NOTE 1 — The Company and Its Significant Accounting Policies

Description of Business—DNA X, Inc. (“the Company”) was incorporated in the state of Delaware on August 5, 1999 under the name Sonim Technologies Inc., and is headquartered in San Diego, California. Effective January 23, 2026, the Company changed its name to DNA X, Inc. The Company operates an AI and crypto trading platform that operates on the internet and is designed to harness advanced AI and machine learning technologies to automate intelligent trading strategies, enabling clients to capitalize on data-driven insights and dynamic opportunities. See https://dnax.us for more information on the services offered. Until January 23, 2026, the Company operated a cell phone and mobile hotspot manufacturing business. The assets of the phone and mobile hotspot business were sold to Pace Car Acquisition LLC on January 23, 2026.

The trading platform generates revenue from trading commissions that are based on the value of the trades that customers execute on the DNA X trading website. The trading platform is adding enhancements such as perpetual futures and trading in AI compute time. The website is not currently open to the public as the Company is developing and testing the new services. Potential customers are individual and institutional investors.

Liquidity and Ability to Continue as a Going Concern—The Company’s consolidated financial statements account for the continuation of its business as a going concern. The Company is subject to the risks and uncertainties associated with operating an AI and crypto trading platform including the ability to attract new customers and to keep existing customers from moving their business to other competitors. On July 8, 2026, the Company received $2,500 in cash from the sale of preferred shares to DNA Holdings Venture Inc. (“DNA Holdings”). On July 8, 2026 the $3,053 convertible note that the Company previously issued was cancelled and exchanged for preferred stock of the Company. On August 7, 2026, the Company received an additional $2,500 in cash from the sale of preferred shares to DNA Holdings. See Note 13. There is one class of preferred stock and it is convertible into common stock of the Company upon stockholders’ approval. The preferred stock does not have any special dividend rights or any voting rights. The $5,000 received and is expected to be sufficient to support completing enhancements to the DNA X trading platform and to allow the Company to pay obligations as they become due over the year following the filing of this 10-Q.

Reverse Stock Split—On October 28, 2025, the Company effected a 1-for-18 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). The Company’s common stock began trading on the Nasdaq Capital Market on a post-split basis on October 29, 2025. As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to October 18, 2025, was automatically converted into one-eighteenth (1/18) of a share of common stock. The Reverse Stock Split affected all common stockholders uniformly and did not alter any stockholder’s percentage interest in the Company’s equity, except to the extent that the Reverse Stock Split would result in a stockholder owning a fractional share. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive a fractional share, instead cash was paid to stockholders for the value of the fractional share.

The Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock. All outstanding stock options, restricted stock units, and warrants entitling their holders to purchase or obtain or convert into shares of our common stock were adjusted, as required by the terms of these securities.

The Company’s stockholders’ equity, in the aggregate, remained unchanged following the Reverse Stock Split. Net income (loss) per share increased because there were fewer shares of common stock outstanding. There were no other accounting consequences, including changes to the amount of stock-based compensation expense to be recognized in any period, that arose as a result of the Reverse Stock Split.

All common share and per-share amounts in this Form 10-Q have been retroactively restated to reflect the effect of the Reverse Stock Split.

Financial Statement Presentation—The unaudited condensed consolidated financial statements include the accounts of DNA X, Inc. and its wholly owned subsidiaries (collectively “DNA X” or the “Company”). Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these unaudited condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. Certain prior period amounts in the unaudited condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2025.

Principles of Consolidation—The accompanying consolidated financial statements through January 23, 2026 include the accounts of DNA X, Inc. and its wholly owned foreign subsidiaries, Sonim Technologies (India) Private Limited, Sonim Technologies (Shenzhen) Limited, Sonim Technologies Inc. Shenzhen Limited Beijing Branch, Sonim Technologies (Hong Kong) Limited, Sonim Technologies Germany GmbH and Sonim Technologies Communications India Private Limited (collectively, the “Company”). After the Company’s subsidiaries in Shenzhen, Beijing, Hong Kong, and Germany were sold on January 23, 2026, only Sonim Technologies (India) Private Limited is consolidated after January 23, 2026. On May 26, 2026, the Company was deemed to gain control over DNA X LLC, and after this date the Company also includes DNA X LLC in their consolidated financial statements.

