TAOX 10-Q
TAO Synergies Inc. (TAOX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from __________________ to __________________ |
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or | (I.R.S. Employer |
organization) | Identification No.) |
(Address of principal executive offices) | (Zip code) |
(
(Registrant’s telephone number, including area code)
Synaptogenix, Inc.
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on |
| | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
As of August 13, 2026, there were
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan,” “anticipate,” “believe,” “estimate,” “should,” “expect” and similar expressions, include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our inability to obtain adequate financing, fluctuations in the price of our digital assets, potential decreases in the value of our digital assets and rewards, the significant length of time associated with drug development and related insufficient cash flows and resulting illiquidity, our inability to expand our business, significant government regulation of pharmaceuticals and the healthcare industry, lack of product diversification, volatility in the price of our raw materials, existing or increased competition, results of arbitration and litigation, stock volatility and illiquidity, and our failure to implement our business plans or strategies. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. You should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2026, as updated in our quarterly reports and current reports filed with the SEC from time to time. We advise you to carefully review the reports and documents we file from time to time with the SEC including our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under securities laws, we undertake no obligation to publicly release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
2
TABLE OF CONTENTS
3
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
TAO SYNERGIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, | December 31, | ||||
| 2026 | | 2025 | |||
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash and cash equivalents | $ | | $ | | ||
Digital assets | | | ||||
Prepaid expenses and other current assets |
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TOTAL CURRENT ASSETS |
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Fixed assets, net of accumulated depreciation | | | ||||
Yuma Partnership investments |
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TOTAL ASSETS | $ | | $ | | ||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES |
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Accounts payable | $ | | $ | | ||
Accrued expenses |
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TOTAL CURRENT LIABILITIES |
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Warrant liability | | | ||||
Derivative liability | | | ||||
TOTAL LIABILITIES | | | ||||
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Commitments and contingencies |
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Series D Convertible redeemable preferred stock, $ | | | ||||
Series E Convertible redeemable preferred stock, $ | | | ||||
STOCKHOLDERS’ EQUITY | ||||||
Common stock - | |
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Additional paid-in capital | | | ||||
Accumulated other comprehensive income | | | ||||
Accumulated deficit | ( | ( | ||||
TOTAL STOCKHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | | $ | | ||
See accompanying notes to these Condensed Consolidated financial statements.
4
TAO SYNERGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | Three Months Ended | | Three Months Ended | | Six Months Ended | | Six Months Ended | ||||
| June 30, | June 30, | June 30, | June 30, | ||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||
REVENUES: | ||||||||||||
Revenues from TAO staking | $ | | $ | | $ | | $ | | ||||
OPERATING EXPENSES: | ||||||||||||
Research and development |
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General and administrative |
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Warrant issuance costs | — | | — | | ||||||||
TOTAL OPERATING EXPENSES |
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OPERATING LOSS | ( | ( | ( | ( | ||||||||
OTHER EXPENSE: |
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Interest income |
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Unrealized loss on digital assets | ( | ( | ( | ( | ||||||||
Change in fair value of Yuma partnership investments | ( | — | | — | ||||||||
Change in fair value of warrant liability | | ( | | ( | ||||||||
Change in fair value of derivative liability | | ( | ( | ( | ||||||||
TOTAL OTHER EXPENSE |
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Net loss before income taxes |
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Provision for income taxes |
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Net loss | ( | ( | ( | ( | ||||||||
Preferred Stock dividends | | | | | ||||||||
Deemed dividend on Series E Warrants | | — | | — | ||||||||
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Net loss attributable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||
PER SHARE DATA: |
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Basic and fully diluted loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic and fully diluted weighted average common shares outstanding |
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See accompanying notes to these Condensed Consolidated financial statements.
5
TAO SYNERGIES INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
Additional | Accumulated Other | ||||||||||||||||||||||||||||||||
Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Common Stock | Paid-In | Accumulated | Comprehensive | |||||||||||||||||||||||||||
| Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | Shares | | Amount | | Capital | | Deficit | | Income (Loss) | | Total | |||||||||
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Balance April 1, 2025 |
| | $ | | — | $ | — | — | $ | — | | $ | | $ | | $ | ( | $ | | $ | | ||||||||||||
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Stock based compensation |
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Exercise of investor warrants | — | — | — | — | — | — | | | | — | — | | |||||||||||||||||||||
Issuance of common stock for consulting fees |
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Issuance of warrants for consulting fees | — | — | — | — | — | — | — | — | | — | — | | |||||||||||||||||||||
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Issuance of Series D Preferred Stock and warrants | — | — | | | — | — | — | — | | — | — | | |||||||||||||||||||||
Preferred stock dividends | — | | — | | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||
Preferred stock redemptions and conversions | ( | ( | — | — | — | — | | | | — | — | | |||||||||||||||||||||
Deemed dividends on preferred stock | — | | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||
Preferred stock accretion | — | | — | | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||
Modification of Series C preferred stock | — | | — | — | — | — | — | — | | — | — | | |||||||||||||||||||||
Reclassification of warrants upon amendment | — | — | — | — | — | — | — | — | | — | — | | |||||||||||||||||||||
Net loss |
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Balance June 30, 2025 | | $ | | | $ | | — | $ | — | | $ | | $ | | $ | ( | $ | | $ | | |||||||||||||
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
Additional | Accumulated Other | ||||||||||||||||||||||||||||||||
Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Common Stock | Paid-In | Accumulated | Comprehensive | |||||||||||||||||||||||||||
| Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | Shares | | Amount | | Capital | | Deficit | | Income (Loss) | | Total | |||||||||
| | | | | | | | | | | | | | | | | | | | | |
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Balance April 1, 2026 |
| — | $ | — | | $ | | | $ | | | $ | | $ | | $ | ( | $ | | $ | | ||||||||||||
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Stock based compensation | — | — | — | — | — | — | — | — | | — | — | | |||||||||||||||||||||
Issuance of common stock for consulting fees |
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Issuance of warrants for consulting fees | — | — | — | — | — | — | — | — | | — | — | | |||||||||||||||||||||
Accrual of preferred stock dividends | — | — | — | | — | | — | — | — | ( | — | ( | |||||||||||||||||||||
Payment of preferred stock dividends | — | — | — | ( | — | ( | — | — | — | — | — | — | |||||||||||||||||||||
Preferred stock accretion |
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Net loss |
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Balance June 30, 2026 |
| — | $ | — | | $ | | | $ | | | $ | | $ | | $ | ( | $ | | $ | | ||||||||||||
6
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
Additional | Accumulated Other | ||||||||||||||||||||||||||||||||
Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Common Stock | Paid-In | Accumulated | Comprehensive | |||||||||||||||||||||||||||
| Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | Shares | | Amount | | Capital | | Deficit | | Income | | Total | |||||||||
Balance January 1, 2025 |
| | $ | | — | $ | — | — | $ | — | | $ | | $ | | $ | ( | $ | | $ | | ||||||||||||
Stock based compensation |
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Exercise of investor warrants |
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Issuance of common stock for consulting fees | — | — | — | — | — | — | | | | — | — | | |||||||||||||||||||||
Issuance of warrants for consulting fees | — | — | — | — | — | — | — | — | | — | — | | |||||||||||||||||||||
Issuance of Series D Preferred Stock and warrants | — | — | | | — | — | — | — | | — | — | | |||||||||||||||||||||
Preferred stock dividends paid | — | | — | | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||
Deemed dividends on preferred stock |
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Preferred stock redemptions and conversions | ( | ( | — | — | — | — | | | | — | — | | |||||||||||||||||||||
Preferred stock accretion | — | | — | | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||
Modification of Series C preferred stock | — | | — | — | — | — | — | — | | — | — | | |||||||||||||||||||||
Reclassification of warrants upon amendment | — | — | — | — | — | — | — | — | | — | — | | |||||||||||||||||||||
Net loss |
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Balance June 30, 2025 | | $ | | | $ | | — | $ | — | | $ | | $ | | $ | ( | $ | | $ | | |||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
Additional | Accumulated Other | ||||||||||||||||||||||||||||||||
Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Common Stock | Paid-In | Accumulated | Comprehensive | |||||||||||||||||||||||||||
| Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | Shares | | Amount | | Capital | | Deficit | | Income | | Total | |||||||||
Balance January 1, 2026 |
| — | $ | — | | $ | | | $ | | | $ | | $ | | $ | ( | $ | | $ | | ||||||||||||
Stock based compensation |
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Issuance of common stock for consulting fees | — | — | — | — | — | — | | | | — | — | | |||||||||||||||||||||
Issuance of warrants for consulting fees | — | — | — | — | — | — | — | — | | — | — | | |||||||||||||||||||||
Accrual of preferred stock dividends | — | — | — | | — | | — | — | — | ( | — | ( | |||||||||||||||||||||
Payment of preferred stock dividends | — | — | — | ( | — | ( | — | — | — | — | — | — | |||||||||||||||||||||
Preferred stock accretion | — | — | — | | — | | — | — | ( | — | — | ( | |||||||||||||||||||||
Net loss |
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Balance June 30, 2026 | — | $ | — | | $ | | | $ | | | $ | | $ | | $ | ( | $ | | $ | | |||||||||||||
See accompanying notes to these Condensed Consolidated financial statements.
