CID Holdco, Inc. 8-K

What Happened

• On May 29, 2026, CID Holdco, Inc. (DAIC) completed the third closing under a Note Purchase Agreement with White Lion Capital, issuing a senior secured convertible promissory note in a face amount of $287,500 for cash proceeds of $230,000 (20% original issue discount). The Note bears interest at 8% per year (first six months’ interest accrues immediately and is guaranteed) and matures six months after issuance. Proceeds must be applied to scheduled monthly payments under the Company’s December 4, 2025 loan from J.J. Astor & Co.
• The Company also disclosed executive compensation actions: CEO Edmund Nabrotzky, CFO Charles Maddox and CTO Vijayan Nambiar agreed to reduce salaries to state-law minimums and to defer base salary; CRO Robin (Mrs.) Rochester agreed to reduce salary by 50% and also agreed to a deferral arrangement. These actions are part of broader cost-saving measures, including employee furloughs.

Key Details

• Note face amount: $287,500; cash proceeds: $230,000 (20% original issue discount).
• Interest: 8% per annum; first six months’ interest accrues immediately and is guaranteed; maturity = 6 months from issue.
• Conversion: Holder may convert into Common Stock at a variable price equal to 80% of the lowest daily VWAP during the 15 trading days before conversion; ownership cap = 4.99% (can be increased to 9.99% with 61 days’ notice). On default, Holder may convert at $0.01/share.
• Security and priority: Note is a second senior secured obligation, secured by company assets but subject to a second-priority lien behind J.J. Astor & Co.’s first-priority lien (Dec. 4, 2025 loan).
• Use of proceeds: Required to be applied to payments under the J.J. Astor loan.
• Executive actions: Named executives agreed to salary reductions and deferrals; amendments and deferral agreements will be filed as exhibits to the next Form 10-Q.
• Item 3.02 references the unregistered sale of the convertible security to the Holder.

Why It Matters

• Liquidity and near-term refinancing: The Note is short-term (6 months) and proceeds are earmarked to pay an existing lender, signaling near-term cash needs and reliance on short-term financing.
• Potential dilution and downside conversion terms: The convertible feature (80% of low VWAP over 15 days) can create dilution if converted; the default conversion at $0.01/share creates significant dilution risk upon an event of default.
• Priority of claims: The Note is second-lien debt behind J.J. Astor, which limits recovery for this Holder and highlights the company’s capital structure constraints.
• Cost control: Executive salary reductions and deferrals and broader furloughs are immediate cash-saving steps that reduce near-term payroll expense; the company says deferred amounts are expected to be restored when financing permits.