CID Holdco, Inc.

Note 1 – Company Information

Organization and Nature of Operations

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 in-process 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 the developer of an asset tracking platform intended to push the limits of near real-time precision-based location technology. The Company’s platform leverages the technologies including the patented passive and active RFID tracking solutions, low power edge camera platforms utilizing artificial intelligence, enabling users to give accuracy to all mapping technologies in areas that are troublesome. Through its technological solutions, the Company serves multiple industries including construction, military, mining, retail, warehousing and manufacturing.

In July 2024, the Legacy Company incorporated Dot Works, Inc. (“Dot Works”), a Puerto Rico corporation, as a wholly-owned subsidiary. Dot Works, based in Puerto Rico, serves as the primary manufacturing facility for Dot Ai, producing smart hardware devices and embedded technological components used in AI-driven enterprise solutions (ZIM Bridges and Smart Industrial TAGS). Activities include assembly, quality control, and packaging of proprietary systems.

On March 18, 2024, ShoulderUp Technology Acquisition Corp., a Delaware corporation (“ShoulderUp”), entered into a Business Combination Agreement (the “Business Combination Agreement”) by and among CID Holdco, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of ShoulderUp (“Holdings”), ShoulderUp Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings (“ShoulderUp Merger Sub”), SEI Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Holdings (“SEI Merger Sub” and together with ShoulderUp Merger Sub, the “Merger Subs”), and SEE ID, Inc., a Nevada corporation (collectively with any predecessor entities, the “Company”).

On June 18, 2025 (the “Closing Date” or “Closing”), the Company consummated the Business Combination transactions by and among the Company, SUAC, ShoulderUp Merger Sub, Inc., SEI Merger Sub, Inc., and SEE ID, Inc. Pursuant to the Business Combination Agreement, on the Closing Date, (i) ShoulderUp Merger Sub merged with and into SUAC (the “ShoulderUp Merger”), with SUAC surviving the ShoulderUp Merger as a wholly-owned subsidiary of the Company (“SUAC Surviving Company”); and (ii) simultaneously with the ShoulderUp Merger, SEI Merger Sub merged with and into SEE ID (“the SEE ID Merger”), with SEE ID surviving the SEE ID Merger as a wholly-owned subsidiary of the Company (the “Surviving Company”) (the ShoulderUp Merger and the SEE ID Merger, together the “Mergers” and together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”).

Pursuant to the Business Combination Agreement, on June 18, 2025, each of the following transactions occurred in the following order: (a) ShoulderUp Merger Sub merged with and into SUAC, with SUAC continuing as the surviving entity, and, in connection therewith, each ordinary share of SUAC issued and outstanding immediately prior to the Closing Date were canceled in exchange for the right of the holder thereof to receive, with respect to each ordinary share that is not redeemed or converted at Closing, one share of common stock of the Company (“Common Stock”); (b) SEI Merger Sub merged with and into SEE ID, with SEE ID continuing as the surviving entity, and, in connection therewith, (i) SEE ID Common Stock issued and outstanding immediately prior to the Closing Date were canceled in exchange for the right of the holders thereof to receive shares of Common Stock as set forth in the Business Combination Agreement and (ii) any convertible securities of SEE ID were converted; and (c) as a result of the Mergers, SUAC and SEE ID each became wholly owned subsidiaries of the Company, and the Company became a publicly-traded company, all upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of applicable law.

At Closing, Continental Stock Transfer & Trust Company (the “Transfer Agent”), SUAC and the Company entered into the Warrant Assumption and Assignment Agreement (the “Warrant Assumption Agreement”), pursuant to which, among other things, SUAC assigned to the Company all of SUAC’s right, title and interests, and the Company assumed all of SUAC’s liabilities and obligations under the certain Warrant Agreement, dated as of November 16, 2021, between SUAC and Continental Stock Transfer & Trust Company (the “Existing Warrant Agreement”). As a result, each Warrant automatically ceased to represent a right to acquire SUAC Class A Common Stock and instead represents a right to acquire shares of the Company’s Common Stock pursuant to the terms and conditions of the Existing Warrant Agreement (as amended by the Warrant Assumption Agreement). As such, the holders of each whole warrant to purchase SUAC Class A Common Stock receivedone warrant to purchase the Company’s Common Stock at an exercise price of $11.50 per share.

In connection with the Business Combination, CID Holdco filed a registration statement on Form S-4 (File No. 333-282600) with the U.S. Securities and Exchange Commission (“SEC”), as amended (the “Registration Statement”). The Registration Statement was declared effective by the SEC on June 18, 2025. Subsequently, the Company filed a registration statement on Form S-1 (File No. 333-290052), as amended, which was declared effective by the SEC on September 18, 2025.

Liquidity and Going Concern

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40,Presentation of Financial Statements — Going Concern, which requires that management evaluate whether there are relevant conditions and events that in aggregate raise substantial doubt about the entity’s ability to continue as a going concern and to meet its obligations as they become due within one year after the date that the condensed consolidated financial statements are issued. Under the guidance, the Company must first evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern (step 1). If the Company concludes substantial doubt is raised, management also is required to consider whether its plans alleviate that doubt (step 2).

The Company has a limited operating history, has incurred significant operating losses since its inception, and the revenue and income potential of the Company’s business and market are unproven. The preparation of these condensed consolidated financial statements does not include any adjustments that may result from the outcome of this uncertainty. The Company’s condensed consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of June 30, 2026, the Company had $456,069 in cash, a working capital deficit of $9,475,752 and accumulated deficit of $69,687,375. To date, the Company has funded its operations primarily with the net proceeds from the issuance of convertible promissory notes and the issuance and sale of equity securities. Following June 18, 2025, the Company has also funded its operations with proceeds from the Business Combination, short-term borrowings, and proceeds from the issuance of shares under its share subscription line of credit. The Company expects to incur substantial operating losses for the next several years and has obtained additional near-term financing to continue its research and development activities as described below.

On June 18, 2025, the Company entered into a share subscription line of credit agreement under which the Company can access up to $50,000,000 in aggregate proceeds (see Note 10) to fund its R&D activities and its operations. See Subsequent events (Note 21).

On December 5, 2025, the Company entered into a loan agreement with J.J. Astor & Co. 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 an exercise price of $1.69 per share, subject to customary adjustments and a 4.99% beneficial ownership limitation (which may be increased to 9.99% upon agreement). Conversions and warrant exercises are subject to Nasdaq rules.

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”).

On April 17, 2026, the Company entered into a financing arrangement with White Lion Capital, LLC (“White Lion”) consisting of an equity purchase facility and senior secured convertible promissory notes. Under the equity purchase facility, the Company may sell up to $10.0 million of its common stock to White Lion from time to time through purchase notices, subject to specified pricing terms, ownership limitations, and other conditions.

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 $2,875,000, reflecting a 20% original issue discount on aggregate cash proceeds of up to $2,300,000. The notes bear interest at 8% per annum, 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 $2,000,000 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.

