PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, along with detailed notes explaining the company's organization, accounting policies, IPO, related party transactions, commitments, and fair value measurements Condensed Consolidated Balance Sheets The balance sheets provide a snapshot of the company's financial position as of March 31, 2025, and December 31, 2024, showing a slight increase in total assets and a significant rise in total liabilities and stockholders' deficit Condensed Consolidated Balance Sheets | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $6,049,416 | $6,017,969 | | Total Liabilities | $19,364,002 | $14,816,337 | | Stockholders' Deficit | $(18,891,890) | $(14,394,305) | - Non-redemption agreements derivative liability significantly increased to $12,599,255 as of March 31, 2025, from $8,886,828 as of December 31, 202410 Unaudited Condensed Consolidated Statements of Operations The statements of operations reveal a substantial increase in net loss for the three months ended March 31, 2025, primarily driven by changes in the fair value of derivative liability and interest and penalties Unaudited Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Loss | $(4,491,196) | $(439,985) | | Change in fair value of derivative liability | $(3,712,427) | $(247,680) | | Interest and penalties | $(489,351) | — | | Income from cash and investments held in Trust Account | $28,349 | $257,512 | - Basic and diluted net loss per share for redeemable Class A common stock increased significantly from $(0.03) in Q1 2024 to $(0.36) in Q1 202513 Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit This statement illustrates the changes in the stockholders' deficit, showing a notable increase in the accumulated deficit due to net losses and adjustments related to the redemption value of Class A common stock Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Stockholders' Deficit | $(18,891,890) | $(14,394,305) | | Accumulated Deficit | $(18,293,070) | $(13,795,485) | - The net loss of $(4,491,196) for the three months ended March 31, 2025, was a primary contributor to the increase in accumulated deficit15 Unaudited Condensed Consolidated Statements of Cash Flows The cash flow statements highlight a net decrease in cash for the three months ended March 31, 2025, primarily due to cash used in operating activities, partially offset by financing activities Unaudited Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(332,440) | $(68,152) | | Net cash provided by investing activities | $14,462 | — | | Net cash provided by financing activities | $285,538 | — | | Net change in cash | $(32,440) | $(68,152) | | Cash - end of the period | $400,093 | $335,304 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide comprehensive disclosures for the financial statements, detailing the company's blank check operations, significant accounting policies, IPO and private placement specifics, related party transactions, commitments, and fair value measurements, including the ongoing business combination efforts and liquidity concerns Note 1 - Organization and Business Operation ShoulderUp Technology Acquisition Corp. is a blank check company focused on a business combination, which stockholders approved with SEE ID, Inc. on February 6, 2025. The company has not generated operating revenues and faces significant liquidity challenges, raising substantial doubt about its ability to continue as a going concern - The company is a blank check company formed on May 20, 2021, for the purpose of effecting a business combination21 - Stockholders approved the Business Combination Agreement with SEE ID, Inc. on February 6, 20252148 - As of March 31, 2025, the company had a working capital deficit of approximately $6.3 million, and the mandatory liquidation date has passed, raising substantial doubt about its ability to continue as a going concern5357 Trust Account Withdrawals for Taxes (through March 31, 2025) | Item | Amount | | :--- | :--- | | Total withdrawn | $2,886,354 | | Remitted to tax authorities | $2,526,664 | | Remaining excess (unremitted) | $359,690 | | Accrued but unpaid income tax liability | $176,789 | | Unpaid Delaware franchise tax | $79,400 | | Amount in dedicated tax account | $365,175 | Note 2 - Significant Accounting Policies and Basis of Consolidation This note details the company's adherence to GAAP, its status as an emerging growth company, and key accounting treatments for estimates, cash, fair value measurements, and derivative financial instruments. It also addresses the impact of the Inflation Reduction Act on excise tax liabilities - The company is an "emerging growth company" and has elected not to opt out of the extended transition period for new accounting standards6566 - A liability of $3,905,240 (including penalties and interest) has been recorded for the 1% excise tax under the Inflation Reduction Act of 2022 due to share redemptions as of March 31, 20255961 - The company accounts for non-redemption agreements as derivative liabilities, with changes in fair value recognized in the consolidated statements of operations76 Net Loss Per Common Share (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Basic and diluted net loss per share (redeemable Class A) | $(0.36) | $(0.03) | | Basic and diluted net loss per share (non-redeemable Class A and B) | $(0.36) | $(0.03) | Note 3 - Initial Public Offering This note outlines the details of the company's IPO, including the number of units sold, the offering price, and the initial amount deposited into the Trust Account - The company consummated its IPO on November 19, 2021, selling 30,000,000 units at $10.00 per unit90 - $306,000,000 ($10.20 per unit) from the IPO and private units was deposited