC Agreement, in the absence of any other
financing sources, could have a material adverse effect on our business.
The issuanceconversion of certain securities under the CommonSeries Stock PurchaseC
Agreement, the common stock purchase warrant issued to White Lion (the “Commitment Warrant”),Preferred and the H Capital Note Purchaseissued Agreement
isin connection with the Envoy transaction are contingent upon us obtaining stockholder approval
pursuant to Nasdaq Rule 5635 (“Stockholder Approval”). If we do not obtain
the Stockholder Approval, these securities may
never become issuable and/or exercisable.
If it becomes necessary for us to issue and sell to White Lion Common
Stock in excess of the exchange cap under the Common Stock Purchase Agreement in order to receive aggregate gross proceeds equal to $10,000,000
under the Common Stock Purchase Agreement, then for so long as the Exchange Cap continues to apply to issuances and sales of Common Stock
under the Common Stock Purchase Agreement, we must first obtain Stockholder Approval. In addition, no tranche of the convertible notes
may be funded until Stockholder Approval has been obtained. If we are unable to obtain the required Stockholder Approval, these securities
will not be issuable and/or exercisable, and will have little to no value.
TheUntil receipt
of Stockholder Approval under Nasdaq Rule 5635, the Series C Preferred and H Capital Note will be convertible into no more than an aggregate
of 19.99% of our outstanding Common Stock as of the date of issuance (if at all). Accordingly, the Company has agreed to useduly commercially reasonable efforts to duly
call, give
notice of, convene, and hold a stockholder meeting (the “Stockholder Meeting”) as soon as reasonably practicable,
but in no event later than May 15, 2026, for the
purposes of obtaining Stockholder Approval. If the Company fails to hold a Stockholder
Meeting by May 15, 2026, it shall pay liquidated damages to White Lion, as more fully described in the Common Stock Purchase Agreement.
In the event Stockholder Approval is not obtained at the first Stockholder Meeting, the Company is obligated
to cause an additional Stockholder
Meeting to be heldno less frequently than once every onethree hundred eighty (180) days during the period beginning on such date and continuing seven hundred twenty (720)
days thereafter,months, until Stockholder Approval is obtained.
There are no assurances that our Common Stock will remain listed on Nasdaq, which could have a material adverse effect on the liquidity of our Common Stock.
The Company’s Common Stock is listed on the Nasdaq Global Market. On February 5, 2026, the Company received a deficiency notice from Nasdaq indicating that its Common Stock did not meet the minimum bid price and minimum market value of listed securities continued listing requirements. The Company received an additional deficiency notice from Nasdaq on February 10, 2026 indicating that its Common Stock did not meet the minimum publicly held share value requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(A) and 5810(c)(3)(C), the Company had 180 calendar days, or until August 4, 2026, to regain compliance with each requirement. Additionally, in accordance with Nasdaq Listing Rule 5810(c)(3)(D) the Company had 180 calendar days, or until August 10, 2026 to regain compliance with the minimum publicly held share value requirement. On August 27, 2026, the Company received a written notification from Nasdaq identifying an additional basis for the potential delisting of the Company’s Common Stock, from Nasdaq because the Company had not yet filed its Annual Report on Form 10-Q for the period ended June 30, 2026. Accordingly, Nasdaq determined that such matter served as an additional basis for delisting the Company’s securities from Nasdaq.
On June 23, 2026, the Company received formal written notice from Nasdaq indicating that the Company had regained compliance with the minimum bid price requirement for continued listing on the Nasdaq Global Market, because the closing bid price of the Common Stock had been $1.00 per share or greater for the last 12 consecutive business days from June 8, 2026 to June 22, 2026. The Company, however, did not regain compliance with the minimum market value of listed securities by the August 4, 2026 deadline or the minimum publicly held share value requirement by the August 10, 2026 deadline. Nasdaq, therefore, determined that these matters served as bases for delisting the Company’s securities.
The Company timely requested a hearing before the Nasdaq Hearings Panel (the “Hearings Panel”) with respect to the determination relating to the minimum market value of listed securities and paid the applicable $20,000 hearing fee (the “Hearing”). The Hearing request stayed the suspension of the Company’s securities and the filing of a Form 25-NSE with the Securities and Exchange Commission pending the issuance of a written decision by the Hearings Panel. The Hearings Panel will consider deficiency relating to the minimum publicly held share value requirement in its decision regarding the Company’s continued listing on Nasdaq at the Hearing. Additionally, the Company had the right to appeal the delisting determination based on its delinquent filing by requesting a hearing before the Hearings Panel. Under Nasdaq Listing Rule 5815(a)(1)(B), a hearing request regarding a delinquent filing stays the suspension of the Company’s securities for a period of 15 days from the date of the request, unless the Company specifically requests, and the Hearings Panel grants, a further stay. The Company timely requested an extended stay of the suspension and to present its views with respect to the delinquent filing deficiency, including its plan to complete the delinquent filing, to the Hearings Panel at the Hearing.
