What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-15 · 124 added, 52 removed, 197 unchanged (47% of the section changed)

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

References to the “Company,” “our,” “us” or “we” refer to Classover Holdings, Inc.

References to the “Company,” “our,” “us” or “we” refer to KIDZ AI Inc .

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited financial statements and the notes related thereto.

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Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors .

CLASSOVER’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are an online enrichment class platform that offers over 20 courses taught by experienced, independent educators.

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Unlike traditional classes, we give students the unique opportunity to explore their interest in-depth via interactive, live streaming courses with flexible time slots.

Our total revenue decreased by $296,818, or 36%, from $816,016 for the three months ended March 31, 2025, to $519,198 for the three months ended March 31, 2026.

Our gross profit decreased by $144,468, from $405,366 for the three months ended March 31, 2025, to $260,898 for the three months ended March 31, 2026.

Our gross profit margin remained unchanged at 50% for the three months ended March 31, 2026 as compared to same period in 2025.

Our total revenue decreased by $243,817, or 34%, from $725,648 for the three months ended June 30, 2025, to $481,831 for the three months ended June 30, 2026.

Our gross profit decreased by $110,996, from $322,718 for the three months ended June 30, 2025, to $211,722 for the three months ended June 30, 2026.

Our gross profit margin remained unchanged at 44% for the three months ended June 30, 2026 as compared to same period in 2025.

Our total revenue decreased by $540,635, or 35% from $1,541,664 for the six months ended June 30, 2025, to $1,001,029 for the six months ended June 30, 2026.

Our gross profit decreased by $255,464, from $728,084 for the six months ended June 30, 2025, to $472,620 for the six months ended June 30, 2026.

And our gross profit margin remained unchanged at 47% for the six months ended June 30, 2026 as compared to same period in 2025.

Business Model

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Our business model is dependent upon our ability to grow and maintain a large user base, and it also requires that we grow and keep registered users and paid subscribers.

As of March 31, 2026 and 2025, we have 73,881 and 65,614 registered users, respectively.

As of June 30, 2026 and 2025, we have 74,997 and 68,374 registered users, respectively.

"Registered users" are individuals who have signed up and created an account on our platform.

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To be the platform of choice for educator partners, we continue to invest in increasing the size and engagement of our user base, improving recommendation and personalization features, and developing marketing capabilities that drive higher conversions.

As of March 31, 2026 and 2025, we have 1,229 and 977 educator partners working with us, respectively.

As of June 30, 2026 and 2025, we have 1,266 and 1,051 educator partners working with us, respectively.

Operating Efficiency

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We have three predominant sources of revenue:

(i) time-based subscriptions, (ii) credit-based subscriptions to our online courses, and (iii) marketing consulting services.

(i) time-based subscriptions, (ii) credit-based subscriptions to our online courses.

Customers are required to pay in advance to enroll for courses.

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Results of Operations

For the three months ended June 30, 2026 and 2025

The following table summarizes our results of operations for the years presented.

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Change in fair value of convertible debt

Financing cost

Staking rewards

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Total revenues

Our total revenue decreased by $296,818, or 36% from $816,016 for the three months ended March 31, 2025, to $519,198 for the three months ended March 31, 2026.

Our total revenue decreased by $243,817, or 34% from $725,648 for the three months ended June 30, 2025, to $481,831 for the three months ended June 30, 2026.

The decrease was primarily attributable to reduced customer traffic and lower user engagement on the Company’s platform during the quarter, which resulted in decreased demand for both credit-based course purchases and pass subscription products.

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Streaming Services

Cost of revenues decreased by $152,350, or 37%, from $410,650 for the three months ended March 31, 2025, to $258,300 for the three months ended March 31, 2026.

Cost of revenues decreased by $132,821, or 33%, from $402,930 for the three months ended June 30, 2025, to $270,109 for the three months ended June 30, 2026.

The decrease in cost of revenues was primarily attributable to lower customer activity and reduced sales volume during the quarter and was generally consistent with the decrease in revenues.

Compensation expenses for independent educators and employees directly involved in providing services decreased by $131,088, or 35%, from $371,390 for the three months ended March 31, 2025, to $240,302 for the three months ended March 31, 2026.