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. Under the $10,000,000 equity purchase facility, the Company had submitted purchase notices totaling $640,192 and issued 329,898 shares of common stock to White Lion. In addition, White Lion had exercised $180,000 of warrants, resulting in the issuance of 65,596 shares of common stock.

On June 23, 2026, the Company entered into a note purchase agreement with Phillips Equities & Trust, LLC (“Phillips”), pursuant to which Phillips agreed to provide $500,000 of financing in the form of secured convertible debt. The note matures 12 months from the issuance date and bears interest at 6% per annum. The note is convertible, at the holder’s option, into shares of the Company’s common stock at a conversion price equal to 80% of the applicable market price, subject to the exchange cap, beneficial ownership limitations, applicable securities laws, and trading market requirements. The Company expects to use the proceeds primarily for general corporate purposes, including supporting liquidity and servicing existing debt obligations.

If the Company is unable to obtain necessary funds through its business operations and the proceeds realized through the Business Combination, significant reductions in spending and the delay or cancellation of planned activities may be necessary. These actions would have a material adverse effect on the Company’s business, results of operations, and prospects. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date these condensed consolidated financial statements are issued. The accompanying quarterly condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of these uncertainties.

Note 2 - Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 – Summary of Significant Accounting Policies to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no material changes in these policies or their application.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of CID Holdco, and its wholly-owned subsidiaries, Dot Ai and Dot Works, which are collectively referred to as the “Company” in these condensed consolidated financial statements. All intercompany balances and transactions have been eliminated upon consolidation.

Basis of Presentation

The condensed consolidated financial statements include the accounts of CID Holdco, Inc. and its subsidiaries, with all intercompany transactions and balances eliminated in consolidation. The Company has prepared the condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in conformity with the rules and regulations of the SEC. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented.

These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 11, 2026.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued Accounting Standards Update (“ASU”) No. 2024-03,Disaggregation of Income Statement Expenses, which requires disclosures of certain additional expense information on an annual and interim basis, including, among other items, the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each income statement expense caption, as applicable. The updated standard is effective for our annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this guidance but does not anticipate a material impact on its condensed consolidated financial statements or related disclosures.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which prescribes standardized categories and enhanced disaggregation of information in the rate reconciliation, requires disclosure of disaggregated income taxes paid, and modifies certain other income tax-related disclosure requirements. The standard is effective for fiscal years beginning after December 15, 2024, and was adopted by the Company in its fiscal year 2025 annual reporting period. The Company evaluated the impact of adopting this guidance and because it continues to operate in a loss position and does not pay income taxes, the adoption did not have a material impact on its condensed consolidated financial statements or related disclosures.

In November 2024, the FASB issued ASU No. 2024-04,Debt—Debt with Conversion and Other Options (Subtopic 470-20): Clarifications to Accounting for Certain Convertible Debt Instruments, which amends ASC 470-20 to clarify the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The ASU is intended to improve the relevance and consistency in application of the induced conversion guidance in ASC 470-20 for (a) convertible debt instruments with cash conversion features and (b) debt instruments that are not currently convertible. The ASU removes references limiting induced conversion guidance to settlements in equity, thereby clarifying that the guidance may apply to conversions settled in equity, cash (or other assets), or a combination thereof. It also clarifies that, to qualify for induced conversion accounting, (i) the inducement offer must preserve the form and amount of consideration issuable under the original conversion privileges, (ii) the instrument must contain a substantive conversion feature at issuance and on the date the inducement offer is accepted, and (iii) the conversion must result from changed conversion privileges exercisable only for a limited period. The ASU further provides implementation guidance and examples, and clarifies that inducement expense is measured as the excess of the fair value of the consideration transferred over the fair value of the consideration issuable under the original conversion terms. The amendments in ASU No. 2024-04 are effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. As of June 30, 2026, the guidance did not have an impact on the Company, as there have been no modifications to the original conversion terms of its convertible debt instruments to induce holders to convert their holdings into equity shares.

Other than the accounting standards described above, the Company did not adopt any new accounting standards during the three and six months ended June 30, 2026 that had a material impact on its condensed consolidated financial statements. The Company has reviewed all recently issued accounting pronouncements and determined that no other standards adopted during the periods materially affected its condensed consolidated financial position, results of operations, cash flows, or related disclosures.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is assessed by comparing the carrying amount of the asset or asset group with the undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying amount exceeds the expected undiscounted future cash flows, an impairment loss is recognized to the extent that the carrying amount exceeds the fair value of the asset or asset group.

As of June 30, 2026, the Company identified impairment indicators related to its long-lived assets and performed a recoverability assessment. Based on the assessment, the estimated undiscounted future cash flows exceeded the carrying amount of the related asset group and, accordingly, no impairment loss was recognized. As of December 31, 2025, no indicators of impairment were identified andno impairment loss was recognized.

Revisions and Reclassifications

Certain revisions and reclassifications have been made to amounts in prior years’ financial statements and notes to the financial statements to conform to current year presentation. These revisions and reclassifications had no impact on total loss from operations, net loss, or shareholders’ equity (deficit) for any period presented (See Note 5).

Note 3 – Reverse Stock Split

On May 12, 2026, at the Company’s annual meeting of stockholders, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation authorizing the Board of Directors (the “Board”) to effect one or more reverse stock splits of the Company’s common stock at a ratio ranging from 1-for-10 to 1-for-25, with the exact ratio to be determined by the Board in its sole discretion. The Board subsequently approved a 1-for-25 reverse stock split (the “Reverse Stock Split”).

On May 27, 2026, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split. The Reverse Stock Split became effective at 4:01 p.m. Eastern Time on May 29, 2026. The Company’s common stock began trading on a split-adjusted basis on The Nasdaq Stock Market LLC at the market open on June 1, 2026 under the existing trading symbol “DAIC” and a new CUSIP number of 171756208.

As a result of the Reverse Stock Split, every 25 shares of common stock issued and outstanding or held as treasury stock immediately prior to the effective time were automatically reclassified and combined into one share of common stock, without any action required by the respective stockholders. The Reverse Stock Split reduced the number of shares of common stock outstanding from approximately 30.26 million shares to approximately 1.21 million shares. The par value of the Company’s common stock remained unchanged at $0.0001 per share, and the Reverse Stock Split did not affect the number of shares of common stock authorized under the Company’s Certificate of Incorporation.

No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole share, and stockholders were entitled to receive cash in lieu of such fractional shares based on the fair value of the Company’s common stock immediately prior to the effective time, as determined by the Board. In connection with the settlement of fractional shares, the Company paid a de minimus amount to stockholders.

The Reverse Stock Split did not affect the Company’s total assets, total liabilities, or total stockholders’ equity, except for the immaterial effect of cash paid in lieu of fractional shares. The reduction in the par value of issued and outstanding common stock resulting from the reduction in the number of shares outstanding was reclassified to additional paid-in capital. All share and per-share amounts presented in the accompanying condensed consolidated financial statements and related notes have been retrospectively adjusted, where applicable, to reflect the Reverse Stock Split.