On September 15, 2026, the Company appeared before a Nasdaq Hearings Panel (the “Hearings Panel”) and presented a compliance plan (the “Compliance Plan”) addressing the previously disclosed deficiencies in Nasdaq’s continued listing requirements for failure to satisfy the minimum market value of listed securities requirement of $50 million pursuant to Nasdaq Listing Rule 5450(b)(2)(A), the minimum market value of publicly held shares of $15 million required under Nasdaq Listing Rule 5450(b)(2)(C), and the Company’s failure to file its Quarterly Report on Form 10-Q for the period ended June 30, 2026.
There can be no assurance that the Hearings Panel will decide in the Company’s favor with respect to the Nasdaq Staff determinations, the Compliance Plan or any other matter. The Hearings Panel’s decision will determine the future of trading of the Common Stock on Nasdaq. The Common Stock remains listed on Nasdaq pending the outcome of the Hearing.
Investors who buy shares at different times will likely pay different
prices.
Pursuant to the ELOC Agreement, we will have discretion, subject to
market demand, to vary the timing, prices, and numbers of shares sold to the White Lion. If and when we do elect to sell shares of Common
Stock to the White Lion under the ELOC Agreement, after the White Lion has acquired such shares, the White Lion may resell all or a portion
of such shares at any time or from time to time in its discretion and at different prices. As a result, investors who purchase shares
from the White Lion at different times will likely pay different prices for those shares, and so may experience different levels of dilution
and in some cases substantial dilution and different outcomes in their investment results. Investors may experience a decline in the value
of the shares they purchase from the White Lion as a result of future sales made by us to the White Lion at prices lower than the prices
such investors paid for their shares.
The sale and issuance of our Common Stock to the Selling Securityholder
will cause dilution to our existing stockholders, and the sale of the shares acquired by the Selling Securityholder, or the perception
that such sales may occur, could cause the price of our Common Stock to decline.
Sales of a substantial number of shares of our Common Stock in the
public market could occur at any time, subject to the restrictions and limitations described below. If our shareholders sell, or the market
perceives that our shareholders intend to sell, substantial amounts of shares of our Common Stock in the public market following this
offering, the market price of shares of our Common Stock could decline significantly.
The Selling Securityholder can resell up to 51,000,000 shares. After
the Selling Securityholder has acquired the shares, the Selling Securityholder may resell all, some, or none of those shares at any time
or from time to time in its discretion. Therefore, sales to the Selling Securityholder by us could result in substantial dilution to the
interests of other holders of our Common Stock. Additionally, sales of a substantial number of shares of our Common Stock in the public
market by the Selling Securityholder and/or by our other existing stockholders, or the perception that those sales might occur, could
depress the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities
in the future at a time and at a price that we might otherwise wish to effect sales.
We have broad discretion in the use of the net proceeds we receive
from the sale of shares to the Selling Securityholder and may not use them effectively.
Our management will have broad discretion in the application of the
proceeds we receive from the Selling Securityholder pursuant to sales of Common Stock under the Common Stock Purchase Agreement, if any,
and you will not have the opportunity as part of your investment decision to assess whether our management is using the proceeds appropriately.
Because of the number and variability of factors that will determine our use of our proceeds from the Selling Securityholder, their ultimate
use may vary substantially from their currently intended use. The failure by our management to apply these funds effectively could result
in financial losses that could have a material adverse effect on our business and cause the price of our Common Stock to decline. Pending
their use, we may invest the proceeds from the Selling Securityholder in short-term, investment-grade, interest-bearing securities. These
investments may not yield a favorable return to our stockholders.
The convertible notes issuable to White Lion will be secured
by substantially all of our assets, and a default could result in White Lion foreclosing on our assets.
Our obligations under the convertible notes will be secured by a security
interest in all of our assets and personal property, including our intellectual property. If we default under the convertible notes, White
Lion could foreclose on our assets, which could force us to curtail or cease our operations.
White Lion has the right to require us to apply a portion of
our financing proceeds toward repayment of the convertible notes.
Under the terms of the Note Purchase Agreement with White Lion, White
Lion has the right to require us to apply up to 10% of all cash proceeds received from the issuance of securities pursuant to the Common
Stock Purchase Agreement, the exercise of the Commitment Warrant, or the issuance of any other securities of the Company, toward repayment
of the convertible notes. This could reduce the amount of proceeds available to us for working capital and other corporate purposes.
The exercise price of the Commitment Warrant is subject to full
ratchet anti-dilution adjustment, which could result in additional dilution to our stockholders.
The Commitment Warrant issued to White Lion includes a full ratchet
anti-dilution provision, pursuant to which the exercise price of the Commitment Warrant will be reduced to the effective price per share
of any new issuance of Common Stock or Common Stock equivalents below the then-current exercise price (subject to exceptions for exempt
issuances). Because the exercise price is initially set at 99% of the closing sales price of the Common Stock on the trading day prior
to the exercise date and is subject to downward adjustment, any future dilutive issuance by the Company could result in a reduction of
the exercise price and a corresponding increase in the number of shares issuable upon exercise, resulting in additional dilution to our
existing stockholders.