Compensation expenses for independent educators and employees directly involved in providing services decreased by $124,559, or 33%, from $371,866 for the three months ended June 30, 2025, to $247,307 for the three months ended June 30, 2026.

Gross profit margin

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Service revenues

The total gross profit margin increased remains at 50% for the three months ended March 31, 2026 and 2025.

The total gross profit margin remains at 44% for the three months ended June 30, 2026 and 2025.

Operating expenses

During the three months ended March 31, 2026, we incurred total operating expenses of $1,155,713, an increase of $454,440, or 65%, as compared to total operating expenses of $701,273 during the three months ended March 31, 2025.

General and administrative expenses increased significantly by $522,617, or 91%, from $573,539 for the three months ended March 31, 2025, to $1,096,156 for the three months ended March 31, 2026.

June 30, 2026, we incurred total operating expenses of $1,360,028, a decrease of $661,723, or 33%, as compared to total operating expenses of $2,021,751 during the three months ended June 30, 2025., 2025.

General and administrative expenses decreased significantly by $621,228, or 33%, from $1,889,175 for the three months ended June 30, 2025, to $1,267,947 for the three months ended June 30, 2026.

Our general and administrative expenses include compensation related to the administrative personnel, amortization and depreciation expenses, rent, and other general expenses.

The increase in general and administrative expenses in the three months ended March 31, 2026 as compared to same period last year was primarily attributable to an increase of $188,960 stock compensation to management, an increase of $146,441 on employee compensation, an increase of $103,510 on amortization expenses in relation to our IP assets, and an increase of $81,976 professional expenses in relation to our merger.

Specifically,

Our other general expenses increased by $81,976 from $171,328 for the three months ended March 31, 2025, to $253,305 for the three months ended March 31, 2026.

The increase was primarily attributable to higher regulatory registration expenses and professional accounting fees as we completed a merger with Battery Future Acquisition Corp.

The decrease in general and administrative expenses in the three months ended June 30, 2026 as compared to same period last year was primarily attributable to a decrease of $692,462 professional expense and $84,084 on compensation, as well as the decrease was offset an increase of $103,564 on amortization expenses in relation to our IP assets.

The decrease of professional expense was primarily attributable to lower regulatory registration expenses and professional accounting fees after we completed a merger with Battery Future Acquisition Corp.

(“BFAC”) and became a public listed company.

Employee compensation expenses increased by $146,441 from $294,900 for the three months ended March 31, 2025, to $441,341 for the three months ended March 31, 2026.

The increase is primarily driven by additional hiring during 2026 to support our growth.

In addition, there was an upward adjustment to executive compensation, further contributing to the overall compensation growth.

In addition, employee stock compensation was $188,960 for the three months ended March 31, 2026.

There was no employee stock compensation for the three months ended March 31, 2025.

Amortization and depreciation expenses increased by $104,474 from $16,221 for the three months ended March 31, 2025, to $120,695 for the three months ended March 31, 2026.

The increase was primarily attributable to the amortization of the intangible assets.

Employee compensation expenses decreased by $84,084 from $468,655 for the three months ended June 30, 2025, to $384,571 for the three months ended June 30, 2026.

The decrease was primarily attributable to a reduction in headcount and salary levels across the Company's operations, as well as lower outsourced staffing costs.

These reductions were partially offset by higher US-based employee payroll expenses, reflecting the Company's expanded corporate and compliance infrastructure following its 2025 listing.

Other expense

Other expense for the three months ended March 31, 2026, was $3,292,719 as compared to $1,300 for the three months ended March 31, 2025.

The spike on other expense was primarily attributable to a decrease of $2,444,670 in fair value of crypto assets and an increase of $860,631 in fair value of convertible debt.

Other expense for the three months ended June 30, 2026, was $1,347,768 as compared to $2,128,776 for the three months ended June 30, 2025.

The decrease on other expense was primarily attributable to an increase of $1,607,699 in fair value of warrants and decrease of $473,500 on financing cost, in addition, the decrease was partially offset by a decrease of $1,127,371 and $203,841 in fair value of crypto assets and convertible debt respectively.

Provision for income taxes

We had no income tax provision for the three months ended March 31, 2026 and 2025 as we made fully allowance on the deferred tax assets as we have determined that it is not more likely than not that the assets will be realized.

