CID Holdco, Inc.
For the period ended Jun 30, 2026. Filed Sep 25, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Sep 25, 2026
DAIC$1.01-2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-12.
0001213900-26-055091
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-09-25.
0001213900-26-103514
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 92 previous paragraphs and 104 current paragraphs.
58 unchanged; 20 reworded; 26 added; 14 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
Reverse Stock Split
Current report
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.
Current report
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.
Current report
Cost of goods sold decreased by $60,556, or 90.1%, and $74,968, or 89.0%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in 2025. The decreases were primarily attributable to the lower level of revenue and the related reduction in costs associated with the products and services provided during the periods.
Current report
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.
Current report
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.
Current report
Sales and marketing expenses for the three and six months ended June 30, 2026 and 2025 are summarized as follows:
Current report
General and administrative expenses for the three and six months ended June 30, 2026 and 2025 are summarized as follows:
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
For additional information regarding events subsequent to June 30, 2026, refer to Subsequent event (Note 21) in the condensed consolidated financial statements.
Current report
Comparison of six months ended June 30, 2026 and 2025
Current report
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.
Current report
For the six months ended June 30, 2026, net cash used in operating activities consisted of a net loss of $8.2 million, partially offset by net non-cash adjustments of $1.2 million and a $5.3 million net source of cash from changes in operating assets and liabilities. Non-cash adjustments primarily included depreciation expense of $0.3 million, amortization of debt origination fees of $0.3 million, $0.3 million of interest expense, $0.1 million of shares issued for debt origination fees, and $0.1 million of shares issued for services. Changes in operating assets and liabilities were primarily attributable to a $3.6 million decrease in accounts receivable and a $2.5 million increase in accounts payable, partially offset by a $1.2 million increase in inventory.
Current report
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.
Current report
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%.
Current report
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.
Current report
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.
Current report
Net cash provided by financing activities was $1.3 million for the six months ended June 30, 2026, compared to $12.9 million for the six months ended June 30, 2025.
Current report
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.
Current report
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.
Current report
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.
Removed paragraphs (14)
Previous report
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.
Previous report
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.
Previous report
Cost of goods sold decreased by $14,412, or (84.4)%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily attributable to lower service costs associated with third-party software licensing.
Previous report
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.
Previous report
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.
Previous report
Sales and marketing expenses for the three months ended March 31, 2026 and 2025 are summarized as follows:
Previous report
General and administrative expenses for the three months ended March 31, 2026 and 2025 are summarized as follows:
Previous report
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.
Previous report
Comparison of three months ended March 31, 2026 and 2025
Previous report
Cash provided by operating activities was $0.1 million for the three months ended March 31, 2026. This consisted of a net loss of $4.5 million adjusted for non-cash charges of $0.4 million and net changes in operating assets and liabilities of $4.2 million. The non-cash charges were primarily driven by fair value of shares issued for services of $0.1 million and depreciation and amortization of $0.2 million. Changes in operating assets and liabilities were primarily attributable to decreases in accounts receivable of $3.5 million, increases in accounts payable of $1.4 million and accrued expenses of $0.2 million, partially offset by increase in inventory of $0.9 million.
Previous report
There were no investing activities for the three months ended March 31, 2026.
Previous report
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.
Previous report
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.
Previous report
Cash provided by financing activities was $1.6 million for the three months ended March 31, 2025, which consisted of proceeds from the issuance of bridge loans.
Reworded paragraphs (20)
Previous wording
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 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.
Current wording
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, except as required by law.
Previous wording
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 & Outdoor tracking with seamless transitions, Passive RFID (including Bluetooth and 5G), Collision Avoidance, real-time locating system, Dolly Management, and related supported software applications.
Current wording
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.
Previous wording
The Company is headquartered in Las Vegas, NV with our management 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.
Current wording
The Company is headquartered in Las Vegas, NV with our management 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 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. 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.
Previous wording
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) divided by the Company Fully Diluted Common Stock (159,915,641) or 8.129%. Stock options of Legacy Company were not exercised and remain outstanding after giving into effect 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 3 to the condensed consolidated financial statements.
Current wording
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 Company’s Fully Diluted Common Stock (159,915,641, equivalent to approximately 6,396,626 shares after giving effect to the reverse stock split). Stock options of Legacy Company were not exercised and remain outstanding after giving 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 4 to the condensed consolidated financial statements.
Previous wording
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 and because of additional costs associated with legal, accounting, compliance, insurance, investor relations, and other areas associated with being a public company. Our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
Current wording
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 as well as additional costs associated with legal, accounting, compliance, insurance, investor relations, and other areas associated with being a public company. Our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
Previous wording
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.
Current wording
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.
Previous wording
Our total revenue, cost of goods sold, gross profit, and gross margin for the three months ended March 31, 2026 and 2025 are summarized as follows:
Current wording
Our total revenue, cost of goods sold, gross profit, and gross margin for the three and six months ended June 30, 2026 and 2025 are summarized as follows:
Previous wording
Research and development expenses for the three months ended March 31, 2026 and 2025 are summarized as follows:
Current wording
Research and development expenses for the three and six months ended June 30, 2026 and 2025 are summarized as follows:
Previous wording
Sales and marketing expenses increased by $230,396, or 33.7%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase reflects our continued pivot toward market-facing initiatives and was primarily driven by increased spending of $164,196 on brand-related marketing activities, events and sponsorships, and $72,915 on customer relationship management and marketing software tools.