Note 4 – Business Combination and Reverse Recapitalization

Business Combination

On March 18, 2024, the Company entered into a Business Combination Agreement with ShoulderUp, ShoulderUp Merger Sub, Inc., SEI Merger Sub, Inc. and the Legacy Company.

On June 18, 2025, the Company consummated its Business Combination pursuant to the terms of the Business Combination Agreement. The Business Combination was structured as follows. All share and per-share amounts below have been adjusted to give effect to the Company’s 1-for-25 reverse stock split, effective May 29, 2026:

Redemption

Prior to the Closing, certain public shareholders of ShoulderUp exercised their rights to redeem certain ordinary shares for funds previously held in the trust account, resulting in the redemption of 2,000 ordinary shares for an aggregate payment of approximately $22,019. After redemptions, there was a total of 506,589 ordinary shares, which were converted into Common Stock in connection with the Business Combination, and approximately $5.58 million remained in the trust account. After giving effect to the 1-for-25 reverse stock split effective May 29, 2026, such 506,589 shares were adjusted to approximately 20,264 shares of Common Stock.

Share Ownership Upon Closing

The number of shares of Common Stock issued in connection with the Business Combination and subsequent equity conversion was as follows:

The post-reverse stock split amounts presented above give effect to the Company’s 1-for-25 reverse stock split, effective May 29, 2026. Pursuant to the terms of the reverse stock split, no fractional shares were issued. Any fractional shares resulting from the reverse stock split were rounded down to the nearest whole share, and the Company paid a de minimis amount of cash in lieu of such fractional shares.

The Legacy Company incurred $2,726,183 in transaction costs in connection with the Business Combination, which was determined not to be a capital-raising transaction for the Legacy Company. The $2,726,183 consists of the following:

The following tables reconcile elements of the Business Combination to the Company’s condensed consolidated financial statements, and should be read in conjunction with the footnotes referenced above:

Bridge Loan Agreements

In the first two quarters of 2025, the Legacy Company entered into unsecured bridge loan agreements with two major lenders, totaling $2,850,000 in principal. These loans bear interest at an annual rate of 20%, calculated on a 365-day basis, and include a minimum interest provision requiring payment of at least 8% or 10% of the principal amount if repaid prior to their six-month maturity dates. As of the date of Closing, the Company recorded an accrued interest liability of $280,000, which was settled at Closing.

Prior to the Closing of the Business Combination, one of the lenders elected to convert a portion of its outstanding principal and accrued interest into 614,125 shares of Common Stock, based on a conversion price of $4.00 per share. The other lender opted to receive full repayment in cash. Following the 1-for-25 reverse stock split effective May 29, 2026, the 614,125 shares were adjusted to 24,565 shares of Common Stock.

The table below summarizes the transaction:

In connection with the bridge loan conversion, the Company derecognized $2,456,500 of the outstanding liability upon the issuance of 614,125 shares of Common Stock, equivalent to 24,565 shares after giving effect to the Company’s 1-for-25 reverse stock split. The Company recognized a loss on debt extinguishment of $6,141,250 during the second quarter of 2025, based on the fair value of the Common Stock of $14.00 per share at the Closing, equivalent to $350.00 per share on a post-reverse stock split basis.

PIPE Investments

In connection with the Business Combination, the Company entered into a private investment in public equity (“PIPE”) financing agreement with certain accredited investors. Pursuant to the PIPE subscription agreements, these investors committed to purchase an aggregate of 2,709,411 shares of Common Stock at a price of $4.00 per share, for total gross proceeds of $10,837,643. The PIPE investment provided additional capital to support the Company’s post-closing operations and was consummated concurrently with the Closing of the Business Combination.

Following the Company’s 1-for-25 reverse stock split, effective May 29, 2026, the 2,709,411 shares are equivalent to approximately 108,376 shares of Common Stock, and the $4.00 per-share purchase price is equivalent to $100.00 per share on a post-reverse stock split basis. The aggregate gross proceeds were unaffected by the reverse stock split. The following table presents the breakdown of the PIPE investments.

In connection with the Business Combination, the Company assumed an excise tax liability of $3,905,240 and a franchise tax liability of $8,428, both of which were incurred prior to the Closing and were recorded as assumed obligations from the reverse recapitalization transaction. Accordingly, the Company recorded a total accrued tax liability of $3,913,668 related to the Business Combination.

The U.S. Treasury issued final regulations under Section 58.4501-2(e) clarifying the application of the 1% stock repurchase excise tax imposed by the Inflation Reduction Act. The regulations provide that redemptions of stock issued prior to August 16, 2022 are exempt from the excise tax if the shares were subject to mandatory redemption or stockholder put rights from issuance through redemption. The Company’s SPAC redemptions qualified for this exemption because the shares were issued before August 16, 2022 and were continuously subject to contractual redemption rights, including mandatory redemption and stockholder put options, which were redeemed in connection with extension votes. As a result, the previously recorded excise tax liability of $3,905,240 was reversed as of December 31, 2025, with a corresponding adjustment to additional paid-in capital.

Note 5 - Reclassifications and Revisions of Prior Period Financial Statements

Based on an analysis of FASB ASC, ASC 250-Accounting Changes and Error Corrections, Staff Accounting Bulletin 99,Materiality, and Staff Accounting Bulletin 108,Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company concluded that the identified revisions were not material to its previously issued financial statements. Accordingly, the prior period financial statements have been revised to reflect these reclassifications and corrections.

For the three months ended March 31, 2025, the Company revised its expense presentation by reallocating certain amounts previously reported under cost of goods sold to general and administrative, research and development, and sales and marketing expenses to better reflect the nature of the underlying costs. In addition, certain expenses were reclassified among these operating expense categories. These reclassifications had no effect on total revenue, loss from operations, net loss, or shareholders’ equity (deficit) for any period presented. The impact of these reclassifications was previously disclosed in the Company’s Q2 2025 Quarterly Report on Form 10-Q filed with the SEC on August 20, 2025. See such filing for additional details.

Note 6 - Concentrations

Concentration of Credit Risk Arising From Cash Deposits in Excess of Insured Limits

The Company maintains a cash balance with a U.S. financial institution, in which the balance exceeds the FDIC insured limit of $250,000. As of June 30, 2026 and December 31, 2025, the Company’s cash balance held at the financial institution exceeded the FDIC limit. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Significant Customers

A significant customer is defined as a customer that accounts for 10% or more of the Company’s total revenue. For the three and six months ended June 30, 2026, two customers collectively accounted for 100% of total revenue. One customer represented approximately 60% and 61% of total revenue for the three and six months ended June 30, 2026, respectively, while the other customer represented approximately 40% and 39%, respectively. For the three months ended June 30, 2025, two customers accounted for approximately 81% and 15% of total revenue, respectively. For the six months ended June 30, 2025, the same two customers accounted for approximately 53% and 41% of total revenue, respectively.

