CID Holdco, Inc. (DAIC) - Q3 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended September 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 company consummated a business combination with ShoulderUp Technology Acquisition Corp. on June 18, 2025, resulting in a reverse recapitalization. Operations include hardware manufacturing in Puerto Rico and software development globally.
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | Q3 2024 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|---|
| Revenue | $778,482 | $81,636 | $1,257,813 | $183,631 |
| Gross Profit | $290,196 | $73,639 | $685,255 | $165,625 |
| Gross Margin | 37.3% | 90.2% | 54.5% | 90.2% |
| Net Loss | $(4,216,555) | $(2,658,414) | $(34,360,316) | $(18,850,414) |
| Cash and Equivalents | $1,418,834 (as of Sept 30, 2025) | |||
| Working Capital | Deficit of $5,404,007 | |||
| Accumulated Deficit | $(59,093,579) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 853.6% QoQ and 585.0% YTD, driven by product sales (bridges, gateways, labels) and a major reseller exclusivity agreement. However, a $196,000 revenue reversal occurred in Q3 due to updated estimates on the exclusivity payment recognition.
- Margin Compression: Gross margin declined significantly from 90.2% in 2024 to 37.3% in Q3 2025 due to the higher proportion of lower-margin hardware product sales compared to prior service/revenue mix.
- Expense Increases: Operating expenses rose sharply. General and Administrative (G&A) expenses increased 441.1% QoQ due to operational ramp-up and public company compliance costs. R&D and Sales & Marketing also saw significant increases to support growth.
- Debt and Equity: All outstanding SAFE notes ($23.3M liability) were converted to equity upon the business combination closing. The company recognized a $17.4M loss on the change in fair value of these notes and a $5.7M loss on debt extinguishment related to bridge loans converted to equity.
- Restatements: Prior period financials (2024) were restated to reclassify costs from Cost of Goods Sold to operating expenses, correcting an overstatement of COGS.
Outlook, Risks, and Contingencies
- Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern within one year due to significant operating losses and a working capital deficit. Continued funding is required for R&D and operations.
- Liquidity Sources: The company secured a $50M Standby Equity Purchase Agreement (SEPA) with New Circle Principal Investment LLC. In October 2025, the company utilized this line to raise $78,516. An $8M secured promissory note term sheet was also entered into in late October 2025.
- Legal Proceedings: A terminated founder filed a lawsuit in September 2025 regarding employment termination. The company has filed a motion to dismiss. No accrual has been made as the outcome is not probable.
- Internal Controls: The company identified material weaknesses in internal controls over financial reporting, specifically regarding the categorization of expenses (COGS vs. OpEx), staffing levels, and fair value calculation reviews. Remediation plans are underway.
- Customer Concentration: Revenue is highly concentrated; one customer accounted for approximately 86% of Q3 2025 revenue and 90% of YTD 2025 revenue.
Investor Verification Checklist
- Revenue Recognition: Verify the assumptions and estimates used for the $2M exclusivity payment revenue recognition and the impact of the $196k reversal.
- Customer Concentration: Assess the risk associated with reliance on a single customer for ~90% of revenue.
- Going Concern Status: Review the company's ability to access the $50M SEPA line and secure the proposed $8M debt to fund operations given the $5.4M working capital deficit.
- Internal Controls: Monitor the remediation of material weaknesses in financial reporting and expense categorization.
- Legal Exposure: Track the status of the lawsuit filed by the terminated founder.