As a result of the combination of factors discussed above, our net loss increased to$4,187,534 for the three months ended March 31, 2026 from net loss of $297,207 for the three months ended March 31, 2025.

We had no income tax provision for the three months ended June 30, 2026 as we made fully allowance on the deferred tax assets as we have determined that it is not more likely than not that the assets will be realized.

Provision for income taxes for the three months ended June 30, 2025 was $38,360.

As a result of the combination of factors discussed above, our net loss decreased to $2,496,074 for the three months ended June 30, 2026 from net loss of $3,866,169 for the three months ended June 30, 2025.

For the six months ended June 30, 2026 and 2025

The following table summarizes our results of operations for the years presented.

The results below are not necessarily indicative of results to be expected for future periods.

For the Six Months Ended

Service revenues

Total revenues

Cost of revenues:

Cost of revenues

Total cost of revenues

Operating expenses:

Selling and marketing

General and administrative

Research and development

Total operating expenses

(Loss) from operations

Other income (expense)

Change in fair value of warrants

Change in fair value of crypto assets

Change in fair value of convertible debt

Financing cost

Staking rewards

Interest and other expense

Total other income (expense)

(Loss) before provision for income taxes

Provision for income taxes

$ (6,683,608 )

$ (4,163,376 )

$ (2,520,232 )

The summary information by revenue stream are as follows:

For the Six Months Ended

Service revenues

Total revenues

Our total revenue decreased by $540,635, or 35% from $1,541,664 for the six months ended June 30, 2025, to $1,001,029 for the six months ended June 30, 2026.

During this period, management devoted greater operational focus and resources to public company compliance, treasury management, and strategic initiatives, including AI-related projects and the Company's broader AI-driven strategic transformation.

Management believes these efforts may support the Company's long-term growth and the continued development of its AI-powered education initiatives.

Cost of revenue

For the Six Months Ended

Payment Processing Fee

Streaming Services

Cost of revenues decreased by $285,171, or 35%, from $813,580 for the six months ended June 30, 2025, to $528,4 09 for the six months ended June 30, 2026.

The decrease in cost of revenues was primarily attributable to lower customer activity and reduced sales volume during the six months and was generally consistent with the decrease in revenues.

Compensation expenses for independent educators and employees directly involved in providing services decreased by $255,646, or 34%, from $743,256 for the six months ended June 30, 2025, to $487,610 for the six months ended June 30, 2026.

Gross profit margin

Our gross profit and gross profit margin from the two revenue streams are summarized as follows:

For the Six Months Ended

Service revenues

The total gross profit margin remains at 47% for the six months ended June 30, 2026 and 2025.

Operating expenses

During the six months ended June 30, 2026, we incurred total operating expenses of $2,515,741, a decrease of $207,283, or 8%, as compared to total operating expenses of $2,723,024 during the six months ended June 30, 2025.

General and administrative expenses decreased significantly by $98,611, or 4%, from $2,462,714 for the six months ended June 30, 2025, to $2,364,103 for the six months ended June 30, 2026.

Our general and administrative expenses include compensation related to the administrative personnel, amortization and depreciation expenses, rent, and other general expenses.

The decrease in general and administrative expenses in the six months ended June 30, 2026 as compared to same period last year was primarily attributable to an decrease of $586,344 other general expenses, and the decrease was partially offset by an increase of $230,187 stock compensation to management, an increase of $62,356 on employee compensation, an increase of $207,074 on amortization expenses in relation to our IP assets, specifically.

Our other general expenses decreased by $586,344 from $1,329,956 for the six months ended June 30, 2025, to $743,612 for the six months ended June 30, 2026.

The decrease was primarily attributable to higher regulatory registration expenses and professional accounting fees as we completed a merger with Battery Future Acquisition Corp.

(“BFAC”) and became a public listed company.

Employee compensation expenses increased by $62,356 from $763,555 for the six months ended June 30, 2025, to $825,911 for the six months ended June 30, 2026.

The increase is primarily due to additional hiring and higher executive compensation, partially offset by a reduction in headcount during the second quarter of 2026.

In addition, employee stock compensation increased by $230,187 from $137,277 for the six months ended June 30, 2025 to $367,464 for the six months ended June 30, 2026.

Amortization and depreciation expenses increased by $207,074 from $32,442 for the six months ended June 30, 2025, to $239,516 for the six months ended June 30, 2026.

