Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Information and Factors That May Affect Future Results

This quarterly report on Form 10-Q contains forward-looking statements regarding our business, financial condition, results of operations and prospects. The Securities and Exchange Commission (the "SEC") encourages companies to disclose forward-looking information so that investors can better understand a company's future prospects and make informed investment decisions. This quarterly report on Form 10-Q and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management's plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "will" and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. Factors that could cause our actual results of operations and financial condition to differ materially are set forth in the "Risk Factors" section of our Form 10-K/A for the year ended December 31, 2025 filed with the SEC on June 4, 2026, and accepted on June 5, 2026.

As used in this "Management's Discussion and Analysis of Financial Condition and Results of Operation," except where the context otherwise requires, the term "we," "us," "our," or "the Company," refers to the business of Specificity, Inc.

We caution that these factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

The following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere in this quarterly report on Form 10-Q.

Business Overview

At our core we are a full service digital marketing firm that delivers cutting-edge marketing solutions to identify and market in real-time to potential customers who are in the buying cycle. Our digital marketing solutions focus on B2B and B2C consumer markets and give small and medium sized businesses a fair chance to capture online traffic. Our underlying technology solution utilizes BiToS and MAIDs to build audiences, effectively eliminating bot traffic and ad waste and produces real-time messaging opportunities to reach target audiences more efficiently than broad based market messaging platforms. We also implement intuitive ad sequencing, audience ID technology, AI integration, saturation modeling, conversion funneling, CRM integration, traffic resolution, and comprehensive analytics reporting.

Our digital marketing capabilities were acquired through organic development in-house and through our efforts as a tech incubator and early adopter of innovative marketing tools. Currently, our operations are focused on 3 service offerings within our single segment business.

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Put-Thru - Enterprise-Grade Digital Marketing, Scaled for SMBs. Put-Thru is a digital marketing tech stack designed specifically for SMBs. Unlike enterprise-level marketing platforms that require significant investment and expertise, Put-Thru delivers powerful digital advertising solutions at an affordable price point, helping SMBs compete with larger brands.

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Tradigital Partners - White-Label Digital Marketing Solutions for Ad Agencies. Tradigital Partners is a specialized white-label digital marketing service designed exclusively for advertising agencies to partner their traditional campaigns with digital. This solution allows agencies to expand their service offerings by providing cutting-edge digital marketing solutions under their own brand, without the need for in-house expertise or infrastructure.

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Pickpocket - DIY Digital Marketing Platform for Small Business Owners. Pickpocket is a DIY digital marketing platform built for small business owners who want to take control of their advertising efforts while cutting out the waste of audiences that don't make sense for their product or service. Designed for businesses with annual revenues between $500,000 and $5 million, Pickpocket leverages behavior-based ID technology to help users build ideal customer profiles and directly target potential buyers through their mobile devices. The main goal of Pickpocket is to directly target your competitors.

We primarily generate revenue through recurring fixed monthly digital services agreements for the vast majority of our clients. We bill for our services at the beginning of each month and our services are completed at the end of the month. We also generate revenue through marketing campaigns for product or service launches and other non-recurring events.

Results of Operations - Three Months Ended June 30, 2026, as compared to June 30, 2025

Revenues

Revenue increased $55,719, or 20.9%, to $322,019 for the three months ended June 30, 2026 from $266,300 in the same period last year. The increase was primarily attributable to a large new customer project during the quarter. Revenue may fluctuate between periods based on customers' digital marketing requirements. Customers generally may pause future marketing services, which could materially affect the timing of revenue. In addition, large, nonrecurring marketing campaigns associated with specific events or promotions may cause quarterly revenue fluctuations.

Cost of Revenues

For the three month period ended June 30, 2026 cost of revenues increased to $203,583 as compared to $154,929 in the same period last year. The increase was primarily attributable to additional personnel and the use of higher-quality, higher-cost digital marketing data sources and related platforms to serve our clients.

Operating Expenses

Operating expenses include sales and marketing, capital raise promotion costs, general and administrative, share-based compensation and depreciation and amortization. Sales and marketing and general and administrative expenses are the principal components of operating expenses, with professional fees representing more than 50% of total operating expenses. Operating expenses increased to $180,775 for the three months ended June 30, 2026, from $178,664 for the prior-year period. The increase was primarily attributable to higher legal fees associated with the issuance of a convertible note and higher sales commissions. We expect operating expenses to increase as we support sales growth initiatives and capital-raising activities.

Other Expenses

Other expenses increased to $58,906 for the three months ended June 30, 2026, from $12,500 for the same period last year. The increase was primarily attributable to the amortization of original issue discount and additional interest expense associated with the issuance of a convertible note.

Provision for Income Taxes

We recorded no provision for income taxes for the three months ended June 30, 2026, due to our continued net operating losses. We maintained a full valuation allowance against our net deferred tax assets.

Net Loss

For the three month period ended June 30, 2026 our net loss increased to $121,245 as compared to $79,793 in the same period last year. The increase in quarterly net loss was primarily due to interest costs associated with the issuance of a convertible note.