As of June 30, 2026, the Company’s accounts receivable balance consisted of two customers. One customer accounted for approximately 95% of total accounts receivable and the other customer accounted for approximately 5%. As of December 31, 2025, the Company’s accounts receivable balance was concentrated among three customers. One customer accounted for approximately 98% of total accounts receivable. The Company monitors the creditworthiness of its customers on an ongoing basis and believes that its credit risk is limited due to the financial strength and payment history of these customers. Management does not expect any material losses from these receivable concentrations and has not recorded an allowance for credit losses, as all receivables are considered highly collectible.

As of June 30, 2026 and December 31, 2025, there wasno accounts receivable allowance for credit losses. There wereno credit losses for the three and six months ended June 30, 2026 and 2025.

Note 7 - Property and Equipment

Property and equipment, net, as of June 30, 2026 and December 31, 2025, consisted of the following:

Note 8 - Capitalized Software Development Costs

The Company capitalizes eligible costs incurred in the development of internal-use software during the application development stage, in accordance with ASC 350-40,Internal-Use Software. Capitalized software development costs include direct labor, third-party services, and other direct costs associated with the development of new software or significant upgrades and enhancements to existing software. Costs incurred during the preliminary project stage and post-implementation/operational stage are expensed as incurred. Capitalized software development costs are amortized on a straight-line basis over the estimated useful life of the software, which management has determined to be five years.

The Company evaluates capitalized software development costs for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. During the six months ended June 30, 2026, the Company experienced a significant deterioration in operating activities, suspended manufacturing operations, furloughed its workforce, and began evaluating potential transactions involving the sale of substantially all of the Company’s assets and business. Management determined that these events represented impairment indicators and performed a recoverability assessment of the asset group that includes the Company’s capitalized software.

As of June 30, 2026, the net carrying amount of capitalized software development costs was approximately $2.7 million. Based on management’s estimate of the undiscounted cash flows expected to be generated from the continued use and eventual disposition of the related asset group, management determined that the carrying amount was recoverable. Accordingly, no impairment loss related to the capitalized software was recognized as of June 30, 2026.

The capitalized software remained classified as held and used as of June 30, 2026, and amortization continues over its remaining estimated useful life. Management will continue to evaluate the recoverability and remaining useful life of the capitalized software in future reporting periods based on changes in expected use, operating plans, and any potential disposition transactions.

The software was ready for its intended use as of January 1, 2026, and amortization commenced on that date. For the six months ended June 30, 2026 and 2025, the Company recorded amortization expense of $292,072 and $0, respectively. For the three months ended June 30, 2026 and 2025, the Company recorded amortization expense of $146,036 and $0, respectively. Amortization expense is included in “Depreciation and amortization” in the condensed consolidated statements of operations.

Note 9 - Loans and Fair Value Measurements

SAFE Notes

Prior to the June 18, 2025 Business Combination, SEE ID had issued SAFE agreements totaling $8.5 million in proceeds. The SAFE agreements provided for conversion or settlement upon specified triggering events, including equity financings, liquidity events, or dissolution events. The Company classified the SAFE agreements as derivative liabilities and measured them at fair value using a probability-weighted expected return method.

Upon closing of the Business Combination, which qualified as an equity financing under the SAFE agreements, all outstanding SAFE notes automatically converted into 2,909,057 shares of Common Stock, equivalent to approximately 116,362 shares after giving effect to the Company’s 1-for-25 reverse stock split. As a result, the Company recognized a $17.4 million fair value adjustment during the second quarter of 2025 based on the $14.00 per share closing price.

J.J. Astor Loans and Subsequent Assumption by LHT I

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. The difference of $1,844 was recorded as interest expense towards to J.J. Astor loan and rolled into the principal pf the LHT I loan. Accordingly, the Company recorded the remaining obligation as a short-term loan payable to LHT I, LLC as of June 30, 2026.

The Company had also capitalized $190,000 of loan origination fees associated with the J.J. Astor financing, which are being amortized over the 12-month term of the loan at $15,833 per month. As of June 30, 2026, the remaining unamortized deferred financing costs were $79,167. Following the assignment of the loan to LHT I, LLC, the deferred financing costs remained associated with the outstanding loan and will continue to be amortized at $15,833 per month through the loan’s maturity date.

White Lion loans

On April 17, 2026, the Company entered into a financing arrangement with White Lion Capital, LLC (“White Lion”) consisting of an equity purchase facility and senior secured convertible promissory notes. Under the equity purchase facility, the Company may sell up to $10.0 million of its common stock to White Lion from time to time through purchase notices, subject to specified pricing terms, ownership limitations, and other conditions.

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.

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. Under the $10.0 million equity purchase facility, the Company had submitted purchase notices totaling $640,192 and issued 329,898 shares of common stock to White Lion. In addition, White Lion had exercised $180,000 of warrants, resulting in the issuance of 65,596 shares of common stock.

The Company elected to account for the White Lion convertible notes under the fair value option, with changes in the fair value of the notes recognized in earnings each reporting period through settlement. During the second quarter of 2026, White Lion converted the outstanding notes and accrued amounts into shares of the Company’s common stock. In connection with these conversions, the Company issued 360,165 shares of common stock in satisfaction of an aggregate of approximately $895,155 of principal and accrued interest. The related note liability was derecognized upon conversion, and by June 26, 2026, the White Lion convertible notes had been fully converted and satisfied. Accordingly, no White Lion convertible note liability remained outstanding as of June 30, 2026.

Phillips Loan

On June 23, 2026, the Company entered into a note purchase agreement with Phillips Equities & Trust, LLC (“Phillips”), pursuant to which Phillips agreed to provide $500,000 of financing in the form of secured convertible debt. The note matures 12 months from the issuance date and bears interest at 6% per annum. The note is convertible, at the holder’s option, into shares of the Company’s common stock at a conversion price equal to 80% of the applicable market price, subject to the exchange cap, beneficial ownership limitations, applicable securities laws, and trading market requirements. The Company expects to use the proceeds primarily for general corporate purposes, including supporting liquidity and servicing existing debt obligations.

Derivative Liabilities

Derivative instruments that are not traded on an exchange are valued using conventional valuation models that incorporate both observable and unobservable inputs. Although the Company is publicly traded, the valuation of these derivative instruments requires significant unobservable inputs, including assumptions related to expected volatility, term, probability-weighted scenarios, and other model-based estimates. Accordingly, these derivative instruments are classified within Level 3 of the fair value hierarchy.

Upon completion of the Business Combination, all outstanding SAFE notes were converted into shares of the Company’s common stock, resulting in a significant reduction in the related derivative liabilities during the six months ended June 30, 2025.

During 2025, the Company entered into a loan agreement with J.J. Astor that included detachable warrants and embedded derivative features, including a conversion feature and a call option. These instruments and features did not qualify for equity classification under ASC 815 and were therefore bifurcated and accounted for as derivative liabilities at fair value, with changes in fair value recognized in the condensed consolidated statements of operations.

In addition, on April 17, 2026, the Company entered into a warrant purchase agreement with White Lion Capital, LLC. Pursuant to the agreement, White Lion has the right to purchase up to $2.0 million of the Company’s common stock at an exercise price equal to 99% of the closing market price on the trading day immediately preceding the applicable exercise date. The warrant does not qualify for equity classification under ASC 815 and is therefore accounted for as a derivative liability at fair value, with changes in fair value recognized in the condensed consolidated statements of operations.

