DAICW filing — read by section

daic-20260630 
 
 UNITED STATES 

 SECURITIES AND
EXCHANGE COMMISSION 

 Washington, D.C.
20549 

 FORM 10-Q 

 (MARK ONE) 

 ☒ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 For the quarterly
period ended: June
30, 2026 

 OR 

 ☐ 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 For the transition
period from to 

 Commission file
number: 001-42711 

 CID
HOLDCO, INC. 

 (Exact name of registrant as specified in its
charter)

 Delaware 
 
 99-2578850 
 
 (State of other jurisdiction of 
 
 (I.R.S. Employer 

 incorporation or organization) 
 
 Identification No.) 

 5661
 S Cameron St , Suite 100 ,
 Las Vegas , Nevada 
 
 89118 
 
 (Address of principal executive offices) 
 
 (Zip Code) 
 
 +1
(303) 332 4122 

 (Registrant’s telephone number, including
area code)

 Securities registered pursuant to Section 12(b)
of the Act:

 Title
 of each class 
 
 Trading
 Symbol(s) 
 
 Name
 of each exchange on which registered 

 Common
 Stock, par value of $0.0001 per share 
 
 DAIC 
 
 The
 Nasdaq Stock Market LLC 

 Warrants,
 each exercisable for one share of Common Stock at an exercise price of $287.5 per
 share 
 
 DAICW 
 
 The
 Nasdaq Stock Market LLC 
 
 Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
☐ No ☒ 

 Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes 
☒ No ☐ 

 Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions
of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act. ☐

 Large accelerated filer 
 ☐ 
 
 Accelerated filer 
 ☐ 

 Non-accelerated
 filer 
 ☒ 
 
 Smaller reporting company 
 ☒ 
 
 Emerging Growth Company 
 ☒ 
 
 If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ☐ 

 Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ 

 The number of shares of the common stock of the registrant issued
and outstanding as of September 24, 2026 was 2,337,767 
shares of common stock. 

 CID HOLDCO, INC. 

 FORM 10-Q FOR
THE QUARTER ENDED JUNE 30, 2026 

 TABLE OF CONTENTS 

 PART I - FINANCIAL INFORMATION 
 
 1 

 Item 1. - Financial Statements (unaudited) 
 
 1 

 Condensed Consolidated Balance Sheets (unaudited) 
 
 1 

 Condensed Consolidated Statements of Operations (unaudited) 
 
 2 

 Condensed Consolidated Statements of Shareholders’ Equity
 (Deficit) (unaudited) 
 
 3 

 Condensed Consolidated Statements of Cash Flows (unaudited) 
 
 4 

 Notes to Condensed Consolidated Financial Statements (unaudited) 
 
 5 

 Item 2. - Management’s Discussion and Analysis of Financial
 Condition and Results of Operations 
 
 29 

 Item 3. - Quantitative and Qualitative Disclosures about Market
 Risk 
 
 40 

 Item 4. - Controls and Procedures 
 
 41 

 PART II - OTHER INFORMATION 
 
 43 

 Item 1. - Legal Proceedings 
 
 43 

 Item 1.A. - Risk Factors 
 
 43 

 Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds 
 
 44 

 Item 3. - Defaults Upon Senior Securities 
 
 44 

 Item 4. - Mine Safety Disclosures 
 
 44 

 Item 5. - Other Information 
 
 44 

 Item 6. - Exhibits 
 
 45 

 SIGNATURES 
 
 47 
 
 i 

 PART
I - FINANCIAL INFORMATION 

 Item
1. – Financial Statements (unaudited) 

 CID HOLDCO, INC. 

 CONDENSED
CONSOLIDATED BALANCE SHEETS 

 (UNAUDITED) 

 June 30, 
 2026 
 
 December 31,
 2025 
 
 ASSETS 
 
 Current assets: 
 
 Cash 
 
 $ 
 456,069 
 
 $ 
 865,624 
 
 Accounts receivable 
 
 32,687 
 
 3,624,547 
 
 Inventory 
 
 2,668,700 
 
 1,430,881 
 
 Prepaid expenses and other current assets 
 
 420,398 
 
 480,903 
 
 Total current assets 
 
 3,577,854 
 
 6,401,955 
 
 Noncurrent assets: 
 
 Property and equipment, net 
 
 603,221 
 
 645,240 
 
 Operating lease right-of-use assets (ROU) 
 
 630,958 
 
 701,878 
 
 Capitalized software development costs 
 
 2,667,942 
 
 2,920,718 
 
 Other long-term assets 
 
 26,840 
 
 27,893 
 
 Total long-term assets 
 
 3,928,961 
 
 4,295,729 
 
 Total assets 
 
 $ 
 7,506,815 
 
 $ 
 10,697,684 
 
 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) 
 
 Current liabilities: 
 
 Accounts payable 
 
 $ 
 6,608,784 
 
 $ 
 4,124,924 
 
 Accrued expenses 
 
 2,185,947 
 
 1,826,189 
 
 Accrued compensation 
 
 201,737 
 
 177,222 
 
 Accrued franchise taxes 
 
 20,428 
 
 8,428 
 
 Interest payable to related parties 
 
 10,344 
 
 - 
 
 Derivative liabilities 
 
 197,742 
 
 78,635 
 
 Short-term debt from third-parties, net 
 
 1,345,450 
 
 1,540,651 
 
 Short-term debt from related parties, net 
 
 349,996 
 
 - 
 
 Deferred revenue, current portion 
 
 1,984,370 
 
 236,038 
 
 Operating lease liabilities, current portion 
 
 148,808 
 
 139,963 
 
 Total current liabilities 
 
 13,053,606 
 
 8,132,050 
 
 Long-term liabilities: 
 
 Deferred revenue, net of current portion 
 
 - 
 
 1,748,512 
 
 Operating lease liabilities, net of current
 portion 
 
 500,910 
 
 577,656 
 
 Total long-term liabilities 
 
 500,910 
 
 2,326,168 
 
 Total liabilities 
 
 13,554,516 
 
 10,458,218 
 
 Commitments and contingencies (Note 18) 
 
 Shareholders’ equity (deficit) 
 
 Common stock, $ 0.0001 
 par value; 300,000,000 
 shares authorized; 1,966,042 
 and 1,170,933 
 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively (a) 
 
 197 
 
 117 
 
 Additional paid-in capital (a) 
 
 63,639,477 
 
 61,690,683 
 
 Accumulated deficit 
 
 ( 69,687,375 
 ) 
 
 ( 61,451,334 
 ) 

 Total shareholders’ equity (deficit) 
 
 ( 6,047,701 
 ) 
 
 239,466 
 
 Total liabilities and shareholders’
 equity 
 
 $ 
 7,506,815 
 
 $ 
 10,697,684 
 
 (a) 
 
 All share information, Common Stock balances, and Additional paid-in capital balances have been adjusted
 to reflect a 1-for-25 reverse stock split effective May 29, 2026. 
 
 The accompanying notes
are an integral part of these condensed consolidated financial statements. 

 1 

 CID HOLDCO, INC. 

 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS 

 (UNAUDITED) 

 For the Three Months
 Ended 
 June 30, 
 
 For the Six Months Ended
 
 June 30, 
 
 2026 
 
 2025 
 
 2026 
 
 2025 
 
 Revenue 
 
 $ 
 12,398 
 
 $ 
 126,833 
 
 $ 
 24,612 
 
 $ 
 479,331 
 
 Cost of goods sold 
 
 6,638 
 
 67,194 
 
 9,304 
 
 84,272 
 
 Gross profit 
 
 5,760 
 
 59,639 
 
 15,308 
 
 395,059 
 
 Operating expenses: 
 
 General and administrative 
 
 2,099,979 
 
 824,204 
 
 4,516,691 
 
 1,441,935 
 
 Research and development 
 
 394,769 
 
 181,641 
 
 1,006,074 
 
 575,505 
 
 Sales and marketing 
 
 373,695 
 
 770,247 
 
 1,286,840 
 
 1,452,996 
 
 Acquisition and integration 
 
 - 
 
 534,290 
 
 - 
 
 911,627 
 
 Depreciation and amortization 
 
 167,046 
 
 5,101 
 
 334,091 
 
 5,101 
 
 Total operating expenses 
 
 3,035,489 
 
 2,315,483 
 
 7,143,696 
 
 4,387,164 
 
 Loss from operations 
 
 ( 3,029,729 
 ) 
 
 ( 2,255,844 
 ) 
 
 ( 7,128,388 
 ) 
 
 ( 3,992,105 
 ) 

 Other expenses: 
 
 Interest expense 
 
 ( 743,938 
 ) 
 
 ( 168,763 
 ) 
 
 ( 1,109,191 
 ) 
 
 ( 328,763 
 ) 

 Change in fair value of SAFE notes 
 
 - 
 
 ( 17,980,118 
 ) 
 
 - 
 
 ( 17,368,415 
 ) 

 Change in fair value of derivative liabilities 
 
 ( 17,864 
 ) 
 
 - 
 
 ( 17,864 
 ) 
 
 - 
 
 Other income (expense), net 
 
 - 
 
 ( 2,726,183 
 ) 
 
 - 
 
 ( 2,726,183 
 ) 

 Gains (loss) from extinguishment of debt 
 
 - 
 
 ( 5,728,295 
 ) 
 
 - 
 
 ( 5,728,295 
 ) 

 Gain (loss) on issuance of shares 
 
 20,658 
 
 - 
 
 19,402 
 
 - 
 
 Total other expenses 
 
 ( 741,144 
 ) 
 
 ( 26,603,359 
 ) 
 
 ( 1,107,653 
 ) 
 
 ( 26,151,656 
 ) 

 Loss before income taxes 
 
 ( 3,770,873 
 ) 
 
 ( 28,859,203 
 ) 
 
 ( 8,236,041 
 ) 
 
 ( 30,143,761 
 ) 

 Provision for income taxes 
 
 - 
 
 - 
 
 - 
 
 - 
 
 Net loss 
 
 $ 
 ( 3,770,873 
 ) 
 
 $ 
 ( 28,859,203 
 ) 
 
 $ 
 ( 8,236,041 
 ) 
 
 $ 
 ( 30,143,761 
 ) 

 Net loss per share (a) 
 
 Basic and diluted (a) 
 
 $ 
 ( 2.68 
 ) 
 
 $ 
 ( 50.05 
 ) 
 
 $ 
 ( 6.37 
 ) 
 
 $ 
 ( 56.58 
 ) 

 Weighted average number of shares 
 
 Basic and diluted 
 
 1,405,120 
 
 576,579 
 
 1,292,050 
 
 532,747 
 
 (a) 
 
 All share and per share information have been adjusted to reflect a 1-for-25 reverse stock split effective
 May 29, 2026. 
 