Reclassifications—Prior period amounts were reclassified to conform to the current period presentation including the separation of amortization of debt discounts and issuance costs on the statement of cash flow.

Assets Held For Sale—The Company generally considers assets to be held for sale when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) management has initiated an active program to locate a buyer or buyers and other actions required to complete the plan to sell the disposal group, (iv) the sale of the property within one year is considered probable, (v) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value and (vi) significant changes to the plan to sell are not expected. Property classified as held for sale is no longer depreciated and is reported at the lower of its carrying value or its estimated fair value less estimated costs to sell. During the fourth quarter ended December 31, 2025, the Company deemed that its phone and hotspot operations met the held for sale criteria and was classified as such on the audited condensed consolidated balance sheet for the December 31, 2025 balance sheet and the prior period that was presented. The six criteria were met on December 30, 2025 when the stockholders approved the asset sale and the asset sale became probable.

Discontinued Operations—The Company deems it appropriate to classify a business as a discontinued operation if the related disposal group meets all the following criteria: (i) the disposal group is a component of the Company, (ii) the component meets the held-for-sale criteria, and (iii) the disposal of the component represents a strategic shift that has a major effect on the Company’s operations and financial results. During the fiscal quarter ended December 31, 2025, the Company deemed its phone and hotspot operations to be discontinued operations due to the disposal group meeting all three criteria. As such, the results of the phone and hotspot operations are presented as discontinued operations in the unaudited condensed consolidated statements of operations for the six months ended June 30, 2026 and June 30, 2025, and have been excluded from both continuing operations and segment results for all periods presented.

Related Party Transactions— On October 1, 2024, the Company signed an agreement with a then-related party, in which a family member of the Company’s then-director, Jeffrey Wang, holds an indirect interest of approximately 40%, to purchase parts and components to be used in the manufacturing of the company’s products for the aggregate amount of approximately $1,000. The agreement was executed in the ordinary course of business. The Company did not purchase any raw materials under this agreement in 2026. As of July 18, 2025, Jeffrey Wang is no longer a director of the Company.

The Company’s director, Scott Walker, has an ownership interest of approximately 50% in DNA Holdings, the entity that sold the DNA X LLC cryptocurrency trading platform to the Company. The entity received 19.99% of the pre-transaction shares of the Company in redeemable shares of common stock of the Company on December 15, 2025. As of June 30, 2026, these shares, which are no longer redeemable, represented approximately 15% of the Company’s outstanding common stock. On May 26, 2026, DNA Holdings purchased a convertible promissory note in the principal amount of $3,053 in exchange for $1,800 in cash and the cancellation of the entire $1,200 principal amount of a convertible promissory note previously issued to DNA Holdings and $53 of accrued unpaid interest due under such convertible promissory note. On July 8, 2026 the $3,053 convertible promissory note was surrendered and exchanged for preferred stock in the Company, and DNA Holdings purchased additional preferred stock for $2,500 in cash. This preferred stock has the right to convert to common stock in the Company upon stockholders’ approval. The preferred stock does not have any voting rights. See Note 13.

The Company has executed a Transition Services Agreement with DNA Holdings to facilitate the paying of certain contractors that work on enhancements to the DNA X software. Through June 30, 2026, the company has reimbursed DNA Holdings $94 for the costs of these consultants. All transactions between the Company and DNA Holdings have been approved by the Company’s management.

