CID Holdco, Inc. Form 10-Q Summary
Business context and reporting period
CID Holdco, Inc. develops industrial Internet-of-Things, RFID, artificial-intelligence-enabled tracking, and related software and subscription solutions for construction, military, mining, retail, warehousing, and manufacturing customers. The report covers the three and six months ended June 30, 2026, with comparisons to the corresponding 2025 periods. The company operates through CID Holdco, SEE ID, and Dot Works, its Puerto Rico manufacturing subsidiary.
Effective May 29, 2026, the company completed a 1-for-25 reverse stock split. All share and per-share amounts have been retrospectively adjusted. Effective May 25, 2026, the company furloughed employees and suspended manufacturing operations to preserve liquidity; limited personnel continued servicing existing customers and supporting core initiatives.
Key financial metrics
| Metric | Three months ended June 30, 2026 | Three months ended June 30, 2025 | Six months ended June 30, 2026 | Six months ended June 30, 2025 |
|---|---|---|---|---|
| Revenue | $12,398 | $126,833 | $24,612 | $479,331 |
| Gross profit | $5,760 | $59,639 | $15,308 | $395,059 |
| Gross margin | 46.5% | 47.0% | 62.2% | 82.4% |
| Loss from operations | $(3,029,729) | $(2,255,844) | $(7,128,388) | $(3,992,105) |
| Net loss | $(3,770,873) | $(28,859,203) | $(8,236,041) | $(30,143,761) |
| Basic and diluted loss per share | $(2.68) | $(50.05) | $(6.37) | $(56.58) |
| Net cash used in operating activities | Not separately provided | Not separately provided | $(1,706,742) | $(6,392,742) |
At June 30, 2026, cash was $456,069, total assets were $7.5 million, total liabilities were $13.6 million, and shareholders’ deficit was $6.0 million. Working capital deficit was $9.5 million and accumulated deficit was $69.7 million.
Current liabilities included $6.6 million of accounts payable, $2.2 million of accrued expenses, $1.3 million of third-party short-term debt, $350,000 of related-party short-term debt, $197,742 of derivative liabilities, and $2.0 million of current deferred revenue. Total operating lease liabilities were $649,718.
Six-month investing cash outflows were $39,296, primarily for capitalized software development. Financing activities provided $1.34 million, consisting principally of short-term borrowings, common-stock issuances, related-party loans, and warrant exercises, partially offset by $1.03 million of debt repayments. Cash declined by $409,555 from December 31, 2025.
Material changes versus the prior comparable period
- Revenue declined 90.2% in the second quarter and 94.9% for the first six months. 2026 revenue was predominantly SaaS and service revenue, while 2025 included substantially more hardware sales and feasibility-study revenue.
- Gross margin declined to 46.5% for the quarter and 62.2% year to date, compared with 47.0% and 82.4%, respectively, primarily due to changes in revenue mix and related costs.
- General and administrative expense increased 154.8% for the quarter and 213.2% year to date, driven by public-company, legal, accounting, audit, board, and labor costs.
- Research and development expense increased 117.3% for the quarter and 74.8% year to date, primarily because of higher labor and cloud-related costs.
- Sales and marketing expense decreased 51.5% for the quarter and 11.4% year to date due to lower brand, event, sponsorship, customer-relationship-management, and marketing-software spending.
- The 2025 net loss included a $17.4 million fair-value loss related to SAFE notes, a $5.7 million debt-extinguishment loss, and $2.7 million of other transaction-related expense. These significant items did not recur in 2026.
- Accounts receivable decreased from $3.6 million at December 31, 2025 to $32,687 at June 30, 2026, while inventory increased from $1.4 million to $2.7 million and accounts payable increased from $4.1 million to $6.6 million.
- Shares outstanding increased from 1,170,933 at December 31, 2025 to 1,966,042 at June 30, 2026, primarily through equity-line issuances, debt conversion, warrant exercises, and commitment shares.
Guidance, outlook, risks, contingencies, and unusual items
Management expects substantial operating losses for the next several years and states that additional financing is required to continue research and development and meet obligations. The filing explicitly concludes that conditions raise substantial doubt about the company’s ability to continue as a going concern within one year. Management indicates that spending reductions, delayed activities, or cancellations may be required if financing is unavailable.
- The company had funded $690,000 net under the White Lion convertible-note arrangement as of June 30, 2026; the notes were fully converted into 360,165 common shares by June 26, 2026. White Lion also provided $640,192 under an equity purchase facility for 329,898 shares and exercised $180,000 of warrants for 65,596 shares.
- The company had $349,996 of executive loans outstanding at 7.5% interest, with possible additional executive loans up to an aggregate $600,000.
- The remaining J.J. Astor loan balance was assigned to LHT I and reported as short-term debt. Subsequent to quarter end, LHT I issued a default notice demanding approximately $1.06 million and surrender of collateral, with potential foreclosure of a material portion of the company’s assets.
- The company entered into a $500,000 secured convertible note with Phillips on June 23, 2026. Subsequent to quarter end, the Phillips note and LHT I obligations were addressed through a settlement involving conversion of approximately $1.09 million into 2,815,506 shares and transfer of certain assets.
- A proposed $6 million preferred-stock financing announced July 22, 2026 was terminated by the lead investor on July 27, 2026. The planned financing will not proceed unless the parties reach another agreement.
- Nasdaq issued delisting determinations relating to the $50 million minimum market value of listed securities, the $15 million minimum market value of publicly held shares, and the delinquent filing. The company appealed, and its common stock remained listed pending a Hearings Panel decision. There is no assurance that continued listing will be granted.
- The company’s disclosure controls and procedures were ineffective as of June 30, 2026. Material weaknesses involve insufficient accounting personnel and financial-reporting controls, inadequate segregation of duties, and controls over third-party fair-value calculations.
- Two customers represented 100% of second-quarter and year-to-date revenue. One customer represented approximately 95% of accounts receivable at June 30, 2026.
- The company identified impairment indicators related to long-lived assets, including capitalized software, but recorded no impairment because estimated undiscounted cash flows exceeded carrying value.
- The company remains involved in litigation concerning a former founder. The outcome is not known or probable, and no loss accrual has been recorded.
- On September 14, 2026, the company entered into a binding term sheet to acquire Envoy Technologies for consideration including approximately 10.8 million shares of common and convertible preferred stock, subject to definitive agreements, approvals, and other conditions. The transaction would substantially dilute existing shareholders if completed.
Most important facts for investors to verify
- Whether the company can obtain sufficient financing to fund operations, service debt, and avoid asset foreclosure or further restructuring.
- The outcome of the Nasdaq Hearings Panel proceedings and whether the common stock will remain listed.
- The status and enforceability of the LHT I settlement, collateral transfers, debt conversions, and related share issuances.
- Whether manufacturing operations and the furloughed workforce can resume, and whether customer revenue can recover from the severe 2026 decline.
- The potential dilution from convertible debt, warrants, equity facilities, the proposed Envoy acquisition, and other preferred-stock or common-stock issuances.
- Customer concentration, collectability of receivables, and the recoverability of the $2.7 million capitalized software balance and $2.7 million inventory balance.
- Management’s remediation of material weaknesses and the reliability of future financial reporting and fair-value measurements.