AIAI Holdings Corp: Form 10-Q for the period ended Mar 31, 2026

Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited financial statements and related notes thereto included in "Item 1. Financial Statements" and with the audited financial statements and the related notes included in our Registration Statement filed on May 1, 2026 (“Registration Statement”) . The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in this quarterly report. See “Forward-Looking Statements".

The following discussion and analysis of the financial condition and results of operations of the registrant, AIAI Holdings Corporation, and the registrant’s “Predecessor” company, C.C. Carlton Industries, Ltd. together with their financial statements and the related notes appearing elsewhere in this filing.

AIAI HOLDINGS CORPORATION

Overview

AIAI Holdings Corporation (“AIAI”) will operate through a unique business model that applies its licensed AI technology to strategic acquired portfolio companies. Our business will generate revenue through products and services distributed by our subsidiary Portfolio Companies, which are the operating companies we will acquire and enhance through AI implementation.

Our anticipated accelerated timeline of four to six months for the implementation of our AI technology, compared to our perceived industry standard of 24-36 months, represents a significant competitive advantage and drives our financial performance. This accelerated time frame for the implementation of our AI should enable faster revenue recognition from technology services while allowing more rapid realization of operational improvements in acquired companies. There are several reasons why will believe our implementation process will occur more rapidly than traditional software implementations:

(1) Truncated Administrative Process: Traditional software companies are typically subject to lengthy sales processes involving competitive bidding and procurement, which are often weighed against criteria generated by a third-party consultant, typically beginning after a 30 to 180 day study and subsequent report on the client’s requirements..

(2) Standardizing Backend Foundational IT: Traditional software businesses must develop detailed statements of work, project plans, and system mappings, tailored to each client’s business and requirements. This process can often take several months just to begin the integration and deployment. Our approach is different because we are not selling software. We perform upfront analysis and develop standardized backend and middleware specifications that become a single technology foundation as a requirement during any subsidiary acquisition diligence process. We thereby expect to be able to generally complete this work concurrently with an approximately 12-week diligence period so we can accelerate post-acquisition integration and operational readiness. In addition to deploying our software platform, we supplement the implementation with our experienced industry-agnostic services, support, and management teams to enable consistent and uniform execution across our portfolio companies.

(3) Industry Agnostic AI Platform: A significant reason we believe we will have an accelerated platform is technical in nature. The AI technology we are licensing from M42 is supported by over one billion lines of code and configuration, industry specific and non-industry specific APIs and extremely advanced mathematics and science. As a result, our platform does not require traditional data cleansing, data extraction, data transformation, and data loading “extract transform load” (ETL) processes. We can leave the data in its data silo rather than “normalizing” disparate data types, and going through a centralized ETL process, we can “loosely associate” unstructured or structured disparate data silos and analyze them in place. This approach enables us to process very large data volumes and deliver insights significantly faster than traditional solutions, which often remain constrained by extended periods of data cleansing and normalization efforts. This capability allows us to access portfolio companies’ data and business applications and deliver AI-enabled insights within days or weeks while our competitors continue to spend extended periods manually cleansing, normalizing, integrating and extracting data.

Key Factors Affecting Our Performance

Implementation Efficiency

Our financial performance depends significantly on maintaining our accelerated implementation timeline. Any extension of this timeline could increase implementation costs, delay the realization of expected cost savings, and reduce revenue growth at our portfolio companies expected to be achieved through utilization of our licensed AI, and potentially impact customer satisfaction at our portfolio companies. Our ability to maintain AI implementation efficiency while scaling operations across multiple sectors and geographies directly impacts our profitability and growth potential.

Acquisition Performance

The success of our acquisition strategy materially affects our financial results. Key factors include our ability to:

• Identify suitable acquisition targets at appropriate valuations
• Complete effective due diligence under time constraints
• Successfully integrate acquired companies
• Implement our AI solutions within acquired operations
• Achieve projected operational improvements
• Maintain consistent implementation timelines across acquisitions

Market Conditions

Our performance is influenced by general economic conditions, technology spending trends, and sector-specific factors across our target industries. Economic downturns could impact both technology services revenue and acquisition opportunities. Market conditions also affect our ability to maintain our targeted dividend policy and achieve desired returns on acquisitions.

Results of Operations

Three Months Ended March 31, 2026 compared to the Three Months Ended March, 31, 2025

(in thousands)

For the three months ended March 31, 2026 and 2025, AIAI did not conduct any substantive business operations other than incurring expenses incidental to the Direct Listing process, as further discussed below. As a result, there was no revenue-generating activity or operational performance to report for the period.

Operating Expenses

General and administrative expenses

General and administrative costs increased by less than $0.1 million, or 100.0%, from $0 in the period ended March 31, 2025 to less than $0.1 million in the three months ended March 31, 2026. This increase was attributable to employee compensation expenses incurred during the 2026 period; the Company had no employees during the 2025 period.

Transaction advisory costs

Transaction advisory costs increased $2.7 million, or 100.0%, from $0 in the period ended March 31, 2025 to $2.7 million in the three months ended March 31, 2026. This increase was due to transaction costs incurred in connection with the evaluation and execution of strategic initiatives related to identification of portfolio companies and completion of the Direct Listing of our common stock including legal, accounting, and advisory services.