7
TAO SYNERGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Six Months Ended | | Six Months Ended | ||
| June 30, 2026 | June 30, 2025 | ||||
CASH FLOW USED IN OPERATING ACTIVITIES | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used by operating activities | ||||||
Stock based compensation | | | ||||
Accrual of Restricted Stock Awards | — | | ||||
Non-cash revenue from digital assets | ( | ( | ||||
Unrealized loss on digital assets | | | ||||
Warrant issuance costs | — | | ||||
Change in fair value of Yuma partnership investments | ( | — | ||||
Change in fair value of warrant liability | — | | ||||
Change in fair value of derivative liability | | | ||||
Consulting services paid by issuance of common stock | | | ||||
Consulting services paid by issuance of warrants |
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Depreciation expense |
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Change in assets and liabilities: | ||||||
Decrease (increase) in prepaid expenses and other current assets |
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(Decrease) increase in accounts payable |
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(Decrease) in accrued expenses |
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Net Cash Used in Operating Activities |
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CASH FLOWS USED IN INVESTING ACTIVITIES | ||||||
Purchase of crypto currency | — | ( | ||||
Net Cash Used in Investing Activities | — | ( | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
Proceeds from investor warrant exercises | — | | ||||
Net proceeds from Series D Convertible Preferred Stock offering | — | | ||||
Redemption of Series C Convertible Preferred Stock | — | ( | ||||
Dividends on Convertible Preferred Stock | ( | ( | ||||
Net Cash Used in Financing Activities | ( | | ||||
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NET DECREASE IN CASH AND EQUIVALENTS |
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CASH AND EQUIVALENTS AT BEGINNING OF PERIOD |
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CASH AND EQUIVALENTS AT END OF PERIOD | $ | | $ | | ||
DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||
Accretion of Series C Convertible Preferred Stock to redemption value | $ | — | $ | | ||
Accretion of Series D Convertible Preferred Stock to redemption value | $ | | $ | | ||
Accretion of Series E Convertible Preferred Stock to redemption value | $ | | $ | — | ||
Accrual of Series D Convertible Preferred Stock and Warrant Issuance Costs | $ | — | $ | | ||
Warrant liability upon issuance of Series D Convertible Preferred stock | $ | — | $ | | ||
Reclassification of warrant liability | $ | — | $ | | ||
Derivative liability upon issuance of Series D Convertible Preferred stock | $ | — | $ | | ||
Reclassification of derivative liability | $ | — | $ | | ||
Series C Convertible Preferred Stock conversions and redemptions | $ | — | $ | | ||
Accrual of Restricted Stock Awards Payable | $ | — | $ | | ||
Issuance of Consultant Warrants | $ | — | $ | | ||
Deemed dividend on Series E Warrants | $ | | $ | — | ||
See accompanying notes to these Condensed Consolidated financial statements.
8
TAO SYNERGIES INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Unless the context otherwise indicates, references in these Notes to the accompanying financial statements to “we,” “us,” “our” and “the Company” refer to TAO Synergies Inc. and together with its wholly owned and condensed consolidated subsidiaries (formerly known as Synaptogenix, Inc. and Neurotrope Bioscience, Inc.), a Delaware corporation. References to “Neurotrope”, “Parent Company” or “Parent” refer to Neurotrope, Inc., a Nevada corporation.
Note 1 – Organization, Business, Risks and Uncertainties:
Organization and Business
On May 17, 2020, Neurotrope, Inc. (“Neurotrope” or “the Parent”) announced plans for the complete legal and structural separation of its wholly owned subsidiary, Neurotrope Bioscience, Inc., from Neurotrope (the “Spin-Off”). Under the Separation and Distribution Agreement between Neurotrope and Synaptogenix (the “Separation and Distribution Agreement”), Neurotrope distributed all of its equity interest in this wholly owned subsidiary to Neurotrope’s stockholders. Following the Spin-Off, Neurotrope does not own any equity interest in the Company, and the Company operates independently from Neurotrope. On December 7, 2020, the Company became an independent company, Synaptogenix, Inc., a Delaware corporation (formerly known as Neurotrope Bioscience, Inc.) (“Synaptogenix”) when Synaptogenix filed an amended and restated certificate of incorporation which, among other things, changed its name to Synaptogenix, Inc. (the “Company”).
On June 9, 2025, in connection with the Company’s previously announced exploration of strategic opportunities, the Company announced the launch of a differentiated cryptocurrency treasury strategy focused on the pure play artificial intelligence (“AI”) crypto coin, TAO, the native cryptocurrency of Bittensor, a decentralized blockchain network for machine learning and AI. On June 25, 2025, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State for the State of Delaware, effective June 26, 2025, to change the name of the Company from “Synaptogenix, Inc.” to “TAO Synergies Inc.”
On September 26, 2025, the Company formed a subsidiary TAOX Florida Inc. for the purpose of facilitating the Company’s expansion into the cryptocurrency treasury strategy business.
The Company’s shares of common stock, par value $
Background on TAO and Bittensor
Bittensor is a public Layer 1 blockchain, called Subtensor, built with the Substrate framework and organized into independent “subnets” where miners produce digital commodities (commonly AI outputs) and validators evaluate them. Depending on the subnet’s incentive mechanism, miners may produce digital commodities that can include, for example, text prompt completions and other question-answer outputs, vector embeddings and related semantic search or ranking outputs, code-related outputs, image generation outputs, and speech-to-text transcription outputs. On chain, an algorithm named Yuma Consensus aggregates validators’ rankings of miners to compute emissions (new tokens minted by the protocol) for miners, validators, stakers, and subnet creators. This mechanism is widely referred to in project materials as Bittensor’s “Proof-of-Intelligence” consensus model. In this context, “consensus” refers to stake-weighted convergence on subnet validator scoring used to allocate emissions and other incentives, and not to transaction ordering or block finality, which are currently provided on Subtensor through a separate proof-of-authority authority set. Subtensor’s transaction ordering and block finality are currently provided by a proof of authority model under which a small, permissioned “authority set” produces and finalizes blocks. TAO is the Network’s native token and is used to pay transaction fees, incentivize subnet participants, and for staking. Staking TAO affects how emissions and incentives are allocated (including by influencing validator stake weight and related reward calculations and, under dTAO (defined below), by staking into a subnet’s on-chain pool to receive that subnet’s alpha token) and may affect governance participation. Staking TAO does not itself validate or finalize Subtensor transactions. TAO is, however, also used for governance (including voting power that may be exercised directly or via delegation) and may be used to create/register subnets under protocol rules.
9
As of August 11, 2026, TAO’s circulating supply was approximately
Under the February 13, 2025 Dynamic TAO (“dTAO”) upgrade, newly issued TAO is first routed to subnets under protocol rules that, as of November 2025, allocate TAO across subnets based on net TAO inflows from staking activity rather than subnet token prices, and staking into a subnet exchanges TAO for that subnet’s alpha token. Subnet alpha tokens are subnet-specific tokens a participant receives when staking TAO into the subnet’s on-chain market pool, and the alpha token to subnet exchange rate is generally determined by the pool’s reserves. Exits convert alpha tokens back to TAO at the prevailing pool exchange rate at the time of conversion, so outcomes are price sensitive. According to current documentation, emissions for each subnet are generally distributed at the end of every approximately 360 blocks, or about 72 minutes, and the subnet’s participant distribution is generally allocated 41% to miners, 41% to validators and their stakers, and 18% to the subnet owner. The Bittensor blockchain does not impose protocol-enforced delays (unbonding periods) in accessing unstaked TAO. That said, custodians, validators, liquidity pools, or other service providers and operational setups may impose operational, contractual, or practical limits on withdrawal timing or liquidity.
The initial Bittensor mainnet “Kusanagi” launched in January 2021, was followed by the “Nakamoto” upgrade in November 2021, then a fork to the current “Finney” chain on March 20, 2023. Subnets went live on October 2, 2023. Governance has transitioned to a bicameral model in which a “Triumvirate” (employees of the Opentensor Foundation) authors proposals and a “Senate” (a group of delegates who have elected to participate in proposals) must approve the proposals prior to implementation. The Senate is comprised of the top delegate hotkeys by stake. In this specific context, a “hotkey” is the operational public key used by a participant to conduct on-chain actions (including by a validator), and a “delegate” is a hotkey that accepts delegated TAO from third parties for staking. “Top” refers to the delegate hotkeys with the highest total stake at a given time. Per current documentation, the Senate has 12 seats (although not all must be filled), and a delegate generally must reach at least 2% of total network stake amount through delegation or self-stake and elect to participate in the Senate. If all twelve Senate seats are filled, and a delegate wishes to join, the lowest stake member is replaced. Because Senate membership is stake-based, governance influence may be concentrated among large stakers and delegates.
Our Cryptocurrency Asset Strategy
In June 2025, the Company adopted a differentiated cryptocurrency treasury strategy focused on the pure play artificial intelligence (AI) crypto coin, TAO, the native cryptocurrency of Bittensor. Bittensor is a decentralized blockchain network for machine learning and AI. This was a shift from our prior approach of holding excess cash (as defined below) primarily in Federal Deposit Insurance Corporation (“FDIC”)-insured interest-bearing accounts. We now seek to allocate substantial portions of our excess cash to purchasing TAO, with the goal of obtaining an increased yield on excess cash by staking TAO for revenue generation and capital appreciation, a strategy that underscores our mission to create significant value for shareholders.
To identify “excess cash,” the Company first evaluates its cash, cash equivalents, and short-term investments (collectively, “cash assets”). The Company then estimates the amount of cash assets required to fund approximately
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To guide its cryptocurrency asset purchases, the Company’s Board of Directors (the “Board”) adopted a long-only TAO accumulation strategy and has delegated authority to our Executive Chairman, in consultation with internal personnel and external advisors, to determine the timing, size, and method of TAO purchases with the objective of maximizing tokens per share. Under this authority, management reviews our cash assets, identifies any excess cash as described above, and determines whether to allocate such excess cash to the acquisition of TAO. In addition to using excess cash, the Company’s acquisition strategy may also involve issuing debt or equity securities or undertaking other capital raising transactions, subject to market conditions, with the objective of using the proceeds to purchase additional TAO.
The Company has not established a specific target amount of TAO that we seek to hold. Instead, the Company monitors market conditions, liquidity needs, and financing opportunities in determining whether to make additional TAO purchases in the future. The Company views its TAO holdings as long-term holdings and expects to continue accumulating TAO over time. As of June 30, 2026, approximately
Although a liquid market for TAO exists, the Company has not monetized (i.e., sold) any TAO to date. A majority of the Company’s TAO is staked as soon as trade settlement permits, and the Company currently stakes TAO through two staking providers - tao5 and Yuma Validator, LLC (“Yuma”). The Company only engages in TAO staking. In the future, the Company may explore additional yield-enhancement strategies, including participation in Bittensor subnets. Any such activity would likely be undertaken with a third-party partner possessing substantial subnet expertise.