Redeemable Common Stock—Stock that was issued for the DNA X LLC business was classified as redeemable common stock in the temporary equity section of the balance sheet from its issuance on December 15, 2025 until May 26, 2026, when the put option that gave DNA Holdings the right to take back the DNA X LLC business was terminated. As of June 30, 2026, the common stock that was issued to DNA Holdings for the DNA X LLC business is classified as permanent equity.

Estimates—The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates include, but are not limited to, estimates related to revenue recognition; valuation assumptions regarding the determination of the fair value of common stock, as well as stock options; the useful lives of the Company’s long-lived assets; intangible assets; product warranties; loss contingencies; the recognition and measurement of income tax assets and liabilities, including uncertain tax positions; the net realizable value of inventory; allowances for credit losses; and estimation of assets and liabilities for operating entities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates, judgments or revise the carrying value of its assets or liabilities.

Concentrations of Credit Risk—The Company plans on relaunching its cryptocurrency trading platform later this year and the commission revenue will be concentrated in the cryptocurrency trading industry, which is highly competitive and rapidly changing. Significant technological changes in the industry or customer requirements, or the emergence of competitive products with new capabilities or technologies, could adversely affect the Company’s consolidated operating results.

Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited with high-quality, federally insured commercial banks in the United States and cash balances are in excess of federal insurance limits as of June 30, 2026 and the year ended 2025.

Segment Information—The Company considers the cryptocurrency trading platform that is under development to be a reporting segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, who is the chief executive officer, in deciding how to allocate resources and assessing performance.

Cash and Cash Equivalents—The Company considers all highly liquid investments with an original maturity from the date of purchase of 90 days or less to be cash equivalents. As of June 30, 2026 and December 31, 2025, cash and cash equivalents consist of cash deposited with banks and money market funds. Included in the Company’s cash and cash equivalents are amounts held by foreign subsidiaries. After the sale of all of the Company’s foreign subsidiaries except for Inda, the Company has less than $250 in foreign bank accounts.

Receivable for Cash Held Back from the Asset Sale—All customer accounts receivable were sold on January 23, 2026 with the asset sale. The only remaining non-trade receivable is from the Buyer of the Company’s assets and is due on October 28, 2026. The original amount held back was $1,500 and the amount has been reduced to $1,248 to reflect severance payments that were made by the Buyer on behalf of the Company. Payment of the receivable is subject to indemnity claims by the Buyer.

Receivables Financing Agreement—On August 7, 2025, the Company entered into a non-recourse factoring agreement with Tradewind GmbH (the “Factor”). This agreement was terminated in January 2026.

Inventory—The Company sold all of its inventory on or before January 23, 2026.

Property and Equipment—The Company sold all of its property and equipment on January 23, 2026. Prior to the sale, most property and equipment consisted of personal computers and related equipment.

Identifiable Intangible Assets—The Company acquired identifiable intangible assets for the trading platform and for the trademarks and domain names of DNA X. These assets were acquired on May 26, 2026 when the Company gained accounting control of DNA X LLC. The assets were recorded as fair value on May 26, 2026 based on information from a third party valuation company. The intangible assets are amortized on a straight-line bases over 5 years for software and over 10 years for trademarks. See Note 4. For the DNA X trading platform, software that was developed after May 26, 2026 is capitalized if the project has been approved, is likely to be completed, and has not been made available for its intended use. Major enhancements to the software are also capitalized. Software costs that do not meet these criteria are expensed in the current period.

Asset Acquisition vs. Business Acquisition— The Company evaluates each acquisition to determine whether the acquired set of assets and activities meets the definition of a business under ASC 805, Business Combinations. The Company may elect to apply the optional concentration test. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the acquired set is not considered a business. If the concentration test is not applied or is not met, the Company evaluates whether the acquired set includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. An acquired set that does not meet the definition of a business is accounted for as an asset acquisition. See Note 7 for how this was applied to the gain of control of DNA X LLC on May 26, 2026.

