DNA X, Inc.: Form 10-Q for the period ended Mar 31, 2026

Forward-Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations together with “Cautionary Note About Forward-Looking Statements” and our unaudited condensed consolidated financial statements and related notes included under Item 1 of this Quarterly Report on Form 10-Q as well as our most recent Annual Report on Form 10-K for the year ended December 31, 2025 as amended, including Part 1, Item 1A “Risk Factors.”

Company Overview

We are a provider of crypto trading services to the public. Our services are available over the internet at https://dnax.us. We serve individual cryptocurrency traders. Our products allow users to efficiently buy and sell cryptocurrencies with cash or cash equivalents, or to exchange one cryptocurrency for another cryptocurrency. Our platform allows users to execute strategies between pairs of cryptocurrencies that allow them to swap between the currencies as the prices diverge or converge. This allows users to automate strategies without the need to continuously monitor the market. We are developing products to increase the number of cryptocurrencies that are available for trading on our platform and products the Company expects to bring in additional customers and drive additional revenue from commissions and fees.

We are currently operating on a limited basis to monitor the platform and address any bugs or performance issues. We plan to add additional features and products to the platform throughout 2026 as we execute our growth strategy. We will continue to monitor the platform to ensure that it can handle the anticipated increase in trading volume. We may use social media and traditional media to market our platform to potential customers. We may expand our marketing efforts as new products become available to customers.

Prior to December 2025, when we acquired our platform, we operated under the name Sonim Technologies, Inc. and were primarily focused on designing and manufacturing cell phones and mobile hotspots. We developed the software that ran on our products. We completed the disposition of substantially all assets of our phone and hotspot business on January 23, 2026.

Our Products

Trading and Swapping Cryptocurrencies

Our https://dnax.us website allows users to trade or swap certain cryptocurrencies for other cryptocurrencies or for cash equivalent currencies. New customers can set up an account on our website that will allow them to trade cryptocurrencies. The customer owns the assets before and after the trade and commissions are automatically deducted from the trade. We do not take custody of any of our customers’ crypto assets. We employ various security measures in an effort to protect our customers and ourselves from cyber threats. The trades on our platform are generally completed immediately and there is no delay in settling the transactions.

Our platform allows anyone to set up an automated trading strategy and to buy one currency when the price ratio with another currency is reached in one direction, and to sell the currency when the ratio is reached in the other direction. This allows users to automatically trade and capture profits as cryptocurrencies trade within certain ranges. These strategies can be viewed by all users and can be duplicated. Our platform maintains histories of the strategies that can be analyzed to develop new strategies. We generate commission revenue from our users’ trading activity on our platform.

We are developing new enhancements to our trading platform that when implemented, are expected to increase trading volume.

Recent Developments

Completion of the Asset Purchase Agreement with Pace Car Acquisition LLC. On January 23, 2026, we completed the sale of substantially all assets and most liabilities related to our legacy phone and mobile hotspot business for a purchase price of $15.0 million in cash, less working capital, indebtedness and transaction expense adjustments for a net sales price of $13.5 million.

Results of Operations

The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the operating results to be expected for the full year or in any future period. On January 23, 2026, we completed the sale of our phone and hotspots assets, and many of our employees transferred to the buyer. The accompanying consolidated financial statements and certain tables below present operations from this legacy business as discontinued operations for all periods presented, and the assets and liabilities of this legacy business are presented as assets and liabilities held for sale for the period ended December 31, 2025. Since that time, we have focused on growing and developing our cryptocurrency trading platform, DNA X. The following table presents key components of the Company’s results of discontinued operations for the three months periods ended March 31, 2026 and 2025:

DISCONTINUED OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS

PERIODS ENDED MARCH 31, 2026 and 2025

(IN THOUSANDS)

Gain on sale of assets

Gain on sale of assets of $15.6 million during the three months ended March 31, 2026 is attributable to the disposition of our legacy phone and hotspot business and is calculated as the consideration paid of $15.0 million less a working capital adjustment, less the book value of the assets sold and the liabilities assumed.

The consolidated statement of operations of discontinued operations for the three months ended March 31, 2026 reflects the 23-day period prior to the completion of the asset sale. Revenue for the three months ended March 31, 2025 was $12.9 million higher than in the corresponding period in 2026 because we operated our legacy phone and hotspot business for the entire quarter in 2025 and because there was a one-time release of accrued promotional funds in 2025.

Gross profit was negative in 2026 because we discontinued some products and wrote down inventory.

Operating expenses were lower in 2026 because the period was only for 23 days as compared to an entire quarter in 2025.

Income tax expense of $2.5 million is calculated on the gain on the sale of assets plus the operating net loss for the quarter, and an estimate of future net income or loss for the three remaining quarters of the year. Because the Company has net operating loss carryforwards, the actual cash that will be paid in the United States for income taxes for the 2026 tax year is estimated to be approximately $0.5 million. The estimated taxes are netted with the gain on sale of the assets and are included in discontinued operations.