Liquidity Uncertainties
As of June 30, 2026, the Company had approximately $
The Company expects to need additional capital in order to continue pursuing its TAO treasury strategy. Any additional equity financing, if available, may not be on favorable terms and would likely be significantly dilutive to the Company’s current stockholders, and debt financing, if available, may involve restrictive covenants. If the Company is able to access funds through collaborative or licensing arrangements, it may be required to relinquish rights to some of its technologies or product candidates that the Company would otherwise seek to develop or commercialize on its own, on terms that are not favorable to the Company. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, will likely have a materially adverse effect on its business, financial condition and results of operations.
Other Risks and Uncertainties
The Company operates in an industry that is subject to rapid technological change, intense competition, and significant government regulation. The Company’s operations are subject to significant risk and uncertainties including financial, operational, technological and regulatory. Such factors include, but are not necessarily limited to, market conditions of, and overall sentiment towards, the cryptoeconomy, the ability to obtain favorable licensing, manufacturing or other agreements, including risk associated with the Company’s Cognitive Research Enterprises, Inc. (formerly known as the Blanchette Rockefeller Neurosciences Institute, or BRNI) (“CRE”) licensing agreement, and the ability to raise capital to achieve strategic objectives. The Company maintains its digital assets with a third-party custodian. As a result, the Company is exposed to custodial concentration risk related to the safekeeping and access to such assets. See additional risks and uncertainties set forth under the heading “Risk Factors” contained elsewhere in this Quarterly Report on Form 10-Q.
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Note 2 – Summary of Significant Accounting Policies:
Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three and six months ended June 30, 2026 may not be indicative of results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2026.
Use of Estimates:
The preparation of financial statements in conformity with GAAP requires management to make significant estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and as such these estimates may ultimately differ from actual results.
Comprehensive Income (Loss)
The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income (loss). Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss). For the three and six months ended June 30, 2026 and 2025, the Company had items of other comprehensive income, which are reflected in the accompanying financial statements.
Net Earnings per Share
Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of shares of Common Stock outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of shares of Common Stock issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net earnings or loss per share if their inclusion would be anti-dilutive.
Since the Company incurred a net loss for the three and six months ended June 30, 2026 and 2025, all potentially dilutive securities were anti-dilutive. Accordingly, diluted net loss per share is the same as basic net loss per share for all periods presented.
The weighted average dilutive securities that have been excluded from the calculation of diluted net loss per share for the three and six months ended June 30, 2026 and 2025, respectively, are as follows:
For the Three Months Ended | For the Six Months Ended | |||||||
| June 30, |
| June 30, | |||||
| 2026 | | 2025 | | 2026 | | 2025 | |
Common Stock Options |
| | | | | |||
Convertible Preferred Stock | | | | | ||||
Common Stock Warrants |
| | | | | |||
Total |
| | | | | |||
The Company computes earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for Common Stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The Series C, Series D and Series E
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Preferred Shares are considered participating securities as preferred shareholders are entitled to participate with common stockholders on an as-converted basis in any distributions of assets by the Company under the terms of the Certificate of Designations.
Cash and Cash Equivalents and Concentration of Credit Risk:
The Company considers all highly liquid cash investments with an original maturity of three months or less when purchased to be cash equivalents. At June 30, 2026, the Company’s cash balances that exceed the current insured amounts under the Federal Deposit Insurance Corporation (“FDIC”) were approximately $
Investment in Limited Partnership Interests
As permitted under ASC Topic 825 - Financial Instruments (“ASC 825”), the Company has elected the fair value option for its investment in limited partnership interests which otherwise would be subject to ASC Topic 323 - Investment - Equity Method and Joint Ventures. Pursuant to ASC Topic 820 - Fair Value Measurement, because the investments do not have a readily determinable fair value the Company has elected to use net asset value per share or its equivalent (“NAV”) as a practical expedient to measure the Company’s investment at fair value, unless it is probable that the investment will be sold at a value different from its NAV, so long as the investee entity calculates NAV in a manner consistent with the measurement principles established by ASC Topic 946, Financial Services—Investment Companies. The Company uses the practical expedient and, accordingly, measures its investments at fair value each reporting period based on the NAV reported by the investee entities.
Digital Assets
Effective January 1, 2025, the Company adopted FASB Accounting Standards Update (“ASU”) 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. Under this guidance, crypto assets within the scope of the ASU are measured at fair value each reporting period, with changes in fair value recognized in net income. The Company’s digital assets, which are comprised solely of $TAO tokens, meet the scope requirements of ASU 2023-08.
TAO tokens are divisible into partial tokens and are presented rounded to the nearest one-hundredth of a token. The following table summarizes the Company’s digital asset holdings as of June 30, 2026:
Assets | | Tokens | | Average Cost Basis | | Fair Market Value | | Cumulative Unrealized Loss | |||
Staked TAO |
| | $ | | $ | | $ | | |||
Un-staked TAO |
| |
| |
| |
| | |||
Totals |
| | $ | | $ | | $ | | |||
Segments
The Company currently operates in
Fair Value of Financial Instruments:
The carrying amounts reflected in the balance sheets for prepaid expenses and payables approximate fair value due to the short maturities of these instruments. The carrying amounts for available for sale debt security, warrant liability and derivative liability approximate fair value based on level 3 of the fair value hierarchy. The carrying amounts for digital assets approximate fair value based on level 1 of the fair value hierarchy.
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Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable markets.
Level 3 — Unobservable inputs which are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
BitGo, Inc. (“BitGo”) secures the Company’s digital assets in regulated, insured, cold storage with BitGo Bank and Trust, N.A. (formerly known as BitGo Trust Company, Inc.) (“BitGo Trust”) and facilitates the Company’s acquisitions of TAO through its affiliated platforms. BitGo serves as the principal market for the Company’s digital assets, and the fair value of digital assets is primarily determined based on pricing data obtained from BitGo. BitGo is a regulated trust company that provides custody, staking, and trading services for institutional clients and maintains insurance coverage for assets held in cold storage. Management selected BitGo based on its regulatory status, security controls, insurance coverage, and experience providing digital asset solutions to institutional clients.
Accounting for Digital Assets
Fair Market Value
Digital assets are measured at their fair market values using the last close price of the day in the Coordinated Universal Time (UTC) time zone at each reporting period end on the balance sheet. The Company’s digital assets are presented as current assets. The majority of the Company’s digital assets are staked with no lock-up period, and are considered current assets in accordance with ASC 210-10-20, Balance Sheet, due to the Company’s ability to sell them in a liquid marketplace and with a reasonable expectation that they will be realized in cash during the normal operating cycle of our business to support operations if needed.
Cost Basis
The cost basis of the Company’s digital assets is measured at fair value based on the spot price at the time of receipt, consistent with the applicable guidance under ASC 350-60. The Company has elected to adopt the First-In, First-Out (FIFO) method for determining the cost basis of digital assets disposed of. The method assumes that the assets that were acquired first are disposed of first. Realized gains and losses from the disposal of digital assets are included in other income in the Condensed Consolidated Statements of Comprehensive Loss. The Company had
Revenue Recognition - Digital Assets
The Company engages in network-based smart contracts by staking (or delegating) its digital assets with third party validator nodes. Through these contracts, the Company provides digital assets to stake on a node for the purpose of validating transactions and adding blocks to a respective blockchain network. The term of a smart contract can vary based on the rules of the respective blockchain and can be from immediate to several weeks after it is cancelled (or “un-staked”) by the delegator and requires that the crypto assets staked remain locked up during the duration of the smart contract. The Company stakes its TAO directly from qualified custody with BitGo Trust, enabling a yield generation while maintaining the highest standards of security and regulatory compliance. As of June 30, 2026, the Company’s staked assets have immediate terms, meaning there is no lock-up period upon the asset being un-staked.
In exchange for staking the crypto assets on blockchain networks, the Company is entitled to a fractional share of the fixed digital asset award a third-party validator node receives for successfully validating or adding a block to the blockchain. This award is remitted in the native token of the validator node and is referred to as a staking reward. The Company’s staking reward received from delegating to a third-party validator node is proportionate to the digital assets staked by the Company compared to the total digital assets
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staked by all delegators to that node at that time. Token rewards earned from staking are calculated and distributed directly to the Company’s digital wallets by the blockchain networks as part of their consensus mechanisms.
The Company considers the provision of staking services to be an output of the Company’s ordinary activities and accounts for staking rewards under ASC 606. Each separate validation under a smart contract with a network represents a performance obligation. The satisfaction of the performance obligation for processing and validating blockchain transactions occurs at a point in time when confirmation is received from the network indicating that the validation is complete, and the awards are available for transfer. At that point, the fair value of the staking reward is recognized and recorded as revenue. Staking rewards are non-cash consideration and are measured at fair value at the time control is obtained, using quoted market prices of the underlying digital asset. The Company presents staking revenue on a gross basis as it has determined it is acting as a principal in the transaction, as it controls the validation services prior to transfer of the rewards. Once the reward has been acquired by the Company, the tokens are added to the Company’s digital asset holdings and their fair value is accounted for in accordance with ASC 820.
Fixed Assets and Leases:
The Company has one lease which has a remaining term of
Fixed assets are stated at cost less accumulated depreciation. Depreciation is computed on a straight line basis over the estimated useful life of the asset, which is deemed to be between and
Research and Development Costs:
All research and development costs, including costs to maintain or expand the Company’s patent portfolio licensed from CRE are expensed when incurred. Non-refundable advance payments for research and development are capitalized because the right to receive those services represents an economic benefit. Such capitalized advances will be expensed when the services occur and the economic benefit is realized. There were
Income Taxes:
There is
The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of January 1, 2026, the Company had
With few exceptions, the U.S. and state income tax returns filed for the tax years ending on December 31, 2022 and thereafter are subject to examination by the relevant taxing authorities. Net operating loss (“NOL”) carryforwards are subject to examination in the year they are utilized regardless of whether the tax year in which they are generated has been closed by the statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOLs generated as such NOLs are utilized.
Recently Issued Accounting Pronouncements:
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Topic 220), which requires disclosure in the notes to financial statements about specific types of expenses included in the expense captions presented on the face of the statement of operations. The requirements of the ASU are effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact related to the adoption of ASU 2024-03 on its consolidated financial statement disclosures.