Provision for income taxes

The Company has net operating loss carry forward deferred tax assets of $1.39 million and $0.82 million related to pre-tax losses as of March 31, 2026 and December 31, 2025, respectively. A full valuation allowance has been recorded on the operating loss carry forward deferred tax asset as of March 31, 2026 and December 31, 2025.

Liquidity and Capital Resources

Overview

Prior to the completion of the Direct Listing of our common stock and the contemporaneous closing of the acquisition transactions for our Portfolio Companies, our liquidity needs primarily consist of working capital requirements associated with transaction advisory costs incurred in connection with the Direct Listing of our common shares. Our principal sources of liquidity are funded through capital contributions provided by our Founder or affiliated entities under common control of our Founder. As of March 31, 2026 and December 31, 2025, we did not have cash or financial assets of our own, nor did we have any indebtedness. During these periods, we did not conduct any substantive business operations, and all liquidity needs were met exclusively through capital contributions by our Founder and our affiliates who made payments to service providers on our behalf.

Following completion of the Direct Listing and the contemporaneous closing of the acquisition transactions for our Portfolio Companies our liquidity needs will primarily consist of working capital requirements for the operations of our Portfolio Companies as well as incremental general and administrative costs associated with operating as a public company, acquisition funding, capital expenditures, and research and development investments. Our principal sources of liquidity are expected to be cash generated from operations, available cash and cash equivalents, loans from or additional capital contributions provided by our Founder or affiliated entities, borrowings under one or more credit facilities, and access to capital markets.

Contractual Obligations

As of March 31, 2026, our contractual obligations, the effectiveness of which occurred contemporaneous with the effectiveness of our Registration Statement consist primarily of:

• Earnout obligations related to acquisition of the Portfolio Companies
• Employment agreements with key personnel
• License Agreement and related Technology Services Agreement with M42
• Contingent fees due to providers of legal and capital markets advisory services incurred in connection with the Direct Listing of our common shares

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

Business Combinations

Our acquisition strategy requires significant judgments in allocating purchase price to acquired assets and liabilities, including identifying and valuing intangible assets. We must also estimate the future performance of acquired companies and the expected synergies from implementing our AI solutions, which affects the valuation of acquired businesses and potential earnout obligations.

We account for business combinations in accordance with Accounting Standard Codification (“ASC”) Topic 805, which requires the identification of the acquirer, determination of the acquisition date, and recognition and measurement of the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree. The purchase price is allocated to the acquired assets and liabilities based on their estimated fair values at the acquisition date. Significant judgment is required in identifying and valuing intangible assets, estimating future performance of acquired entities, and assessing expected synergies. Any excess of the purchase price over the fair value of net assets acquired is recognized as goodwill.

Off-Balance Sheet Arrangements

As of March 31, 2026 and December 31, 2025, we did not have any relationships with unconsolidated entities or financial partnerships designed to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Prior to the closing of the acquisitions of our Portfolio Companies we have no cash and cash equivalents or debt obligations and therefore no interest rate risk. Following the acquisition of our Portfolio Companies, sources of interest rate risk will primarily include acquired debt obligations of our Portfolio Companies and any future debt obligations. Changes in interest rates affect the returns we can earn on our cash and cash equivalents and the cost of any future debt financing for acquisitions or operations.

Effects of Inflation and Tariffs

While inflationary cost increases can affect our income from operations, we believe that inflation generally has not had a material adverse effect on our results of operations. Other than the potential for increased inflation as a result of supply chain disruption due to international conflicts, or new tariffs and retaliatory actions by other countries, inflationary cost increases are not expected to have a material adverse effect on our results of operations.

Emerging Growth Company Status

We are an “emerging growth company” as defined in the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

• Reduced disclosure about our executive compensation arrangements
• Exemption from the requirements to hold non-binding advisory votes on executive compensation
• Exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting
• Extended transition periods for complying with new or revised accounting standards

We will remain an emerging growth company until the earliest of the end of the fiscal year in which we have more than $1.235 billion in annual revenue, we have more than $700 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1 billion of non convertible debt securities over a three-year period.

C.C. CARLTON INDUSTRIES, LTD.

Overview

Founded in 1993, CCCI is a well-established civil construction company based in Texas, specializing in delivering full-scope civil construction, project management, and estimating services. With over 30 years of experience serving Texas, CCCI has focused on civil construction services and established a strong reputation for excellence in the construction industry. Services include clearing, site preparation, excavation, wet utility installation, dry utility installation, lift and pump stations, water treatment plants, concrete structures, streets and parking lots. Additionally, CCCI’s landscaping division offers irrigation, revegetation, aquatic plantings, and custom wall construction. Backed by deep industry expertise and proven estimating processes, CCCI has designed and managed a diverse range of projects, such as single-family subdivisions, multi-family subdivisions, apartments, commercial sites, hospitals, medical office buildings, industrial sites, schools, and municipal projects.