Management's Discussion & Analysis (MD&A)
New heading “Reverse Stock Split”
Largest changes
The Company is headquartered in Las Vegas, NV with our management andsee in full comparisonandadministrative staff located in Bethesda, MD for East Coast customer engagements and government lobbying activity. We also manufacture hardware in Puerto Rico through our wholly owned subsidiary Dot Works. Ourembeddeddevelopment team and Design for Manufacturing (“DFM”) capability is built around our Chief Technology Officer (“CTO”) in Worcester, MA and our core software team is in Bangalore, India.India.However, as part of measures implemented to preserve liquidity while the Company evaluated financing opportunities, effective May 25, 2026, the Company implemented a temporary furlough of its employees and suspended its manufacturing operations. Accordingly, as of June 30, 2026, the Company was not conducting active manufacturing operations. During the furlough period, the Company continued to maintain its executive team, whose members agreed to salary deferrals and reductions, as applicable, together with a limited number of independent contractors primarily based in India to service existing customers and support core initiatives. The Company intends to resume operations and recall employees as liquidity and operational circumstances permit.
see in full comparisonSubsequent to the end of the first quarter, on April 17, 2026, the Company entered into a financing arrangement with an investor consisting of an equity purchase facility and senior secured convertible promissory notes. Under the equity purchase facility, the Company may sell up to $10,000,000 of its common stock over time through purchase notices, subject to specified pricing terms and ownership limitations.In addition, the Company entered into a note purchase agreementwith the investorpursuant to whichtheWhiteinvestorLion agreed to purchase senior secured convertible promissory notesinwith an aggregate principal amount of up to$2,875,000,$2.875 million, reflecting a 20% original issue discountapplied toon aggregateloancash proceeds of up to$2,300,000.$2.3 million. Thenotes bear interest at 8% per annum and are issued at a discount. The convertiblenotes are secured by substantially all of the Company’sassetsassets, and are convertible into common stock at a discount to the market price,withsubjectprovisionstoforfurtherareductions inreducedthe conversion price upon certain events of default.The note is currently structured as a second priority lien, subordinated to the Company’s obligations to J.J. Astor & Co. pursuant to a loan agreement dated December 5, 2025, until those obligations are discharged in full.In connection with the financing,theWhiteinvestorLionwillisreceivealso entitled to commitment shares valued at $120,000 and warrants to purchase up to$2,000,000$2.0 million of common stock at an exercise price equal to 99% of the closing market price on the trading daypriorimmediatelytoprecedingexercise.theTotalapplicable exercise date. Aggregate share issuances under the agreements are subject to a 19.99% capofon the Company’s outstandingsharescommon stock unless stockholder approval is obtained.The Company expects to use the proceeds primarily for general corporate purposes, including supporting liquidity and servicing existing debt obligations.
“Research and development expense increased by $217,441, or 55.2%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily driven by higher labor expenses of $339,292 and R&D cloud costs of $73,929, partially offset by a decrease in R&D compliance and testing expenses of $205,446. …”see in full comparison
see in full comparisonOur largest source of operating cash is investments made by our shareholders.Our primary uses of cashfromin operating activitiesare forinclude employee-related expenditures, sales and marketingexpenses,activities, inventory purchases, and research&and development activities. We have historically supplemented our liquidity and working capital throughnetproceeds from thesaleissuance of equity securities andbridge loans.borrowings.
“Research and development expense increased by $213,128, or 117.3%, and $430,569, or 74.8%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in 2025. The increases were primarily driven by higher labor and cloud-related research and development costs, partially offset by lower compliance and testing expenses.”see in full comparison
Full comparison: every changed paragraph (57)
Please read the following discussion and analysis of our financial
condition and results of operations together with our condensed consolidated financial statements and related notes included in this filing.
Some of the information contained in this discussion and analysis, including information regarding our plans and strategy for our business,
includes forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should carefully consider
the substantial risks and uncertainties that could impact our business, results of operations, and financial condition. In particular,
we encourage you to review the risks and uncertainties described under “Risks Relating to Our Business and Industry” in our
Annual Report on Form 10-K filed with the SEC on March 11, 2026, as well as other risk factors disclosed elsewhere in that filing and
in this Quarterly Report. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking
statements contained in this Form 10-Q or implied by past results and trends. Forward-looking statements are statements that attempt to
forecast or anticipate future developments in our business, financial condition, or results of operations. These statements speak only
as of their respective dates (unless otherwise indicated), and we undertake no obligation to update or revise them in light of future
developments.developments, except as required by law.
CID Holdco, Inc. (the “Company”, or “CID Holdco”,
or “CID”), formerly known as SEE ID Inc., dba Dot AI (the “Legacy Company” or “SEE ID”), was incorporated
in Delaware with its headquarters in Las Vegas, Nevada. The Company helps businesses transform their operations by optimizing safety,
security, and efficiency of operations through real-time tracking of resources. Through the Company’s extensive research and development
initiatives, the Company’s main focus includes areas such as Industrial IoT, Indoor &and Outdoor tracking with seamless transitions,
Passive RFID (including Bluetooth and 5G), Collision Avoidance, real-time locating system, Dolly Management, and related supported software
applications.