At issuance, the fair value of the J.J. Astor warrant liability was $210,776, and the fair value of the combined embedded conversion and call option derivative liability was $26,100. These amounts were bifurcated from the related loan proceeds. The derivative liabilities are remeasured at fair value at each reporting date. The fair value of the J.J. Astor warrant liability decreased to $52,535 as of December 31, 2025 and further decreased to $12,736 as of June 30, 2026.

At issuance, the fair value of the White Lion warrant liability was $101,243. The warrant liability is remeasured at fair value at each reporting date, and its fair value increased to $158,906 as of June 30, 2026.

As reflected in the table below, derivative liabilities are presented at fair value at the beginning and end of each reporting period. As of June 30, 2026, the Company’s derivative liabilities consisted of (i) the J.J. Astor warrant liability of $12,736, (ii) the White Lion warrant liability of $158,906, and (iii) the J.J. Astor embedded conversion and call option derivative liability of $26,100, for total derivative liabilities of $197,742. The fair value of the embedded conversion and call option derivative liability is estimated using the Probability-Weighted Expected Return Method (“PWERM”) model, which incorporates significant unobservable inputs, including expected monthly installment payments, the repayment percentage, the applicable discount factor, and scenario probability assumptions. The warrant liability is measured using the Black-Scholes option pricing model, with key inputs including Company asset volatility, Company equity volatility, Company size-adjusted asset volatility, Company size-adjusted equity volatility, the risk-free interest rate, and the liquidity horizon. Changes in the fair value of these derivative instruments during the periods are recognized in the condensed consolidated statement of operations in the periods in which they occur.

Note 10 - Equity Line of Credit (“ELOC”)

As part of its funding efforts, on June 18, 2025, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with New Circle Principal Investment LLC (“New Circle”), pursuant to which the Company has the right, but not the obligation, to sell up to $50 million of its Common Shares through June 18, 2028, at a price based on a discounted VWAP formula. Under the SEPA, the Company may sell shares at pricing based on either (i)97% of the lowest daily VWAP over thethree trading days following a purchase notice or (ii) the greater of 85% of VWAP or the lowest sale price on a specified trading day, depending on the timing of the notice.

The Company satisfied the $350,000 commitment fee through the issuance of 106,383 shares of Common Stock in September 2025, equivalent to approximately 4,255 shares after giving effect to the Company’s 1-for-25 reverse stock split. The commitment fee was expensed in September 2025. Prior to the issuance of a purchase notice, the SEPA is accounted for as a purchased put option on the Company’s equity. Upon delivery of a purchase notice, it represents a forward contract to issue Common Stock. As the arrangement is an embedded derivative that does not qualify for the equity scope exception under ASC 815, it is bifurcated and measured at fair value, with changes recognized in the statement of operations. The fair value of the derivative was de minimis as of June 30, 2026 and was not recorded on the balance sheet.

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.

On May 8, 2026, the Company terminated its SEPA with New Circle. The Company terminated the SEPA as part of a shift in its financing strategy. The termination was effected by notice permitted under the SEPA. Following the termination, neither the Company nor New Circle has any further right to require purchases of the Company’s common stock under the SEPA after the termination date, and the SEPA otherwise ceased to be of further force and effect, except for those provisions that expressly survive termination. No termination fee or penalty was payable by the Company in connection with the termination.

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 de minimis loss related to share issuances under the White Lion ELOC in the condensed consolidated statements of operations.

Note 11 – Shareholders’ Equity

Reverse Recapitalization

As described in Note 4,Business Combination and Reverse Recapitalization, all historical equity data, including stock option data, in these condensed consolidated financial statements has been retrospectively adjusted by the Exchange Ratio to reflect the reverse recapitalization that occurred on June 18, 2025.

Common Stock

On May 29, 2026, the Company effected a 1-for-25 reverse stock split of its common stock. Accordingly, all share amounts presented below have been retrospectively adjusted, where applicable, to reflect the effect of the reverse stock split. See Note 3 –Reverse Stock Split for additional information.

As of June 30, 2026, the Company was authorized to issue 300,000,000 shares of common stock, par value $0.0001 per share, of which 1,966,042 shares were issued and outstanding.

During the three months ended March 31, 2026, the Board of Directors approved the issuance of 13,598 (Post-split) shares of common stock to a service provider. Although the administrative steps necessary to formally issue the shares were completed in April 2026, the related share-based compensation expense was recognized during the three months ended March 31, 2026 based on the date of Board approval.

During the six months ended June 30, 2026, the Company issued an aggregate of 330,698 shares of common stock pursuant to ELOC purchase notices, including 800 shares issued to New Circle and 329,898 shares issued to White Lion. In addition, the Company issued 360,165 shares to White Lion upon the conversion of an aggregate of $895,155 of outstanding principal and accrued interest,65,596 shares upon the exercise of $180,000 warrants, and 25,052 shares in settlement of $120,000 of commitment fees.

Note 12 - Equity Incentive Plan

In January 2021, the Legacy Company adopted the 2021 Equity Incentive Plan (the “2021 Incentive Plan”), which provided for grants of awards in the form of incentive stock options, non-qualified stock options, and restricted stock awards to selected employees, directors, and independent contractors of the Company and its affiliates, as defined in the Incentive Plan. The Company assumed the 2021 Plan and all outstanding awards thereunder in connection with the Business Combination. Initially, the aggregate number of shares of Common Stock that may be issued by the Legacy Company under the 2021 Incentive Plan was not to exceed 4,672,506, equivalent to approximately 186,900 shares after giving effect to the Company’s 1-for-25 reverse stock split. Following the Business Combination, no additional awards may be granted under the 2021 Incentive Plan, and no additional shares remain available for issuance under the 2021 Incentive Plan other than the 2,032,521 shares that were subject to the outstanding awards that were assumed by the Company in connection with the Business Combination, equivalent to approximately 81,301 shares after giving effect to the Company’s 1-for-25 reverse stock split. The purpose of the 2021 Incentive Plan was to encourage and enable selected participants to acquire or to increase their holdings of the Company’s Common Stock and other equity-based interests in the Company in order to promote a closer identification of their interests with those of the Company and its stockholders. The 2021 Incentive Plan is administered by the Company’s Board of Directors. As of June 30, 2026, the Company has granted awards under the 2021 Equity Incentive Plan as described in the stock options and restricted stock awards subsections below under this note.

Effective as of June 18, 2025, in connection with the closing of the transactions contemplated by the Business Combination Agreement, the Company adopted the 2024 Equity Incentive Plan (the “2024 Incentive Plan”). The purpose of the 2024 Incentive Plan is to advance the interests of the Company and its stockholders by attracting, retaining and rewarding employees, consultants and directors and by motivating such persons to contribute to the growth and profitability of the Company. The 2024 Incentive Plan provides for the grant of awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares, performance units, cash-based awards and other stock-based awards.