CCCI is dedicated to fostering long-term relationships with its clients, driven by the company’s commitment to transparency, ethical practices, and adherence to the highest standards of quality. CCCI’s team of experienced professionals works collaboratively to deliver innovative solutions tailored to meet the unique needs of each project, ensuring customer satisfaction and project success. As CCCI continues to grow and adapt to the evolving construction landscape, CCCI remains committed to enhancing its capabilities and expanding its service offerings, positioning itself as a leader in the civil construction sector in Central Texas.

CCCI expects the strong demand for its services will continue, driven by (i) population growth in Texas resulting in public and private development, (ii) state and local government funding, and (iii) the need to repair and upgrade infrastructures. CCCI is prequalified to perform Texas Department of Transportation work, which gives the company enhanced credibility and competitive advantage in a region where public infrastructure is expanding rapidly. As of March 31, 2026 and December 31, 2025, CCCI’s remaining performance obligation backlog was $165.2 million and $158.9 million, respectively.

Revenue Model

CCCI primarily derives revenue from fixed-price contracts in the civil construction sector with a focus on construction of site utilities, roads, bridges, and concrete structures in Texas. CCCI specializes in providing full-scope civil construction, project management, and estimating services, including but not limited to wet and dry utility installation, paving and concrete structures, site clearing and grading, lift and pump stations, and treatment plants. Additionally, CCCI offers landscaping services including irrigation, revegetation, aquatic plantings, tree replacement, and decorative wall construction. This diverse expertise is essential for executing a variety of projects, including single-family subdivisions, multi-family subdivisions, commercial sites, hospitals, medical office buildings, industrial sites, schools, and municipal projects with efficiency and scalability.

CCCI recognizes revenue over time as work is completed, typically using an input measure such as costs incurred to date relative to total estimated costs at completion to measure progress. Costs that do not depict progress toward satisfaction of the performance obligation are included in contract costs but may not result in revenue being recognized, such as significant re-work.

Trends and Key Factors Affecting Performance

CCCI believes that future performance will be influenced by a number of factors, including those described in the section titled “Risk Factors” in AIAI's Registration Statement as well as the factors described below. While each of these factors presents significant opportunities for CCCI, these factors also pose challenges that CCCI must successfully address in order to sustain the growth of the company’s business and enhance results of operations.

Weather Natural Disasters and Emergencies

CCCI’s performance in a given period can be impacted by adverse weather conditions, severe weather events, natural disasters or other emergencies, which include, among other things, heavy or prolonged snowfall, icing, or rainfall, hurricanes, tropical storms, tornadoes, floods, extreme temperatures, wildfires, and pandemics. These conditions and events can negatively impact CCCI’s financial results due to, among other things, the termination, deferral or delay of projects, reduced productivity and exposure to significant liabilities. See “Risk Factors.”

Seasonality

CCCI’s operations are typically affected more by weather conditions during the first and fourth quarters of the fiscal year, because cold, snowy or wet conditions can create challenging working environments that are more costly for CCCI’s customers or cause delays on projects. This may alter the company’s construction schedules and can create variability in CCCI’s revenues, profitability and the required number of employees. Second and third quarter revenues are typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. See “Risk Factors.”

CCCI’s Ability to Obtain New Projects

CCCI bids on projects that it believes offers an opportunity to meet the company’s profitability objectives or that offer the opportunity to enter promising new markets. The potential customers often conduct rigorous competitive processes for awarding contracts. CCCI will potentially face strong competition and pricing pressures for any additional contract awards from other government agencies, and CCCI may be required to qualify or continue to qualify under various multiple award task order contract criteria. See “Risk Factors.”

CCCI’s Ability to Obtain Approval of Change Orders and Successfully Pursue Claims

CCCI is subject to variation in scope and cost of projects from the company’s original projections. In certain circumstances, CCCI seeks to collect or assert claims against customers, engineers, consultants, subcontractors or others involved in a project for additional compensation exceeding the contract price or for amounts not included in the original contract scope. CCCI’s experience has often been that customers have been willing to negotiate equitable adjustments to the contract compensation or completion time provisions if unexpected circumstances arise. However, this process may result in disputes over whether the work performed is beyond the scope of the work included in the original project plans and specifications or, if the customer agrees that the work performed qualifies as extra work, the price that the customer is willing to pay for the extra work. See “Risk Factors.”

CCCI’s Ability to Estimate and Control Construction Costs

CCCI’s costs primarily consist of payroll, equipment, materials, subcontractors, and other project related expenses. CCCI’s contracts are typically fixed price, and if CCCI is unable to accurately estimate the overall risks, requirements or costs when CCCI bids on or negotiates a contract that is ultimately awarded, the company may achieve a lower than anticipated profit or incur a loss on the contract due to higher than estimated costs. Additionally, CCCI’s costs and profitability can be adversely affected by factors such as inflation, tariffs, supply chain and other operational inefficiencies. CCCI’s future growth also depends on the company’s ability to accurately estimate and control construction costs, a major part of which consists of implementing AIAI’s licensed AI technology in CCCI’s estimating and operational processes going forward. Also, CCCI’s labor and training expenses may increase as a result of a shortage in the supply of skilled personnel. CCCI strives to minimize exposure to labor and material price increases in the company’s project bids and the manner in which CCCI executes work. In fixed price contracts, CCCI attempts to insulate itself from the unfavorable effects of inflation, when possible, by incorporating escalating wage and price assumptions into construction cost estimates, by obtaining firm fixed price quotes from major subcontractors and material suppliers, by securing purchase commitments for materials early in the project schedule and by including contingency for these risks in the bid price. Construction and other materials used in construction activities are generally available locally from multiple sources. See “Risk Factors.”