Variable Interest Entities—The Company evaluates its interests in legal entities to determine whether the entity is a variable interest entity (“VIE”) and whether the Company is the primary beneficiary of the VIE in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation.

A VIE is an entity that either (i) lacks sufficient equity to finance its activities without additional subordinated financial support or (ii) has equity holders that lack the characteristics of a controlling financial interest. The Company is considered the primary beneficiary of a VIE when it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If the Company is the primary beneficiary, the VIE is consolidated and all intercompany balances and transactions are eliminated. For VIEs in which the Company is not the primary beneficiary, the Company accounts for its interest under the equity method of accounting or other applicable guidance. The Company presents, on a separate line within the consolidated balance sheets, the assets of consolidated VIEs that can only be used to settle the obligations of the VIE and the liabilities of consolidated VIEs for which creditors do not have recourse to the general credit of the Company.

On May 26, 2026, the Company determined that its interest in DNA X LLC became a controlling interest and the assets of the DNA X LLC subsidiary were consolidated into the Company’s consolidated financial statements beginning on May 26, 2026

Equity Method Investments—The Company accounts for investments in entities over which it has the ability to exercise significant influence, but not control, using the equity method of accounting in accordance with ASC Topic 323, Investments—Equity Method and Joint Ventures. Significant influence is generally presumed to exist when the Company owns between 20% and 50% of the voting interests of an entity; however, the Company also considers qualitative factors such as representation on the board of directors, participation in policy-making decisions, and material intercompany transactions. Under the equity method, investments are initially recorded at cost and subsequently adjusted for the Company’s proportionate share of the investee’s net income or loss and distributions received. The Company’s share of earnings or losses is recorded as a separate line item within the consolidated statements of operations.

The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. If the Company determines that a decline in fair value is other-than-temporary, the investment is written down to its estimated fair value. Distributions received from equity method investees are accounted for as reductions of the carrying amount of the investment unless the distributions represent a return on investment. The Company discontinues applying the equity method when its investment balance is reduced to zero and resumes recognizing its share of earnings only after its share of cumulative earnings exceeds previously unrecognized losses. The Company recognized $48 in net income from its investment in DNA X LLC for the six months ended June 30, 2026. The Company recorded this $48 as other income on its unaudited condensed consolidated statement of operations. On May 26, 2026, the Company gained full control over DNA X LLC and converted its interest in DNA X LLC from an equity method investment to a consolidated entity. There was no gain or loss on the conversion as the value of the net assets acquired were equal to the carrying value of the investment.

Leases—The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or finance leases and, if significant, are recorded on the Consolidated Balance Sheets as both a right of use asset and a lease liability. There were no such leases in 2026.

Non-recurring Engineering (“NRE”) Tooling and Purchased Software Licenses—For the discontinued operations, third-party design services relating to the design of tooling materials and purchased software licenses used in the manufacturing process are capitalized and included in other assets that are part of assets held for sale.

Long-lived Assets—The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Revenue Recognition—The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

Revenue related to the phone and hotspot business is included in discontinued operations for all periods presented. DNA X LLC was accounted for as an equity investment through May 26, 2026. After May 26, 2026, control of DNA X LLC by the Company was achieved, and subsidiary is consolidated into the Company’s financial statements as of June 30, 2026.

Revenue recognition for discontinued operations was reduced for discounts, price protection and customer incentives.

Cost of Revenues—Cost of revenue is related to the phone and hotspot business.

Advertising—The Company expenses the costs of advertising, including promotional expenses, as incurred. For the six months ended June 30, 2026 and 2025 the Company had no advertising expenses.

Research and Development—Research and development expenses consist of compensation costs and development fees paid to third parties. The Company expenses research and development costs as incurred.