 The accompanying notes
are an integral part of these condensed consolidated financial statements. 

 2 

 CID HOLDCO, INC. 

 CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) 

 (UNAUDITED) 

 Total 
 
 Common Stock (a) 
 
 Additional
 Paid-In 
 
 Accumulated 
 
 Shareholders’
 Equity 
 
 Six
 Months Ended June 30, 2026 
 
 Shares 
 
 Amount 
 
 Capital (a) 
 
 Deficit 
 
 (Deficit) 
 
 Balances as of December 31, 2025 
 
 1,170,933 
 
 $ 
 117 
 
 $ 
 61,690,683 
 
 $ 
 ( 61,451,334 
 ) 
 
 $ 
 239,466 
 
 Stock-based compensation 
 
 - 
 
 - 
 
 1,753 
 
 - 
 
 1,753 
 
 Share issuance for services 
 
 13,598 
 
 1 
 
 124,999 
 
 - 
 
 125,000 
 
 Share issuance for cash 
 
 800 
 
 - 
 
 6,420 
 
 - 
 
 6,420 
 
 Net loss 
 
 - 
 
 - 
 
 - 
 
 ( 4,465,168 
 ) 
 
 ( 4,465,168 
 ) 

 Balances as of March 31, 2026 
 
 1,185,331 
 
 $ 
 118 
 
 $ 
 61,823,855 
 
 $ 
 ( 65,916,502 
 ) 
 
 $ 
 ( 4,092,529 
 ) 

 Stock-based compensation 
 
 - 
 
 - 
 
 1,611 
 
 - 
 
 1,611 
 
 Share issuance for cash 
 
 329,898 
 
 33 
 
 640,159 
 
 - 
 
 640,192 
 
 Share issuance for debt conversion 
 
 360,165 
 
 36 
 
 895,119 
 
 - 
 
 895,155 
 
 Share issuance for warrant exercises 
 
 65,596 
 
 7 
 
 158,736 
 
 158,743 
 
 Share purchase commitment 
 
 25,052 
 
 3 
 
 119,997 
 
 120,000 
 
 Net loss 
 
 - 
 
 - 
 
 - 
 
 ( 3,770,873 
 ) 
 
 ( 3,770,873 
 ) 

 Balances as of June 30, 2026 
 
 1,966,042 
 
 $ 
 197 
 
 $ 
 63,639,477 
 
 $ 
 ( 69,687,375 
 ) 
 
 $ 
 ( 6,047,701 
 ) 
 
 Total 
 
 Legacy Common Stock 
 
 Common Stock (a) 
 
 Additional
 Paid-In 
 
 Accumulated 
 
 Shareholders’
 Equity 
 
 Six Months Ended
 June 30, 2025 
 
 Shares 
 
 Amount 
 
 Shares 
 
 Amount 
 
 Capital (a) 
 
 Deficit 
 
 (Deficit) 
 
 Balances as of December 31, 2024 
 
 108,975,000 
 
 $ 
 108,975 
 
 - 
 
 $ 
 - 
 
 $ 
 330,366 
 
 $ 
 ( 24,733,263 
 ) 
 
 $ 
 ( 24,293,922 
 ) 

 Retroactive application of recapitalization 
 
 ( 108,975,000 
 ) 
 
 ( 108,975 
 ) 
 
 488,429 
 
 49 
 
 108,926 
 
 - 
 
 - 
 
 Balances as of December 31, 2024, adjusted 
 
 - 
 
 - 
 
 488,429 
 
 49 
 
 439,292 
 
 ( 24,733,263 
 ) 
 
 ( 24,293,922 
 ) 

 Stock-based compensation 
 
 - 
 
 - 
 
 - 
 
 - 
 
 10,005 
 
 - 
 
 10,005 
 
 Net loss 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 ( 1,284,558 
 ) 
 
 ( 1,284,558 
 ) 

 Balances as of March 31, 2025 
 
 - 
 
 $ 
 - 
 
 488,429 
 
 $ 
 49 
 
 $ 
 449,297 
 
 $ 
 ( 26,017,821 
 ) 
 
 $ 
 ( 25,568,475 
 ) 

 Stock-based compensation 
 
 - 
 
 - 
 
 - 
 
 9,737 
 
 - 
 
 9,737 
 
 Reverse recapitalization transaction, net 
 
 - 
 
 - 
 
 617,049 
 
 62 
 
 56,157,130 
 
 - 
 
 56,157,192 
 
 Net loss 
 
 - 
 
 - 
 
 - 
 
 ( 28,859,203 
 ) 
 
 ( 28,859,203 
 ) 

 Balances as of June 30, 2025 
 
 - 
 
 $ 
 - 
 
 1,105,478 
 
 $ 
 111 
 
 $ 
 56,616,164 
 
 $ 
 ( 54,877,024 
 ) 
 
 $ 
 1,739,251 
 
 (a) 
 
 All Common Stock share and related dollar information as well as Additional paid-in capital have been
 adjusted to reflect a 1-for-25 reverse stock split effective May 29, 2026. 
 
 The accompanying notes
are an integral part of these condensed consolidated financial statements. 

 3 

 CID HOLDCO, INC. 

 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS 

 (UNAUDITED) 

 For the Six
 Months Ended 
 June 30, 
 
 2026 
 
 2025 
 
 OPERATING ACTIVITIES 
 
 Net loss 
 
 $ 
 ( 8,236,041 
 ) 
 
 $ 
 ( 30,143,761 
 ) 

 Adjustments to reconcile net loss to net cash used in operating activities: 
 
 Depreciation and amortization expense 
 
 334,091 
 
 5,101 
 
 Amortization of debt origination fees 
 
 267,500 
 
 — 
 
 Interest expense 
 
 270,723 
 
 21,380 
 
 Change in fair value of SAFE notes 
 
 — 
 
 17,368,415 
 
 Change in fair value of derivative liabilities 
 
 17,864 
 
 — 
 
 Transaction costs paid in shares 
 
 — 
 
 156,869 
 
 Share-based compensation expense 
 
 3,364 
 
 19,742 
 
 Noncash operating lease expense 
 
 70,920 
 
 — 
 
 Amortization of ROU assets 
 
 — 
 
 31,641 
 
 Loss on debt extinguishment 
 
 — 
 
 5,728,295 
 
 Loss on issuance of shares 
 
 ( 19,402 
 ) 
 
 — 
 
 Operating lease payment 
 
 — 
 
 ( 51,642 
 ) 

 Reverse recapitalization transaction 
 
 — 
 
 ( 3,339,169 
 ) 

 Shares issued for debt origination fees 
 
 120,000 
 
 — 
 
 Shares issued for services 
 
 125,000 
 
 — 
 
 Change in operating assets and liabilities: 
 
 Accounts receivable 
 
 3,591,860 
 
 34,328 
 
 Prepaid expenses and other assets 
 
 61,559 
 
 ( 404,842 
 ) 

 Inventory 
 
 ( 1,237,819 
 ) 
 
 ( 297,186 
 ) 

 Accounts payable 
 
 2,483,860 
 
 ( 540,863 
 ) 

 Accrued expenses 
 
 359,758 
 
 1,006,861 
 
 Accrued compensation 
 
 24,515 
 
 ( 150,623 
 ) 

 Interest payable to related parties 
 
 10,344 
 
 — 
 
 Accrued taxes 
 
 12,000 
 
 3,911,691 
 
 Operating lease liabilities 
 
 ( 67,901 
 ) 
 
 — 
 
 Derivative liabilities 
 
 101,243 
 
 — 
 
 Deferred revenue 
 
 ( 180 
 ) 
 
 251,021 
 
 Net cash used in operating activities 
 
 ( 1,706,742 
 ) 
 
 ( 6,392,742 
 ) 

 INVESTING ACTIVITIES 
 
 Purchase of property and equipment 
 
 — 
 
 ( 107,200 
 ) 

 Capitalized software development
 costs 
 
 ( 39,296 
 ) 
 
 ( 636,598 
 ) 

 Net cash used in investing activities 
 
 ( 39,296 
 ) 
 
 ( 743,798 
 ) 

 FINANCING ACTIVITIES 
 
 Proceeds from issuance of short-term loans to third-parties 
 
 1,190,000 
 
 2,850,000 
 
 Proceeds from issuance of SAFE notes 
 
 — 
 
 23,752 
 
 Proceeds from PIPE investments 
 
 — 
 
 10,837,643 
 
 Proceeds from issuance of short-term loan from related
 parties 
 
 349,996 
 
 — 
 
 Proceeds from issuance of shares 
 
 644,756 
 
 — 
 
 Proceeds from Trust accounts 
 
 — 
 
 5,577,304 
 
 Proceeds from warrant exercises 
 
 180,000 
 
 — 
 
 Purchase of common stock 
 
 — 
 
 ( 5,000,000 
 ) 

 Repayment of bridge loans 
 
 — 
 
 ( 1,380,545 
 ) 

 Repayment of short-term loan to
 third-parties 
 
 ( 1,028,269 
 ) 
 
 — 
 
 Net cash provided by financing activities 
 
 1,336,483 
 
 12,908,154 
 
 Net increase in cash during the period 
 
 ( 409,555 
 ) 
 
 5,771,614 
 
 Cash, beginning of period 
 
 865,624 
 
 721,032 
 
 Cash, end of period 
 
 $ 
 456,069 
 
 $ 
 6,492,646 
 
 SUPPLEMENTAL DISCLOSURE OF CASH ACTIVITIES 
 
 Cash paid for interest 
 
 $ 
 778,691 
 
 $ 
 - 
 
 Conversion of third-party short-term debt to equity 
 
 $ 
 895,155 
 
 $ 
 2,456,500 
 
 ROU asset obtained in exchange for lease liability 
 
 $ 
 - 
 
 $ 
 482,227 
 
 Conversion of SAFE notes to equity 
 
 $ 
 - 
 
 $ 
 40,726,793 
 
 The accompanying notes are an integral part
of these condensed consolidated financial statements. 