The Company is headquartered in Las Vegas, NV with our management
and and
administrative staff located in Bethesda, MD for East Coast customer engagements and government lobbying activity. We also manufacture
hardware in Puerto Rico through our wholly owned subsidiary Dot Works. Our embedded development team and Design for Manufacturing (“DFM”)
capability is built around our Chief Technology Officer (“CTO”) in Worcester, MA and our core software team is in Bangalore,
India. India.However, as part of measures implemented to preserve liquidity while the Company evaluated financing opportunities, effective May
25, 2026, the Company implemented a temporary furlough of its employees and suspended its manufacturing operations. Accordingly, as of
June 30, 2026, the Company was not conducting active manufacturing operations. During the furlough period, the Company continued to maintain
its executive team, whose members agreed to salary deferrals and reductions, as applicable, together with a limited number of independent
contractors primarily based in India to service existing customers and support core initiatives. The Company intends to resume operations
and recall employees as liquidity and operational circumstances permit.
Reverse Stock Split
On May 29, 2026, the Company effected a 1-for-25 reverse stock split of its common stock, as previously approved by the Company’s stockholders and Board of Directors. The Company’s common stock began trading on a split-adjusted basis on Nasdaq on June 1, 2026. The Reverse Stock Split reduced the Company’s outstanding common shares from approximately 30.26 million shares to approximately 1.21 million shares and did not change the par value or authorized number of shares. All share and per-share amounts presented in the condensed consolidated financial statements and related disclosures have been retrospectively adjusted, where applicable, to reflect the Reverse Stock Split.
In connection with the Business Combination, CID Holdco filed a registration
statement on Form S-4 (File No. 333-282600) (as amended, the “Registration Statement”) with the U.S. Securities and Exchange
Commission (the “SEC”). On June 18, 2025, the Registration Statement was declared effective by the SEC. At Closing, the assets
and liabilities of Legacy Company were combined with the assets and liabilities ShoulderUp Technology Acquisition Corp on a historical
cost basis. All Legacy Company Common Stock was exchanged for Common Stock of the Company based upon the exchange ratio as defined in
the Business Combination Agreement as Aggregate Merger Consideration (13,000,000 CID Holdco shares, equivalent to 520,000 shares after
giving effect to the Company’s 1-for-25 reverse stock split.) divided by the CompanyCompany’s Fully Diluted
Common Stock (159,915,641159,915,641,
equivalent to approximately 6,396,626 shares after giving effect to the reverse stock split) or 8.129%.. Stock options of Legacy Company were not
exercised and remain outstanding after giving intoeffect effect
to the exchange ratio. In connection with the Business Combination, we incurred transaction
costs, settled certain SUAC related party notes
through the issuance of common shares, converted SAFE notes into Common Stock of the Company,
and raised cash proceeds from PIPE investors.
Additional information regarding the Business Combination and Reverse Recapitalization is
provided in Note 34 to the condensed consolidated
financial statements.
Currently, revenues are primarily related to the delivery of hardware
products such as bridges, labels and gateways to customers. We also provide feasibility study reports to customers seeking to gain insight
into how data driven tracking could improve their business, which is recognized upon acceptance of the feasibility report.
General and administrative expenses consist of employee-related costs
for executive, finance, legal, human resources, facilities, and certain IT personnel, including salaries, employee benefits and share-based
compensation, professional fees for external legal, accounting, recruiting and other consulting services, credit losses, allocated overhead
costs, and unallocated lease costs. We expect our general and administrative expenses to continue to increase in absolute dollars for
the foreseeable future to support our growth andas becausewell ofas additional costs associated with legal, accounting, compliance, insurance, investor
investor relations, and other areas associated with being a public company. Our general and administrative expenses may fluctuate as a percentage
percentage of our revenue from period to period due to the timing and extent of these expenses.
The change in the fair value of SAFE agreements represents the unrealized gains or losses resulting from the fluctuations in the estimated fair value of the outstanding SAFE agreements, or reevaluation of updated market conditions and company-specific factors. A SAFE agreements were converted to common shares in 2025.
Our total revenue, cost of goods sold, gross profit, and gross margin
for the three and six months ended MarchJune 31,30, 2026 and 2025 are summarized as follows:
Revenue decreased by $114,435, or 90.2%, and $454,719, or 94.9%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in 2025. Revenue for the three and six months ended June 30, 2026 was primarily comprised of SaaS subscription revenue generated from the Company’s internally developed software platform, while revenue for the corresponding periods in 2025 was primarily derived from the sale and delivery of hardware products, including bridges, labels and gateways, as well as feasibility studies provided to customers.