Stock-Based Compensation—The Company measures equity classified stock-based awards granted to employees, nonemployee directors, and consultants based on the estimated fair value on the date of grant and recognizes compensation expense of those awards, net of actual forfeitures, on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. For awards subject to performance conditions, the Company evaluates the probability of achieving each performance condition at each reporting date and begins to recognize expense over the requisite service period when it is deemed probable that a performance condition will be met using the accelerated attribution method. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The fair value of each restricted stock award is measured as the fair value per share of the Company’s common stock on the date of grant.

Comprehensive Income or Loss—The Company had no items of comprehensive income or loss other than net loss for the six month ended June 30, 2026 and the year ended December 31, 2025. Therefore, a separate statement of comprehensive loss has not been included in the accompanying consolidated financial statements.

Income taxes—The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Compliance with income tax regulations requires the Company to make decisions relating to the transfer pricing of revenue and expenses between each of its legal entities that are located in several countries. The Company’s determinations include many decisions based on management’s knowledge of the underlying assets of the business, the legal ownership of these assets, and the ultimate transactions conducted with customers and other third parties. The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations in multiple tax jurisdictions. The Company may be periodically reviewed by domestic and foreign tax authorities regarding the amount of taxes due. These reviews may include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with various filing positions, the Company records estimated reserves when it is more likely than not that an uncertain tax position will not be sustained upon examination by a taxing authority. Such estimates are subject to change. See Note 9.

Net Earnings (Loss) per Share—Net earnings (loss) per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. For the six months ended June 30, 2026 and 2025, for purposes of the calculation of diluted net loss per share, warrants to purchase stock, unvested restricted stock units and stock options to purchase common stock are considered potentially dilutive securities. Because we had a net loss in continuing operations, we did not present fully diluted earnings per share for the second quarter of 2026 or 2025.

Promissory Notes—The Company accounts for promissory notes in accordance with ASC 470, Debt. Promissory notes are initially recorded at the amount of cash proceeds received, net of any original issue discount and direct issuance costs. Debt discounts and issuance costs are amortized to interest expense over the term of the note using the effective interest rate method, which approximates the effective interest method. Interest is accrued based on the stated interest rate. For convertible notes we analyze the note’s terms and determine if the conversion feature needs to be bifurcated from the debt portion. For the two DNA Notes (see note 6) we determined that they needed to be bifurcated between the debt portion and a derivative liability for the conversion feature.

Derivative Liability—The Company evaluates financial instruments containing characteristics of both liabilities and equity in accordance with FASB ASC 480, Distinguishing Liabilities from Equity, and FASB ASC 815, Derivatives and Hedging. Derivative liabilities are revalued at fair value at each reporting period, with changes in fair value recognized in the results of operations as a gain or loss on derivative remeasurement. The Company uses a Binomial option pricing model to determine the fair value of these instruments. Derivative liabilities are revalued at fair value at each reporting period, with changes in fair value recognized in the results of operations as a gain or loss on derivative remeasurement. The Company uses a Binomial option pricing model to determine the fair value of these instruments.

Debt Extinguishment—The Company evaluates new debt agreements with the counterparties of existing debt holders to determine if the new debt should be accounted for as a debt modification or a debt extinguishment of the old debt. If the change in value between the new debt and the old debt is greater than or equal to 10% of the debt, then the transaction would be considered a debt extinguishment. If less than 10% then it would be considered a debt modification. See Note 6 for how this was applied to the new note on May 26, 2026.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Pronouncements adopted in 2025

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures This guidance requires expanded annual income tax disclosures, including (1) consistent categories and greater disaggregation of information in the rate reconciliation, and (2) income taxes paid disaggregated by jurisdiction. This guidance was adopted by the Company effective for the annual period ending December 31, 2025. The adoption affected the footnote disclosures and did not have a material impact on the unaudited condensed consolidated financial statements.

Pronouncements adopted in 2026

None.

Pronouncements not yet adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses. This guidance requires additional disclosure of certain amounts included in the expense captions presented on the Statement of Operations as well as disclosures about selling expenses. The ASU is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this guidance will have on its consolidated financial statements and related disclosures.