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Note 3 – Collaborative Agreements and Commitments:
Strategic Investments in TAO Cryptocurrency
On June 24, 2025, the Company announced its initial purchase of TAO as part of the Company’s cryptocurrency treasury strategy and that BitGo had been selected to provide qualified custody, staking and trading services for the Company’s TAO holdings.
BitGo secures the Company’s digital assets in regulated, insured cold storage with BitGo Trust and facilitates the Company’s acquisitions of TAO through its affiliated trading platforms, including access to liquidity via its OTC desk. TAO is staked directly from qualified custody with BitGo Trust, enabling the Company to generate yield while maintaining security and regulatory compliance. The Company has begun to generate revenue through TAO staking. The initial acquisition of TAO was funded by the Company’s cash reserves and balance sheet.
The Company stakes its TAO holdings and, as a result, earns a return on its staking which is received in additional TAO tokens. Staking rewards are recognized as income when earned and when control of the additional tokens is obtained. TAO tokens received through staking represent non-cash investing and operating activity and are excluded from cash flows from operations.
It was determined that TAO is considered an intangible asset pursuant to ASU 2023-08. Digital assets within the scope of ASU 2023-08 are not subject to impairment under ASC 360 and are instead measured at fair value each reporting period. As such, the Company is accounting for the value of TAO investments and TAO earned through staking activities as a current asset, as management actively manages these holdings as part of its treasury strategy and intends and has the ability to convert them to cash within one year, based upon fair market value at the applicable measurement date and time applied consistently each period, with changes in fair value recognized in earnings in the period in which they occur.
Below is a rollforward of digital asset activity for the six months ended June 30, 2026:
Balance of Digital Assets as of January 1, 2026 | | $ | |
Purchase of TAO tokens | — | ||
Staking rewards (non-cash additions) | | ||
Unrealized loss on digital assets | ( | ||
Balance of Digital Assets as of June 30, 2026 | $ | |
The above rollforward reflects total purchases of TAO, staking rewards earned, and unrealized changes in fair value during the period, which reconcile to the ending balance. The fair value of TAO is determined based on quoted market prices from active trading platforms and is classified as Level 1 within the fair value hierarchy.
The following table identifies the digital assets earned from staking activities:
For the Three and Six Months Ended | For the Three and Six Months Ended | |||||||||
June 30, | June 30, | |||||||||
| 2026 | | 2026 | | 2025 | 2025 | ||||
Asset | | Token Rewards | | Revenue |
| Token Rewards |
| Revenue | ||
TAO - Six Months | | $ | | | $ | | ||||
TAO - Three Months |
| | $ | | | | $ | | ||
Changes in fair value of digital assets and staking rewards are recognized in the statement of operations.
Cost of Revenue
The Company’s cost of revenues related to its digital asset staking are primarily advisory fees incurred for the processing of the staking transactions and fees for BitGo (our cryptocurrency exchange). These costs are directly related to the production of digital asset staking revenues. For the three and six months ended June 30, 2026, the cost associated with the revenue recorded from digital asset staking was $
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As of August 11, 2026, the Company had a total of approximately
Strategic Investments in Limited Partnership Interests in Yuma
On October 24, 2025, the Company entered into Subscription Agreements (the “Subscription Agreements”) with Yuma Subnet Composite Onshore Fund, L.P. (“YSCO”) and Yuma Large Cap Subnet Onshore Fund, L.P. (“YLCSO”), pursuant to which the Company agreed to purchase from YSCO a
The Company evaluated its interests in YSCO and YLCSO under ASC 810, Consolidation, and determined that both entities are variable interest entities (“VIEs”). Based on its analysis, the Company concluded that it does not have the power to direct the activities that most significantly impact the economic performance of the VIEs and therefore is not the primary beneficiary. Accordingly, the Company does not consolidate these entities.
The Company has elected the fair value option under ASC 825, Financial Instruments, for these investments at initial recognition. Subsequent changes in fair value are recognized in earnings in the period of change.
The Company measures the fair value of its limited partnership interests using the NAV per share (or its equivalent) as a practical expedient in accordance with ASC 820, Fair Value Measurement.
As of June 30, 2026, the carrying value of the investments represents the Company’s maximum exposure to loss. The Company has not provided financial or other support to these VIEs and has no obligation to provide additional funding.
The Company may request to redeem its units in the funds on the last day of each calendar quarter after the units have been outstanding for at least 12 months. Such requests are subject to approval by the funds. Due to this restriction, the Company’s units were not redeemable as of June 30, 2026. The investments will be eligible for redemption beginning on December 31, 2026.
Below is a summary of activity for the Yuma investments as of June 30, 2026:
Balance of Limited Partnership Interests as of January 1, 2026 | | $ | |
| |||
Balance as of June 30, 2026 | $ | |
Stanford License Agreements
On May 12, 2014, the Company entered into a license agreement (the “Stanford License Agreement”) with The Board of Trustees of The Leland Stanford Junior University (“Stanford”), pursuant to which Stanford has granted to the Company a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of bryostatin structural derivatives, known as “bryologs,” for use in the treatment of central nervous system disorders, lysosomal storage diseases, stroke, cardio protection and traumatic brain injury, for the life of the licensed patents. The Company is required to use commercially reasonable efforts to develop, manufacture and sell products (“Licensed Products”) in the Licensed Field of Use (as defined in the Stanford License Agreement) during the term of the licensing agreement which expires upon the termination of the last valid claim of any licensed patent under this agreement. In addition, the Company must meet specific product development milestones, and upon meeting such milestones, make specific milestone payments to Stanford. The Company must also pay Stanford royalties of
On January 19, 2017, the Company entered into a second license agreement with Stanford, pursuant to which Stanford has granted to the Company a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of “Bryostatin Compounds and Methods of Preparing the Same,” or synthesized bryostatin, for use in the treatment of neurological diseases, cognitive dysfunction and psychiatric disorders, for
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the life of the licensed patents. The Company paid Stanford $
The Company has advanced the development of synthetic bryostatin by demonstrating the equivalence of the synthetic to the natural bryostatin product. The estimated cost to initiate and produce sufficient quantities of the synthetic bryostatin drug product is approximately $
Mt. Sinai License Agreement
On July 14, 2014, the Company entered into an Exclusive License Agreement (the “Mount Sinai License Agreement”) with the Icahn School of Medicine at Mount Sinai (“Mount Sinai”). Pursuant to the Mount Sinai License Agreement, Mount Sinai granted the Company (a) a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under Mount Sinai’s interest in certain joint patents held by the Company and Mount Sinai (the “Joint Patents”) as well as in certain results and data (the “Data Package”) and (b) a non-exclusive license, with the right to grant sublicenses on certain conditions, to certain technical information, both relating to the diagnostic, prophylactic or therapeutic use for treating diseases or disorders in humans relying on activation of Protein Kinase C Epsilon (PKC ε), which includes Niemann-Pick Disease (the “Mount Sinai Field of Use”). The Mount Sinai License Agreement allows the Company to research, discover, develop, make, have made, use, have used, import, lease, sell, have sold and offer certain products, processes or methods that are covered by valid claims of Mount Sinai’s interest in the Joint Patents or an orphan drug designation application covering the Data Package (“Mount Sinai Licensed Products”) in the Mount Sinai Field of Use (as such terms are defined in the Mount Sinai License Agreement).
The Company was required to pay Mt. Sinai milestone payments of $
On February 24, 2026, the Company terminated the Mount Sinai License Agreement, effective
Agreements with BryoLogyx
On June 9, 2020, the Company entered into a supply agreement (the “Supply Agreement”) with BryoLogyx Inc. (“BryoLogyx”), pursuant to which BryoLogyx agreed to serve as the Company’s exclusive supplier of synthetic bryostatin. Pursuant to the terms of the Supply Agreement, the Company placed an initial order and subsequently received one gram of current good manufacturing practice (cGMP) synthetic bryostatin as an active pharmaceutical ingredient to be used in a drug product (“API”). The Company may place additional orders for API beyond the initial order by making a written request to BryoLogyx no later than six months prior to the requested delivery date. The Company is not currently using synthetic bryostatin for its current Phase 2 clinical trial and will determine when to incorporate the synthetic into the clinical trial process.
In connection with the Supply Agreement, on June 9, 2020, the Company entered into a transfer agreement (the “Transfer Agreement”) with BryoLogyx. Pursuant to the terms of the Transfer Agreement, the Company agreed to assign and transfer to BryoLogyx all of the Company’s right, title and interest in and to that certain Cooperative Research and Development Agreement, dated as of January 29, 2019 (the “CRADA”), by and between the Company and the U.S. Department of Health and Human Services, as represented by the NCI, under which Bryostatin-1’s ability to modulate CD22 in patients with relapsed/refractory CD22+ disease has been evaluated to date. Pursuant to guidance provided by NCI, the CRADA has been cancelled and BryoLogyx has initiated a request for a new CRADA in its name. BryoLogyx will be filing its own investigational new drug application (“IND”) for CD22 with the FDA. As consideration for the transfer of rights to the CRADA, BryoLogyx has agreed to pay to the Company
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Nemours Agreement
On September 5, 2018, the Company announced a collaboration with Nemours A.I. DuPont Hospital (“Nemours”), a premier U.S. children’s hospital, to initiate a clinical trial in children with Fragile X syndrome, a genetic disorder. In addition to the primary objective of safety and tolerability, measurements will be made of working memory, language and other functional aspects such as anxiety, repetitive behavior, executive functioning, and social behavior. On August 5, 2021, the Company announced its memorandum of understanding with Nemours to initiate a clinical trial using Bryostatin-1, under orphan drug status, to treat Fragile X. The Company intends to provide the Bryostatin-1 and obtain the IND, and Nemours intends to provide the clinical site and attendant support for the trial. The Company and Nemours, jointly, will develop the trial protocol. The Company estimates its total trial and IND cost to be approximately $
The Company has filed an IND with the FDA. The FDA has placed the development of the IND on clinical hold pending completion of further analytics relating to drug pharmacokinetics and pharmacodynamics. The Company is currently evaluating its plans to advance Fragile X development.
CRE License Agreement
Effective October 31, 2012, the Company executed a Technology License and Services Agreement (the “TLSA”) with CRE, a related party, and NRV II, LLC (“NRV II”), another affiliate of CRE, which was amended by Amendment No. 1 to the TLSA as of August 21, 2013, as amended and restated on February 4, 2015 (the “CRE License Agreement”). Pursuant to the CRE License Agreement, CRE and NRV II provide research services and have granted the Company the exclusive and nontransferable world-wide, royalty-bearing right, with a right to sublicense (in accordance with the terms and conditions described below), under CRE’s and NRV II’s respective right, title and interest in and to certain patents and technology owned by CRE or licensed to NRV II by CRE as of or subsequent to October 31, 2012, to develop, use, manufacture, market, offer for sale, sell, distribute, import and export certain products or services for therapeutic applications for AD and other cognitive dysfunctions in humans or animals. Additionally, the CRE License Agreement specifies that all patents that issue from a certain patent application shall constitute licensed patents and all trade secrets, know-how and other confidential information claimed by such patents constitute licensed technology under the CRE License. The CRE License Agreement terminates on the later of the date (a) the last of the licensed patent expires, is abandoned, or is declared unenforceable or invalid or (b) the last of the intellectual property enters the public domain.
After Neurotrope’s initial Series A stock financing, the CRE License Agreement required the Company to enter into scope of work agreements with CRE as the preferred service provider for any research and development services or other related scientific assistance and support services. There were
In addition, on November 29, 2018, the Company and CRE entered into a second amendment (the “Second Amendment”) to the TLSA pursuant to which CRE granted certain patent prosecution and maintenance rights to the Company. Under the Second Amendment, the Company will have the sole and exclusive right and the obligation, to apply for, file, prosecute and maintain patents and applications for the intellectual property licensed to the Company, and pay all fees, costs and expenses related to the licensed intellectual property.
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Note 4 – Related Party Transactions:
On June 4, 2025, Dr. Daniel L. Alkon resigned as an officer, director and Chief Scientific Officer of the Company to become a consultant working with the Company’s newly established Bryostatin Development Committee of the Board (the “Bryostatin Development Committee”), consisting of Mr. William Singer and Mr. Joshua Silverman. Dr. Alkon will serve as director of the Bryostatin Platform Development Program and will work with the Bryostatin Development Committee to find and evaluate opportunities for continued development of the Company’s Bryostatin assets. On June 4, 2025, Dr. Alkon entered into a consulting agreement with the Company (the “Alkon Consulting Agreement”). In connection with his resignation, and pursuant to the Alkon Consulting Agreement, the Company and Dr. Alkon agreed to reduce Dr. Alkon’s base monthly salary to $
The Silverman Compensation Agreement provides for an initial
In the event of termination without “Cause” or by Mr. Silverman for “Good Reason” (as such terms are defined in the Silverman Compensation Agreement). Mr. Silverman is entitled to receive accrued compensation through the termination date, severance equal to
In the event of Mr. Silverman’s death during the term of the Silverman Compensation Agreement, his estate is entitled to receive accrued compensation, any unpaid bonus amounts, accelerated vesting of all unvested equity awards, and any other benefits due under the Company’s benefit plans. In addition, the death benefit under the Company’s life insurance program, if any, will be paid to his designated beneficiary or estate. If Mr. Silverman’s employment terminates due to disability, he is entitled to accrued compensation, prorated target bonus, and continued salary payments for 24 months, along with accelerated vesting of all unvested equity awards and benefits under the Company’s long-term disability insurance plan, if applicable.
All severance and equity acceleration benefits are subject to Mr. Silverman’s execution and non-revocation of a general release of claims. The Silverman Compensation Agreement also includes provisions regarding confidentiality, non-disparagement, post-employment cooperation, and compliance with Section 409A of the Internal Revenue Code. Compensation under the Silverman Compensation Agreement is subject to the Company’s clawback policies as may be required by applicable law or listing standards.
Note 5 – Other Commitments:
Employment Agreements
On June 8, 2025, Dr. Alan J. Tuchman M.D. resigned as Chief Executive Officer of the Company, effective June 8, 2025. On August 28, 2025, Dr. Tuchman further resigned from his position as a member of the Board and as a member of all committees of the Board on which he served. Dr. Tuchman now serves as the Company’s Chief Medical Officer. In connection with his resignation as Chief Executive Officer, the Company and Dr. Tuchman agreed to reduce Dr. Tuchman’s base monthly salary to $
20
As noted above in Note 4—Related Party Transactions, on August 14, 2025, the Company entered into the Silverman Compensation Agreement with Mr. Silverman, effective as of July 1, 2025, pursuant to which Mr. Silverman serves as the Company’s Executive Chairman. See Note 4—Related Party Transactions for additional information regarding the Silverman Compensation Agreement. For the three months ended June 30, 2026 and 2025, the Company paid Mr. Silverman $
Consulting Agreements
Consulting Agreement with James Altucher, Z-List Media, OSS Capital LLC and Joseph Jacks
The Company continues to recognize expense related to consulting agreements entered into in 2025 with James Altucher and Z-List Media, Inc. and with OSS Capital LLC and Joseph Jacks. During the three and six months ended June 30, 2026, the Company recognized consulting expense of $
Additional information regarding these arrangements was previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Contingencies
Pursuant to the Separation and Distribution Agreement and Tax Matters Agreement between Neurotrope and Synaptogenix (the “Tax Matters Agreement”), Neurotrope agreed to indemnify Synaptogenix for certain liabilities, and Synaptogenix agreed to indemnify Neurotrope for certain liabilities, in each case for uncapped amounts. Indemnities that Synaptogenix may be required to provide Neurotrope are not subject to any cap, may be significant and could negatively impact Synaptogenix’s (now TAO Synergies Inc.) business, particularly with respect to indemnities provided in the Tax Matters Agreement. Third parties could also seek to hold Synaptogenix (now TAO Synergies Inc.) responsible for any of the liabilities that Neurotrope has agreed to retain. Further, the indemnity from Neurotrope may not be sufficient to protect Synaptogenix (now TAO Synergies Inc.) against the full amount of such liabilities, and Neurotrope may not be able to fully satisfy its indemnification obligations. Moreover, even if Synaptogenix ultimately succeeds in recovering from Neurotrope any amounts for which Synaptogenix (now TAO Synergies Inc.) is held liable, Synaptogenix (now TAO Synergies Inc.) may be temporarily required to bear these losses. As of the reporting date, there are no claims relating to the indemnification agreement.
Note 6 – Stockholders’ Equity:
The Company’s amended and restated certificate of incorporation authorizes it to issue
The holders of Common Stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the Board from time to time may determine. To date, the Company has not paid dividends on its Common Stock. Holders of Common Stock are entitled to
June 2025 Private Placement
During 2025, the Company completed a private placement of Series D Convertible Preferred Stock and related warrants (the “Series D Common Stock Warrants”) and entered into related warrant amendments and registration rights agreements. The resale registration statement covering the applicable underlying shares was declared effective by the SEC on July 17, 2025.
As of June 30, 2026,
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the three and six months ended June 30, 2026, the Company recorded dividends/accretion of $
The Company was in compliance with the material terms and covenants of the Series D Convertible Preferred Stock arrangements as of June 30, 2026, and there were no material amendments to these arrangements during the current quarter.
October 2025 Private Placement
In October 2025, the Company issued Series E convertible preferred stock, par value $
As of June 30, 2026,
The Company was in compliance with the material terms and covenants of the Series E Convertible Preferred Stock arrangements as of June 30, 2026, and there were no material amendments to these arrangements during the current quarter.
Series B Common Stock Warrants
Pursuant to a November 17, 2022 private placement, the Company issued to investors warrants and, pursuant to its advisory agreements, the Company issued to its advisor additional warrants with the same terms to purchase
The warrants were determined to be within the scope of ASC 480-10 as they are puttable to the Company at the Holders’ election upon the occurrence of a Fundamental Transaction (as defined in the agreements). As such, the Company recorded the warrants as a liability at fair value with subsequent changes in fair value recognized in earnings.
During the three months ended June 30, 2026 and 2025, the Company recorded a gain of $
Accounting Treatment of September 2024 Private Placement
Series C Preferred Shares
As of December 31, 2025, the Series C convertible preferred stock, par value $
During the six months ended June 30, 2025, the Company redeemed $
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Series C Common Stock Warrants
The Company’s warrants to purchase Common Stock issued in connection with the Company’s private placement of Series C Convertible Preferred Stock in September 2024 (the “Series C Common Stock Warrants”) were liability-classified prior to their reclassification to equity effective June 30, 2025. As a result, the Series C Common Stock Warrants are no longer remeasured at fair value each reporting period.
During the three and six months ended June 30, 2026, the Company recorded $
Accounting Treatment of June 2025 Private Placement
Series D Preferred Shares
The Company determined that the Series D Convertible Preferred Stock contains embedded features requiring bifurcation and liability accounting under ASC 815. The embedded derivative liability is remeasured at fair value each reporting period, with changes in fair value recognized in earnings.
During the three months ended June 30, 2026 and 2025, the Company recorded
The Series D Common Stock Warrants were reclassified from liabilities to equity during 2025 following amendments to the warrant terms. Accordingly, the Series D Common Stock Warrants are no longer remeasured at fair value each reporting period.
Additional information regarding the June 2025 private placement, related warrant issuances, and warrant amendments was previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Accounting Treatment of October 2025 Private Placement
Series E Preferred Shares
The Company determined that the Series E Convertible Preferred Stock contains embedded features requiring bifurcation and liability accounting under ASC 815. The embedded derivative liability is remeasured at fair value each reporting period, with changes in fair value recognized in earnings.
During the three months ended June 30, 2026 and 2025, the Company recorded a gain of approximately $
The Series E Common Stock Warrants were classified in equity upon issuance and are not remeasured in subsequent reporting periods.
Additional information regarding the October 2025 private placement, related warrant issuances, and initial accounting treatment was previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
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Note 7 – Stock-Based Compensation:
2020 Equity Incentive Plan
Upon completion of the Spin-Off, the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) became effective on December 7, 2020. On December 20, 2023, the Company held its annual meeting of stockholders at which time the Company’s stockholders approved an amendment to the Company’s 2020 Plan to increase the total number of shares of Common Stock authorized for issuance from
The Compensation Committee administers the 2020 Plan and has full power to grant stock options and Common Stock, construe and interpret the 2020 Plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, as it believes reasonable and proper. The Compensation Committee, in its absolute discretion, may award Common Stock to employees, consultants, and directors of the Company, and such other persons as the Compensation Committee may select, and permit holders of options to exercise such options prior to full vesting.
Stock and Option Grants
The following is a summary of stock option activity under the stock option plans for the six months ended June 30, 2026:
| | | Weighted- | | ||||||
Average | Aggregate | |||||||||
Weighted- | Remaining | Intrinsic | ||||||||
Number | Average | Contractual | Value | |||||||
of | Exercise | Term | (in | |||||||
Shares | Price | (Years) | thousands) | |||||||
Options outstanding at January 1, 2026 |
| | $ | |
| $ | — | |||
Options granted |
| | $ | |
|
| — | |||
Less options forfeited |
| — | $ | — |
| — |
| — | ||
Less options expired/cancelled |
| — | $ | — |
| — |
| — | ||
Less options exercised |
| — | $ | — |
| — |
| — | ||
Options outstanding at June 30, 2026 |
| | $ | |
| $ | — | |||
Options exercisable at June 30, 2026 |
| | $ | |
| $ | — | |||
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Common Stock, which was $
On April 7, 2026, the Company granted an aggregate of
As of June 30, 2026, the Company had unrecognized stock option expense of approximately $
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Director’s Compensation Policy
On March 29, 2023, the Company adopted an amended and restated non-employee director compensation policy (the “Director Compensation Policy”). The Director Compensation Policy provides for the annual automatic grant of nonqualified stock options to purchase up to
Restricted Stock Issuances
On January 16, 2026, the Company issued
Stock Compensation Expense
The Company currently estimates, beginning at the closing date of the Series B offering, implied volatility factor for all options and warrants based upon the Company’s historical volatility. From November 21, 2022 to June 2025, the Company computed implied volatility based upon a blend of the Parent Company’s and Company’s historical volatility along with the volatility of selected comparable publicly traded companies as, at that time, the Company lacked sufficient historical stock trading activity. It incorporated the historical volatility of the Parent Company as the Parent Company’s historical volatility provides a good estimation of the Company’s volatility since its operations were identical to the Company’s prior to the Spin-Off. Since June 2025, the Company used its own implied volatility coupled with comparable company volatilities to arrive at a reasonable estimate of total volatility.
The Company recorded total expenses relating to the outstanding stock options of $
Note 8 – Common Stock Warrants:
The table below presents a reconciliation of the Company’s outstanding and exerciseable warrants for the six months ended June 30, 2026:
| | Number |
| of shares | |
Warrants outstanding and exercisable January 1, 2026 | | |
Warrants issued | | |
Warrants exercised |
| — |
Warrants expired |
| ( |
Warrants outstanding June 30, 2026 | | |
Warrants exercisable June 30, 2026 |
| |
On May 18, 2026, the Company issued stock options to certain Company officers and directors with an exercise price of $
As a result of the May 2026 Adjustment, the Company recognized the change in the fair value of the Series E Warrants as a deemed dividend in the amount of approximately $
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Series E Warrants in the amount of approximately $
On July 6, 2026, the Company issued warrants to a consultant with an exercise price of $
As of June 30, 2026, the weighted average exercise price and the weighted average remaining life of the total warrants were $
Note 9 - Fair Value on a Recurring Basis:
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The estimated fair value of the warrant liability and bifurcated embedded derivatives represent Level 3 measurements. The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at June 30, 2026 and December 31, 2025 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
June 30, | December 31, | |||||||
Description | | Level | | 2026 | | 2025 | ||
Liabilities: |
| |
| |
| | ||
Warrant liability (Note 6) |
| 3 | $ | | $ | | ||
Derivative liability (Note 6) |
| 3 | $ | | $ | | ||
The following table sets forth a summary of the change in the fair value of the Series B Warrant liability that is measured at fair value on a recurring basis:
Balance on December 31, 2025 | | $ | |
Change in fair value of warrant liabilities |
| | |
Balance on June 30, 2026 | $ | |
The following table sets forth a summary of the change in the fair value of the Series D Convertible Preferred Stock bifurcated embedded derivative liability that is measured at fair value on a recurring basis:
Balance on December 31, 2025 | | $ | |
Change in fair value of derivative liability Series D Convertible Preferred Stock | ( | ||
Balance on June 30, 2026 | $ | |
The following table sets forth a summary of the change in the fair value of the Series E Convertible Preferred Stock bifurcated embedded derivative liability that is measured at fair value on a recurring basis:
Balance on December 31, 2025 | | $ | |
Change in fair value of derivative liability Series E Convertible Preferred Stock |
| | |
Balance on June 30, 2026 | $ | |
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Note 10 – Business Segment:
The Company operates in
The Company’s cryptocurrency treasury strategy is managed by the Executive Chairman of the Board in conjunction with the Company’s Chairman of the Audit Committee of the Board and does not represent a separate business segment.
In addition to the significant expense categories included within net loss presented on the Company’s Condensed Consolidated Statements of Comprehensive Income, the following table disaggregates the components of research and development expenses:
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | |||||
External clinical development expenses | $ | | $ | | $ | | $ | | ||||
Personnel related and stock-based compensation |
| |
| |
| |
| | ||||
Other research and development expenses |
| |
| |
| |
| | ||||
Total research and development expenses | $ | | $ | | $ | | $ | | ||||
Note 11 – Subsequent Events
Refer to Notes 3 and 8 disclosures of applicable subsequent events.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2025.
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the unaudited financial statements contained in this report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Basis of Presentation
The unaudited financial statements for the six months ended June 30, 2026 and 2025 include a summary of our significant accounting policies and should be read in conjunction with the discussion below and our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in the financial statements. All such adjustments are of a normal recurring nature.
Overview
TAO Synergies Inc. (formerly known as Synaptogenix, Inc.) was previously a biopharmaceutical company with product candidates in pre-clinical and clinical development. We began operations in October 2012. The Company was principally focused on developing a product platform based upon a drug candidate called Bryostatin-1 for the treatment of Alzheimer’s disease. The Company was also evaluating Bryostatin-1 for other neurodegenerative or cognitive diseases and dysfunctions, such as Fragile X syndrome, Multiple Sclerosis, and Niemann-Pick Type C disease, which have undergone pre-clinical testing.
Neurotrope, our predecessor company, had been a party to a technology license and services agreement with the original Blanchette Rockefeller Neurosciences Institute (which has been known as Cognitive Research Enterprises, Inc. since October 2016), and its affiliate NRV II, LLC, which we collectively refer to herein as “CRE,” pursuant to which we now have an exclusive non-transferable license to certain patents and technologies required to develop our proposed products. We were formed for the primary purpose of commercializing the technologies initially developed by BRNI for therapeutic applications for AD or other cognitive dysfunctions. These technologies have been under development by BRNI since 1999 and, until March 2013, had been financed through funding from a variety of non-investor sources (which include not-for-profit foundations, the NIH, which is part of the U.S. Department of Health and Human Services, and individual philanthropists). From March 2013 forward, development of the licensed technology has been funded principally through us in collaboration with CRE.
On June 9, 2025, in connection with the Company’s previously announced exploration of strategic opportunities, the Company announced the launch of a differentiated cryptocurrency treasury strategy focused on the pure play artificial intelligence (AI) crypto coin, TAO, the native cryptocurrency of Bittensor, a decentralized blockchain network for machine learning and AI. On June 25, 2025, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State for the State of Delaware, effective June 26, 2025, to change the name of the Company from “Synaptogenix, Inc.” to “TAO Synergies Inc.” On September 26, 2025, the Company formed a subsidiary TAOX Florida Inc. for the purpose of facilitating the Company’s expansion into the cryptocurrency treasury strategy business.
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Recent Developments
Background on TAO and Bittensor
Bittensor is a public Layer 1 blockchain, called Subtensor, built with the Substrate framework and organized into independent “subnets” where miners produce digital commodities (commonly AI outputs) and validators evaluate them. Depending on the subnet’s incentive mechanism, miners may produce digital commodities that can include, for example, text prompt completions and other question-answer outputs, vector embeddings and related semantic search or ranking outputs, code-related outputs, image generation outputs, and speech-to-text transcription outputs. On chain, an algorithm named Yuma Consensus aggregates validators’ rankings of miners to compute emissions (new tokens minted by the protocol) for miners, validators, stakers, and subnet creators. This mechanism is widely referred to in project materials as Bittensor’s “Proof-of-Intelligence” consensus model. In this context, “consensus” refers to stake-weighted convergence on subnet validator scoring used to allocate emissions and other incentives, and not to transaction ordering or block finality, which are currently provided on Subtensor through a separate proof-of-authority authority set. Subtensor’s transaction ordering and block finality are currently provided by a proof of authority model under which a small, permissioned “authority set” produces and finalizes blocks. TAO is the Network’s native token and is used to pay transaction fees, incentivize subnet participants, and for staking. Staking TAO affects how emissions and incentives are allocated (including by influencing validator stake weight and related reward calculations and, under dTAO (defined below), by staking into a subnet’s on-chain pool to receive that subnet’s alpha token) and may affect governance participation. Staking TAO does not itself validate or finalize Subtensor transactions. TAO is, however, also used for governance (including voting power that may be exercised directly or via delegation) and may be used to create/register subnets under protocol rules.
As of August 11, 2026, TAO’s circulating supply was approximately 11.22 million tokens with a market capitalization of approximately $2.2 billion, according to publicly available sources. The lifecycle of TAO follows a supply schedule. Approximately one block is produced every ~12 seconds, with 1 TAO per block minted before the first halving (about 7,200 TAO/day), and 0.5 TAO per block minted after the first halving (about 3,600 TAO/day). The first halving occurred when total issuance reached 10.5 million TAO on December 15, 2025. TAO is not halved on a daily basis. Instead, the per-block emission rate decreases by 50% when predetermined issuance thresholds are reached. TAO has a hard cap of 21,000,000 tokens. Subtensor transaction fees are paid in TAO. Current public documentation indicates that transaction fees are deducted from total issuance rather than distributed as rewards. Accordingly, subnet miners and subnet validators generally do not receive TAO as transaction-fee awards for validating transactions, and instead earn rewards primarily through protocol emissions. In addition, per current documentation, certain staking-related transactions are described as subject to a percentage-based fee (for example, 0.05% of the TAO amount being staked or unstaked), in addition to any weight-based transaction fees (in this context “weight” is a measure of compute time).
Under the February 13, 2025 dTAO upgrade, newly issued TAO is first routed to subnets under protocol rules that, as of November 2025, allocate TAO across subnets based on net TAO inflows from staking activity rather than subnet token prices, and staking into a subnet exchanges TAO for that subnet’s alpha token. Subnet alpha tokens are subnet-specific tokens a participant receives when staking TAO into the subnet’s on-chain market pool, and the alpha token to subnet exchange rate is generally determined by the pool’s reserves. Exits convert alpha tokens back to TAO at the prevailing pool exchange rate at the time of conversion, so outcomes are price sensitive. According to current documentation, emissions for each subnet are generally distributed at the end of every approximately 360 blocks, or about 72 minutes, and the subnet’s participant distribution is generally allocated 41% to miners, 41% to validators and their stakers, and 18% to the subnet owner. The Bittensor blockchain does not impose protocol-enforced delays (unbonding periods) in accessing unstaked TAO. That said, custodians, validators, liquidity pools, or other service providers and operational setups may impose operational, contractual, or practical limits on withdrawal timing or liquidity.
The initial Bittensor mainnet “Kusanagi” launched in January 2021, was followed by the “Nakamoto” upgrade in November 2021, then a fork to the current “Finney” chain on March 20, 2023. Subnets went live on October 2, 2023. Governance has transitioned to a bicameral model in which a Triumvirate (employees of the Opentensor Foundation) authors proposals and a Senate (a group of delegates who have elected to participate in proposals) must approve the proposals prior to implementation. The Senate is comprised of the top delegate hotkeys by stake. In this specific context, a “hotkey” is the operational public key used by a participant to conduct on-chain actions (including by a validator), and a “delegate” is a hotkey that accepts delegated TAO from third parties for staking. “Top” refers to the delegate hotkeys with the highest total stake at a given time. Per current documentation, the Senate has 12 seats (although not all must be filled), and a delegate generally must reach at least 2% of total network stake amount through delegation or self-stake and elect to participate in the Senate. If all twelve Senate seats are filled, and a delegate wishes to join, the lowest stake member is replaced. Because Senate membership is stake-based, governance influence may be concentrated among large stakers and delegates.
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Our Cryptocurrency Asset Strategy
In June 2025, we adopted a differentiated cryptocurrency treasury strategy focused on the pure play artificial intelligence (AI) crypto coin, TAO, the native cryptocurrency of Bittensor. Bittensor is a decentralized blockchain network for machine learning and AI. This was a shift from our prior approach of holding excess cash (as defined below) primarily in FDIC-insured interest-bearing accounts. We now seek to allocate substantial portions of our excess cash to purchasing TAO, with the goal of obtaining an increased yield on excess cash by staking TAO for revenue generation and capital appreciation, a strategy that underscores our mission to create significant value for shareholders.
To identify “excess cash,” we first evaluate our cash, cash equivalents, and short-term investments (collectively, “cash assets”). We then estimate the amount of cash assets required to fund approximately 1.5 to 2.0 years of projected operating and working capital needs. Cash assets in excess of this estimated liquidity requirement are considered “excess cash” for purposes of our TAO accumulation strategy. By allocating a substantial portion of our excess cash to TAO, we generally mean that we seek to allocate between 75 percent and 100 percent of this excess cash to the purchase of TAO. However, actual allocation levels may vary due to market conditions, the prevailing price of TAO, liquidity needs, and other factors considered by management.
To guide our cryptocurrency asset purchases, our Board adopted a long-only TAO accumulation strategy and has delegated authority to our Executive Chairman, in consultation with internal personnel and external advisors, to determine the timing, size, and method of TAO purchases with the objective of maximizing tokens per share. Under this authority, management reviews our cash assets, identifies any excess cash as described above, and determines whether to allocate such excess cash to the acquisition of TAO. In addition to using excess cash, our acquisition strategy may also involve issuing debt or equity securities or undertaking other capital raising transactions, subject to market conditions, with the objective of using the proceeds to purchase additional TAO.
We have not established a specific target amount of TAO that we seek to hold. Instead, we monitor market conditions, liquidity needs, and financing opportunities in determining whether to make additional TAO purchases in the future. We view our TAO holdings as long-term holdings and expect to continue accumulating TAO over time. As of June 30, 2026, approximately 87.7% of our treasury holdings were invested in TAO. We do not hedge our TAO exposure and have no diversification strategy into other crypto assets. Accordingly, our treasury strategy currently reflects long-only exposure to TAO. However, we are exploring the potential implementation of hedging strategies to manage risks associated with digital asset price volatility; we have not implemented any hedging strategies to date, and there can be no assurance that any such strategies will be implemented or, if implemented, effective.
Although a liquid market for TAO exists, we have not monetized (i.e., sold) any TAO to date. The majority of our TAO is staked as soon as trade settlement permits, and we currently stake TAO through two staking providers - tao5 and Yuma. We only engage in TAO staking. In the future, we may explore additional yield-enhancement strategies, including participation in Bittensor subnets. Any such activity would likely be undertaken with a third-party partner possessing substantial subnet expertise.
Our Staking Program
We stake our TAO tokens, with the percentage staked varying based on various liquidity and operational considerations, and review this allocation periodically. All staking services are provided through BitGo Bank and Trust, N.A. (formerly known as BitGo Trust Company, Inc.) (the “Custodian”) pursuant to the terms of a Custodial Services Agreement (“CSA”) and the BitGo Staking & Delegation Services Terms (collectively, the “Staking Terms”) which are described below under the heading “Use of Custodians and Storage of TAO Tokens.” In addition, we have entered into a non-custodial Staking & Delegation Technology Services Agreement with Yuma (the “Yuma Agreement”) under which Yuma operates a validator for root subnet staking on the Bittensor network. Yuma does not custody our TAO or any rewards. For 18 months following the effective date of that agreement, we are required to delegate at least 90% of TAO subject to root subnet staking to a Yuma validator.
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Process of Staking
The Custodian currently supports staking TAO to the tao5 and Yuma validators pursuant to its Staking Terms. Under these terms, the Custodian or its designated third-party providers, with input from the Company, stake delegated TAO, and exercise any validation rights and voting rights (which do not include protocol governance or voting rights), and distribute net rewards subject to validator service fees. The Bittensor blockchain does not impose protocol-enforced delays or unbonding periods. We do not currently engage in subnet staking or participate in AMM pools, but may do so in the future. Yuma’s role is non-custodial, and its commission rate pursuant to the Yuma Agreement is the publicly posted validator commission on the Bittensor blockchain and may change from time to time.
The Bittensor Network
Bittensor is a public Layer 1 blockchain, called Subtensor, built with the Substrate framework and organized into independent “subnets” where miners produce digital commodities (commonly AI outputs) and validators evaluate them. On chain, an algorithm named Yuma Consensus aggregates validators’ rankings of miners to compute emissions (new tokens minted by the protocol) for miners, validators, stakers, and subnet creators. This incentive mechanism is widely referred to in project materials as “Proof-of-Intelligence.” TAO is the Network’s native token and is used to pay transaction fees, incentivize subnet participants, and for staking.
Validators
We rely on the Custodian to facilitate our staking activities with respect to TAO tokens. Through its staking services, the Custodian holds and stakes our TAO through its selected validators tao5 and Yuma.
All miner-performance validation in Bittensor occurs within subnets; block/transaction validation occurs on the Subtensor blockchain. Each subnet independently produces the digital commodities that are its focus, with the subnet creator defining an incentive mechanism for validators to use in judging miners’ work. Validators apply this incentive mechanism to miners, score their performance, and submit these weights to the Bittensor blockchain. These validator scores are then used by the Yuma Consensus algorithm to determine the proportion of the subnet’s emissions that should be allocated to each miner.
Each validator submits its rankings of miners it has evaluated to the Bittensor blockchain. The algorithm then considers all these rankings and seeks to identify which validators appear to provide the most reliable evaluations. Validators whose rankings appear to consistently align with those of other validators should gain more influence in the system, while validators that submit less reliable evaluations are expected to lose influence.
How We Earn Staking Rewards
As holders of TAO tokens we can stake any amount of the liquidity we hold to a validator. Also known as “delegation”, staking supports validators, because their total stake in the subnet, including stake delegated to them by others, determines their consensus power and their share of emissions. After the validator extracts their take, the remaining emissions are credited back to us in proportion to our stake with that validator. We stake TAO tokens through arrangements facilitated and managed by the Custodian and its selected validators, tao5 and Yuma. For a further discussion of the risks related to staking, see “Risk Factors-Risks Related to Staking” elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025.
Use of Custodians and Storage of TAO Tokens
In June 2025, we entered into a CSA with the Custodian, which is a national trust bank chartered and regulated by the Office of the Comptroller of the Currency and licensed to act as a custodian, for a six-month initial term with automatic six-month renewals unless terminated. Termination may occur for convenience with 60 days’ prior written notice or for breach with 30 days’ notice. Assets held under the agreement are generally maintained in segregated custodial accounts, separate from the Custodian’s own assets and other clients’ assets per the CSA. The Custodian provides quarterly electronic account statements and, upon request, will confirm asset holdings. To value TAO held in our account, the Custodian electronically obtains USD equivalent prices from digital asset market data with amounts rounded up to the seventh decimal place to the right. Insurance coverage maintained by the Custodian is described further below. Access to the Company’s custodial account holding TAO is generally limited to persons designated by us through the Custodian’s user interface. The Prime Broker (defined below) is permitted limited access to the Company’s custodial account solely to facilitate the execution of trades of TAO.