Revenue decreased by $340,284, or (96.5)%, for the three months ended
March 31, 2026 compared to the three months ended March 31, 2025. Our revenue for the three months ended March 31, 2026 was comprised
of subscription service revenue, while our revenue for the three months ended March 31, 2025 was primarily comprised of $250,000 related
to the development of product specifications, $98,161 for the amortization of a customer exclusivity agreement, as well as subscription
service revenue.
Cost of goods sold decreased by $14,412,$60,556, or (84.4)%,90.1%, and $74,968, or
89.0%, for the three
and six months ended MarchJune 31,30, 20262026, respectively, compared to the threecorresponding monthsperiods ended March 31,in 2025. The decreasedecreases was were
primarily attributable to the lower service
level of revenue and the related reduction in costs associated with third-partythe softwareproducts licensing.and services provided
during the periods.
Gross profit decreased by $53,879, or 90.3%, and $379,751, or 96.1%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in 2025. Gross margin was 46.5% and 62.2% for the three and six months ended June 30, 2026, respectively, compared to 47.0% and 82.4% for the corresponding periods in 2025. The decreases in gross margin were primarily attributable to changes in the mix of revenue and related costs between the periods.
Our gross margin was 78.2% for the three months ended March 31, 2026
compared to 95.2% for the three months ended March 31, 2025. The decrease in gross margin is primarily attributable to changes in the
mix of services provided during the periods.
Research and development expenses for the three and six months ended
June March
31,30, 2026 and 2025 are summarized as follows:
Research and development expense increased by $213,128, or 117.3%, and $430,569, or 74.8%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in 2025. The increases were primarily driven by higher labor and cloud-related research and development costs, partially offset by lower compliance and testing expenses.
Research and development expense increased by $217,441, or 55.2%, for
the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily driven by higher labor
expenses of $339,292 and R&D cloud costs of $73,929, partially offset by a decrease in R&D compliance and testing expenses of
$205,446. Additionally, as the software was placed into service as of January 1, 2026, the Company ceased capitalizing software development
costs, which primarily consisted of labor costs, and began amortizing the related asset, contributing to higher labor costs recognized
in expense during the period.
Sales and marketing expenses for the three and six months ended March 31,June
30, 2026
and 2025 are summarized as follows:
Sales and marketing expenses increaseddecreased by $230,396,$396,552, or 33.7%,51.5%, and
$166,156, or 11.4%, for the
three and six months ended MarchJune 31,30, 20262026, respectively, compared to the threecorresponding monthsperiods ended March 31,in 2025. The
decreases increase reflects our continued pivot toward
market-facing initiatives and waswere primarily drivenattributable byto increasedlower spending of $164,196 on brand-related marketing activities, events and
sponsorships, andas $72,915well onas reduced
expenditures for customer relationship management and other marketing software tools.
General and administrative expenses for the three and six months ended
June March
31,30, 2026 and 2025 are summarized as follows:
General and administrative expenses increased by $1,798,981,$1,275,775, or 291.2%,154.8%,
and $3,074,756, or 213.2%, for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the three
monthscorresponding endedperiods March 31,in 2025.
The increaseincreases waswere primarily dueattributable to incrementalhigher expensescosts ofassociated $1,277,526 related towith operating as a public company,
including legal, auditing, accounting
and board of director fees, as well as higherincreased labor costs of $443,686 associated with the continued
ramp-up expansion of the business.Company’s operations.
The decrease in the liability balance of SAFE agreements for the three
months ended March 31, 2026, compared to March 31, 2025, was primarily attributable to the conversion of the SAFE notes into company shares
upon the closing of the Business Combination. Upon conversion, the related liabilities were reclassified to equity.
As of MarchJune 31,30, 2026 and December 31, 2025, we had cash of $853,728$456,069
and $865,624, respectively, deficits in working capital of $5,828,944$9,475,752 and $1,730,095, respectively, and accumulated deficits of $65,916,502$69,687,375
and $61,451,334, respectively.
Before the Company elects to sell shares by issuing a purchase notice,
the SEPA represents a purchased put option on the Company’s equity. Once the Company delivers a purchase notice under the SEPA,
the related number of shares to be issued constitutes a forward contract to issue shares of Common Stock. As the feature is embedded in
in an equity host, meets the definition of a derivative, and does not qualify for the equity scope exception under ASC 815, Derivatives
and Hedging, it must be bifurcated and accounted for separately as a derivative asset or liability, depending on changes in the underlying
stock price relative to the pegged discounted VWAP. The derivative is measured at fair value, with changes in fair value recognized in
net income. The fair value of the purchased put option was determined to be de minimis as of MarchJune 31,30, 2026, and therefore was not recorded
on the Company’s balance sheet as of that date.