The increase was primarily attributable to the amortization of the intangible assets.

Provision for income tax

We had no income tax provision for the six months ended June 30, 2026 as we made fully allowance on the deferred tax assets as we have determined that it is not more likely than not that the assets will be realized.

Provision for income taxes for the six months ended June 30, 2025 was $38,360.

As a result of the combination of factors discussed above, our net loss increased from $4,163,376 for the six months ended June 30, 2025 to $6,683,608 for the six months ended June 30, 2026.

Liquidity and Capital Resources

As of March 31, 2026, we had cash and cash equivalents of $2,116,631.

As of June 30, 2026, we had cash and cash equivalents of $5,878,823.

Cash consists primarily of cash on hand and bank deposits.

The Company also maintains U.S.

dollar-denominated stablecoins ("USDC") that are classified as restricted cash in the accompanying consolidated balance sheets pursuant to the terms of the Company's financing arrangements.

The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times.

The following table shows the breakout between cash on hand and bank deposits:

March 31, 2026

June 30, 2026

December 31, 2025

Bank deposits

Restricted USDC in investment accounts

Total cash shown in the Statement of Cash Flows

The accompanying consolidated financial statements have been prepared applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

As of March 31, 2026, the Company had cash of $2,116,631, a working capital deficit of $125,316 and a stockholders’ equity of $3,678,295.

In addition, for the three months ended March 31, 2026, the Company had net loss of $4,187,534, and net cash used in operating activities of $602,380.

As of June 30, 2026, the Company had cash of $5,878,823, a working capital surplus of $6,624,850 and a stockholders’ equity of $9,949,689.

The Company’s liquidity improved significantly as compared to 1 st quarter of 2026.

However, for the three months ended June 30, 2026 and 2025, the Company had losses of $2,496,074 and $3,866,169, respectively, and for the six months ended June 30, 2026 and 2025, the Company had losses of $6,683,608 and $4,163,376, respectively.

These factors among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.

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On June 6, 2025, the Company consummated the initial closing of $11 million of Notes.

As of the date of this financial statement, the Company has up to $489 million in convertible notes available to issue.

Management of the Company has evaluated the mitigation plans and determined that the current working capital, cash position, and Notes available for future issuance are sufficient to support its continuous operations and to meet its payment obligations when liabilities fall due within the next twelve months from the date of issuance of these combined and consolidated financial statements.

On May 28, 2026 the Company issued an additional Senior Secured Convertible Note with an aggregate principal amount of $600,000.

On May 12, 2026, the Company received approval from the SEC on S-3, which allows the Company to sell up to $200,000,000 securities.

The securities may be offered separately, together, or in series, and in amounts, at prices and on other terms to be determined at the time of each offering.

On May 14, 2026, the Company entered into an At-the-Market Sales Agreement (the “ATM Agreement”) with Chardan Capital Markets LLC, as sales agent, pursuant to which the Company may offer and sell, from time to time through or to the Agent, up to an aggregate of $9,115,000 (amended and increased to $12,455,000 on June 5, 2026) of shares of its Class B common stock.

On May 21, 2026, the Company entered into a ChEF Purchase Agreement (the “ChEF Agreement”) with Chardan Capital Markets LLC.

Pursuant to the ChEF Agreement, subject to certain conditions precedent contained therein, the Company has the right, but not the obligation, to issue and sell to Chardan, and Chardan shall purchase from the Company, up to an aggregate of $100 million in newly issued shares of the Company’s Class B common stock.

Subject to certain conditions and limitations, the Company will control the timing and amount of any sales of Shares to Chardan pursuant to the ChEF Agreement.

Management of the Company has evaluated the mitigation plans and determined that the current working capital, cash position, and financing options available for future issuance are sufficient to support its continuous operations and to meet its payment obligations when liabilities fall due within the next twelve months from the date of issuance of these combined and consolidated financial statements.

Accordingly, the Company’s combined and consolidated financial statements are prepared on going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.

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We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

For the three months ended

For the Six months ended

Net cash (used in) operating activities

$ (1,451,648 )

Net cash (used in) investing activities

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Operating Activities

Net cash used in operating activities for the three months ended March 31, 2026, was primarily attributable to net loss of $4,187,534, decrease in deferred revenues of $115,361, and change in crypto staking rewards of $84,680.