Current wording
Sales and marketing expenses decreased by $396,552, or 51.5%, and $166,156, or 11.4%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in 2025. The decreases were primarily attributable to lower spending on brand-related marketing activities, events and sponsorships, as well as reduced expenditures for customer relationship management and other marketing software tools.
Previous wording
General and administrative expenses increased by $1,798,981, or 291.2%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily due to incremental expenses of $1,277,526 related to operating as a public company, including legal, auditing, accounting and board of director fees, as well as higher labor costs of $443,686 associated with the continued ramp-up of the business.
Current wording
General and administrative expenses increased by $1,275,775, or 154.8%, and $3,074,756, or 213.2%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in 2025. The increases were primarily attributable to higher costs associated with operating as a public company, including legal, auditing, accounting and board of director fees, as well as increased labor costs associated with the continued expansion of the Company’s operations.
Previous wording
As of March 31, 2026 and December 31, 2025, we had cash of $853,728 and $865,624, respectively, deficits in working capital of $5,828,944 and $1,730,095, respectively, and accumulated deficits of $65,916,502 and $61,451,334, respectively.
Current wording
As of June 30, 2026 and December 31, 2025, we had cash of $456,069 and $865,624, respectively, deficits in working capital of $9,475,752 and $1,730,095, respectively, and accumulated deficits of $69,687,375 and $61,451,334, respectively.
Previous wording
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. This resulted in gross proceeds of $78,516, $159,500, $317,000, and $5,164, respectively. The Company 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. 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 VWAP pricing terms. For the three months ended March 31, 2026, the Company recorded a loss of $1,256 on the issuance of shares in the statement of operations.
Current wording
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, 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 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, 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 VWAP pricing terms. For the three and six months ended June 30, 2026, the Company recognized losses of $0 and $1,256, respectively, related to share issuances under the New Circle ELOC in the condensed consolidated statements of operations.
Previous wording
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 the investor agreed to purchase senior secured convertible promissory notes in an aggregate principal amount of up to $2,875,000, reflecting a 20% original issue discount applied to aggregate loan proceeds of up to $2,300,000. 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 and are convertible into common stock at a discount to market price, with provisions for a reduced 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, the investor will receive commitment shares valued at $120,000 and warrants to purchase up to $2,000,000 of common stock at an exercise price equal to 99% of the closing market price on the trading day prior to exercise. Total share issuances under the agreements are subject to a 19.99% cap of the Company’s outstanding shares 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.
Current wording
In addition, the Company entered into a note purchase agreement pursuant to which White Lion agreed to purchase senior secured convertible promissory notes with an aggregate principal amount of up to $2.875 million, reflecting a 20% original issue discount on aggregate cash proceeds of up to $2.3 million. The notes are secured by substantially all of the Company’s assets, and are convertible into common stock at a discount to the market price, subject to further reductions in the conversion price upon certain events of default. In connection with the financing, White Lion is also entitled to commitment shares valued at $120,000 and warrants to purchase up to $2.0 million of common stock at an exercise price equal to 99% of the closing market price on the trading day immediately preceding the applicable exercise date. Aggregate share issuances under the agreements are subject to a 19.99% cap on the Company’s outstanding common stock unless stockholder approval is obtained.
Previous wording
The following table shows a summary of our cash flow for the periods presented:
Current wording
The following table shows a summary of the cash flow for the periods presented:
Previous wording
Our largest source of operating cash is investments made by our shareholders. Our primary uses of cash from operating activities are for employee-related expenditures, sales and marketing expenses, inventory purchases, and research & development activities. We have supplemented working capital through net proceeds from the sale of equity securities and bridge loans.
Current wording
Our primary uses of cash in operating activities include employee-related expenditures, sales and marketing activities, inventory purchases, and research and development activities. We have historically supplemented our liquidity and working capital through proceeds from the issuance of equity securities and borrowings.
Previous wording
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 million, adjusted for non-cash charges of approximately $0.6 million and net changes in operating assets and liabilities of approximately $0.2 million. Non-cash charges were primarily driven by a $0.6 million change in the fair value of SAFE notes. Changes in operating assets and liabilities were primarily attributable to a decrease in deferred revenue of $0.1 million and increase in interest payable of $0.2 million.
Current wording
For the six months ended June 30, 2025, net cash used in operating activities consisted of a net loss of $30.1 million, partially offset by net non-cash adjustments of $19.9 million and a $3.8 million net source of cash from changes in operating assets and liabilities. Non-cash adjustments were primarily attributable to a $17.4 million change in the fair value of SAFE 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 $3.9 million increase in accrued taxes and a $1.0 million increase in accrued expenses, partially offset by decreases in accounts payable and other working capital changes.
Previous wording
Our estimated future obligations consist of leases and non-cancelable purchase commitments as of March 31, 2026. For additional discussion on our leases and other commitments, refer to Note 13 –Leases and Note 17 –Commitments and Contingencies to our condensed consolidated financial statements for the three months ended March 31, 2026 included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
Our estimated future obligations consist of leases and non-cancellable purchase commitments as of June 30, 2026. For additional discussion on our leases and other commitments, refer to Note 14 –Leases and Note 18 –Commitments and Contingencies to our condensed consolidated financial statements for the three and six months ended June 30, 2026 included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
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 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.
Current wording
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.
Previous wording
We describe the recently issued accounting pronouncements that apply in Note 2 of the condensed consolidated financial statements as of and for the three months ended March 31, 2026.
Current wording
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 June 30, 2026.
Previous wording
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 nonemerging growth companies but any such election to opt out is irrevocable. The Company has elected not 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.
Current wording
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 non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not 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.