On October 13, December 30, December 31, 2025, and February 10, 2026,
the Company delivered purchase notices for 30,000, 500,000, 1,000,000, and 20,000 shares, respectively, at settlement prices of $2.62,
$0.32, $0.32, and $0.26 per share.share, respectively. After giving effect to the Company’s 1-for-25 reverse stock split, these amounts
are equivalent to 1,200, 20,000, 40,000, and 800 shares, respectively, at split-adjusted settlement prices of $65.50, $8.00, $8.00, and
$6.50 per share, respectively. This resulted in gross proceeds of $78,516, $159,500, $317,000, and $5,164, respectively. The Company issued
issued 30,000 shares in October 2025, 1,000,000 shares in December 2025, 500,000 shares in January 2026, and 20,000 shares in February 2026,
2026.equivalent to 1,200, 40,000, 20,000, and 800 shares, respectively, after giving effect to the 1-for-25 reverse stock split. Because the
shares were issued to New Circle at prices determined using a discounted VWAP formula, the cash proceeds received were
below the fair
value of the shares on the respective issuance dates. The Company measured the shares at fair value on the date cash was
received and
recognized the difference between (i) the fair value of the shares issued and (ii) the proceeds calculated pursuant to the discounted
discounted VWAP pricing terms. For the three and six months ended MarchJune 31,30, 2026, the Company recordedrecognized a losslosses of $1,256$0 onand $1,256, respectively, related
to share issuances under the issuanceNew ofCircle shares
ELOC in the statementcondensed consolidated statements of operations.
On December 5, 2025, the Company entered into a loan agreement with J.J. Astor & Co. (“J.J. Astor”) for up to $5,000,000 in senior secured convertible loans, consisting of an initial $2,000,000 tranche and up to three additional $1,000,000 tranches. The initial tranche was issued as a $2,000,000 convertible note, of which $1,810,000 was funded, net of fees. The note matures on November 30, 2026 and is repayable in twelve monthly installments, consisting of an initial payment of $108,334 followed by eleven monthly payments of approximately $226,515, totaling $2,600,000. Each additional tranche, if funded at the lender’s discretion and subject to specified conditions (including equity line of credit (“ELOC”) availability, Nasdaq listing, minimum stock price, and trading volume requirements), will be issued as a $1,000,000 convertible note with $960,000 funded net of fees and accompanied by a warrant. The Company is required to use proceeds from its ELOC to make monthly payments, with 80% of ELOC proceeds remitted directly to the lender. Certain extraordinary receipts must also be applied toward repayment.
In connection with the initial funding, the Company issued a warrant to purchase 230,770 shares at $1.69 per share, equivalent to approximately 9,231 shares at an exercise price of $42.25 per share after giving effect to the Company’s 1-for-25 reverse stock split. Additional tranches, if funded, would include similar convertible notes and warrants. The agreement also requires the use of ELOC proceeds for repayment, with 80% of such proceeds remitted directly to the lender, and certain extraordinary receipts applied to outstanding balances. See “Derivative Liabilities” below for further discussion of the accounting for the warrant and embedded features.
For the three and six months ended June 30, 2026, the Company paid $794,078 and $1,568,894, respectively, to J.J. Astor. Including the initial repayment of $108,334 in December 2025, the Company had repaid $1,677,228 as of June 30, 2026, leaving an outstanding balance of $922,772. On June 23, 2026, J.J. Astor & Co. entered into a Note Purchase and Assignment Agreement with LHT I, LLC, pursuant to which LHT I, LLC acquired J.J. Astor’s remaining rights and interests under the loan agreement and assumed the related lender obligations under the existing terms. In connection with the assignment, LHT I, LLC paid $924,616 directly to J.J. Astor. Accordingly, the Company recorded the remaining obligation as a short-term loan payable to LHT I, LLC as of June 30, 2026.
On April 17, 2026, the Company entered into a Common Stock Purchase Agreement with White Lion, pursuant to which the Company has the right, but not the obligation, to sell to White Lion from time to time up to an aggregate of $10.0 million of the Company’s common stock during the commitment period, subject to the terms, conditions, and limitations set forth in the agreement. The Company may initiate purchases by delivering either a Rapid Purchase Notice or a VWAP Purchase Notice to White Lion. For each purchase, the Company is required to deliver the applicable shares to White Lion’s designated brokerage account through the Depository Trust Company’s DWAC system. The purchase price and investment amount are determined in accordance with the pricing provisions applicable to the selected purchase mechanism, including, for VWAP purchases, the volume-weighted average market price of the Company’s common stock during the applicable valuation period. Each purchase is subject to customary closing conditions, applicable beneficial ownership limitations, and certain restricted periods during which purchase notices may not be delivered. Generally, White Lion is required to remit the applicable purchase amount to the Company no later than one business day following the applicable purchase notice date or, in the case of a VWAP purchase, the applicable VWAP valuation period. The Company may not deliver a subsequent purchase notice until the prior purchase has closed, unless White Lion waives such restriction in writing.
Throughout June 2026, the Company delivered multiple purchase notices to White Lion and received aggregate proceeds of $640,192 in exchange for the issuance of 329,898 shares of common stock. Because the shares were issued at prices determined using a discounted VWAP formula, the proceeds received were less than the fair value of the shares on the respective issuance dates. Accordingly, the Company measured the shares issued at fair value and recognized the difference between the fair value of the shares and the related cash proceeds as a loss on issuance. For both the three and six months ended June 30, 2026, the Company recognized a loss of $600 related to share issuances under the White Lion ELOC in the condensed consolidated statements of operations. In addition, White Lion had exercised $180,000 of warrants, resulting in the issuance of 65,596 shares of common stock.
