CID Holdco, Inc. (DAIC) - Q2 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2025. CID Holdco, Inc. (formerly SEE ID Inc., dba Dot AI) is an emerging growth company and smaller reporting company focused on Industrial IoT, asset tracking, and AI-driven enterprise solutions. The reporting period is defined by the consummation of a business combination with ShoulderUp Technology Acquisition Corp (SUAC) on June 18, 2025, accounted for as a reverse recapitalization. The company operates manufacturing facilities in Puerto Rico and maintains headquarters in Las Vegas, Nevada.
Key Financial Metrics
| Metric | Q2 2025 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months, Restated) |
|---|---|---|---|
| Revenue | $126,833 | $479,331 | $101,995 |
| Gross Profit | $59,639 | $395,059 | $91,986 |
| Gross Margin | 47.0% | 82.4% | 90.2% |
| Net Loss | $(28,859,203) | $(30,143,761) | $(16,192,000) |
| Net Loss Per Share (Basic/Diluted) | $(2.00) | $(2.26) | $(1.35) |
| Cash and Equivalents (End of Period) | $6,492,646 | ||
| Working Capital | $454,040 | ||
| Total Assets | $10,753,579 | ||
| Total Liabilities | $9,014,328 |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 441% quarter-over-quarter and 370% year-over-year (YTD), driven by an increase in feasibility study reports delivered to new and existing customers.
- Margin Compression: Gross margin decreased from 90.2% (YTD 2024) to 82.4% (YTD 2025). This decline is attributed to new warehouse expenditures in Puerto Rico and increased tariffs on imported raw materials.
- Significant Non-Operating Losses: The Net Loss for the six months ended June 30, 2025, was heavily impacted by non-cash and transaction-related items:
- Change in Fair Value of SAFE Notes: $17.4 million loss due to the revaluation of SAFE notes prior to conversion into equity.
- Loss on Extinguishment of Debt: $5.7 million loss related to the conversion of bridge loans into common stock.
- Transaction Costs: $2.7 million in costs associated with the business combination.
- Liquidity Improvement: Cash balances increased from $721,032 at year-end 2024 to $6.5 million at June 30, 2025, primarily due to $10.8 million in PIPE investment proceeds and $5.6 million from the SUAC trust account.
- Debt Elimination: All outstanding SAFE notes ($23.3 million liability at Dec 31, 2024) were converted to equity upon closing. Bridge loans were partially repaid in cash and partially converted to equity.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern Warning: Management has raised substantial doubt about the company's ability to continue as a going concern within one year. Despite the recent capital raise, the company expects to incur substantial operating losses for the next several years and will require additional financing to fund R&D and operations.
- Capital Resources: On June 18, 2025, the company entered into a Standby Equity Purchase Agreement (SEPA) allowing for up to $50 million in future equity financing. A $350,000 commitment fee is expected to be paid in Q3 2025.
- Restatement of Prior Periods: The company restated financial results for the six months ended June 30, 2024, to correct the fair value accounting of SAFE agreements, which increased the reported net loss for that period by approximately $13 million.
- Internal Control Weaknesses: The company identified material weaknesses in internal controls over financial reporting, specifically regarding the categorization of costs (COGS vs. Operating Expenses), staffing levels in accounting, and the review of fair value calculations for financial instruments.
- Legal Contingency: Potential litigation exists regarding the termination of a founder/Customer Experience Officer who holds 5 million shares and has not signed a termination agreement.
Investor Verification Checklist
- Capital Runway: Verify the sufficiency of the $6.5 million cash balance against the company's burn rate and the timeline for the next round of financing, given the "Going Concern" warning.
- Revenue Quality: Assess the sustainability of revenue growth, which is currently driven by one-time feasibility study reports rather than recurring SaaS subscriptions.
- Internal Controls: Monitor the remediation plan for the identified material weaknesses in financial reporting and cost categorization.
- SAFE Note Accounting: Review the methodology used for the fair value adjustments of SAFE notes, which significantly impacted historical and current period losses.
- Customer Concentration: Note that a single customer accounted for approximately 94% of revenue for the six months ended June 30, 2025.