Cash outflow was partially offset by and change in fair value of warrants of $77,625, change in fair value of convertible debt of $860,631, change in fair value of crypto assets of $2,444,670, non-cash amortization of operating lease right-of-use assets $ 78,061, employee stock compensation of $188,960, and depreciation and amortization of $120,695.

Net cash used in operating activities for the three months ended March 31, 2025, was primarily attributable to net loss of $297,207 and decrease in operating lease liabilities of $77,063 as we made payment under the lease contract and decrease in deferred revenues of $104,044.

Cash outflow was partially offset by the non-cash amortization of operating lease right-of-use assets $75,221, depreciation and amortization expenses of $16,221, increase in due to related parties of $48,365, and increase in accrued liabilities and other payables of $37,171.

Net cash used in operating activities for the six months ended June 30, 2026, was primarily attributable to net loss of $6,683,608, decrease in deferred revenues of $170,791, and change in crypto staking rewards of $91,998.

Cash outflow was primarily offset by change in fair value of convertible debt of $1,325,102, change in fair value of crypto assets of $3,389,376, non-cash amortization of operating lease right-of-use assets $156,128, employee stock compensation of $367,463, and depreciation and amortization of $242,451.

Net cash used in operating activities for the six months ended June 30, 2025, was primarily attributable to net loss of $4,163,376, decrease in operating lease liabilities of $154,885 as we made payment under the lease contract, decrease in deferred revenues of $240,112, and change in fair value of crypto assets of $182,665.

Cash outflow was partially offset by the change in fair value of warrants of $1,540,424, increase in accounts payable of $1,513,002, change in fair value of convertible debt of $260,630, non-cash amortization of operating lease right-of-use assets $151,201, employee stock compensation of $118,444, and increase in accrued liabilities and other payables of $374,008.

Investing Activities

Net cash used in investing activities was $32,583 for the three months ended March 31, 2026.

The increase was primarily due to our purchases of property and equipment.

Net cash used in investing activities was $0 for the three months ended March 31, 2025.

Net cash provided by investing activities was $3,953,027 for the six months ended June 30, 2026.

The increase was primarily due to proceeds from sales of crypto assets.

Net cash used in investing activities was $2,300,000 for the six months ended June 30, 2025.

The decrease was primarily due to our purchases of crypto assets and intangible assets.

Financing Activities

Net cash provided by financing activities was $0 for the three months ended March 31, 2026.

Net cash provided by financing activities was $318,000 for the three months ended March 31, 2025, an increase of $218,000, as compared to $100,000 net cash provided by financing activities for the three months ended March 31, 2024.

The increase was mainly due to the issuance of promissory notes in the amount of $140,000 to the related party, and an advance of $178,000 from related party for the Company’s operating fund.

Net cash provided by financing activities was $3,629,387 for the six months ended June 30, 2026, was primarily attributable to the issuance of promissory notes of $600,000, capital contribution from private placement of $3,032,905,

Net cash provided by financing activities was $8,852,667 for the Six months ended June 30, 2025.

The increase was mainly due to the issuance of promissory notes of $3,089,400, capital contribution from private placement of $4,700,000, and proceeds from the reverse recapitalization of $1,077,752.

Critical Accounting Policies and Estimates

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Historically, the Company has not experienced material refunds.

Consulting Revenue

The Company also generates revenue from consulting services.

The Company’s consulting program is designed to teach startup founders within the education sector how to market their product, refine their course content, infrastructure, and business models, achieve market fit and operating efficiency, and scale the startup into a high growth education business.

The Company’s performance obligation is to provide consulting services to startup founders for a specific term.

Customers are required to prepay full consulting service charge, which is fixed and determinable, at contract inception to secure program spot, and revenue is recognized overtime on a straight-line basis through the service term.

Principal Agent Considerations— The Company makes its application available to be downloaded through third-party digital distribution service providers.

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The second step is to measure the tax benefit as the largest amount that is 50% likely of being realized upon settlement with a taxing authority.

There were no amounts recorded at March 31, 2026 and 2025 related to uncertain tax positions.

There were no amounts recorded at June 30, 2026 and 2025 related to uncertain tax positions.

Fair Value of Financial Instruments —The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures.

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis