OTC: PALX

This
matters because AI and high-performance computing are growing fast, and the old methods of moving data cannot keep up. Palomino’s
technology intends to solve that problem by offering a new way to transmit massive amounts of data at chip-level speeds, using far less
power and space than current methods.

1

What
makes Palomino different? Palomino believes it has figured out how to use high-efficiency microLEDs in a way that can be manufactured
using existing semiconductor processes. That means Palomino’s solution is not only powerful—it’s scalable and cost-effective.

At
Palomino, we are a team of industry veterans with deep experience in semiconductors, optics, and advanced chip design. Our mission is
to redefine how data flows inside the world’s most advanced computing systems.

Corporate
History

We
were incorporated as Unite Acquisition 3 Corp. in the State of Delaware on March 10, 2022. Prior to
the Merger (as defined below), we were a “shell company” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”).

On
September 29, 2025, Unite, through its wholly owned subsidiary Palomino Acquisition Co., consummated the Merger with Private Palomino.
Pursuant to the Merger, Palomino Laboratories Inc. (“Private Palomino”) was the surviving corporation and became a wholly owned subsidiary of Unite, and all of the
outstanding common stock of Private Palomino was converted into Unite’s common stock. As a result, Unite ceased to be a shell company
and continues as a public reporting company under the new name, Palomino Laboratories Inc. On September 29, 2025, the sole holder of
common stock of Unite prior to the Merger, Lucius Partners LLC (“Lucius Partners”), retained 4,000,000 shares of the Company’s
common stock after the Merger, after agreeing to cancel and retire 1,000,000 shares of the Company’s common stock.

The
Merger is accounted for as a reverse recapitalization under U.S. GAAP. This determination was primarily due to Unite being determined
to be a shell company in that it did not meet the U.S. GAAP definition of a business, did not have more than nominal assets, was transacted
through an exchange of shares, Private Palomino’s management continued with the Company, Private Palomino has continued board of
director control, Private Palomino business operations continue under the Company and did not have more than nominal operations at the
time of the Merger. The Company early adopted ASU 2025-03 to analyze the accounting acquirer in the Merger and utilized the factors listed
in the guidance for an exchange of shares to conclude on the Company being the accounting acquirer. Under this method of accounting,
Unite is treated as the “acquired” company for financial reporting purposes. Accordingly, the condensed consolidated financial
statements of the Company represent a continuation of the financial statements of Private Palomino, with the Merger being treated as
the equivalent of Private Palomino issuing stock for the net assets of Unite, accompanied by a recapitalization. The net assets of Unite
are stated at historical cost, with no goodwill or other intangible assets recorded and are consolidated with Private Palomino’s
financial statements on the Merger closing date. Results of operations prior to the Merger are presented as those of Private Palomino.
The shares and net loss per share, prior to the Merger, have been retroactively restated to reflect the common stock exchange ratio of
0.75, as established in the Merger. At the time of the Merger, the stockholders’ deficit of Unite of $398,116 was reclassified
to additional paid-in capital.

Immediately
following the effective time of the Merger, we issued, in the closings of the private placement offering, 5,344,623 units (the
“Units”), for an aggregate purchase price of $8,016,937, at a purchase price of $1.50 per Unit, with each Unit consisting
of (i) one share of common stock, (ii) a warrant representing the right to purchase one share of common stock, exercisable from issuance
until one year after the common stock is admitted for trading or listed on an approved market at an exercise price of $1.50 per share
(such shares of common stock issuable upon the exercise of the warrants, the “Warrant Shares”). The private placement offering
is referred to herein as the “Offering.”

2

In
connection with the Offering, the placement agent (a) was paid at each closing from the Offering proceeds a total cash commission of
10.0% of the aggregate gross purchase price paid by purchasers in the Offering at that closing (the “Cash Fee”), (b) was
paid at each closing from the Offering proceeds a total non-allocable expense allowance equal to 2.0% of the aggregate gross purchase
price paid by purchasers in the Offering at that Closing (the “Expense Allowance”), and (c) received (and/or its designees
will receive) warrants to purchase 611,337 shares of common stock, with a term expiring seven years after the final Closing of the Offering
and an exercise price equal $1.80 (the “Placement Agent Warrants”).

The Company completed two additional closings of the Offering, pursuant to which it issued an aggregate of 1,159,394 Units for gross proceeds
of $1,739,091, at a purchase price of $1.50 per Unit, and incurred equity issuance cost of $230,951, resulting in net proceeds of $1,508,140.
In connection with these additional closings, the Company also issued 1,159,394 Warrants.

In
connection with the Merger, all officers and directors of the Company and their affiliates and associated entities entered into lock-up
agreements with the Company for a term ending three years after the common stock begins to trade on an approved market, whereby they
have agreed to certain restrictions on the sale or disposition (including pledge) of the Company common stock held by (or issuable to)
them.

Conversion of SAFE notes (“Simple Agreement
for Future Equity” or “SAFE”)

At
the initial closing of the Offering, the $1,845,000 aggregate amount of outstanding SAFEs automatically converted into Units at a conversion price of $1.20 per share, or 1,537,501 shares of common stock. The SAFE holders also received 1,537,501 Warrants
to purchase 1,537,501 shares of common stock. Upon the SAFE conversion, the Company recorded the last fair market value adjustment of
$219,952. $2,306,098 was recognized in additional paid-in capital upon the SAFE Conversion.

The
SAFE Warrants were determined to be equity-classified.

Strategy
and Market Focus

Palomino’s
strategy is focused on becoming a leading technology enabler in the optical interconnect revolution, supporting the industry-wide transition
from copper to optical solutions at the circuit board level. Palomino feels its strategy is critical for keeping up with the demands
of modern computing. By replacing traditional copper wiring with light-based (optical) connections at the circuit board level, we aim
to overcome key challenges like limited speed, high energy use, and signal loss. There are fundamental limitations of traditional copper
interconnects and Palomino aims to reshape how data is moved within and between computing systems.

Our
first wave of products targets short-reach, high-speed optical links for PCIe Gen 6+ and Ethernet backplanes, especially in markets
where speed, latency, energy consumption, and interconnect density are critical. These segments include AI/ML servers, high-performance
computing (HPC), and next-generation data center infrastructure, where performance bottlenecks are becoming increasingly unsustainable
and existing technologies are starting to hit their limits. In these markets, the volume of data being processed is increasing rapidly,
and current copper-based technologies are struggling to keep up.

By
enabling compact, high-bandwidth, and low-power optical I/O, Palomino is well-positioned to drive adoption of chip-scale optical interconnects—delivering
meaningful improvements in system performance and scalability for computer architectures.

Technology
Platform and Differentiation

Palomino’s
proprietary microLED platform, built on gallium nitride (GaN) compound semiconductors, is engineered for seamless compatibility
with existing high-volume manufacturing infrastructure. Our platform provides:

●

High-speed
modulation supporting advanced data communication protocols: our microLEDs can switch on and off incredibly fast—measured
in billions of times per second—making them ideal for today’s high-speed data networks. This bandwidth of modulation
allows for rapid data transmission that meets the needs of cutting-edge communication standards, ensuring smooth and reliable performance
even with demanding applications. Typical Ethernet connections transfer data at speeds up to 100 megabits per second. Our microLED
technology is anticipated to achieve data transfer rates up to 100 times faster.

●
Low-power
optical emission, optimized for environments with strict thermal restraints: our technology is designed to use very little energy
when producing light, which helps reduce heat generation. This is especially important in tightly packed electronic systems where
managing temperature is critical for reliability and performance. By keeping power consumption low, we help extend device lifespan
and reduce cooling costs.

●
Monolithic
integration enabling chiplet-scale optical I/O: our microLEDs can be directly integrated onto silicon-based platforms or other
advanced materials, allowing optical connections to be built right at the chip level. This “chiplet-scale” integration
makes it easier to create compact, efficient modules that handle data movement within and between chips, paving the way for smaller,
faster computing devices.

●
Scalable
wafer-level fabrication with high yield on large-diameter substrates ensuring cost-effective mass production: our microLEDs will
use large semiconductor wafers, which allows us to produce many devices at once with consistent quality. High yield means most devices
meet specifications, reducing waste and lowering production costs. This scalability ensures we can meet market demand without sacrificing
reliability or affordability.

3

Unlike
traditional Vertical-Cavity Surface-Emitting Laser (“VCSEL”) or edge-emitting laser modules, which often require precise
fiber alignment and expensive packaging, our microLED-based modules emit light directly from the surface and can be bonded directly using
advanced packaging methods. This approach significantly reduces assembly complexity, enhances integration with existing systems, and
lowers the overall cost of the final product. By simplifying manufacturing while boosting performance, our technology offers a more efficient
and scalable solution for next-generation optical interconnects.

Competitive
Landscape

Today’s
optical transceiver market is largely driven by VCSEL and edge-emitting laser technologies, with major contributions from industry leaders
such as Lumentum Holdings Inc. (NASDAQ: LITE), Coherent Corp. (NASDAQ: COHR), Broadcom Inc. (NASDAQ: AVGO), and OSRAM Opto Semiconductors
Inc. While these laser solutions have underpinned optical communication systems for decades, they are increasingly constrained by challenges
related to scalability, packaging complexity, and integration—particularly in short-reach and board-level interconnect applications.
As data transmission demands grow and system architectures evolve, these limitations underscore the need for next-generation optical
solutions that offer greater efficiency, compactness, and compatibility with advanced integration platforms.

Emerging
players like Avicena Tech. are pioneering microLED-based solutions for optical interconnects. However, Palomino believes its differentiated
approach—leveraging GaN-based technology combined with a robust system-level integration roadmap—offers a unique and scalable
path toward manufacturable, high-density optical I/O. Palomino has begun, and expects to continue, to leverage foundational research
conducted at the UCSB, dating back to 2017, where the laboratories of Professors Steven DenBaars, one of Palomino’s co-founders,
and Nobel Laureate Shuji Nakamura first demonstrated the origin of high-speed light-emitting diode (LED) communications. This breakthrough—referred
to as OptiGaN (a type of LED fabrication process that leverages gallium nitride (GaN) material)—showcased the potential of gallium
nitride (GaN)-based LEDs in enabling optical data transmission at unprecedented speeds, laying the groundwork for next-generation photonics
applications.

We
believe by leveraging a fabless business model (where we will design, develop, and market semiconductor products but not manufacture
them) alongside proprietary device architectures and packaging intellectual property, we are uniquely positioned to redefine the cost
and performance benchmarks of legacy optical technologies.

Palomino
expects to compete using its leadership in GaN Materials, fabrication and device design. We plan to operate freely with patent protection
on microLED structures and integration processes, developed by UCSB and Palomino. Palomino is driving efficiency in its core technology
with superior energy-per-bit performance (<1pJ/bit) versus traditional optics.

Target
Markets and Customer Segments

Our
vision is to revolutionize high-speed data communication in AI systems and data centers using energy-efficient, high-speed GaN microLED-based
optical interconnects.

The
addressable market, for Palomino’s high speed LED-based optical interconnects, encompasses several high-growth verticals, including:

●

Hyperscale
data centers - large computing facilities—run by companies such as Amazon, Microsoft, Google, and Meta—demand ever-increasing
bandwidth, energy efficiency, and density. As server-to-server and rack-to-rack data movement grows exponentially, there is a critical
need for scalable optical interconnects that can reduce power consumption and latency, while supporting higher data rates and port
densities.

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●
AI/ML
(Artificial Intelligence/Machine Learning) infrastructure providers - training and inference workloads for large AI models require
high-bandwidth, low-latency communication between accelerators such as graphic processing units (“GPUs”) and custom AI
chips. Optical I/O solutions that offer high-density connectivity and efficient data movement are essential for scaling these systems
efficiently across multi-chip and multi-node architecture.

●
HPC
cluster - HPC systems power scientific research, simulation, and complex data analysis, relying on ultra-low latency and high-throughput
interconnects. As HPC clusters become more complex and data-intensive, optical technologies capable of supporting dense, energy-efficient
communication between compute nodes become a critical enabler.

●
Semiconductor
companies adopting chiplet architectures - as monolithic scaling approaches physical and economic limits, chiplet architectures
are emerging as a path forward. These designs require high-speed, low-power interconnects between multiple dies. Optical I/O offers
a compelling solution to the limitations of traditional electrical interconnects, enabling disaggregated, high-performance system
design.

●
Networking
original equipment manufacturer (“OEMs”) seeking low-latency optical interconnects - original equipment manufacturers
in the networking space are increasingly seeking optical alternatives to traditional copper connections to reduce latency, increase
bandwidth, and enable more compact system designs. Optical I/O solutions with integrated packaging and scalable manufacturing are
poised to meet these evolving needs.

According
to a Bank of America (“BofA”) Global Research report published in June 2025, LightCounting estimates optical transceiver
total assessable market “TAM” across datacom and telecom to grow to $43.4 billion by calendar year 2030 from $16.4 billion
in calendar year 2024, a +18% compound annual growth rate or “CAGR”. These optical transceivers are sold by Coherent (NASDAQ:
COHR), Lumentum Holdings Inc. (NASDAQ: LITE), and InnoLight Technology, among others.

The
same BofA report estimates that Marvell Technology Inc. estimates that its electro-optics interconnect business, comprising of components
such as digital signal processors (DSPs), transimpedance amplifiers (TIAs), laser drivers, and silicon photonics (SiPho)—addresses
a Serviceable Addressable Market (SAM) projected to grow from approximately $4.3 billion in calendar year 2023 to $19 billion by calendar
year 2028.

Figure
X. Optical Transceiver TAM opportunity from 2018 to 2030 (source: BofA Global Research).

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Research
& Development

Our
Research and Development (“R&D”) Focus: Building the Future of Data Movement

At
Palomino, our R&D efforts are the engine behind our innovation. We are not just improving current technology—we intend to create
what’s next in high-speed data communication. We intend to develop ultra-high-speed 5 terabit-per-second (Tbps) optical links with
superior energy and performance efficiency, engineered specifically for chip-to-chip and rack-to-rack data communication, surpassing
the limitations of conventional interconnect technologies. We aim to revolutionize data interconnects by designing and deploying 5 Tbps
optical links optimized for short-reach, high-bandwidth applications such as chip-to-chip and rack-to-rack communication. Our solution
is intended to (i) deliver superior energy efficiency (targeting <1 pJ/bit), (ii) offer extremely low latency (<5 ns), (iii) enable
compact integration into next-generation compute architectures and (iv) outperform existing electrical and optical interconnect technologies
in data centers and high-performance computing environments.

By
leveraging advancements in silicon photonics, WDM (Wavelength Division Multiplexing), and co-packaged optics, our goal is to eliminate
traditional bandwidth and energy bottlenecks at the heart of AI high performance computing “HPC”, and cloud infrastructures.

Here
is where we are focused and why it matters:

Smarter
Materials for Better Performance: We are working on advanced ways to grow and process gallium nitride (GaN)—a powerful
material that helps us build extremely efficient light-emitting devices. By improving how this material is made and used, we can create
high-quality components that are easier and more cost-effective to produce at scale.

Faster
MicroLED Designs: Our engineers are designing microLEDs—tiny light sources—so they can blink on and off extremely
quickly, which is essential for moving data at ultra-high speeds. We also make sure they use very little energy, which is critical for
AI systems and other technology that need to run fast without overheating.

Bringing
Light and Silicon Together: We are developing ways to combine our light-based technology with the everyday electronics (CMOS) found
in nearly all chips. This combination makes it possible to build smaller, faster, and more energy-efficient data links directly inside
computer chips—making next-gen systems more compact and cost-effective.

Solving
the Heat Problem: High-speed computing creates a lot of heat, and if it’s not managed well, performance suffers. We’re
designing special packaging to keep things cool, mechanically stable, and precisely aligned—so our devices can run reliably in
real-world systems.

Why
It Matters: Our R&D is about more than just invention—it’s about building practical, scalable solutions for the data-hungry
technologies of the future. From AI to cloud computing, the world needs faster and more efficient ways to move data. Palomino’s
research aims to make that possible. Our R&D team consists of Jeffrey Shealy, Steven DenBaars, Richard Ogawa, and several consultants.

In
addition to our collaboration with UCSB, we are pursuing strategic collaborations with other technology leaders in the optical transceiver
space and we intend to engage in government-backed initiatives to accelerate innovation and pre-qualify products for key customer applications.
In pursuit of non-dilutive funding, Palomino intends to explore contract R&D funding from the U.S. Government to explore novel research
concepts in the area of nanomaterials, LED devices, advanced packaging, and optical interconnect modules. No application have been started
at this time, and Palomino is in the process of identifying appropriate programs.

Intellectual
Property

Our
intellectual property (“IP”) portfolio includes U.S. and international patent applications across device architecture, materials
integration, and optical packaging. We currently have multiple patent applications in process and continue to build IP around:

●
MicroLED
chiplet integration.

●
High-density
optical interconnect layouts.

●
Advanced
GaN-based device designs.

6

We
also maintain proprietary process flows, materials recipes, and device design know-how as trade secrets.

We
have applied for the following patents:

AMPACC
Ref. No.

Filing
Date

Application

Number

Patent
Type

Patent
Name

Current

Status

996RO0001US

April
13, 2023

18/300,332

Non-provisional

Compact
Ultra-Violet Laser Diode configured for LIDAR System for Air Turbulence Detection

Pending

996RO0002US

May
4, 2023

18/312,456

Non-provisional

Solar
Blind Solid State Gallium containing Photodiode Device and related method

Issued

996RO0002US1

June
7, 2024

18/737,354

Non-provisional

Solar
Blind Solid State Gallium containing Photodiode Device and related method

Pending

996RO0003US

July
26, 2023

18/359,780

Non-provisional

Integrated
Ultra-Violet Laser Spectrometer and Method

Pending

996RO0004US

February
20, 2025

18/058,592

Non-provisional

Resonant
Cavity Light Emitting Diode for Data Communication

Pending

996RO0005US

March
5, 2025

18/071,614

Non-provisional

III-Nitride
Quantum Dot MicroLED for Data Communication

Pending

Regulatory
Compliance

Palomino
will operate in full compliance with applicable U.S. export control laws and regulations, including the Export Administration Regulations
(EAR) and the International Traffic in Arms Regulations (ITAR), particularly as they pertain to compound semiconductors and optoelectronic
technologies.

Our
modules and components will be evaluated for export classification, and in many cases will be designated under EAR99, a classification
used for items that are subject to the EAR but not listed on the Commerce Control List (CCL). Items classified as EAR99 generally do
not require a license for export, unless they are being shipped to a sanctioned country, end-user, or for a prohibited end-use. This
designation facilitates broader international distribution while still falling under the purview of U.S. export control law.

To
ensure ongoing compliance with these regulations, Palomino will eventually engage experienced outside export control advisors to evaluate
our products and internal processes. This will include guidance on end-use screening, customer due diligence, and the proper classification
and documentation of exports.

It
is important to note that while Palomino’s hardware will be developed in compliance with U.S. export regulations, including those
that enable dual-use commercial technologies, the final regulatory approval and responsibility for system-level deployment and operational
compliance typically lies with the data service provider or integrator deploying the technology.

We
remain committed to responsible innovation and the secure, lawful distribution of advanced optoelectronic components globally.

Manufacturing
and Supply Chain

We
retain internal control of our core epitaxy and device fabrication processes and are in the process of qualifying external foundry partners
for scaling production. Substrate and wafer suppliers are being qualified to ensure long-term supply chain stability and redundancy.
Currently, our only technology supplier is UCSB, for which we have a licensing agreement. However, this supplier is replaceable, as Palomino
owns the trade secret governing the production process. The underlying technology is not rare, and comparable alternatives are available
from other suppliers offering technically compatible solutions. As a result, we do not view supplier concentration as a material risk
to our operations.

Our
fabless model intends to enable capital-efficient growth and rapid iteration without the overhead of full-scale foundry operations.

We
intend to commercialize and outsource the manufacturing of our products to a third-party manufacturer. Our fabless model will leverage
established third-party manufacturing partners that are certified under internationally recognized ISO standards, ensuring high-quality,
compliant production while maintaining flexibility and scalability.

7

Sales
and Business Development

While
we are pre-revenue company, Palomino has initiated early-stage technical and commercial discussions with Tier 1 hyperscale operators,
semiconductor integrators, and OEMs seeking high-speed, low-power interconnect solutions. Such engagements focus on the market opportunity,
system deployments plans and data specification for hardware.

Palomino’s
early market access strategy is designed to build credibility, accelerate validation, and establish a strong ecosystem presence. Key
elements of this approach include:

●

Technical
demonstrations and prototypes. We are actively developing and showcasing functional prototypes to demonstrate the performance, scalability,
and manufacturability of our optical I/O solutions. These demonstrations serve as critical proof points for potential customers,
partners, and investors.

●
Strategic
partnerships with packaging and interposer solution providers. Collaborating with industry-leading packaging and interposer vendors
allows us to co-develop integrated solutions optimized for performance, thermal efficiency, and manufacturability. These partnerships
are essential for accelerating time-to-market and ensuring end-to-end system compatibility.

●
Participation
in photonics industry consortia and standards bodies. Engaging with key industry groups and standards organizations enables us to
contribute to the development of next-generation optical interconnect specifications, stay aligned with emerging trends, and position
our technology within the broader ecosystem of interoperable solutions.

Palomino’s
near term go-to-market strategy is planned to include the following initiatives: (a) continued partnering with UCSB as well as our continued
partnership with Solid State Lighting & Energy Electronics Center (SSLEEC) for prototype development, (b) the ability to demonstrate
100 Gbps optical link performance using 8x8 microLED arrays, with ongoing performance validation, (c) pursue joint development agreements
(JDAs) with data center operators and AI hardware vendors to align product design with end-user requirements, (d) engage in pilot deployments
with AI hardware vendors and data centers, and (e) transition to volume manufacturing through partnerships with qualified foundries and
outsourced semiconductor assembly and test (OSAT) providers. Palomino’s optical hardware solutions are expected to be sold through
a hybrid go-to-market strategy that will include both direct sales and strategic distribution partnerships. For large-scale customers
such as AI server manufacturers, hyperscale data centers, and advanced computing integrators, we plan to offer direct engagement to support
customized integration, design collaboration, and performance optimization. At the same time, we anticipate being able to leverage a
network of specialized distributors and ecosystem partners to broaden our market reach, accelerate adoption, and provide localized technical
support. We believe this dual-channel approach will ensure flexibility, responsiveness, and scalability in bringing our microLED-based
optical solutions to market.

Environmental
Considerations

We
are committed to sustainable operations and full regulatory compliance with all applicable federal, state, and local environmental standards.
Our cleanroom operations and hazardous material handling will be managed by qualified third-party providers who adhere to industry best
practices and maintain strict compliance with all relevant regulations.

We
are not subject to any federal, state or local environmental laws or regulations concerning our products and we do not require any license
to operate.

Employees

As
of December 31, 2025, we had 5 full time employees, no part-time employees, and 13 consultants. We believe that our future success will
depend, in part, on our continued ability to attract, hire and retain qualified personnel.

Available
Information

We
file annual, quarterly, and current reports and other information with the SEC. You may read and copy any reports, statement or other
information that we file with the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please
call the SEC at (202) 551-8090 for further information on the public reference room. These SEC filings are also available to the public
from commercial document retrieval services and at the Internet site maintained by the SEC at http://www.sec.gov.

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