An Inability to Obtain Bonding Could Have a Negative Impact on CCCI’s Operations and Results

CCCI is often required to provide surety bonds securing the company’s performance under customer contracts. CCCI’s ability to obtain surety bonds primarily depends on company’s working capital, past performance, capitalization, credit rating, management expertise, overall capacity of the surety market and other factors. If CCCI is unable to obtain reasonably priced surety bonds in the future, it could significantly affect CCCI’s ability to be awarded new contracts and could, consequently, have a material adverse effect on CCCI’s business, results of operations and financial condition. See “Risk Factors.”

Key Performance Indicators and Non-GAAP Measures

CCCI regularly reviews the following key business metrics to evaluate the business, measure company performance, identify trends affecting the company’s business, formulate financial projections and make strategic decisions. In assessing the performance of CCCI’s business, net income (loss) is the primary measure that management uses to assess performance. In addition to net income (loss), CCCI also considers a variety of other key performance measures, including non-GAAP measures. The key performance measures used by management for determining how CCCI’s business is performing are total revenue, income (loss) from operations, net income (loss), gross profit, gross margin, and Adjusted EBITDA, which is a non-GAAP measure.

CCCI believes that these key financial measures provide useful information to users of the financial statements in understanding and evaluating CCCI’s results of operations in the same manner as CCCI’s management team. The presentation of these key performance measures, including Adjusted EBITDA, which is a non-GAAP financial measure, is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. See “Non-GAAP Measures” below.

The following table sets forth CCCI’s key performance measures for the periods indicated below:

(in thousands)

Adjusted EBITDA

Adjusted EBITDA is calculated as net income (loss) adjusted to exclude interest expense, income and state franchise tax expense and depreciation and amortization, further adjusted to exclude share-based compensation, non-core costs related to strategic initiatives, and certain other non-recurring charges. CCCI uses Adjusted EBITDA to supplement U.S. GAAP measures of performance in the evaluation of the effectiveness of CCCI’s business strategies, to make budgeting decisions and to compare CCCI’s performance against that of other peer companies using similar measures. See “Non-GAAP Measures” below for a reconciliation of Adjusted EBITDA to net income (loss).

Components of Results of Operations

Revenue from contracts

CCCI generates revenue by providing comprehensive civil construction, project management, and estimating services in Texas. CCCI’s contracts are typically fixed-price, and CCCI generally recognizes revenue over time as performance obligations are satisfied and control over promised goods or services are transferred to customers, in accordance with Accounting Standard Codification (“ASC”) Topic 606. This method assesses the extent of progress based on the ratio of costs incurred to date against the total estimated costs at completion of the performance obligation. Estimating total costs to complete requires CCCI to make informed estimates regarding material costs and availability, labor costs and productivity including subcontracting costs, as well as overhead expenses.

Costs of contracts

Costs of contracts consists of all direct and indirect costs on construction contracts, including raw materials, labor, equipment costs, and subcontractor costs. The cost of significant uninstalled materials, re-work, or scrap is generally excluded from the cost-to-cost measure of progress as it is not proportionate to the entity’s progress in satisfying the performance obligation. CCCI expects the cost of contracts to increase in absolute dollars in future periods as the business grows. As additional cost-optimization initiatives are executed, CCCI expects the cost of contracts as a percentage of revenue to decrease over time.

General and administrative expenses

General and administrative expenses primarily consist of costs for estimating and bidding, business development, and costs related to CCCI’s operational offices such as operating leases that are not allocated to direct contract costs and expenses related to CCCI’s corporate functions. General and administrative expenses are expensed as incurred. CCCI expects to incur additional general and administrative expenses as a result of operating as a public company, including expenses related to compliance with public company reporting obligations, and increased costs for investor relations and professional services. CCCI expects general and administrative expenses to increase in future periods and to vary from period to period as a percentage of revenue.

Depreciation and amortization

Depreciation includes the depreciation of fixed assets, including construction equipment, transportation equipment, furniture and fixtures, office equipment, and leasehold improvements. Amortization includes amortization of right of use assets under finance leases of equipment. Depreciation and amortization expense is included in the statements of operations within cost of contracts and general and administrative expenses.

Interest expense

Interest expense primarily consists of the interest incurred on CCCI’s lines of credit, finance leases, notes payable, and amortization of debt issuance costs, such as debt origination and commitment fees.

State franchise tax expense

Tax expenses primarily consist of the State of Texas franchise tax. CCCI’s primary operations are classified as a partnership for federal income tax purposes reportable by its members and are not subject to federal and certain state income taxes. Accordingly, CCCI makes no provision for federal and state income taxes in its financial statements except for certain state franchise, excise, and margin tax payable by the partnership entity. Following the completion of its acquisition by AIAI, CCCI will be subject to taxation as a corporation.