 4 

 CID HOLDCO, INC. 

 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 

 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. 

 5 

 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 received one 
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). 

 6 

 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. 

 7 

 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.
 
 8 

 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 and no 
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).
 
 9 

 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: 

 ● 
 At the Closing, each ordinary share of ShoulderUp that was not redeemed or converted was exchanged for one 
 share of CID Holdco Inc. Common Stock. Each issued and outstanding unit of ShoulderUp (“Unit”) was automatically separated
 into (i) one 
 ordinary share and (ii) one-half of one 
 warrant. Each whole warrant is exercisable to purchase one ordinary share at an exercise price of $ 287.50 
 per share. 
 
 10 

 ● 
 506,589 
 shares of Common Stock were issued to the public shareholders of ShoulderUp at Closing, equivalent to approximately 20,264 
 shares after giving effect to the 1-for-25 
 reverse stock split. An additional 6,698,333 
 shares were issued to ShoulderUp’s officers and directors, ShoulderUp Technology Sponsor LLC (the “Sponsor”), and transferees
 of founder shares, equivalent to approximately 267,933 
 shares on a post-split basis. 
 
 ● 
 1,345,001 
 shares of Common Stock were issued to certain original public shareholders who had previously agreed not to redeem their shares, equivalent
 to approximately 53,800 
 shares after giving effect to the reverse stock split. 
 
 ● 
 482,500 
 shares of Common Stock were issued to holders of the ShoulderUp bridge loan to partially settle the outstanding loan balance at Closing,
 equivalent to 19,300 
 shares after giving effect to the reverse stock split. In addition, 150,000 
 shares were issued to legal services provider DLA Piper LLP to partially settle outstanding service fees pursuant to the Expense Release
 and Payment Agreement executed on June 3, 2025, equivalent to 6,000 
 shares on a post-split basis. 
 
 ● 
 All 108,975,000 
 shares of SEE ID Common Stock issued and outstanding immediately prior to the Closing were canceled and converted into 12,210,718 
 shares of the Company’s Common Stock pursuant to the applicable exchange ratio of 0.11205 .
 Following the 1-for-25 
 reverse stock split, such shares were adjusted to approximately 488,429 
 shares of Common Stock. 
 
 ● 
 2,909,057 
 shares of Common Stock were issued to the SEE ID SAFE note holders, equivalent to approximately 116,362 
 shares after giving effect to the reverse stock split. 
 
 ● 
 11,205 
 shares of Common Stock were issued in exchange for financial advisory services at Closing, equivalent to approximately 448 
 shares after giving effect to the reverse stock split. 
 
 ● 
 3,323,536 
 shares of Common Stock were issued to three major PIPE investors, equivalent to approximately 132,942 
 shares after giving effect to the reverse stock split. 
 
 ● 
 The Company assumed 15,654,983 
 public and private warrants of ShoulderUp, net of 20,017 
 forfeitures. Following the 1-for-25 
 reverse stock split, the number of shares of Common Stock underlying such warrants was proportionately adjusted to approximately 626,199 
 shares, and the exercise price was adjusted from $ 11.50 
 per (Pre-split) share to $ 287.50 
 per post-split share. 
 
 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:

 Shares at
 Closing 
 
 Shares After
 1-for-25
 Reverse
 
 Stock Split 
 
 Ordinary shares, outstanding prior to the Business Combination 
 
 508,589 
 
 20,344 
 
 Less: Redemption of ordinary shares 
 
 ( 2,000 
 ) 
 
 ( 80 
 ) 

 Ordinary shares held by ShoulderUp’s officers and directors, the Sponsor and each transferee of founder
 shares 
 
 6,698,333 
 
 267,933 
 
 Ordinary shares held by non-redemption share holders 
 
 1,345,001 
 
 53,800 
 
 Ordinary shares held by ShoulderUp bridge loan holder 
 
 482,500 
 
 19,300 
 
 Ordinary shares held by DLA Piper, LLP 
 
 150,000 
 
 6,000 
 
 Common Stock issued to holders of SEE ID Inc. 
 
 12,210,718 
 
 488,429 
 
 Common Stock issued to SEE ID SAFE note holders 
 
 2,909,057 
 
 116,362 
 
 Common Stock issued to StartUpNV 
 
 11,205 
 
 448 
 
 Common Stock issued to PIPE investors 
 
 3,323,536 
 
 132,942 
 
 Common Stock Upon the Business Combination 
 
 27,636,939 
 
 1,105,478 
 
 11 

 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: 

 ● 
 $ 1,003,500 
 in assumed expenses from ShoulderUp for financial advisory services provided by Cohen Capital Markets; 

 ● 
 $ 156,870 
 for financial advisory services provided by a financial advisor; 

 ● 
 $ 295,000 
 in registration fees paid to Nasdaq Corporate Solutions, LLC; 

 ● 
 $ 271,079 
 paid to Continental Stock Transfer & Trust Co.; 

 ● 
 $ 126,812 
 paid to Edgar Agents, LLC; and 

 ● 
 $ 872,922 
 in bonus expenses related to the successful closing of the Business Combination. 
 
 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:

 Recapitalization 
 
 Closing proceeds 
 
 Proceeds from Trust account 
 
 $ 
 5,577,304 
 
 Proceeds from PIPE investors 
 
 10,837,643 
 
 Proceeds from legacy ShoulderUp bank accounts 
 
 74,501 
 
 Closing disbursements 
 
 Less: Payment to purchase founder shares 
 
 ( 5,000,000 
 ) 

 Net cash proceeds from the Business Combination 
 
 $ 
 11,489,448 
 
 Noncash activities 
 
 Conversion of SAFE notes to equity 
 
 40,726,793 
 
 Conversion of short-term debt to equity 
 
 8,597,749 
 
 Transaction costs paid in shares 
 
 156,870 
 
 Less: Accrued taxes assumed from ShoulderUp 
 
 ( 3,913,668 
 ) 

 Less: Short-term debt assumed from ShoulderUp 
 
 ( 900,000 
 ) 

 Net equity impact of the Business Combination 
 
 $ 
 56,157,192 
 
 Par value of common stock issued 
 
 ( 1,543 
 ) 

 Total Impact of Business Combination on additional paid-in capital 
 
 $ 
 56,155,649 
 
 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. 

 12 

 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:

 Bridge Loans 
 
 Effective 
 Date 
 
 Amount 
 
 Interest at 
 closing 
 
 Payback in 
 Cash 
 
 Payback in 
 shares at 
 4/share 
 
 Shares at 
 Closing 
 
 Shares After
 1-for-25 
 Reverse
 
 Stock Split 
 
 Bridge loan 1* 
 
 1/29/2025 
 
 $ 
 1,500,000 
 
 $ 
 150,000 
 
 $ 
 ( 193,500 
 ) 
 
 $ 
 1,456,500 
 
 364,125 
 
 14,565 
 
 Bridge loan 2* 
 
 4/9/2025 
 
 500,000 
 
 50,000 
 
 ( 50,000 
 ) 
 
 500,000 
 
 125,000 
 
 5,000 
 
 Bridge loan 3* 
 
 5/7/2025 
 
 500,000 
 
 50,000 
 
 ( 50,000 
 ) 
 
 500,000 
 
 125,000 
 
 5,000 
 
 Bridge loan 4 
 
 3/29/2025 
 
 100,000 
 
 10,000 
 
 ( 110,000 
 ) 
 
 - 
 
 - 
 
 - 
 
 Bridge loan 5 
 
 6/5/2025 
 
 250,000 
 
 20,000 
 
 ( 270,000 
 ) 
 
 - 
 
 - 
 
 - 
 
 Total 
 
 $ 
 2,850,000 
 
 $ 
 280,000 
 
 $ 
 ( 673,500 
 ) 
 
 $ 
 2,456,500 
 
 614,125 
 
 24,565 
 
 * 
 
 Bridge loans from this investor had an aggregate principal amount of $ 2,500,000 .
 At the Closing of the Business Combination, the investor received a cash payment of $ 293,500 ,
 consisting of $ 250,000 
 in minimum 10 %
 interest and $ 43,500 
 in principal repayment. In addition, the investor received 614,125 
 shares of Common Stock in exchange for $ 2,456,500 
 of combined principal and accrued interest, based on a per share price of $ 4.00 . 
 
 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. 

 PIPE 
 
 Effective 
 Date 
 
 Amount 
 
 Shares at 
 Closing 
 
 Shares After 
 1-for-25 
 Reverse
 
 Stock Split 
 
 PIPE 1 
 
 6/16/2025 
 
 $ 
 2,814,500 
 
 703,625 
 
 28,145 
 
 PIPE 2 
 
 6/10/2025 
 
 1,000,000 
 
 250,000 
 
 10,000 
 
 PIPE 3 
 
 6/17/2025 
 
 7,023,143 
 
 1,755,786 
 
 70,231 
 
 Total PIPE 
 
 $ 
 10,837,643 
 
 2,709,411 
 
 108,376 
 
 13 

 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. 

 14 

 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
was no accounts receivable allowance
for credit losses. There were no 
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:

 Estimated 
 useful life 
 
 June 30, 
 2026 
 
 December 31, 
 2025 
 
 Equipment 
 
 3 
 to 10 
 years 
 
 $ 
 665,303 
 
 $ 
 665,303 
 
 Leasehold improvements 
 
 Lesser of lease term or estimated useful life 
 
 16,400 
 
 16,400 
 
 Less: Accumulated depreciation and amortization 
 
 ( 78,482 
 ) 
 
 ( 36,463 
 ) 

 Property and equipment, net 
 
 $ 
 603,221 
 
 $ 
 645,240 
 
 For the Three Months
 Ended 
 June 30, 
 
 For the Six Months Ended
 
 June 30, 
 
 2026 
 
 2025 
 
 2026 
 
 2025 
 
 Depreciation expense 
 
 $ 
 21,010 
 
 $ 
 5,101 
 
 $ 
 42,019 
 
 $ 
 5,101 
 
 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.

 15 

 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. 

 16 

 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. 

 17 

 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. 

 18 

 For the Three Months Ended 
 June 30, 
 
 For the Six Months Ended
 June 30, 
 
 2026 
 
 2025 
 
 2026 
 
 2025 
 
 Fair Value - beginning of period 
 
 $ 
 78,635 
 
 $ 
 22,746,675 
 
 $ 
 78,635 
 
 $ 
 23,334,626 
 
 Addition 
 
 101,243 
 
 - 
 
 101,243 
 
 23,752 
 
 Change in fair value of derivative liabilities 
 
 17,864 
 
 - 
 
 17,864 
 
 - 
 
 Change in fair value of SAFE notes 
 
 - 
 
 17,980,118 
 
 - 
 
 17,368,415 
 
 SAFE notes converted into shares 
 
 - 
 
 ( 40,726,793 
 ) 
 
 ( 40,726,793 
 ) 

 Fair Value - end of period 
 
 $ 
 197,742 
 
 $ 
 - 
 
 $ 
 197,742 
 
 $ 
 - 
 
 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 the three 
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.

 19 

 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. 
 
 20 

 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.

 21 

 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. 

 Shares 
 
 Weighted-Average
 Exercise Price 
 
 Weighted-Average
 Remaining
 Contractual
 Life
 (in years) 
 
 Options outstanding as of December 31, 2025 
 
 74,472 
 
 $ 
 2.74 
 
 5.66 
 
 Options granted 
 
 - 
 
 - 
 
 - 
 
 Options exercised 
 
 - 
 
 - 
 
 - 
 
 Options canceled 
 
 ( 7 
 ) 
 
 215.27 
 
 n/a 
 
 Options outstanding as of June 30, 2026 
 
 74,465 
 
 2.72 
 
 5.16 
 
 Total vested as of June 30, 2026 
 
 74,010 
 
 2.69 
 
 5.59 
 
 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
did not 
grant any restricted stock awards. As of June 30, 2026 and December 31, 2025, there were no 
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, and no 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. 

 22 

 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:

 For the Three Months Ended
 June 30, 
 
 For the Six Months Ended 
 June 30, 
 
 2026 
 
 2025 
 
 2026 
 
 2025 
 
 Operating lease cost 
 
 $ 
 51,298 
 
 $ 
 31,468 
 
 $ 
 102,596 
 
 $ 
 53,021 
 
 Other short-term lease cost 
 
 6,180 
 
 30,667 
 
 29,798 
 
 63,668 
 
 Total lease cost 
 
 $ 
 57,478 
 
 $ 
 62,135 
 
 $ 
 132,394 
 
 $ 
 116,689 
 
 The following table summarizes the operating lease asset and liabilities
recorded as of June 30, 2026 and December 31, 2025:

 June 30, 
 2026 
 
 December 31,
 2025 
 
 Operating lease right-of-use asset, net 
 
 $ 
 630,958 
 
 $ 
 701,878 
 
 Short-term operating lease liabilities 
 
 148,808 
 
 139,963 
 
 Long-term operating lease liabilities 
 
 500,910 
 
 577,656 
 
 Total operating lease liabilities 
 
 $ 
 649,718 
 
 $ 
 717,619 
 
 Weighted average operating lease term 
 
 3.66 
 years 
 
 4.16 
 years 
 
 Weighted average operating lease discount rate 
 
 9.51 
 % 
 
 9.53 
 % 
 
 The following table summarizes future minimum lease commitments as
of June 30, 2026:

 Year ending December 31, 
 
 Operating Leases 
 
 2026 (remaining 6 months) 
 
 100,885 
 
 2027 
 
 207,783 
 
 2028 
 
 $ 
 215,950 
 
 2029 
 
 197,905 
 
 2030 
 
 42,436 
 
 Thereafter 
 
 - 
 
 Total lease payments 
 
 $ 
 764,958 
 
 Less: imputed interest 
 
 ( 115,240 
 ) 

 Present value of lease liabilities 
 
 $ 
 649,718 
 
 23 

 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 for one
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 for one
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. 
 
 24 

 Note 16 – Accrued Expenses 

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

 June 30, 
 2026 
 
 December 31,
 2025 
 
 Transaction costs accrued for Cohen Capital Market 
 
 $ 
 1,003,500 
 
 $ 
 1,003,500 
 
 Board of directors’ fees 
 
 1,158,528 
 
 780,000 
 
 Other 
 
 23,919 
 
 42,689 
 
 Total accrued expenses 
 
 $ 
 2,185,947 
 
 $ 
 1,826,189 
 
 Note 17 - Inventory 

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

 June 30,
 2026 
 
 December 31,
 2025 
 
 Raw materials 
 
 $ 
 1,761,277 
 
 $ 
 1,064,464 
 
 Finished goods 
 
 203,835 
 
 116,106 
 
 Shipping costs 
 
 96,411 
 
 64,066 
 
 Inventory in transit 
 
 607,177 
 
 186,245 
 
 Total inventories 
 
 $ 
 2,668,700 
 
 $ 
 1,430,881 
 
 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 a single 
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. 

 25 

 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. 
 
 For the Three Months Ended 
 June 30, 
 
 For the Six Months Ended 
 June 30, 
 
 2026 
 
 2025 
 
 2026 
 
 2025 
 
 Services 
 
 $ 
 12,398 
 
 $ 
 120,971 
 
 $ 
 24,612 
 
 $ 
 473,469 
 
 Products 
 
 - 
 
 5,862 
 
 - 
 
 5,862 
 
 Total Revenue 
 
 $ 
 12,398 
 
 $ 
 126,833 
 
 $ 
 24,612 
 
 $ 
 479,331 
 
 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, and no 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. 

 26 

 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. 

 27 

 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 applicable ten 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. 
 
 28 

 Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

 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. 

 Overview 

 CID Holdco, Inc. (the “Company”, or “CID Holdco”,
or “CID”), formerly known as SEE ID Inc., dba Dot AI (the “Legacy Company” or “SEE ID”), was incorporated
in Delaware with its headquarters in Las Vegas, Nevada. The Company helps businesses transform their operations by optimizing safety,
security, and efficiency of operations through real-time tracking of resources. Through the Company’s extensive research and development
initiatives, the Company’s main focus includes areas such as Industrial IoT, Indoor and Outdoor tracking with seamless transitions,
Passive RFID (including Bluetooth and 5G), Collision Avoidance, real-time locating system, Dolly Management, and related supported software
applications.

 The Company is 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.

 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.

 Throughout this Quarterly Report, unless otherwise noted or otherwise
suggested by context, the “Company”, “we”, “us”, “our” refers to SEE ID and Dot Works,
as applicable, prior to the consummation of the Business Combination (as defined below), and CID Holdco, SEE ID, and Dot Works, collectively,
after the consummation of the Business Combination.

 29 

 Reverse Stock Split 

 On May 29, 2026, the Company effected a 1-for-25 reverse stock split
of its common stock, as previously approved by the Company’s stockholders and Board of Directors. The Company’s common stock
began trading on a split-adjusted basis on Nasdaq on June 1, 2026. The Reverse Stock Split reduced the Company’s outstanding common
shares from approximately 30.26 million shares to approximately 1.21 million shares and did not change the par value or authorized number
of shares. All share and per-share amounts presented in the condensed consolidated financial statements and related disclosures have been
retrospectively adjusted, where applicable, to reflect the Reverse Stock Split.

 Business Combination 

 On June 18, 2025 (the “Closing Date”) the Company consummated
the Business Combination transactions by and among the Company, ShoulderUp Technology Acquisition Corp (“SUAC” or “ShoulderUp”),
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; 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 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”).

 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.

 Factors Affecting Our Performance 

 Acquiring New Customers 

 We believe that we have a substantial opportunity to grow our customer
base. We intend to drive new customer acquisition by continuing to invest significantly in sales and marketing to engage our prospective
customers, increase brand awareness, and drive adoption of our Dot Cloud platform. Our ability to attract new customers depends on a number
of factors, including the effectiveness of our sales and marketing efforts, macroeconomic factors and their impact on our customers’
businesses, and the success of our efforts to expand internationally.

 30 

 Expanding Within Our Existing
Customer Base 

 We believe that there is a significant opportunity to expand sales
to existing customers following their initial adoption of our Dot Cloud. We will expand our customer base by selling more applications
and expanding use of existing applications across geographies and divisions. Our ability to expand within our customer base will depend
on a number of factors, including our customers’ satisfaction, pricing, competition, macroeconomic factors, and changes in our customers’
spending levels. While there are many factors involved in this expansion, the Customer Success department will be the key internal driver
to retention and expansion of customer revenue. At this juncture, it is not a significant part of our operational expense but will be
built out as our bookings increase and our channel support requirements come online.

 Investments in Innovation and
Future Growth 

 Our market leadership is supported by continuous innovation in our
Dot Cloud, our inventions in IoT data collection and our advances in applying AI to our customer problem sets. We will continuously invest
in adding new applications and methods to our solutions. As such, spending on research and development will always be an important part
of our strategy, however, the driving force that will fuel our company is market growth. Our recent pivot to move most of our spending
to Sales and Marketing shows a commitment to our go-to-market strategy. We recognize the need to increase adoption and expand brand awareness
as we increase market share.

 Adding additional compliance and oversight resources as we grow, and
especially as we adapt to operating as a public entity, is a natural and essential step. In addition, our small operations team will continue
to grow as the demand increases from our maturing sales pipeline.

 Components of Results of Operations 

 Revenue 

 We will provide access to our Dot Cloud through subscription arrangements,
where the customer is charged a per-subscription fee for access for a specified term. Subscription agreements will contain multiple service
elements for one or more of our cloud-based Applications via mobile app(s) or a website that enables data collection and provides access
to the cellular network, IoT devices (which we also refer to as connected devices), and support services delivered over the term of the
arrangement. Our subscription contracts will typically have an initial term of three to five years and are generally non-cancellable and
non-refundable, subject to limited exceptions under our standard terms of service and other exceptions for public sector customers, who
are often subject to annual budget appropriations cycles. Our Connected Dot Cloud and IoT devices are highly integrated with the subscription
service and together will represent a single performance obligation. Revenues attributable to this combined performance obligation are
recognized over time as the services are delivered.

 We also provide professional services including onboarding (implementation)
services, marketing services, and product consulting. These services were evaluated to be distinct and are treated as separate performance
obligations from the subscription services. Revenue related to these services are recognized over time as services are performed.

 Allocation of Overhead Costs 

 Overhead costs that are not directly attributable to a specific functional
group are allocated based on relative usage. These costs include expenses related to warehouse lease and cloud hosting services.

 31 

 Cost of Goods Sold 

 Cost of goods sold consists primarily of cellular-related costs, third-party
cloud infrastructure expenses, customer support costs, warranty charges, employee-related costs directly associated with our customer
support and operations, including salaries, employee benefits and share-based compensation, amortization of internal-use software development,
certain cloud computing implementation costs, expenses related to shipping and handling, packaging, fulfillment, warehousing, write-downs
of excess and obsolete inventory, and allocated overhead costs.

 As our customers expand and increase the use of our Dot Cloud driven
by additional IoT devices and Applications, our cost of goods sold may vary from quarter to quarter as a percentage of our revenue due
to the timing and extent of these expenses. We intend to continue to invest additional resources in our Dot Cloud and customer support
and operations personnel as we grow our business. The level and timing of investment in these areas will affect our cost of goods sold
in the future.

 Operating Expenses 

 Research and development 

 Research and development expenses consist primarily of employee-related
costs, including salaries, employee benefits and share-based compensation, depreciation and other expenses related to prototyping IoT
devices, product initiatives, software subscriptions, hosting used in research and development, and allocated overhead costs. We continue
to focus our research and development efforts on adding new features and products and enhancing the utility of our Dot Cloud. We capitalize
the portion of our internal-use software development costs that meets the criteria for capitalization. We expect our research and development
expenses to generally increase in absolute dollars for the foreseeable future as we continue to invest in research and development efforts
to enhance our Dot Cloud. Our research and development expenses may fluctuate as a percentage of our revenue from period to period due
to the timing and extent of these expenses.

 Sales and marketing 

 Sales and marketing expenses consist primarily of employee-related
costs directly associated with our sales and marketing activities, including salaries, employee benefits and share-based compensation,
and sales commissions. Sales and marketing expenses also include expenditures related to advertising, media, marketing, promotional costs,
free trial expenses, brand awareness activities, business development, corporate partnerships, travel, conferences and events, professional
services, and allocated overhead costs. We also have a heavy reliance on contracted services in these areas which are reflected in the
department spend. We plan to continue to invest in sales and marketing to grow our customer base and increase our brand awareness. As
a result, we expect our sales and marketing expenses to increase in absolute dollars for the foreseeable future. Our sales and marketing
expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.

 General and administrative 

 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.

 32 

 Interest expense 

 Interest expense consists primarily of interest incurred for our short-term
loans.

 Change in fair value of SAFE agreements 

 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.

 Results of Operations 

 Revenue, Cost of Goods Sold, Gross
Profit, and Gross Margin 

 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:

 For the Three Months Ended
 June 30, 
 
 2026 
 
 2025 
 
 $ Change 
 
 % Change 
 
 Revenue 
 
 $ 
 12,398 
 
 $ 
 126,833 
 
 $ 
 (114,435 
 ) 
 
 (90.2 
 )% 

 Cost of goods sold 
 
 6,638 
 
 67,194 
 
 (60,556 
 ) 
 
 (90.1 
 )% 

 Gross profit 
 
 $ 
 5,760 
 
 $ 
 59,639 
 
 $ 
 (53,879 
 ) 
 
 (90.3 
 )% 

 Gross margin % 
 
 46.5 
 % 
 
 47.0 
 % 
 
 For the Six Months Ended 
 June 30, 
 
 2026 
 
 2025 
 
 $ Change 
 
 % Change 
 
 Revenue 
 
 $ 
 24,612 
 
 $ 
 479,331 
 
 $ 
 (454,719 
 ) 
 
 (94.9 
 )% 

 Cost of goods sold 
 
 9,304 
 
 84,272 
 
 (74,968 
 ) 
 
 (89.0 
 )% 

 Gross profit 
 
 $ 
 15,308 
 
 $ 
 395,059 
 
 $ 
 (379,751 
 ) 
 
 (96.1 
 )% 

 Gross margin % 
 
 62.2 
 % 
 
 82.4 
 % 
 
 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.

 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.

 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.

 33 

 Research and Development 

 Research and development expenses for the three and six months ended
June 30, 2026 and 2025 are summarized as follows:

 For the Three Months Ended
 June 30, 
 
 2026 
 
 2025 
 
 $ Change 
 
 % Change 
 
 Research and development 
 
 $ 
 394,769 
 
 $ 
 181,641 
 
 $ 
 213,128 
 
 117.3 
 % 

 Percentage of revenue 
 
 3,184.1 
 % 
 
 143.2 
 % 
 
 For the Six Months Ended 
 June 30, 
 
 2026 
 
 2025 
 
 $ Change 
 
 % Change 
 
 Research and development 
 
 $ 
 1,006,074 
 
 $ 
 575,505 
 
 $ 
 430,569 
 
 74.8 
 % 

 Percentage of revenue 
 
 4,087.7 
 % 
 
 120.1 
 % 
 
 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.

 Sales and Marketing 

 Sales and marketing expenses for the three and six months ended June
30, 2026 and 2025 are summarized as follows:

 For the Three Months Ended 
 June 30, 
 
 2026 
 
 2025 
 
 $ Change 
 
 % Change 
 
 Sales and marketing 
 
 $ 
 373,695 
 
 $ 
 770,247 
 
 $ 
 (396,552 
 ) 
 
 (51.5 
 )% 

 Percentage of revenue 
 
 3,014.2 
 % 
 
 607.3 
 % 
 
 For the Six Months Ended 
 June 30, 
 
 2026 
 
 2025 
 
 $ Change 
 
 % Change 
 
 Sales and marketing 
 
 $ 
 1,286,840 
 
 $ 
 1,452,996 
 
 (166,156 
 ) 
 
 (11.4 
 )% 

 Percentage of revenue 
 
 5,228.5 
 % 
 
 303.1 
 % 
 
 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.

 34 

 General and Administrative 

 General and administrative expenses for the three and six months ended
June 30, 2026 and 2025 are summarized as follows:

 For the Three Months Ended
 June 30, 
 
 2026 
 
 2025 
 
 $ Change 
 
 % Change 
 
 General and administrative 
 
 $ 
 2,099,979 
 
 $ 
 824,204 
 
 $ 
 1,275,775 
 
 154.8 
 % 

 Percentage of revenue 
 
 16,938.0 
 % 
 
 649.8 
 % 
 
 For the Six Months Ended 
 June 30, 
 
 2026 
 
 2025 
 
 $ Change 
 
 % Change 
 
 General and administrative 
 
 $ 
 4,516,691 
 
 $ 
 1,441,935 
 
 $ 
 3,074,756 
 
 213.2 
 % 

 Percentage of revenue 
 
 18,351.6 
 % 
 
 300.8 
 % 
 
 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.

 Liquidity and Capital Resources 

 Funding Requirements and Going
Concern 

 Liquidity is a measure of our ability to access sufficient cash flows
to meet the short-term and long-term cash requirements of our business operations. To date, we have funded our operations primarily with
proceeds from the issuance of shares of our Common Stock to PIPE investors contemporaneously with the close of the Business Combination,
proceeds from bridge loans and other short-term borrowings. Our future capital requirements will depend on many factors, including, but
not limited to, our growth, our ability to attract and retain customers, the continued market acceptance of our solution, the timing and
extent of spending necessary to support our efforts to develop our Dot Cloud and meet our performance obligations related to subscription
sales of the same, the expansion of sales and marketing activities, and the impact of macroeconomic conditions on us and our customers’
and partners’ businesses. Further, we may enter into arrangements to acquire or invest in businesses, products, services, and technologies.
We will need to raise additional capital in the future to finance our operations and expand our business.

 In connection with the Company’s assessment of going concern
considerations in accordance with the Financial Accounting Standards Board (“FASB”) ASC Topic 205-40, Presentation of Financial
Statements — Going Concern, management anticipates the Company will continue to incur substantial operating losses for the next
several years and will need to obtain additional near-term financing in order to continue its research and development activities. Our
ability to continue as a going concern is dependent on our ability to raise additional capital to fund research and development activities
and meet obligations on a timely basis; however, there can be no assurance that sufficient funding will be available to allow us to successfully
continue our research and development activities and commercialize our products.

 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 our business, results of operations, and
prospects. These conditions raise substantial doubt about our ability to continue as a going concern within one year from the date these
condensed consolidated financial statements are issued.

 35 

 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.

 Sources of Liquidity 

 To date, we have funded our operations primarily through proceeds
from the issuance of common shares to PIPE investors in connection with the closing of the Business Combination, totaling $10,837,643,
proceeds from bridge loans and other short-term borrowings. In the future, we expect to finance our cash needs through a combination of
equity, debt financings, and improvement of cash from operations derived from selling subscriptions to our platform.

 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”), which
provides the Company the right, but not the obligation, to direct New Circle from time to time to purchase up to $50 million of shares
of the Company’s Common Shares during the commitment period ending June 18, 2028, at a discount of the VWAP over a defined pricing
period. Under the SEPA, the Company may sell shares to New Circle at a price based on either: option 1 – 97% of the lowest daily
VWAP over the three trading days following the purchase notice, or option 2 – the greater of 85% of the VWAP or the lowest sale
price on a specific trading day determined by the timing of the notice.

 Any purchase would be subject to certain limitations, including that
New Circle shall not purchase any shares that would result in it and its affiliates beneficially owning more than 4.99% of the then outstanding
voting power or number of shares of Common Stock or any shares that would exceed 19.99% of all shares of Common Stock of the Company outstanding
on the date of the SEPA, unless Company shareholder approval was obtained allowing for issuances in excess of such amount (the “Exchange
Cap”). The Exchange Cap will not apply under certain circumstances, including where the average purchase price of all applicable
sales of Common Shares equals or exceeds the lower of (i) the Nasdaq Official Closing Price immediately preceding the Effective Date;
or (ii) the average Nasdaq Official Closing Price for the five Trading Days immediately preceding the Effective Date.

 The Company had the option to satisfy the $350,000 commitment fee
under the SEPA through the issuance of a variable number of shares of Common Stock or by payment in cash. On September 24, 2025, the Company
paid the commitment fee through the issuance of 106,383 shares of Common Stock, valued at $3.29 per share, which was determined based
on the closing price of the Common Stock on September 18, 2025, the date the Form S-1 was declared effective by the SEC. The commitment
fee of $350,000 was expensed in September 2025.

 Before the Company elects to sell shares by issuing a purchase notice,
the SEPA represents a purchased put option on the Company’s equity. Once the Company delivers a purchase notice under the SEPA,
the related number of shares to be issued constitutes a forward contract to issue shares of Common Stock. As the feature is embedded in
an equity host, meets the definition of a derivative, and does not qualify for the equity scope exception under ASC 815, Derivatives
and Hedging , it must be bifurcated and accounted for separately as a derivative asset or liability, depending on changes in the underlying
stock price relative to the pegged discounted VWAP. The derivative is measured at fair value, with changes in fair value recognized in
net income. The fair value of the purchased put option was determined to be de minimis as of June 30, 2026, and therefore was not recorded
on the Company’s balance sheet as of that date. 

 36 

 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 December 5, 2025, the Company entered into a loan agreement with
J.J. Astor & Co. (“J.J. Astor”) for up to $5,000,000 in senior secured convertible loans, consisting of an initial $2,000,000
tranche and up to three additional $1,000,000 tranches. The initial tranche was issued as a $2,000,000 convertible note, of which $1,810,000
was funded, net of fees. The note matures on November 30, 2026 and is repayable in twelve monthly installments, consisting of an initial
payment of $108,334 followed by eleven monthly payments of approximately $226,515, totaling $2,600,000. Each additional tranche, if funded
at the lender’s discretion and subject to specified conditions (including equity line of credit (“ELOC”) availability,
Nasdaq listing, minimum stock price, and trading volume requirements), will be issued as a $1,000,000 convertible note with $960,000 funded
net of fees and accompanied by a warrant. The Company is required to use proceeds from its ELOC to make monthly payments, with 80% of
ELOC proceeds remitted directly to the lender. Certain extraordinary receipts must also be applied toward repayment.

 In connection with the initial funding, the Company issued a warrant
to purchase 230,770 shares at $1.69 per share, equivalent to approximately 9,231 shares at an exercise price of $42.25 per share after
giving effect to the Company’s 1-for-25 reverse stock split. Additional tranches, if funded, would include similar convertible notes
and warrants. The agreement also requires the use of ELOC proceeds for repayment, with 80% of such proceeds remitted directly to the lender,
and certain extraordinary receipts applied to outstanding balances. See “Derivative Liabilities” below for further discussion
of the accounting for the warrant and embedded features.

 For the three and six months ended June 30, 2026, the Company paid
$794,078 and $1,568,894, respectively, to J.J. Astor. Including the initial repayment of $108,334 in December 2025, the Company had repaid
$1,677,228 as of June 30, 2026, leaving an outstanding balance of $922,772. On June 23, 2026, J.J. Astor & Co. entered into a Note
Purchase and Assignment Agreement with LHT I, LLC, pursuant to which LHT I, LLC acquired J.J. Astor’s remaining rights and interests
under the loan agreement and assumed the related lender obligations under the existing terms. In connection with the assignment, LHT I,
LLC paid $924,616 directly to J.J. Astor. Accordingly, the Company recorded the remaining obligation as a short-term loan payable to LHT
I, LLC as of June 30, 2026.

 On April 17, 2026, the Company entered into a Common Stock Purchase
Agreement with White Lion, pursuant to which the Company has the right, but not the obligation, to sell to White Lion from time to time
up to an aggregate of $10.0 million of the Company’s common stock during the commitment period, subject to the terms, conditions,
and limitations set forth in the agreement. The Company may initiate purchases by delivering either a Rapid Purchase Notice or a VWAP
Purchase Notice to White Lion. For each purchase, the Company is required to deliver the applicable shares to White Lion’s designated
brokerage account through the Depository Trust Company’s DWAC system. The purchase price and investment amount are determined in
accordance with the pricing provisions applicable to the selected purchase mechanism, including, for VWAP purchases, the volume-weighted
average market price of the Company’s common stock during the applicable valuation period. Each purchase is subject to customary
closing conditions, applicable beneficial ownership limitations, and certain restricted periods during which purchase notices may not
be delivered. Generally, White Lion is required to remit the applicable purchase amount to the Company no later than one business day
following the applicable purchase notice date or, in the case of a VWAP purchase, the applicable VWAP valuation period. The Company may
not deliver a subsequent purchase notice until the prior purchase has closed, unless White Lion waives such restriction in writing.

 37 

 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.

 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.

 As of June 30, 2026, Edmund Nabrotzky, Chief Executive Officer of
the Company, Charles Maddox, Chief Financial Officer and Chief Operating Officer of the Company, and Vijayan Nambiar, Chief Technology
Officer of the Company loaned the Company an aggregate of $349,996 and may make additional loans to the Company up to an aggregate amount
of $600,000 (collectively, the “Executive Loans”). The Executive Loans have been made, on the terms and conditions of an unsecured,
subordinated promissory note (the “Executive Notes”). The Executive Notes accrue interest at a rate of 7.5% per annum, and
will be paid in quarterly installments on July 1, 2026, October 1, 2026 with a final payment by December 31, 2026. All of the Company’s
obligations and payments under the Executive Notes are subordinated to the Company’s obligations under the loan agreement with J.J.
Astor & Co.

 For additional information regarding events subsequent to June 30,
2026, refer to Subsequent event (Note 21) in the condensed consolidated financial statements.

 Cash Flows 

 Comparison of six months ended
June 30, 2026 and 2025 

 The following table shows a summary of the cash flow for the periods
presented:

 For the Six Months Ended
 June 30, 
 
 2026 
 
 2025 
 
 Net cash (used in) operating activities 
 
 $ 
 (1,706,742 
 ) 
 
 $ 
 (6,392,742 
 ) 

 Net cash (used in) investing activities 
 
 (39,296 
 ) 
 
 (743,798 
 ) 

 Net cash provided by financing activities 
 
 $ 
 1,336,483 
 
 $ 
 12,908,154 
 
 Operating Activities 

 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.

 38 

 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.

 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.

 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.

 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.

 Investing Activities 

 Net cash used in investing activities was $39,296 for the six months
ended June 30, 2026, compared to $743,798 for the six months ended June 30, 2025, representing a decrease of $704,502, or 94.7%.

 For the six months ended June 30, 2026, net cash used in investing
activities consisted entirely of $39,296 of capitalized software development costs related to qualifying development activities, including
costs associated with version 4 of the Company’s internally developed software.

 For the six months ended June 30, 2025, net cash used in investing
activities consisted of $636,598 of capitalized software development costs and $107,200 of purchases of property and equipment. The decrease
in cash used in investing activities was primarily attributable to lower capitalized software development costs and the absence of property
and equipment purchases during the six months ended June 30, 2026.

 Financing Activities 

 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.

 39 

 For the six months ended June 30, 2026, net cash provided by financing
activities was primarily attributable to $1.2 million of proceeds from short-term loans, $0.6 million of proceeds from the issuance of
common stock, $0.3 million of proceeds from short-term loans from related parties, and $0.2 million of proceeds from warrant exercises,
partially offset by $1.0 million of repayments of short-term loans.