As of March 31, 2026, Edmund Nabrotzky, Chief Executive Officer of
the Company, Charles Maddox, Chief Financial Officer and Chief Operating Officer of the Company, and Vijayan Nambiar, Chief Technology
Officer of the Company loaned the Company an aggregate of $349,996 and may make additional loans to the Company up to an aggregate amount
of $600,000 (collectively, the “Executive Loans”). The Executive Loans have been made, on the terms and conditions of an unsecured,
subordinated promissory note (the “Executive Notes”). The Executive Notes accrue interest at a rate of 7.5% per annum, and
will be paid in quarterly installments on July 1, 2026, October 1, 2026 with a final payment by December 31, 2026. All of the Company’s
obligations and payments under the Executive Notes are subordinated to the Company’s obligations under the loan agreement with J.J.
Astor & Co.
Subsequent to the end of the first quarter, on April 17, 2026, the
Company entered into a financing arrangement with an investor consisting of an equity purchase facility and senior secured convertible
promissory notes. Under the equity purchase facility, the Company may sell up to $10,000,000 of its common stock over time through purchase
notices, subject to specified pricing terms and ownership limitations. In addition, the Company entered into a note purchase agreement
with the investor pursuant
to which theWhite investorLion agreed to purchase senior secured convertible promissory notes inwith an aggregate principal
amount of up to $2,875,000,$2.875
million, reflecting a 20% original issue discount applied toon aggregate loancash proceeds of up to $2,300,000.$2.3 million. The notes
bear interest at 8% per annum and are issued at a discount. The convertible notes are secured by substantially
all of the Company’s
assets assets, and are convertible into common stock at a discount to the market price, withsubject provisionsto forfurther areductions
in reducedthe conversion price upon certain
events of default. The note is currently structured as a second priority lien, subordinated to the Company’s obligations to J.J.
Astor & Co. pursuant to a loan agreement dated December 5, 2025, until those obligations are discharged in full. In connection with
the financing, theWhite investorLion willis receivealso entitled to commitment shares
valued at $120,000 and warrants to purchase up to $2,000,000$2.0 million of common stock
at an exercise price equal to 99% of the closing market
price on the trading day priorimmediately topreceding exercise.the Totalapplicable exercise date. Aggregate share issuances under the agreements
are subject
to a 19.99% cap ofon the Company’s outstanding sharescommon stock unless stockholder approval is obtained. The Company expects to
use the proceeds primarily for general corporate purposes, including supporting liquidity and servicing existing debt obligations.
As of June 30, 2026, White Lion had funded $690,000 to the Company under the convertible note arrangement, net of $172,500 of issuance costs.
As of June 30, 2026, Edmund Nabrotzky, Chief Executive Officer of the Company, Charles Maddox, Chief Financial Officer and Chief Operating Officer of the Company, and Vijayan Nambiar, Chief Technology Officer of the Company loaned the Company an aggregate of $349,996 and may make additional loans to the Company up to an aggregate amount of $600,000 (collectively, the “Executive Loans”). The Executive Loans have been made, on the terms and conditions of an unsecured, subordinated promissory note (the “Executive Notes”). The Executive Notes accrue interest at a rate of 7.5% per annum, and will be paid in quarterly installments on July 1, 2026, October 1, 2026 with a final payment by December 31, 2026. All of the Company’s obligations and payments under the Executive Notes are subordinated to the Company’s obligations under the loan agreement with J.J. Astor & Co.
For additional information regarding events subsequent to June 30, 2026, refer to Subsequent event (Note 21) in the condensed consolidated financial statements.
Comparison of threesix months ended
June March 31,30, 2026 and 2025
The following table shows a summary of ourthe cash flow for the periods
presented:
Our largest source of operating cash is investments made by our shareholders.
Our primary uses of cash fromin operating activities are forinclude employee-related
expenditures, sales and marketing expenses,activities, inventory purchases,
and research &and development activities. We have historically supplemented
our liquidity and working capital through net proceeds from the saleissuance of equity securities
and bridge loans.borrowings.
Net cash used in operating activities was $1.7 million for the six months ended June 30, 2026, compared to $6.4 million for the six months ended June 30, 2025.
Cash provided by operating activities was $0.1 million forFor the three
six months ended MarchJune 31,30, 2026.2026, Thisnet cash used in operating
activities consisted of a net loss of $4.5$8.2 millionmillion, adjustedpartially foroffset by net non-cash chargesadjustments of $0.4$1.2 million and a $5.3 million net
source of cash from changes
in operating assets and liabilitiesliabilities. Non-cash adjustments primarily included depreciation expense of $4.2$0.3
million, million.amortization Theof non-cashdebt chargesorigination werefees primarilyof driven$0.3 bymillion, fair$0.3 valuemillion of interest expense, $0.1 million of shares issued for servicesdebt
oforigination fees, and $0.1 million and depreciation and amortization of $0.2shares million.issued for services. Changes in operating assets and liabilities were primarily attributable
to decreasesa $3.6 million decrease in accounts receivable ofand $3.5a million,$2.5 increasesmillion increase in accounts payablepayable, of $1.4 million and accrued expenses of $0.2 million,
partially offset by a $1.2 million
increase in inventory of $0.9 million.inventory.