The 2024 Incentive Plan initially provided for a maximum aggregate of 2,927,332 shares of the Company’s Common Stock available for issuance, equivalent to approximately 117,093 shares after giving effect to the Company’s 1-for-25 reverse stock split. Subsequently, the Company’s stockholders approved an amendment to the 2024 Incentive Plan increasing the number of shares of Common Stock available for issuance thereunder to 19,959,853 shares on a pre-split basis. Following the effectiveness of the Company’s 1-for-25 reverse stock split on May 29, 2026, the 19,959,853-share reserve was adjusted to approximately 798,394 shares of Common Stock, subject to the treatment of fractional shares and other adjustments provided for under the plan. The 2024 Incentive Plan also provides for an annual increase, beginning with the first fiscal year following stockholder approval and continuing for up to ten years, equal to the lesser of 10% of the outstanding shares as of the end of the immediately preceding fiscal year or such lesser amount as determined by the Board.

The 2024 Incentive Plan is administered by the Board of Directors or a duly authorized committee thereof, which has the authority to determine the participants to whom awards will be granted, the type and number of awards, and the terms and conditions of each award, including vesting, subject to the provisions of the plan. The 2024 Incentive Plan will remain in effect until terminated by the Compensation Committee, provided that no awards may be granted later than ten years from the earlier of the date of Board or stockholder approval. As of June 30, 2026, no equity awards had been granted pursuant to the 2024 Incentive Plan.

Stock Options

Stock option activity pursuant to the 2021 Incentive Plan for the three and six months ended June 30, 2026 is as follows. All share and price information have been adjusted to reflect a 1-for-25 reverse stock split effective May 29, 2026.

For the three months ended June 30, 2026 and 2025, the Company recognized share-based compensation expense relating to stock options totaling $1,611 and $9,736 respectively. For the six months ended June 30, 2026 and 2025, the Company recognized share-based compensation expense relating to stock options totaling $3,364 and $19,742, respectively. Share-based compensation expense relating to stock options is included in “General and administrative” in the accompanying condensed consolidated statements of operations.

Restricted Stock Awards

For the three and six months ended June 30, 2026 and 2025, the Company didnot grant any restricted stock awards. As of June 30, 2026 and December 31, 2025, there wereno unvested restricted stock awards.

Note 13 - Net (Loss) Earnings Per Share

Net (Loss) Earnings per share accounting requires the presentation of both basic and diluted (loss) earnings per share on the face of the statements of operations. The Company’s basic net loss per share is computed by dividing net loss by the weighted-average number of shares of Common Stock outstanding for the period. If there are dilutive securities, diluted income per share is computed by including Common Stock equivalents which includes shares issuable upon the exercise of stock options into common shares, using the treasury stock method. In periods for which the Company reports a net loss, the Common Stock equivalents are not included, as they would be anti-dilutive.

As of June 30, 2026 and December 31, 2025, shares of Common Stock underlying stock options totaling 74,465 and 74,472, respectively, andno unvested restricted stock awards, were excluded from the calculation of diluted net loss per share because they were anti-dilutive. In addition,626,199 warrants outstanding as of June 30, 2026 were out of the money and also excluded from the calculation of diluted net loss per share for being anti-dilutive. Convertible debt outstanding during the periods was also excluded from the calculation of diluted net loss per share, as the effect of applying the if-converted method would have been anti-dilutive.

Restricted stock awards can be issued to directors, executives or employees of the Company and are subject to time-based vesting. These unvested shares are excluded from the computation of basic loss per share as these shares are not considered outstanding until vested.

Note 14 - Leases

In June 2024, the Company entered into a non-cancelable operating lease agreement for a facility in Bethesda, Maryland. This lease commenced on July 1, 2024, has a term of 63 months, and has an initial base rent of approximately $7,000 per month that increases annually by three percent. Under the terms of this lease, the Company is also responsible for their proportionate share of expenses associated with the facility and its premises.

In January 2025, the Company entered into a non-cancelable operating lease agreement with an unrelated third-party for a 16,000 square foot facility in Puerto Rico. This lease commenced on February 1, 2025 on a month-to-month basis and became a long-term lease with an initial term of 5 years on June 1, 2025. The initial base rent is $7.00 per square foot, or $9,333 per month, for the first two years, increasing to $7.50 per square foot for the third year and increases by 3% annually thereafter. Under the terms of this lease, the Company is also responsible for their own utilities and a proportionate share of the operating expenses of the premises, not to exceed $3.25 per square foot.

The components of lease expense were as follows for the three and six months ended June 30, 2026 and 2025:

The following table summarizes the operating lease asset and liabilities recorded as of June 30, 2026 and December 31, 2025:

The following table summarizes future minimum lease commitments as of June 30, 2026:

Note 15 - Related Party Transactions

Related parties include entities under common ownership or control with the Company, as well as entities owned, in whole or in part, by the Company’s management, company officers, members of the board of directors, or significant stockholders.

The Company had entered into SAFE agreements with Charles Maddox, the Chief Financial Officer and a stockholder, for proceeds totaling $28,833. On June 18, 2025, in connection with the Business Combination, these SAFE agreements converted into 2,156 (Pre-split) Common Stock shares of the Company.

Pope Technologies LLC is owned by a former member of the Company’s Board of Directors who resigned in March 2026 and, accordingly, was considered a related party during the three and six months ended June 30, 2026. In August 2024, the Company entered into a $1,500,000 purchase order with Pope Technologies LLC for certain products, hardware, installation, programming, subscription, and training services. As of December 31, 2024, $750,000 had been received and recorded as deferred revenue in the accompanying condensed consolidated balance sheets. During the year ended December 31, 2025, the Company delivered the products and recognized $750,000 of revenue from the deferred revenue balance. For the three and six months ended June 30, 2026 and 2025, no revenue was recognized from Pope Technologies LLC. As of June 30, 2026 and December 31, 2025, the Company had an accounts receivable balance of $0 and $78,412, respectively, from Pope Technologies LLC.

Effective January 1, 2022, the Company entered into a customer agreement with PRB Transportation, LLC, a related party owned in part by Charles Maddox, the Company’s Chief Financial Officer and a stockholder, and Jeff Andersen, a stockholder. The Company recognized revenue of $4,898 and $4,254 for the three months ended June 30, 2026 and 2025, respectively, and $9,554 and $8,592 for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026 and December 31, 2025, the Company had accounts receivable balances of $1,630 and $2,928, respectively, from PRB Transportation, LLC.

Beginning on March 1, 2024, the Company began subleasing an office space in Campo Alegre Manati, Puerto Rico from Enzymatic Holdings Corp. The term of this sublease was forone year and the rent was $1,167 per month, plus a one-third share of the cost of utilities. Enzymatic Holdings Corp., LLC is owned, in part, by certain stockholders of the Company. This lease terminated on February 28, 2025, and was not renewed.