Results of Operations - Six Months Ended June 30, 2026, as compared to June 30, 2025

Revenues

Revenue increased $1,519, or 0.3%, to $565,869 for the six months ended June 30, 2026 from $564,350 in the same period last year. Revenue from new customers substantially offset revenue lost from prior-year customer attrition.

Cost of Revenues

For the six month period ended June 30, 2026 cost of revenues increased to $367,041 as compared to $309,705 in the same period last year. The increase was primarily attributable to additional personnel and the use of higher-quality, higher-cost digital marketing data sources and related platforms to serve our clients.

Operating Expenses

Operating expenses decreased to $393,171 for the six months ended June 30, 2026, from $449,654 for the same period last year. The decrease was primarily attributable to lower legal and professional fees following the completion of the reaudits of our financial statements during the prior-year period. We expect operating expenses to increase as we support sales growth initiatives and capital-raising activities.

Other Expenses

Other expenses increased to $109,299 for the six months ended June 30, 2026, from $25,000 for the same period last year. The increase was primarily attributable to the amortization of original issue discount and additional interest expense associated with the issuance of two new convertible notes.

Provision for Income Taxes

We recorded no provision for income taxes for the six months ended June 30, 2026 or 2025 due to our continued net operating losses. We maintained a full valuation allowance against our net deferred tax assets.

Net Loss

For the six month period ended June 30, 2026 our net loss increased to $303,642 as compared to a net loss of $220,009 in the same period last year. The increase in quarterly net loss was primarily due to interest costs associated with convertible note issuances.

Liquidity, Capital Resources, and Off-Balance Sheet Arrangements

We may need to raise additional capital to fund our operations and there can be no assurance that additional capital will be available on acceptable terms or at all. In the short term, we must raise additional capital through debt or equity financing to support our business operations and to grow our business. Over the long term, we must successfully execute our growth plans to increase profitable revenue and income streams to generate positive cash flows to sustain adequate liquidity to meet minimum operating requirements.

Net Working Capital

At June 30, 2026, we had a net working capital deficit of approximately $1,331,173 compared to a net working capital deficit of $1,259,042 at December 31, 2025. Our immediate sources of liquidity include cash and cash equivalents and accounts receivable; however, these cashflows from operations at this stage of our development will not sustain our operations. As shown in our audited financial statements, we have, since inception, financed operations and limited capital expenditures through the sale of stock and convertible notes and working capital funded debt. We relied on proceeds from customer payments and financing activities from the sale of common stock to fund our business operations and growth plans. Management does not believe that current capital resources from operations alone will be sufficient to fund operations for the next twelve months.

We must successfully execute our business plan to increase profitability in order to achieve positive cash flows to sustain adequate liquidity without requiring additional funds from external sources to meet minimum operating requirements. We anticipate that we will need to raise additional capital to fund our operations and to execute our business plan; and there can be no assurance that additional capital will be available on acceptable terms or at all.

Cash Flows from Operating Activities

Cash provided by (used in) operating activities provides an indication of our ability to generate sufficient cash flow from our recurring business activities. For the six month period ended June 30, 2026, net cash used in operations was $94,352 driven primarily by current period net loss and higher interest expense. For the six month period ended June 30, 2025, net cash provided by operations was $14,980 driven primarily by conversion of outstanding accounts payable due to service provider in exchange for common stock, which preserved our operating cash flow.

Cash Flows from Investing Activities

For the six month period ended June 30, 2026, the Company capitalized computer equipment totaling $1,550. For the six month period ended June 30, 2025, there were no inflows or outflows for investing activities.

Cash Flows from Financing Activities

Cash provided by (used in) financing activities provides an indication of our debt financing and proceeds from capital raise transactions. For the six month period ended June 30, 2026, net cash provided by financing activities was $104,229, primarily due to convertible debt issued, Strata equity raise and shareholder loans to provide short term operating capital, partially offset by repayments of convertible debt and shareholder loans. For the six month period ended June 30, 2025, net cash used in financing activities was $10,885, primarily due to repayments of shareholder loans, partially offset by proceeds from Strata and private placement of common stock.

Future Funding

Our management does not believe that our current capital resources will be adequate to continue operating our company and maintaining our business strategy for much more than 12 months. At the date hereof, we have minimal cash at hand. We require additional capital to implement our business and fund our operations.

Since inception we have funded our operations primarily through debt and equity financing and we expect that we will continue to fund our operations through equity and debt financing, either alone or through strategic alliances. Additional funding may not be available on favorable terms, if at all. We intend to continue to fund our business by way of equity or debt financing until natural revenues can support the Company. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock. We cannot assure you that we will be able to raise the working capital as needed in the future on terms acceptable to us, if at all.

If we are unable to raise capital as needed, we are required to reduce the scope of our business development activities, which could harm our business plans, financial condition, and operating results, or cease our operations entirely, in which case, you will lose all of your investment.

Off-Balance Sheet Arrangements

We have no off-balance sheet financing arrangements.