 For the six months ended June 30, 2025, net cash provided by financing
activities was primarily attributable to $10.8 million of proceeds from PIPE investments, $5.6 million of proceeds from trust accounts,
and $2.85 million of proceeds from short-term loans. These cash inflows were partially offset by $5.0 million used to purchase common
stock and $1.4 million used to repay bridge loans.

 The decrease in net cash provided by financing activities for the
six months ended June 30, 2026 compared to the corresponding period in 2025 was primarily attributable to the absence of PIPE investment
and trust account proceeds received in 2025, partially offset by proceeds from short-term borrowings, common stock issuances, and warrant
exercises in 2026.

 Contractual Obligations and Commitments 

 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.

 Critical Accounting Policies and
Estimates 

 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.

 There have been no material changes to our critical accounting policies
and estimates from those disclosed in our Annual Report on Form 10-K filed with the SEC on March 11, 2026. Refer to the section titled
“Critical Accounting Policies and Estimates” included in that filing for a discussion of our significant judgments and estimates.

 Recently Issued and Adopted Accounting
Pronouncements 

 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.

 Emerging Growth Company Status 

 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.

 Item
3. Quantitative and Qualitative Disclosures About Market Risk 

 Not Applicable.

 40 

 Item
4. Controls and Procedures 

 Evaluation of Disclosure Controls
and Procedures 

 Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal
executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.

 Under the supervision and with the participation of our current management,
including our CEO and CFO, we evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, 2026. Based on this evaluation
of our disclosure controls and procedures, our CEO and CFO have concluded that our disclosure controls and procedures were not effective
as of June 30, 2026 because of certain material weaknesses in our internal control over financial reporting, as further described below.

 Notwithstanding the conclusion by our CEO and CFO that our disclosure
controls and procedures as of June 30, 2026 were not effective, and notwithstanding the material weaknesses in our internal control over
financial reporting described below, management believes that the condensed consolidated financial statements and related financial information
included in this Quarterly Report on Form 10-Q fairly present in all material respects our financial condition, results of operations,
and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with accounting principles generally
accepted in the United States of America (“U.S. GAAP”).

 Material Weaknesses 

 Accounting Personnel and Financial
Reporting Controls. Management determined that the Company does not currently maintain sufficient accounting personnel and has
not fully designed and implemented the processes and internal controls necessary to support accurate and timely financial reporting. These
deficiencies (i) limit the Company’s ability to effectively review and approve certain material journal entries and properly adopt
new accounting pronouncements, increasing the risk that a material misstatement of interim or annual financial statements may not be prevented
or detected on a timely basis, and (ii) have resulted in an insufficient segregation of duties between the preparation, review, and approval
of certain material reconciliations and other financial reporting controls.

 For the year ended December 31, 2025, management identified that the
Company did not initially accrue all Board of Director compensation earned during the year ended December 31, 2025. During the year-end
audit process, management recorded the appropriate accrual and related Board of Director compensation expense for the year ended December
31, 2025.

 41 

 In addition, management identified presentation revisions in the statements
of cash flows for the six months ended June 30, 2025 and the nine months ended September 30, 2025. Certain items were reclassified between
operating and financing activities, including amounts related to short-term debt and proceeds from bridge financing arrangements, and
certain components associated with the reverse recapitalization transaction were adjusted for proper presentation. These revisions affected
the classification of cash flows between operating and financing activities but had no impact on total change in cash, net loss, or previously
reported balance sheet amounts.

 Management evaluated the quantitative and qualitative factors associated
with these matters and concluded that the corrections were not material to any previously issued annual or interim financial statements.
Accordingly, the Company has reflected these changes in the affected prior-period financial statements in this Quarterly Report to reflect
these reclassifications as immaterial reclassifications to previously issued financial statements.

 Fair Value Calculation Controls. 
In addition, management identified a material weakness in the design of internal controls related to the review of the fair value
calculation of SAFE notes performed by a third-party valuation specialist. The controls lacked the precision needed to detect inappropriate
inputs that could materially impact valuation.

 The Company is actively working to develop and implement remediation
plans related to the material weakness identified in this section. Remediation efforts include enhancing the design and implementation
of controls over the accounting for financial instruments and hiring additional qualified accounting personnel.

 Internal Control over Financial
Reporting 

 There were no other changes in our internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 42 

 PART
II - OTHER INFORMATION 

 Item
1. Legal Proceedings. 

 Please refer to “Note 17 – Commitments and Contingencies
in “ for the year ended December 31, 2025, “Part II, Item 8. Financial Statements and Supplementary Data” in our Annual
Report on Form 10-K for the year ended December 31, 2025, and “Part. II, Item 1. Legal Proceedings” and “Note 17 —
Commitments and Contingencies” in “Part I, Item 1. Financial Statements” in our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2026, and “Note 17 — Commitments and Contingencies” and “Note 21 –Subsequent Events”
in “Part I, Item 1. Financial Statements” in this Quarterly Report on Form 10-Q for information regarding material pending
legal proceedings. Except as set forth therein, there have been no new material legal proceedings and no material developments in any
of our previously disclosed legal proceedings.

 Item
1A. Risk Factors. 

 As of the date of this Quarterly Report, there have been no material
changes to the risk factors previously disclosed in our Form 10-K filed on March 11, 2026, other than as provided below. Any of these
factors could have a material adverse effect on our results of operations or financial condition. Additional risks not currently known
to us or that we presently consider immaterial may also adversely affect our business or results of operations.

 The issuance of shares of our
Common Stock and Series C Convertible Nonredeemable Preferred Stock to Blade Ranger and Blink under the Term Sheet and the issuance of
shares of Common Stock upon conversion of the H Capital Note will dilute the ownership interest of our existing stockholders. 

 We have entered into the binding Term Sheet to acquire 100% of Envoy’s
outstanding common stock in consideration for which the Company will issue shares equal to an aggregate of 10,833,333 shares of Common
Stock consisting of 233,543 shares Common Stock to BladeRanger and shares of newly authorized Series C Convertible Preferred Stock, of
which 2,166,667 shares will be issued to Blink Charging Co. and 8,433,123 shares will be issued to BladeRanger. The Series C Preferred
has a $6.00 stated value per share and generally will convert one-for-one basis into Common Stock automatically upon stockholder approval,
subject to a 19.99% conversion limitation. In connection with the Term Sheet, we issued the H Capital Note that is convertible into shares
of our Common Stock subject to a 19.99% conversion limitation and other beneficial ownership limitations. Accordingly, the transaction
to acquire Envoy and the conversion of the H Capital Note will result in dilution to the holders of our Common Stock, and such dilution
could cause the trading price of our Common Stock to decline.

 The conversion of the Series C
Preferred and the H Capital Note issued in connection with the Envoy transaction are contingent upon us obtaining stockholder approval
pursuant to Nasdaq Rule 5635 (“Stockholder Approval”). If we do not obtain the Stockholder Approval, these securities may
never become issuable and/or exercisable. 

 Until receipt
of Stockholder Approval under Nasdaq Rule 5635, the Series C Preferred and H Capital Note will be convertible into no more than an aggregate
of 19.99% of our outstanding Common Stock as of the date of issuance (if at all). Accordingly, the Company has agreed to duly call, give
notice of, convene, and hold a stockholder meeting (the “Stockholder Meeting”) as soon as reasonably practicable, for the
purposes of obtaining Stockholder Approval. If Stockholder Approval is not obtained at the first Stockholder Meeting, the Company is obligated
to cause an additional Stockholder Meeting to be no less frequently than once every three months, until Stockholder Approval is obtained.

 There
are no assurances that our Common Stock will remain listed on Nasdaq, which could have a material adverse effect on the liquidity of our
Common Stock. 

 The
Company’s Common Stock is listed on the Nasdaq Global Market. On February 5, 2026, the Company received a deficiency notice from
Nasdaq indicating that its Common Stock did not meet the minimum bid price and minimum market value of listed securities continued listing
requirements. The Company received an additional deficiency notice from Nasdaq on February 10, 2026 indicating that its Common Stock did
not meet the minimum publicly held share value requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(A) and 5810(c)(3)(C), the
Company had 180 calendar days, or until August 4, 2026, to regain compliance with each requirement. Additionally, in accordance with Nasdaq
Listing Rule 5810(c)(3)(D) the Company had 180 calendar days, or until August 10, 2026 to regain compliance with the minimum publicly
held share value requirement. On August 27, 2026, the Company received a written notification from Nasdaq identifying an additional basis
for the potential delisting of the Company’s Common Stock, from Nasdaq because the Company had not yet filed its Annual Report on
Form 10-Q for the period ended June 30, 2026. Accordingly, Nasdaq determined that such matter served as an additional basis for delisting
the Company’s securities from Nasdaq. 

 43 

 On
June 23, 2026, the Company received formal written notice from Nasdaq indicating that the Company had regained compliance with the minimum
bid price requirement for continued listing on the Nasdaq Global Market, because the closing bid price of the Common Stock had been $1.00
per share or greater for the last 12 consecutive business days from June 8, 2026 to June 22, 2026. The Company, however, did not regain
compliance with the minimum market value of listed securities by the August 4, 2026 deadline or the minimum publicly held share value
requirement by the August 10, 2026 deadline. Nasdaq, therefore, determined that these matters served as bases for delisting the Company’s
securities. 