Beginning on August 1, 2024, the Company began subleasing an office/warehouse space in Las Vegas, Nevada from Pope Technologies LLC. The term of this sublease is forone year and the rent is $1,280 per month. Pope Technologies LLC is owned by a former director of the Company. In September 2025, the Company paid a one-time fee of $13,610 to terminate the lease. The lease was terminated as of September 30, 2025. Beginning October 1, 2025, the Company entered into a month-to-month lease for the same location at a monthly lease of $5,813. This lease was terminated effective December 31, 2025. During the first quarter of 2026, the Company accrued $17,438 of lease expense related to the property. Upon further evaluation, the Company determined that the accrual was no longer required and reversed the full amount during the second quarter of 2026.

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 agreements with 3rd party lenders. As of June 30, 2026, the Company had short-term debt from related parties of $349,996 and accrued interest payable of $10,344 related to the Executive Loans, which was included in interest payable to related parties in the condensed consolidated balance sheets.

Note 16 – Accrued Expenses

Accrued expenses as of June 30, 2026 and December 31, 2025 consisted of the following:

Note 17 - Inventory

Inventory as of June 30, 2026 and December 31, 2025 consisted of the following:

Note 18 – Commitment and Contingencies

Since September 2025 the Company has been involved in litigation related to the termination of one of its former founders. Refer to the Form 10-K filed with the SEC on March 11, 2026 for a more comprehensive discussion of the matter. There were no material developments in this matter during the periods ended June 30, 2026. The outcome of this legal proceeding is not known or probable at this time; accordingly, no amounts have been accrued for a potential loss.

In addition to the matters described above, in the ordinary course of business, the Company may become subject to litigation, claims, and regulatory matters. Although it is not feasible to predict the outcome of these matters, the Company believes, unless otherwise indicated below, given the information currently available, that the ultimate resolution of any particular matter, or matters that have the same legal or factual issues, will not have a material adverse effect on its financial condition, results of operations and cash flows.

Note 19 - Segment Reporting

The Company operates asingle reportable segment, which generates revenue primarily from the sale of hardware and related software solutions. Hardware sales represent the initial step in a customer’s adoption of the Company’s SaaS subscription platform and have been a primary driver of revenue growth. This segment also includes ongoing software and subscription services, as well as exclusivity arrangements with resellers that provide protection from competitive sales. The Company’s focus on this integrated hardware and software model reflects its strategy to expand customer adoption of its SaaS platform, strengthen reseller partnerships, and drive sustainable growth.

Revenue by major product and service category for the three and six months ended June 30, 2026 and 2025 is presented in the table below. Product revenue consists primarily of sales of hardware devices, such as bridges, labels, and gateways, which represent the initial step in a customer’s adoption of the Company’s SaaS subscription platform and have contributed significantly to overall revenue growth. Service revenue consists primarily of software subscription services providing access to the Company’s cloud-based platform, as well as related training, support, exclusivity arrangement services, professional services such as onboarding and consulting, and feasibility study reports provided to customers. For the three and six months ended June 30, 2026 and 2025, revenue was generated predominantly from services. All of the Company’s revenue for the periods presented was generated from customers located in the United States.

As of June 30, 2026 and December 31, 2025, the Company had total deferred revenue of $1,984,370 and $1,984,550, respectively. Substantially all of the deferred revenue as of June 30, 2026 is expected to be recognized as revenue within the following twelve months.

The Company’s chief operating decision-makers (the “CODM”), which are the Company’s Chief Executive Officer and Chief Financial Officer, assess performance for the reportable segment and decide how to allocate resources using net income as the primary measure of profitability. The CODM are not regularly provided with specific segment expenses, but focus on revenue, gross profit, and net income/loss. Expense information, including cost of goods sold, can be easily computed from the information provided. This segment’s measures of profitability are shown in the condensed consolidated statements of operations. The measure of segment assets is reported on the condensed consolidated balance sheets as total assets.

Note 20 – Income Taxes

For the three and six months ended June 30, 2026 and 2025, the Company recorded no income tax expense or benefit due to pre-tax book losses. The Company’s effective tax rate was 0% for both periods, primarily as a result of such losses and the corresponding recognition of deferred tax assets, which are fully offset by a valuation allowance. Based on the weight of available evidence, including the Company’s history of cumulative operating losses, management has concluded that it is more likely than not that its deferred tax assets will not be realized. Accordingly, the Company has recorded a full valuation allowance against its deferred tax assets as of June 30, 2026 and December 31, 2025, resulting in a net deferred tax asset balance of $0.

The Company is subject to income taxes in the United States, as well as various state jurisdictions and Puerto Rico. The Company has not been audited by the Internal Revenue Service, Puerto Rican tax authorities, or any state taxing authorities with respect to income taxes. Tax years beginning with 2021 remain open to examination by federal, state, and Puerto Rico tax authorities. Net operating loss and tax credit carryforwards may be subject to adjustment upon examination in the year of utilization.

The Company accounts for uncertain tax positions in accordance with ASC 740. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on its technical merits. As of June 30, 2026, the Company has determined that no uncertain tax positions exist. Accordingly, no liability for unrecognized tax benefits has been recorded, andno interest or penalties have been accrued. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense.

The Company did not make any federal, state, or foreign income tax payments during the three and six months ended June 30, 2026 and 2025. Accordingly, income taxes paid were $0 for all jurisdictions for both periods. Consistent with the Company’s adoption of ASU 2023-09, no disaggregated income taxes paid information is presented as such amounts are immaterial.

On July 4, 2025, legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was enacted, which modifies certain provisions of U.S. federal tax law, including rules related to research and development expensing, interest limitation deductions, and international taxation. The Company has evaluated the provisions of the legislation and determined that the impact is not expected to be material to its consolidated financial statements.

Note 21 - Subsequent Events

On July 22, 2026, the Company entered into a Securities Purchase Agreement under which investors agreed to invest $6 million through the purchase of 400,000 shares of the Company’s Series AA Convertible Non - Redeemable Preferred Stock, par value $0.0001 per share (“Series AA Preferred Stock”) for an aggregate purchase price of $2 million (the “Series AA Purchase Price”), and 800,000 shares of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”) for an aggregate purchase price of $4 million (the “Series B Purchase Price”). The transaction creates new preferred stock classes with significant conversion, liquidation, dividend, anti-dilution, and board-designation rights, including the potential for investors to designate a majority of the Board under certain circumstances. The $4 million Series B investment will initially be held in a restricted account and released only after specified conditions, including SEC registration, stockholder approval, and certain stock-price and trading-volume requirements. The agreement also restricts the Company from taking certain financing, debt, corporate-governance, and other actions without investor consent and requires stockholder approval for the issuance of conversion shares and other matters. The Company will enter into registration-rights, voting, and employment agreements, appoint Joseph Risico as a director and Ryan Daiss as President following the Series AA closing, and establish a performance-based equity program for Mr. Daiss. The transaction is also intended to help the Company address Nasdaq listing-compliance deficiencies, while a special committee will evaluate a potential sale of certain operating assets.