into the Trust Account91 Note 4 - Private Placement This note describes the private placement of units to the Sponsor, including the total proceeds and the outstanding subscription receivable - The Sponsor purchased 1,350,000 Private Units at $10.00 per unit, generating $13,500,000 in gross proceeds92 - $600,000 of the private placement proceeds remains unfunded and recorded as subscription receivable as of March 31, 2025, and December 31, 202492 Note 5 - Related Party Transactions This note details financial arrangements with the Sponsor, including Founder Shares, multiple convertible promissory notes for working capital, and administrative service fees - The Sponsor holds 10,450,000 Founder Shares, subject to a lock-up period9394 - The Sponsor has provided multiple promissory notes totaling $900,000 for working capital needs, all fully drawn and outstanding as of March 31, 2025969798100102 - The company pays the Sponsor $10,000 per month for administrative services105 Note 6 - Commitments and Contingencies This note outlines various commitments and potential liabilities, including registration rights, the waiver of deferred underwriting commissions, non-redemption agreements, and the Business Combination Agreement with SEE ID, Inc - Underwriters waived $11,200,000 in deferred underwriting commissions on September 19, 2024109 - Non-Redemption Agreements involve the Sponsor transferring Founder Shares to investors in exchange for their commitment not to redeem public shares110111112 - The Business Combination Agreement with SEE ID, Inc. involves a merger structure where ShoulderUp and SEE ID will become wholly-owned subsidiaries of Holdings, expected to be listed on Nasdaq119120121 Non-Redemption Agreements Derivative Liability | Date | Amount | | :--- | :--- | | March 31, 2025 | $12,599,255 | | December 31, 2024 | $8,886,828 | Note 7 - Class A Common Stock Subject to Possible Redemption This note explains the classification and changes in Class A common stock subject to possible redemption, which is treated as temporary equity due to redemption rights outside the company's control - Class A common stock subject to possible redemption is classified as temporary equity due to redemption rights outside the company's control127 Class A Common Stock Subject to Possible Redemption | Date | Shares Subject to Redemption | Redemption Value | | :--- | :--- | :--- | | December 31, 2024 | 508,829 | $5,595,937 | | March 31, 2025 | 506,589 | $5,577,304 | Note 8 - Stockholders' Deficit This note details the authorized and outstanding shares of preferred stock, Class A common stock, Convertible Class B common stock, and warrants, including the conversion of all Class B shares to Class A by the Sponsor - As of March 31, 2025, and December 31, 2024, no preferred stock was issued or outstanding130 - On November 19, 2024, the Sponsor converted all 10,450,000 shares of Class B common stock into Class A common stock132 - As of March 31, 2025, and December 31, 2024, there were 15,675,000 warrants issued and outstanding (15,000,000 Public Warrants and 675,000 Private Placement Warrants)136 Note 9 - Fair Value Measurements This note provides information on the fair value measurements, specifically for the non-redemption agreements derivative liability, which is classified as Level 3 in the fair value hierarchy - The non-redemption agreements derivative liability is measured at fair value on a recurring basis and classified as Level 3142143 Non-Redemption Agreements Derivative Liability Fair Value | Date | Fair Value | | :--- | :--- | | March 31, 2025 | $12,599,255 | | December 31, 2024 | $8,886,828 | Key Inputs for Derivative Liability Valuation | Input | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Market price of Class A common stock | $10.95 | $10.81 | | Probability of successful business combination | 70.0% | 50.0% | Note 10 – Segment Information This note states that the company operates as a single reportable segment, with the Chief Financial Officer serving as the chief operating decision maker, overseeing overall financial performance and resource allocation - The company has only one reportable segment, with the Chief Financial Officer identified as the chief operating decision maker (CODM)146 - The CODM reviews net loss, total assets, interest earned on the Trust Account, and general and administrative expenses to assess performance and allocate resources147148 Note 11 – Subsequent Events This note discloses subsequent events after the reporting period, primarily concerning the extension of a non-redemption agreement and a related forfeiture agreement - On April 17, 2025, the company entered into a non-redemption agreement with an investor to rescind redemptions of 500,000 shares, which was extended to June 15, 2025151153 - In connection with the non-redemption agreement, the investor agreed to forfeit 413,333 founder shares held by the Sponsor upon consummation of the Business Combination152 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis provides an overview of the company's blank check operations, recent developments including multiple extension votes and redemptions, the ongoing business combination with SEE ID, Inc., and a detailed analysis of its financial performance and liquidity challenges, emphasizing the going concern doubt Overview This section reiterates the company's purpose as a blank check company, its IPO details, and the process for liquidation if a business combination is not successfully completed - The company is a blank check company incorporated on May 20, 2021, for a business combination156 - The IPO on November 19, 2021, generated $300 million, with $306 million placed in the Trust Account157 - Failure to complete a business