Results of Operations

Three Months Ended March 31, 2026 compared to the Three Months Ended March, 31, 2025

The following table summarizes CCCI’s results of operations for the three months ended March 31, 2026 and 2025, and the changes between periods.

(in thousands)

Revenue from contracts

Revenue decreased by $3.5 million, or 5.6%, to $58.9 million in the three months ended March 31, 2026 from $62.4 million in the three months ended March 31, 2025, due to a reduction in the number of new projects launching in the first quarter of 2026 compared to the prior year period. The reduction in project launches was a result of deterioration in commercial market conditions, as well as weather-related delays that impacted project activity during the three months ended March 31, 2026. Project mix also contributed to the decrease in revenue as compared to the prior year period, as a greater percentage of active projects were publicly bid utility projects with lower contract values and margins than comparable commercial projects.

The pattern of project awards and starts can have a significant impact on the pattern of revenue recognition. During the three months ended December 31, 2025 and the three months ended March 31, 2026, project awards increased from the comparable prior year; however, due to market uncertainty and cost volatility, project starts for certain awarded projects were delayed by our customers into the second quarter of 2026, resulting in a reduction in revenue.

Cost of contracts

Cost of contracts increased by $1.9 million, or 3.6%, to $55.4 million in the three months ended March 31, 2026 from $53.5 million in the three months ended March 31, 2025. Cost of contracts as a percentage of revenue increased by 8.4%, from 85.7% in the three months ended March 31, 2025 to 94.1% in the three months ended March 31, 2026. Increased costs were driven by labor cost inefficiencies arising from adverse weather conditions which limited construction activity as well as customer-driven delays in project starts which limited CCCI’s ability to efficiently deploy labor resources. CCCI maintained its workforce throughout the reporting period irrespective of construction slowdowns in order to support ongoing and anticipated customer projects. Also contributing to increased costs were inflationary costs pressures associated with fuel and materials which could not be passed on to customers. The reduction in gross margin was also partially attributable to a shift towards lower‑margin single‑family and government projects resulting from a recent decline in commercial market conditions driven by higher fuel and materials costs. Competitive market conditions for publicly bid projects also contributed to a decrease in overall contract size and margin compression on successfully bid projects during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

General and administrative expenses

G&A expenses increased by $1.0 million, or 15.9%, to $7.0 million in the three months ended March 31, 2026 from $6.0 million in the three months ended March 31, 2025 due to an increase in professional fees of $1.2 million related to preparation for AIAI's public listing. This increase was partially offset by a decrease in advertising in the three months ended March 31, 2026.

Loss (gain) on disposal of property and equipment

Loss (gain) on sale of assets changed by $0.1 million, or 788.2%, to a $0.1 million gain in the three months ended March 31, 2026 from a loss of less than $0.1 million in the three months ended March 31, 2025, due to an increase in volume of equipment disposals during the three months ended March 31, 2026.

Interest expense

Interest expense decreased by less than $0.1 million, or 2.1%, to $0.3 million in three months ended March 31, 2026 from $0.3 million in the three months ended March 31, 2025. This decrease was attributable to lower interest expense associated with finance leases and the impact of lower variable interest rates on amounts outstanding under the company’s revolving credit facilities. These decreases were offset by higher interest expense on notes payable.

Non-GAAP Measures

In addition to net income (loss) determined in accordance with U.S. GAAP, CCCI uses Adjusted EBITDA, a non-GAAP measure, to evaluate its business, measure its performance and make strategic decisions. Adjusted EBITDA is calculated as net income (loss) adjusted to exclude interest expense, income and state franchise tax expense and depreciation and amortization, further adjusted to exclude share-based compensation, non-core costs related to strategic initiatives including transaction related expenses, certain non-recurring public company costs, system implementation and enhancement costs and certain other non-recurring charges.

Management uses Adjusted EBITDA to assess the CCCI’s financial performance because it allows them to compare its operating performance on a consistent basis across periods by removing the effects of CCCI’s capital structure, asset base and other items that impact the comparability of financial results from period to period. CCCI presents Adjusted EBITDA because it believes it provides useful information regarding the factors and trends affecting its business in addition to measures calculated in accordance with U.S. GAAP.

Management believes that the presentation of this non-GAAP financial measure will provide useful information to investors and analysts in assessing its financial performance and results of operations across reporting periods by excluding items it does not believe are indicative of its core operating performance. Net income (loss) is the U.S. GAAP measure most directly comparable to Adjusted EBITDA. CCCI’s non-GAAP financial measure should not be considered as an alternative to the most directly comparable U.S. GAAP financial measure. You are encouraged to evaluate each of these adjustments and the reasons management considers them appropriate for supplemental analysis.