On July 27, 2026, the lead investor delivered a notice of termination (the “Termination Notice”) to the Company terminated the Securities Purchase Agreement entered into on July 22, 2026, under which investors had agreed to purchase the Company’s Series AA and Series B Convertible Preferred Stock. The investor claimed that the Company failed to satisfy certain closing conditions and breached representations and warranties. As a result, the planned financing transactions and related agreements will not proceed unless the parties reach another agreement. The Company disputes the investor’s allegations, and the Company believes it was ready and able to complete the transaction; the Company is evaluating its legal rights and remedies and is also exploring options for its creditors.

On August 6, 2026, the Company received a Nasdaq Staff Determination stating that its common stock would be subject to delisting because the Company failed to regain compliance with Nasdaq’s $50 million minimum market value of listed securities (“MVLS”) requirement by the August 4, 2026 deadline. The Company had previously also been deficient with respect to Nasdaq’s $1.00 minimum bid price requirement and $15 million minimum market value of publicly held shares (“MVPHS”) requirement. The Company regained compliance with the minimum bid price requirement in June 2026, while the MVPHS deficiency remained outstanding. Following receipt of the August 6, 2026 Staff Determination, the Company timely requested a hearing before the Nasdaq Hearings Panel and paid the required $20,000 hearing fee. The hearing request stays the suspension of trading and delisting of the Company’s common stock pending the Hearings Panel’s decision, and the Company’s common stock remains listed on Nasdaq while the appeal is pending. There can be no assurance that the Hearings Panel will determine to continue the listing of the Company’s common stock or that the Company will be able to regain compliance with the applicable Nasdaq listing requirements.

On August 10, 2026, the Company received an additional Nasdaq delisting determination after it failed to regain compliance with the $15 million MVPHS requirement by the August 10, 2026 deadline, in addition to its previously reported failure to satisfy the $50 million MVLS requirement. The Company’s appeal before the Nasdaq Hearings Panel encompasses both the MVLS and MVPHS deficiencies, and the Company’s common stock remains listed on Nasdaq pending the outcome of the appeal. On August 12, 2026, the Company received a Notice of Default and Demand to Assemble Collateral (the “Default Notice”) from counsel to LHT I. According to the Default Notice, the amount due under the Loan Agreement was $1,057,417.37, inclusive of attorneys’ fees and costs. LHT I LLC demanded that the Company surrender the collateral securing the Loan Agreement and indicated that it may pursue foreclosure. The Company expects that any such foreclosure could result in the transfer of a material portion of the Company’s operations and assets.

On August 27, 2026, the Company received a written notification (the “Additional Staff Determination”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) identifying an additional basis for the potential delisting of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), from Nasdaq. As set forth in the Additional Staff Determination, the Company has not yet filed its Quarterly Report on Form 10-Q for the period ended June 30, 2026 (the “Delinquent Filing”), and therefore no longer complies with Nasdaq’s Listing Rules for continued listing. Accordingly, Nasdaq determined that this matter serves as an additional basis for delisting the Company’s securities from The Nasdaq Stock Market.

On September 10, 2026, the Company issued a $550,000 unsecured convertible promissory note (the “H Capital Note”) to H Capital Ventures Management Consultancies Co. LLC, with H Capital providing $500,000 in cash, reflecting a 10% original issue discount. The note bears 8% annual interest, with the first six months of interest accruing immediately, and matures six months after issuance. H Capital may convert the note into Common Stock of the Company, par value $0.0001 at any time, from time to time. The Conversion Price is equal to the lower of $1.50 per share of Common Stock and 90% of the applicableten Trading Day volume-weighted average price of the Common Stock (the “VWAP”), subject to a $0.50 floor, (the “Floor Price”). The note includes beneficial ownership and conversion limitations, customary events of default, and a provision reducing the conversion price to $0.01 per share upon an event of default. The Company may prepay the note at any time.

On September 14, 2026, the Company entered into a legally binding and enforceable Binding Summary of Principal Terms (the “Term Sheet”) with BladeRanger Ltd. and Envoy Technologies, Inc. to acquire 100% of Envoy’s outstanding common stock. BladeRanger holds 100% of Envoy’s outstanding capital stock. Blink Charging Co. holds $12.5 million convertible notes in Envoy that will convert into 20% of Envoy’s equity prior to closing. At Closing, the Company will issue shares equal to an aggregate of 10,833,333 shares of Common Stock. The consideration issued at Closing includes 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 will have 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. The Closing of the Acquisition is targeted for October 6, 2026, with definitive agreements expected by September 25, 2026, subject to customary closing conditions and required Israeli and Tel Aviv Stock Exchange approvals. Stockholder approval will be required under applicable Nasdaq rules, for certain share issuances and the change of control, although such approval is not a condition to Closing and is targeted for January 2027. Following closing, BladeRanger will have the right to designate one director and one executive management member, while the Company will assume approximately $700,000 of certain Envoy vehicle lease obligations. BladeRanger’s shares will be subject to a six-month lock-up and Blink’s shares to a 12-month lock-up.

On September 15, 2026, the Company, See ID, Inc., ShoulderUp Technology Acquisition Corp., and Dot Works, Inc. (collectively, the “Debtors”) entered into a Settlement Agreement with LHT I, LLC (the “Lender”) to resolve the defaults and all outstanding obligations owed to the Lender under the Loan Agreement dated December 4, 2025, which had been assigned to the Lender, and the $500,000 Junior Secured Convertible Promissory Note dated June 23, 2026 (the “Phillips Note”), which was originally issued to Phillips Equities & Trust, LLC, an affiliate of the Lender, and subsequently assigned to LHT I, LLC. Pursuant to the Settlement Agreement, LHT I, LLC will convert $924,616 of outstanding principal, together with $132,169.41 of accrued and unpaid interest and $30,000 of attorneys’ fees and costs, totaling $1,086,785, into 2,815,506 shares of Common Stock at a conversion price of $0.386 per share. In addition, See ID, Inc. and Dot Works, Inc. will transfer certain assets to the Lender in full and complete satisfaction and discharge of all obligations under the $500,000 Phillips Note. Upon issuance of the conversion shares and completion of the asset transfer, all remaining obligations of the Debtors under the Loan Agreement and the Phillips Note will be fully satisfied and canceled, all related liens and security interests will be released, and the Lender will release the Debtors from claims arising under the Loan Agreement.

Also on September 15, 2026, the Company appeared before a Nasdaq Hearings Panel and presented a compliance plan addressing its previously disclosed deficiencies with respect to Nasdaq’s $50 million minimum Market Value of Listed Securities requirement, the $15 million minimum market value of publicly held shares requirement, and the Company’s delinquent Quarterly Report on Form 10-Q for the period ended June 30, 2026. The Company’s Common Stock remains listed on Nasdaq under the symbol “DAIC” pending the outcome of the hearing and issuance of the Hearings Panel’s written decision. There can be no assurance that the Hearings Panel will grant the Company’s request for continued listing or that the Company will regain compliance with Nasdaq’s continued listing requirements within any period that may be granted by the Hearings Panel.

Subsequent to June 30, 2026, White Lion Capital exercised approximately $200,000 of warrants, resulting in the issuance of an aggregate of 371,725 shares of the Company’s Common Stock at various exercise prices.