combination by the termination date will result in redemption of public shares and liquidation158 Recent Developments This section details a series of events including multiple extensions for the business combination, significant share redemptions, the delisting from NYSE, the waiver of deferred underwriting fees, and the approval of the Business Combination Agreement with SEE ID, Inc - Multiple stockholder meetings approved extensions for the business combination deadline, leading to significant share redemptions at each extension160162165168169170 - The company's securities were delisted from the NYSE on December 19, 2023, and now trade on the over-the-counter market163 - Underwriters waived $11,200,000 in deferred underwriting fees on September 19, 2024166 - Stockholders approved the Business Combination Agreement with SEE ID, Inc. on February 6, 2025171182 - Non-redemption agreements were entered into to reverse redemptions, involving the transfer of Founder Shares, and the derivative liability for these agreements increased to $12,599,255 as of March 31, 2025173177181 Results of Operations The company experienced a significantly higher net loss in the first quarter of 2025 compared to 2024, primarily due to a substantial increase in the change in fair value of derivative liability and interest and penalties - Net loss for the three months ended March 31, 2025, was approximately $4.5 million, a significant increase from $0.4 million in the same period of 2024186187 - The increased net loss in Q1 2025 was primarily driven by a $3.7 million change in fair value of derivative liability and $0.5 million in interest and penalties186 Liquidity and Going Concern Consideration The company faces severe liquidity issues, including a significant working capital deficit and restricted cash, leading management to conclude there is substantial doubt about its ability to continue as a going concern - As of March 31, 2025, the company had $400,093 in operating cash and a working capital deficit of approximately $6.3 million188 - $365,175 of the cash on hand is restricted for tax payments and cannot be used for other purposes188 - The Sponsor has provided multiple promissory notes for working capital, totaling $900,000 as of March 31, 2025191 - Management has determined that the liquidity condition and the passed mandatory liquidation date raise substantial doubt about the company's ability to continue as a going concern192 Critical Accounting Estimates Management identifies the non-redemption agreements derivative liability as the sole critical accounting estimate requiring significant judgment - The non-redemption agreements derivative liability is identified as the only critical accounting estimate194 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that quantitative and qualitative disclosures about market risk are not required for smaller reporting companies - This item is not required for smaller reporting companies195 Item 4. Controls and Procedures The company's disclosure controls and procedures were deemed ineffective as of March 31, 2025, due to a material weakness in internal controls related to reporting complex financial instruments. No changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were not effective as of March 31, 2025197 - A material weakness exists in internal controls related to failures in reporting period closing for complex financial instruments197 - No changes in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025198 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section states that there are no legal proceedings to report - There are no legal proceedings200 Item 1A. Risk Factors New risk factors primarily stem from the delisting of the company's securities from the NYSE, leading to reduced liquidity, potential 'penny stock' classification, and increased difficulty in completing a business combination - The NYSE delisted the company's securities, which are now quoted on the OTC market202 - Delisting could result in limited market quotations, reduced liquidity, and the potential application of 'penny stock' rules, making trading more difficult202205206 - The delisting makes the company less attractive to potential business combination targets and complicates state-level securities regulation203204207 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the IPO and private placement, including the number of units/shares sold, the purchase prices, and the allocation of net proceeds to the Trust Account and for working capital - The IPO sold 30,000,000 units at $10.00 per unit, and a private placement sold 1,350,000 private shares at $10.00 per share208 - $306,000,000 from the IPO and private placement was deposited into the Trust Account, with $1,656,890 held outside for working capital208 Item 3. Defaults Upon Senior Securities This section confirms that there are no defaults upon senior securities - None210 Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Not applicable211 Item 5. Other Information This section indicates that there is no other information to report - None212 Item 6. Exhibits This section lists the exhibits filed with or incorporated by reference into the Quarterly Report on Form 10-Q, including certifications and XBRL documents - Exhibits include the Certificate of Amendment, Certifications of Principal Executive and Financial Officers, and Inline XBRL documents214 PART III. SIGNATURES Signatures This section contains the required signatures for the Form 10-Q report, confirming its submission on behalf of ShoulderUp Technology Acquisition Corp - The report was signed by Phyllis W. Newhouse, Chief Executive Officer, on June 10, 2025217
ShoulderUp Technology Acquisition (SUAC) - 2025 Q1 - Quarterly Report