 The
Company timely requested a hearing before the Nasdaq Hearings Panel (the “Hearings Panel”) with respect to the determination
relating to the minimum market value of listed securities and paid the applicable $20,000 hearing fee (the “Hearing”). The
Hearing request stayed the suspension of the Company’s securities and the filing of a Form 25-NSE with the Securities and Exchange
Commission pending the issuance of a written decision by the Hearings Panel. The Hearings Panel will consider deficiency relating to the
minimum publicly held share value requirement in its decision regarding the Company’s continued listing on Nasdaq at the Hearing.
Additionally, the Company had the right to appeal the delisting determination based on its delinquent filing by requesting a hearing before
the Hearings Panel. Under Nasdaq Listing Rule 5815(a)(1)(B), a hearing request regarding a delinquent filing stays the suspension of the
Company’s securities for a period of 15 days from the date of the request, unless the Company specifically requests, and the Hearings
Panel grants, a further stay. The Company timely requested an extended stay of the suspension and to present its views with respect to
the delinquent filing deficiency, including its plan to complete the delinquent filing, to the Hearings Panel at the Hearing. 

 On
September 15, 2026, the Company appeared before a Nasdaq Hearings Panel (the “Hearings Panel”) and presented a compliance
plan (the “Compliance Plan”) addressing the previously disclosed deficiencies in Nasdaq’s continued listing requirements
for failure to satisfy the minimum market value of listed securities requirement of $50 million pursuant to Nasdaq Listing Rule 5450(b)(2)(A),
the minimum market value of publicly held shares of $15 million required under Nasdaq Listing Rule 5450(b)(2)(C), and the Company’s
failure to file its Quarterly Report on Form 10-Q for the period ended June 30, 2026. 

 There
can be no assurance that the Hearings Panel will decide in the Company’s favor with respect to the Nasdaq Staff determinations,
the Compliance Plan or any other matter. The Hearings Panel’s decision will determine the future of trading of the Common Stock
on Nasdaq. The Common Stock remains listed on Nasdaq pending the outcome of the Hearing. 

 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds. 

 None.

 Item
3. Defaults Upon Senior Securities. 

 None.

 Item
4. Mine Safety Disclosures. 

 Not applicable.

 Item
5. Other Information. 

 Insider Trading Arrangements 

 During the three and six months ended June 30,
2026, no director or officer, as defined in Rule 16a-1(f), adopted 
or terminated 
a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of
Regulation S-K. 

 44 

 Item
6. Exhibits 

 The following exhibits are filed as part of, or incorporated by reference
into, this Quarterly Report on Form 10-Q.

 Incorporation 

 No. 
 
 Description of
 Exhibit 
 
 By Reference 
 
 2.1+ 
 
 Business
 Combination Agreement by and among ShoulderUp Technology Acquisition Corp., CID Holdco, Inc., ShoulderUp Merger Sub, Inc., SEI Merger
 Sub, Inc., and SEE ID, Inc., dated as of March 18, 2024 (incorporated by reference to Exhibit 2.1 of the CID Holdco, Inc.’s Registration
 Statement on Form S-4, filed with the SEC on January 15, 2025). 
 
 Incorporated by reference 

 3.1 
 
 Amended
 and Restated Certificate of Incorporation of CID Holdco, Inc. (incorporated by reference to Exhibit 3.1 of CID Holdco, Inc.’s Current
 Report on Form 8-K, filed with the SEC on June 26, 2025.) 
 
 Incorporated by reference 

 3.2 
 
 Certificate
 of Amendment of the Fifth Amended and Restated Certificate of Incorporation of the Company, filed on May 27, 2026 (incorporated by reference
 to Exhibit 3.1 of CID Holdco, Inc.’s Current Report on Form 8-K, filed with the SEC on May 28, 2026.) 
 
 3.2 
 
 Bylaws
 of CID Holdco, Inc. (incorporated by reference to Exhibit 3.2 of CID Holdco, Inc.’s Current Report on Form 8-K, filed with the SEC
 on June 26, 2025.) 
 
 Incorporated by reference 

 4.1 
 
 Description
 of Securities (incorporated by reference to Exhibit 4.1 of CID Holdco’s Inc.’s Annual Report on Form 10-K for the year ended
 December 31, 2025 filed with the SEC on March 11, 2026) 
 
 Incorporated by reference 

 4.2 
 
 Specimen
 Common Stock Certificate (incorporated by reference to Exhibit 4.5 of CID Holdco, Inc.’s Registration Statement on Form S-4, filed
 with the SEC on January 15, 2025). 
 
 Incorporated by reference 

 4.3 
 
 Specimen
 Warrant Certificate (incorporated by reference to Exhibit 4.6 of CID Holdco, Inc.’s Registration Statement on Form S-4, filed with
 the SEC on January 15, 2025). 
 
 Incorporated by reference 

 4.4 
 
 Existing
 Warrant Agreement, dated November 16, 2021, by and between ShoulderUp Technology Acquisition Corp and Continental Stock Transfer &
 Trust Company, as warrant agent (incorporated by reference to Exhibit 4.4 of CID Holdco, Inc.’s Registration Statement on Form S-4,
 filed with the SEC on January 15, 2025). 
 
 Incorporated by reference 

 4.5 
 
 Warrant
 Assumption and Assignment Agreement, dated as of June 18, 2025. (incorporated by reference to Exhibit 4.4 of CID Holdco, Inc.’s
 Current Report on Form 8-K, filed with the SEC on June 26, 2025). 
 
 Incorporated by reference 

 10.1 
 
 Form
 of PIPE Subscription Agreement (incorporated by reference to Exhibit 10.8 of CID Holdco, Inc.’s Current Report on Form 8-K, filed
 with the SEC on June 26, 2025). 
 
 Incorporated by reference 

 10.2* 
 
 Registration
 Rights and Lock-up Agreement by and among CID Holdco, Inc., and certain parties listed therein, dated as of June 18, 2025 (incorporated
 by reference to Exhibit 10.10 of CID Holdco, Inc.’s Current Report on Form 8-K, filed with the SEC on June 26, 2025). 
 
 Incorporated by reference 

 10.3* 
 
 Amendment to the CID HoldCo Inc. 2024 Equity Incentive
 Plan 
 
 Filed herewith 

 10.4* 
 
 Note Purchase Agreement, dated as of June 23, 2026 between
 CID HoldCo, Inc., and SEE ID, Inc., and DOT Works, Inc. and Phillips Equities & Trust, LLC. 
 
 Filed herewith 

 10.5* 
 
 Junior Secured Convertible Promissory Note, dated June
 26, 2026 issued to Phillips Equities & Trust, LLC 
 
 Filed herewith 

 10.6* 
 
 Registration Rights Agreement dated June 26, 2026 between
 CID HoldCo, Inc. and Phillips Equities & Trust, LLC 
 
 Filed herewith 

 10.7 
 
 Binding
 Summary of Principal Terms, dated September 14, 2026, by and among CID HoldCo, Inc., BladeRanger Ltd. and Envoy Technologies, Inc. (incorporated
 by reference to Exhibit 10.1 of CID Holdco, Inc.’s Current Report on Form 8-K, filed with the SEC on September 16, 2026). 
 
 Incorporated by reference 

 10.8 
 
 Convertible
 Promissory Note, dated September 10, 2026, issued by CID HoldCo, Inc. to H Capital Ventures Management Consultancies Co. LLC. (incorporated
 by reference to Exhibit 10.2 of CID Holdco, Inc.’s Current Report on Form 8-K, filed with the SEC on September 16, 2026) 
 
 Incorporated by reference 

 10.9+ 
 
 Settlement
 Agreement, dated September 15, 2026, by and among LHT I, LLC, CID HoldCo, Inc., See ID, Inc., ShoulderUp Technology Acquisition Corp.
 and Dot Works, Inc. (incorporated by reference to Exhibit 10.3 of CID Holdco, Inc.’s Current Report on Form 8-K, filed with the
 SEC on September 16, 2026) 
 
 Incorporated by reference 

 31.1* 
 
 Certification of Principal Executive Officer Pursuant to
 Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 
 
 Filed herewith. 

 31.2* 
 
 Certification of Principal Financial Officer Pursuant to
 Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 
 
 Filed herewith. 

 32.1* 
 
 Certification of Principal Executive Officer Pursuant to
 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 
 
 Furnished. 
 
 45 

 32.2* 
 
 Certification of Principal Financial Officer
 Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 
 
 Furnished. 

 97.1 
 
 Clawback Policy (incorporated by reference to Exhibit 97.1 of CID Holdco’s Inc.’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 11, 2026) 
 
 Incorporated by reference
 
 101.INS 
 
 Inline XBRL Instance Document 

 101.SCH 
 
 Inline XBRL Taxonomy Extension Schema Document 

 101.CAL 
 
 Inline XBRL Taxonomy Extension Calculation Linkbase Document. 

 101.DEF 
 
 Inline XBRL Taxonomy Extension Definition Linkbase Document 

 101.LAB 
 
 Inline XBRL Taxonomy Extension Label Linkbase Document 

 101.PRE 
 
 Inline XBRL Taxonomy Extension Presentation Linkbase Document 

 104 
 
 Cover Page Interactive Data File (embedded within the Inline XBRL document) 
 
 * 
 Filed herewith. 
 
 + 
 Schedules omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally
 to the SEC a copy of any omitted schedule or exhibit upon the request of the SEC in accordance with Item 601(b)(2) of Regulation S-K. 
 
 46 

 SIGNATURES 

 In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 CID HOLDCO, INC. 
 
 Date: September 25, 2026 
 
 /s/ Edmund Nabrotzky 
 
 Name: 
 Edmund Nabrotzky 
 
 Title: 
 Chief Executive Officer 
 
 (Principal Executive Officer) 
 
 /s/ Charles Maddox 
 
 Name: 
 Charles Maddox 
 
 Title: 
 Chief Financial Officer 
 
 (Principal Financial and Accounting Officer) 
 
 47
CID Holdco, Inc. 10-Q