The following table presents key components of our results of continuing operations (dollars in thousands):

General and Administrative

General and administrative expenses for the three months ended March 31, 2026, increased by $2.5 million compared to 2025 primarily due to employee severance ($1.1 million) and bonuses ($0.4 million) triggered by the completion of the asset sale in 2026. Profession fees for audit and tax services increased by $0.5 million in 2026 because of increased complexity with the purchase of DNA X LLC, and the asset sale transaction. Employee compensation after the asset sale for executives was included in General and Administrative in continuing operations in 2026, but employee compensation for executives in 2025 was allocated to discontinued operations. General and administrative expenses are expected to drop significantly for the remainder of 2026 as one-time costs related to the assets sale will not recur.

Other Income

Other income is net income from our DNA X cryptocurrency trading business for the first quarter of 2026. The increase of $0.05 million in comparison to the three months ended March 31, 2025 is due to the fact that we did not own this business in the first quarter of 2025.

Going Concern, Liquidity and Capital Resources

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business for a period of at least one year from the issuance date of the accompanying consolidated financial statements. We had approximately $1.2 million in cash at March 31, 2026. On May 20, 2026, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with DNA Holdings Venture, Inc. (the “Purchaser”) pursuant to which the Company sold and issued to the Purchaser a convertible promissory note (the “Note”) in the principal amount of $3,053 for an aggregate purchase price in the same amount. The aggregate purchase price for the Note consisted of $1,800 in cash to the Company and the surrender of the convertible promissory note, dated December 15, 2025, in the principal amount of $1,200 issued by the Company to the Purchaser, including $53 of accrued unpaid interest on such principal amount. These $1,800 in loan proceeds are expected to provide sufficient working capital to pay our obligations through December 31, 2026, when the note matures. If the note is not converted into the Company’s common stock prior to December 31, 2026, then the Company will need to raise additional capital to repay the $3.0 million that will become due on December 31, 2026 from the note. Due to the uncertainty of either the note being converted or of us raising additional capital prior to December 31, 2026 , there is substantial doubt regarding our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash Flows

The following table summarizes our sources and uses of cash for the periods presented (in thousands):

28

Cash flows from operating activities – combined continuing and discontinued operations

For the three months ended March 31, 2026, cash used in operating activities was $3.5 million, primarily attributable to the sale of phone and hotspot inventory and the sale of parts inventory from the discontinued phone and hotspot business of $5,5 million, lower prepaids of $1.7 million, offset by the paydown of accounts payable with the proceeds from the asset sale of $2.7 million.

For the three months ended March 31, 2025, cash used in operating activities was $9.6 million, primarily attributable to net cash used in a change in net operating assets and liabilities of $6.1 million and net income of $0.5 million, excluding net non-cash operating activity of $4.0 million. The change in net operating assets and liabilities was primarily due to net payments made on accounts payable and an increase in contract fulfillment assets, which are capitalized costs for product certifications, partially offset by a decrease in inventory. Non-cash charges primarily consist of $5.3 million related to the expiration of customer allowance agreements, $1.1 million in depreciation and amortization and $0.3 million for stock-based compensation.

Cash flows from investing activities – combined continuing and discontinued operations

For the three months ended March 31, 2026, cash provided from investing activities was $3.4 million in net cash received from the asset sale. In 2025, there were no significant investing activities.

Cash flows from financing activities – combined continuing and discontinued operations

For the three months ended March 31, 2026, there were no financing activities.

For the three months ended March 31, 2025, the Company received $3.5 million in cash, net of issuance costs, from Streeterville for one of the notes.

Material Cash Requirements

There have been no material changes to our material cash requirements from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate.

A description of our critical accounting policies that represent the more significant judgments and estimates used in the preparation of our consolidated financial statements was provided in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no changes to our critical accounting policies and estimates described in the Annual Report on Form 10-K for the year ended December 31, 2025, that have had a material impact on our unaudited condensed consolidated financial statements and related notes.

Segment Information

We have one business activity and operate in one reportable segment.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, prior to filing this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive and principal 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 not effective for accounting for complicated transactions related to investments and acquisitions.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating disclosure controls and procedures, our management recognizes that any system of controls, however well designed and operated, can provide only reasonable assurance, and not absolute assurance, that the desired control objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals in all future circumstances. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met.

Material Weakness in Internal Control Over Financial Reporting

The Company identified a material weakness in its internal control over financial reporting related to a lack of personnel with sufficient technical accounting expertise to appropriately analyze and account for complex, non-routine transactions. Specifically, the Company did not maintain adequate resources with the requisite knowledge of U.S. GAAP to properly evaluate the accounting implications of significant transactions, including accounting for business acquisitions.

As a result of this deficiency, the Company failed to appropriately apply relevant accounting guidance, which led to errors in the initial recording of certain transactions and required adjustments during the financial statement close process. Additionally, the review controls designed to detect such errors were not effective due to the same lack of technical expertise.

Management concluded that this control deficiency constitutes a material weakness because there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected on a timely basis.

The Company has not resolved this material weakness as of March 31, 2026.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the three months ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There are no material changes to the risk factors set forth in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025.