In evaluating Adjusted EBITDA, you should be aware that in the future CCCI may incur expenses that are the same as or similar to some of the adjustments in such presentation. CCCI’s presentation of Adjusted EBITDA should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. There can be no assurance that management will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool, and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of CCCI’s operating results as reported under U.S. GAAP. Adjusted EBITDA may be defined differently by other companies in the construction industry and may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

The table below presents CCCI’s Adjusted EBITDA, reconciled to CCCI’s net income (loss) for the periods indicated:

(in thousands)

Adjusted EBITDA for the three months ended March 31, 2026 was negative $1.1 million, a decrease of $5.5 million, or 125.3%, from $4.4 million for the three months ended March 31, 2025. The primary driver of the decrease was a reduction in gross profit due to factors discussed in Revenue from contracts and Cost of contracts within the Results of Operations section above.

Liquidity and Capital Resources

The primary sources of liquidity are cash and cash equivalents, available borrowing capacity under the lines of credit and cash generated from operations. CCCI believes that existing cash on hand and cash generated from operations and available capacity will be sufficient to meet CCCI’s liquidity needs in the short term. CCCI’s ability to satisfy long-term liquidity requirements of the business depends on its future operating performance, which is affected by prevailing economic conditions, market conditions in the civil construction industry, availability and cost of raw materials and other factors, many of which are beyond CCCI’s control.

Cash used in operating activities was $4.4 million in the three months ended March 31, 2026 compared to cash provided by operating activities of $5.2 million in the three months ended March 31, 2025. Cash provided by investing activities was $0.2 million in the three months ended March 31, 2026 compared to cash used in $1.6 million in the three months ended March 31, 2025, driven by decreases in issuances of related party notes, increases in proceeds from related party notes and an increase in proceeds from disposals of property and equipment, partially offset by an increase in payments for related party transactions. Cash provided by financing activities was $1.8 million in the three months ended March 31, 2026, compared to $5.4 million used in financing activities in the three months ended March 31, 2025, driven by greater net borrowings under CCCI’s lines of credit, partially offset by increased repayments on lines of credit. As of March 31, 2026, and December 31, 2025, CCCI had $13.3 million and $15.6 million in cash on hand, respectively.

As of March 31, 2026, CCCI’s working capital was in a surplus as the company’s current assets exceeded current liabilities by $3.1 million. As of December 31, 2025, CCCI’s working capital was in a deficit as the company’s current liabilities exceeded current assets by $8.9 million. Due to the nature of CCCI’s supplier and customer contracts as well as the timing of payments, CCCI expects to continue to fluctuate between a surplus and deficit of net working capital. Additionally, as of March 31, 2026 and December 31, 2025, CCCI’s current deferred revenue totaled $1.8 million and $2.8 million, respectively. Deferred revenue is driven by the nature of CCCI’s customer contracts wherein advance payments and billings in excess of revenues recognized are recorded as deferred revenue and recognized in revenue as CCCI satisfies the underlying performance obligation.

Lines of credit

CCCI maintained a revolving credit note agreement (the “Revolving Credit Note”) with an interest rate of 1% plus Prime (Prime being the highest prime rate published in the Wall Street Journal or announced by the principle office of Citibank, N.A., J.P. Morgan Chase or Bank of America), but at no less than 7% per annum and no more than 14% per annum, and a maturity date of December 19, 2028.

As of March 31, 2026 and December 31, 2025, the maximum availability was $16.6 million and $16.6 million, respectively, and the principal balance outstanding was $15.2 million and $11.1 million, respectively. As of March 31, 2026 and December 31, 2025, there were no debt covenant violations.

CCCI also maintains an $8.0 million revolving line of credit (the “Revolving Credit Line”) which bears interest at the Wall Street Journal’s prime rate plus 0.50% and has a maturity date of December 26, 2027, as amended. As of March 31, 2026 and December 31, 2025, there was $8.0 million and $8.0 million of principal balance outstanding with $0 and $0 available to borrow, respectively. As of March 31, 2026 and December 31, 2025, there were no debt covenant violations.

The aggregate effective interest rate was approximately 7.52% and 8.28% for the periods ended March 31, 2026, and March 31, 2025, respectively.

Notes payable

As of March 31, 2026, CCCI also has outstanding notes payable with maturity dates ranging from October 2027 through December 2030. As of March 31, 2026 and December 31, 2025, outstanding notes payable totaled $5.3 million and $5.1 million, respectively. These notes were primarily issued to equipment suppliers and are secured by machinery and equipment. The notes carry stated interest rates between 0% to 6.89% with monthly installment payments. CCCI continues to monitor and manage its equipment financing obligations.

Cash Flows

The following table summarizes CCCI’s cash flows and cash and cash equivalents, for the periods indicated:

(in thousands)

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2026 increased by $9.6 million compared to the three months ended March 31, 2025, due to a $3.4 million unfavorable change in operating assets and liabilities and a $6.2 million unfavorable change in net income (loss).

Net income (loss) was unfavorable by $6.2 million as CCCI generated a net loss of $3.7 million in the three months ended March 31, 2026 as compared to net income of $2.5 million in the three months ended March 31, 2025. The reasons for the decrease in net income (loss) are set forth under “Results of operations.”

The change in operating assets and liabilities during the three months ended March 31, 2026 resulted in a $3.4 million decrease in cash and cash equivalents as compared to the change in operating assets and liabilities during the three months ended March 31, 2025. This change was driven by timing differences related to collections on construction contract receivables, raw material purchases and vendor payments on construction contracts.

Investing Activities

Net cash provided by investing activities increased by $1.8 million in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase in net cash provided by investing activities was principally the result of a $0.1 million increase in proceeds from disposals of property and equipment, a $0.5 million increase in proceeds from related party notes, and a $1.3 million decrease in related party note issuances, partially offset by a $0.1 million increase in payments for related party transactions.

Financing Activities

Net cash provided by financing activities increased by $7.2 million in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was driven by greater draws on CCCI’s lines of credit of $16.3 million and reduced finance lease payments of $0.5 million. This increase was partially offset by greater repayments on CCCI’s lines of credit of $9.2 million, increased repayments on notes payable of $0.3 million, and increased distributions to owners of $0.1 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Critical Accounting Policies and Estimates

CCCI’s management’s discussion and analysis of company’s financial condition and results of operations are based on CCCI’s financial statements, which have been prepared in accordance with U.S. GAAP. Preparation of the financial statements in conformity with U.S. GAAP requires the use of certain judgments, estimates and assumptions that impact the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date, and amounts of revenue and expenses recognized during the period. CCCI considers an accounting judgment, estimate or assumption to be critical when the estimate or assumption is complex in nature or requires a high degree of judgment and the use of different judgments, estimates and assumptions could have a material impact on CCCI’s financial statements.

On an ongoing basis, CCCI evaluates the company’s estimates and judgments based on historical experience and various other factors that are believed to be reasonable under the circumstances. CCCI reviews the company’s financial reporting and disclosure practices and accounting policies periodically to confirm that CCCI provides accurate and transparent information relative to the current economic and business environment. A summary of CCCI significant accounting policies is included in Note A – Summary of Significant Accounting Policies to CCCI’s audited financial statements included in AIAI's Registration Statement.

CCCI believes that the company’s critical accounting policies and estimates are:

Revenue recognition

CCCI’s accounting policies establish principles for recognizing revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, and subsequently issued additional related ASUs. The majority of CCCI’s contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and, therefore, is not distinct. However, occasionally CCCI has contracts with multiple performance obligations.

For contracts with multiple performance obligations, CCCI allocates the contract’s transaction price to each performance obligation using the observable stand-alone selling price, if available, or alternatively the best estimate of the stand-alone selling price of each distinct performance obligation in the contract. The primary method used to estimate stand-alone selling price is the expected cost plus a margin approach for each performance obligation.

Revenue related to contracts with customers is recognized over time as work is completed due to the continuous transfer of control to the customer, typically using an input measure such as costs incurred to date relative to total estimated costs at completion to measure progress. Costs that do not depict progress toward satisfaction of the performance obligation are included in contract costs but may not result in revenue being recognized, such as significant re-work.

Revenue from contracts with customers is measured based on consideration specified in a contract with a customer, and excludes any amount collected on behalf of third parties. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction, that are collected by CCCI from a customer, are excluded from revenue.

Costs of revenues earned include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. The cost of significant uninstalled materials, re-work, or scrap is generally excluded from the cost-to-cost measure of progress as it is not proportionate to the entity’s progress in satisfying the performance obligation.

Costs to fulfill a contract, including mobilization costs, prior to substantive work beginning are capitalized as incurred and amortized over the expected duration of the contract. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

Contract Estimates Including Claims, Unapproved Change Orders and Variable Consideration

CCCI accounts for long-term contracts through the use of various techniques to estimate total transaction price, total estimated costs at completion, and progress toward satisfaction of performance obligations which are used to recognize revenue earned. Unforeseen events and circumstances can alter the estimate of the costs associated with a particular contract. Total estimated costs at completion can be impacted by changes in productivity, scheduling, the unit cost of labor, subcontracts, materials, and equipment. Additionally, external factors such as weather, customer needs, customer delays in providing permits and approvals, labor availability, governmental regulation and politics may affect the progress of a project’s completion and push the timing and amount of revenue recognition.

To the extent that original cost estimates are modified, estimated costs to complete the increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition, and profitability from a particular contract may be adversely affected.

The nature of CCCI’s contracts gives rise to several types of variable consideration that can either increase or decrease the transaction price. Transaction price for contracts is required to include evaluation of variable consideration to which CCCI has an enforceable right to compensation or obligation for a reduction, which can result in increases or decreases to a contract’s transaction price. The effect of a change in variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis.

Contract modifications can result in contract specifications or requirements that either create new or changes existing enforceable rights and obligations of the parties to the contract. CCCI considers unapproved change orders to be contract modifications for which customers have agreed to changes in the scope of the contract but have not agreed to the price.

Costs associated with contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. In most instances, contract modifications are for goods or services that are not distinct and, therefore, are accounted for as a part of the existing contract. In those instances, the effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis.

Contract assets and contract liabilities

CCCI bills customers on long-term construction contracts depending upon agreed-upon contractual terms, which may include milestone billings based on the completion of certain phases of the work, or when services are provided. When as a result of contingencies, billings cannot occur until after the related revenue has been recognized, the result is unbilled revenue, which is included in contract assets. Additionally, CCCI may receive advances or deposits from customers before revenue is recognized, resulting in deferred revenue, which is included in contract liabilities.

Retainage for which CCCI has an unconditional right to payment that is only subject to the passage of time are classified as contracts receivable. Retainage subject to conditions other than the passage of time does not meet the definition of a receivable and are therefore included in contract assets and contract liabilities, as determined on a contract-by-contract basis.

Contract assets represent revenues recognized in excess of amounts paid or payable (contract receivables) to CCCI on uncompleted contracts. Contract liabilities represent CCCI’s obligation to perform on uncompleted contracts with customers for which CCCI has received payment or for which contract receivables are outstanding.

Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, CCCI is exposed to market risks, including interest rate risk and effects of inflation. CCCI currently does not enter into derivatives or other financial instruments for trading or speculative purposes. CCCI only has operations in the U.S. and does not have material foreign currency exposure.

Interest Rate Risk

CCCI is exposed to interest rate risk through the Revolving Credit Line and Revolving Credit Note. As of March 31, 2026 and December 31, 2025, CCCI had $8.0 million and $8.0 million, respectively, or aggregate principal outstanding under the Revolving Credit Line, which bears interest at the Wall Street Journal’s prime rate plus 0.50%. Additionally, as of March 31, 2026 and December 31, 2025, CCCI had $15.2 million and $11.1 million, respectively, of aggregate principal amount outstanding under the Revolving Credit Note, which bears interest at 1% plus Prime (Prime being the highest prime rate published in the Wall Street Journal or announced by the principle office of Citibank, N.A., J.P. Morgan Chase or Bank of America), but at no less than 7% per annum and no more than 14% per annum.

CCCI does not currently intend to hedge company’s exposure to interest rate risk. The impact of a 1% increase in interest rates on CCCI outstanding debt as of March 31, 2026 would result in an annual increase in interest expense of approximately $0.2 million.

CCCI is exposed to market risk for changes in interest rates applicable to CCCI’s cash and cash equivalents and debt. CCCI’s cash and cash equivalents totaled $13.3 million and $15.6 million as of March 31, 2026 and December 31, 2025, respectively. All cash and cash equivalents were invested in demand deposit accounts.

Effects of Inflation and Tariffs

Inflationary cost increases can affect the profitability of CCCI’s construction contracts. CCCI operates in or provides services to capital-intensive industries in which federal trade policies could significantly impact the availability and cost of materials. Supply chain disruptions due to international conflicts or imposed and proposed tariffs could significantly increase the prices and delivery lead times on raw materials and finished products that are critical to CCCI and its customers, such as cement and steel, among other things, as well as fuel costs. Prolonged lead times on the delivery of raw materials, supply chain disruptions, or further tariff increases on raw materials and finished products could adversely affect CCCI’s business, financial condition and results of operations.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act) prior to the filing of this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were, in design and operation, not effective at a reasonable assurance level due to the following material weaknesses in CCCI’s internal control over financial reporting:

• CCCI historically has not been subject to SEC reporting requirements and has not maintained internal control over financial reporting or disclosure controls designed for a public company environment.
• In connection with CCCI audits for the years ended December 31, 2025, 2024, and 2023, management and our independent auditors identified material weaknesses related to deficiencies in control design and implementation, including information technology general controls and an insufficient complement of personnel with appropriate public‑company accounting expertise.

Changes in Internal Control over Financial Reporting

Following the identification of the material weaknesses in CCCI reporting described above, CCCI management commenced remediation actions relating to these material weaknesses beginning in the three months ended March 31, 2026, as follows:

• To address the material weakness related to internal controls over financial reporting, management has engaged qualified external consultants to assist with financial reporting processes, account reconciliations, and review controls. These consultants provide an additional layer of oversight and help mitigate risks associated with limited internal staffing. As the Company grows and additional resources become available, management plans to expand the finance team and reassign responsibilities to achieve more effective separation of duties. Enhanced management review procedures have been implemented immediately.
• Management has initiated the development of a comprehensive accounting and financial reporting policies and procedures manual, covering key processes such as revenue recognition, expense accruals, account reconciliations, financial close procedures, estimate preparation, and journal entry documentation and review.

The material weaknesses identified above will not be considered fully remediated until these additional controls and procedures have operated effectively for a sufficient period of time and management has concluded, through testing, that these controls are effective. AIAI’s management will monitor the effectiveness of CCCI’s remediation plans and will make changes management determines to be appropriate. If not remediated, these material weaknesses could result in material misstatements to AIAI and CCCI’s annual or interim consolidated financial statements that may not be prevented or detected on a timely basis or result in a delayed filing of required periodic reports. If AIAI is unable to assert that internal controls over financial reporting is effective, investors may lose confidence in the accuracy and completeness of AIAI’s and CCCI’s financial reports, the market price of AIAI’s common stock could be adversely affected, and AIAI could become subject to litigation or investigations by The Nasdaq Stock Market LLC, the SEC, or other regulatory authorities, which could require additional financial and management resources.

There were no changes in internal control over financial reporting during the three months ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting, except as described above.

As of the date of this Quarterly Report on Form 10-Q, there were no material changes to the risk factors described in our Registration Statement S-1/A filed on May 1, 2026.