CashFor the six months ended June 30, 2025, net cash used in operating
activities was $1.7 million for the three months
ended March 31, 2025. This consisted of a net loss of $1.3$30.1 million, adjustedpartially foroffset by net non-cash chargesadjustments of approximately $0.6$19.9 million and a $3.8 million
net
source of cash from changes in operating assets and liabilities of approximately $0.2 million.liabilities. Non-cash chargesadjustments were primarily drivenattributable byto a $0.6$17.4 million
change change
in the fair value of SAFE notes.notes and a $5.7 million loss on debt extinguishment, partially offset by a $3.3 million adjustment related
to the reverse recapitalization transaction. Changes in operating assets and liabilities were primarily attributable to a decrease$3.9 million
increase in deferredaccrued revenue
oftaxes $0.1and a $1.0 million and increase in interestaccrued expenses, partially offset by decreases in accounts payable ofand
other $0.2working million.capital changes.
The decrease in net cash used in operating activities in 2026 compared to 2025 was primarily attributable to the lower net loss and favorable changes in working capital, particularly collections of accounts receivable and increases in accounts payable.
Net cash used in investing activities was $39,296 for the six months ended June 30, 2026, compared to $743,798 for the six months ended June 30, 2025, representing a decrease of $704,502, or 94.7%.
For the six months ended June 30, 2026, net cash used in investing activities consisted entirely of $39,296 of capitalized software development costs related to qualifying development activities, including costs associated with version 4 of the Company’s internally developed software.
For the six months ended June 30, 2025, net cash used in investing activities consisted of $636,598 of capitalized software development costs and $107,200 of purchases of property and equipment. The decrease in cash used in investing activities was primarily attributable to lower capitalized software development costs and the absence of property and equipment purchases during the six months ended June 30, 2026.
There were no investing activities for the three months ended March
31, 2026.
Cash used in investing activities was $0.3 million for the three months
ended March 31, 2025, which consisted of capital expenditures for internal-use software development costs.
Cash used by financing activities was $0.1 million for the three months
ended March 31, 2026. This consisted primarily of proceeds from issuance of short-term loans to related parties of $0.3 million, offset
by repayments of short-term loans of $0.5 million.
CashNet cash provided by financing activities was $1.6$1.3 million for the
six months ended June 30, 2026, compared to $12.9 million for the three
six months ended MarchJune 31,30, 2025, which consisted of proceeds from the issuance of bridge loans.2025.
For the six months ended June 30, 2026, net cash provided by financing activities was primarily attributable to $1.2 million of proceeds from short-term loans, $0.6 million of proceeds from the issuance of common stock, $0.3 million of proceeds from short-term loans from related parties, and $0.2 million of proceeds from warrant exercises, partially offset by $1.0 million of repayments of short-term loans.
For the six months ended June 30, 2025, net cash provided by financing activities was primarily attributable to $10.8 million of proceeds from PIPE investments, $5.6 million of proceeds from trust accounts, and $2.85 million of proceeds from short-term loans. These cash inflows were partially offset by $5.0 million used to purchase common stock and $1.4 million used to repay bridge loans.
The decrease in net cash provided by financing activities for the six months ended June 30, 2026 compared to the corresponding period in 2025 was primarily attributable to the absence of PIPE investment and trust account proceeds received in 2025, partially offset by proceeds from short-term borrowings, common stock issuances, and warrant exercises in 2026.
Our estimated future obligations consist of leases and non-cancelablenon-cancellable
purchase commitments as of MarchJune 31,30, 2026. For additional discussion on our leases and other commitments, refer to Note 1314 –
Leases Leases
and Note 1718 – Commitments and Contingencies to our condensed consolidated financial statements for the
three threeand six months ended
March 31,June 30, 2026 included elsewhere in this Quarterly Report on Form 10-Q.
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosures. Actual results may differ from those estimates under different assumptions or conditions.
We describe the recently issued accounting pronouncements that apply
in Note 2 of the condensed consolidated financial statements as of and for the three and six months ended MarchJune 31,30, 2026.
Section 102(b)(1) of the JOBS Act exempts emerging growth companies
from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not
had a Securities Act registration statement declared effective or do not have a class of securities registered under the Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the
requirements that apply to nonemergingnon-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not
to to
opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application
dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised accounting standard at
the time private companies adopt the new or revised standard.
DAIC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding DAIC (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 199,999 | $2.5K | 0.0% | No change |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 14,613 | $181 | 0.0% | Reduced 1% |