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In June 2025, we also entered into a Master Purchase Agreement (“MPA”) with BitGo Prime LLC (the “Prime Broker”), which is a Delaware limited liability company, to facilitate digital asset trading through the Prime Broker’s proprietary electronic trading system. The agreement operates on a principal-to-principal basis, with each party acting for its own account and not as agent or fiduciary to the other party. All transactions are settled through, and custodied at, the Custodian under the CSA described herein. The Custodian maintains sole and exclusive custody of the Company’s TAO at all times, including during the pendency of trading activity by the Prime Broker. Notwithstanding the Company’s use of the Prime Broker to facilitate trading activities, the Prime Broker does not at any time take custody, possession, or control of the Company’s TAO assets. Pursuant to the MPA, upon confirmation of a trade, settlement occurs on a delivery-versus-payment basis, whereby the Prime Broker facilitates the simultaneous exchange of U.S. dollars from the Company’s custodial account maintained with the Custodian in consideration for the delivery of the corresponding TAO tokens to such account. This settlement mechanism is designed to mitigate counterparty risk by ensuring that the transfer of funds and digital assets occurs concurrently and that the Company’s TAO assets remain in the custody of the Custodian throughout the transaction lifecycle. Access to the Company’s trading account is generally restricted to users it designates. The Prime Broker uses the Custodian’s balance inquiry functionality to verify the existence of sufficient assets before executing trades. The MPA terminates automatically upon termination of the CSA, and the Prime Broker reserves the right to suspend or modify services at its discretion.
The TAO Daily
On September 22, 2025, we announced the launch of The TAO Daily, our comprehensive media, news, and insight platform dedicated to Bittensor (TAO) and the TAO ecosystem. The TAO Daily platform aims to highlight the Bittensor ecosystem developments and provide transparency into the rapidly growing world of decentralized AI. The platform also aims to centralize resources useful to TAO users and investors. Additionally, a new podcast, The TAO Pod, is hosted by James Altucher and Joseph Jacks, well-known TAO ecosystem leader and crypto treasury advisor to the Company.
Series B Common Stock Warrants
Pursuant to a November 17, 2022 private placement, the Company issued to investors warrants and, pursuant to its advisory agreements, the Company issued to its advisor additional warrants with the same terms to purchase 2,323 shares of Common Stock with the same terms (the “Series B Broker Warrants”). The Series B Broker Warrants are within the scope of ASC 718 pursuant to ASC 718-10-20 but are subject to liability classification as they would be required to be classified as liabilities in accordance with ASC 480.
The warrants were determined to be within the scope of ASC 480-10 as they are puttable to the Company at the Holders’ election upon the occurrence of a Fundamental Transaction (as defined in the agreements). As such, the Company recorded the warrants as a liability at fair value with subsequent changes in fair value recognized in earnings.
During the three months ended June 30, 2026 and 2025, the Company recorded a gain of $6,000 and a loss of $554,000, respectively, and, during the six months ended June 30, 2026 and 2025, the Company recorded no gain or loss and a loss of $442,000, respectively related to the change in fair value of the Series B warrant liability, which is recorded in other income (expense) on the Condensed Consolidated Statements of Comprehensive Income. The fair value of the warrants of approximately $9,000 was estimated at June 30, 2026 utilizing the Black Scholes model using the following weighted average assumptions: dividend yield 0%; remaining term of 1.39 years; equity volatility of 137.0%; and a risk-free interest rate of 3.96%.
Series E Warrants Repricing
On May 18, 2026, the Company issued stock options to certain Company officers and directors with an exercise price of $4.80 per share. As a result, the Company issued, to holders of the Series E Warrants, an additional 953,335 warrants pursuant to the repricing triggered by the options issuance and repriced the Series E Warrants to $4.80 per share. On July 6, 2026, the Company issued warrants to a consultant with an exercise price of $3.85 per share. As a result, the Company issued to holders of the Series E Warrants an additional 565,478 warrants and repriced the Series E Warrants to $3.85 per share.
Other Development Projects
To the extent resources permit, we may pursue development of selected technology platforms with indications related to the treatment of various disorders, including neurodegenerative disorders such as AD, based on our currently licensed technology and/or technologies available from third party licensors or collaborators.
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Nemours Agreement
On September 5, 2018, we announced a collaboration with Nemours, a premier U.S. children’s hospital, to initiate a clinical trial in children with Fragile X. In addition to the primary objective of safety and tolerability, measurements will be made of working memory, language and other functional aspects such as anxiety, repetitive behavior, executive functioning, and social behavior. On August 5, 2021, we announced our memorandum of understanding with Nemours to initiate a clinical trial using Bryostatin-1, under orphan drug status, to treat Fragile X. We intend to provide the Bryostatin-1 drug product candidate and obtain the IND and Nemours intends to provide the clinical site and attendant support for the trial. We and Nemours, jointly, will develop the trial protocol. We currently estimate our total trial and IND cost to be approximately $2 million. As of the end of the period covered by this quarterly report, we have incurred cumulative expenses associated with this agreement of approximately $100,000.
We have filed for an IND with the FDA. The FDA has placed the development of the IND on clinical hold pending completion of further analytics relating to drug pharmacokinetics and pharmacodynamics. We are currently evaluating our plans to advance Fragile X development.
Results of Operations
Comparison of the three months ended June 30, 2026 and 2025
The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025:
Three Months ended |
| |||||||||||
June 30, | Dollar |
| ||||||||||
| 2026 | | 2025 | | Change | | % Change |
| ||||
Revenues | $ | 88,626 | $ | 3,962 | $ | 84,664 | 2,136.9 | % | ||||
Operating Expenses: |
| |
| |
|
| | |||||
Research and development expenses | $ | 31,855 | $ | 148,555 | $ | (116,700) |
| (78.6) | % | |||
General and administrative expenses | $ | 1,626,007 | $ | 2,191,395 | $ | (565,388) |
| (25.8) | % | |||
Warrant issuance costs | $ | — | $ | 699,845 | $ | (699,845) | (100.0) | % | ||||
Other expense, net | $ | (7,729,730) | $ | (14,480,245) | $ | 6,750,515 |
| (46.6) | % | |||
Net loss | $ | (9,298,966) | $ | (17,516,078) | $ | 8,217,112 | (46.9) | % | ||||
Revenues
We generated operating revenues for the three months ended June 30, 2026 and 2025 from staking TAO tokens of $88,626 and $3,962, respectively. The increase is attributable to purchasing tokens and staking for the entire 2026 period versus limited purchases and staking in the 2025 period.
Operating Expenses
Overview
Total operating expenses for the three months ended June 30, 2026 were $1,657,862 as compared to $3,039,795 for the three months ended June 30, 2025, a decrease of approximately 45.5%. The decrease in total operating expenses is due to the decreases in research and development, general and administrative and warrant issuance costs.
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Research and Development Expenses
For the three months ended June 30, 2026, we incurred $31,855 in research and development expenses as compared to $148,555 for the three months ended June 30, 2025, a decrease of approximately 78.6%. These expenses were incurred primarily in connection with developing the potential AD therapeutic product. Of these expenses, for the three months ended June 30, 2026, $10,353 was incurred principally relating to our storage of drug product, $7,013 for clinical consulting services, $4,986 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai License Agreement, $9,503 for development of alternative drug supply with Stanford University; comparatively, for the three months ended June 30, 2025, $90,810 was incurred principally relating to our product development and storage of drug product, $37,906 for clinical consulting services, $7,479 of amortization of prepaid licensing fees relating to the Stanford License Agreement and the Mount Sinai License Agreement, and $12,360 for development of alternative drug supply with Stanford University.
Our research and development expenses have decreased as our Cleveland Clinic trial for AD was concluded by the end of 2024 and our MS clinical trial was discontinued. Other development expenses might increase, as our resources permit, in order to advance our potential products. We are continuing to determine how to proceed with respect to our other current development programs for Bryostatin-1.
General and Administrative Expenses
We incurred $1,626,007 and $2,191,395 of general and administrative expenses for the three months ended June 30, 2026 and 2025, respectively, a decrease of approximately 25.8%. The three months ended June 30, 2025 results included warrant issuance costs associated with the Series D Private Placement of approximately $700,000. For the three months ended June 30, 2026, $258,202 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus $212,548 for the three months ended June 30, 2025. The increase resulted primarily from increased compensation for the Company’s Chairman as he became Executive Chairman during the second quarter of 2025; $145,467 was incurred for legal expenses versus $322,510 for the 2025 comparable period. The higher legal fees for 2025 are based upon the Company changing its business strategy, restructuring and financing; $585,001 was incurred for outside operations consulting services during the three months ended June 30, 2026, versus $310,471 for the comparable period in 2025. The higher amount for the 2026 period reflects non-cash expenses associated with warrants issued to cryptocurrency experts totaling $398,306; $8,662 was incurred for travel expenses during the three months ended June 30, 2026, versus $10,370 for the comparable period in 2025 as Company officers and directors conducted due diligence for strategic investments in 2025; $76,094 was incurred for investor relations services during the three months ended June 30, 2026, versus $54,474 for the comparable period in 2025. The 2025 period included additional IR consulting services for the Company’s change to cryptocurrency treasury strategy; $17,389 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services during the three months ended June 30, 2026, versus $52,904 for the comparable period in 2025. The increase for the 2025 period resulted from increased accounting and auditing fees relating to the Company’s cryptocurrency treasury strategy; $165,451 was incurred for insurance during the three months ended June 30, 2026, versus $149,730 for the comparable period in 2025. The increase is attributable to higher premiums relating the Company’s cryptocurrency treasury strategy; $128,016 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other during the three months ended June 30, 2026, versus $109,156 for the comparable period in 2025; and $241,725 was recorded as non-cash stock options compensation expense during the three months ended June 30, 2026, versus $969,232 for the comparable period in 2025. The decrease for the current period is attributable to granting of stock options awards during the third quarter of 2025 partially offset by the issuance of stock options awards during the current quarter.
Other Income / Expense
We recognized total other expense of $7,729,730 for the three months ended June 30, 2026 as compared to other expenses of $14,480,245 for the three months ended June 30, 2025, which consisted, for the periods 2026 and 2025, of unrealized gains on digital assets, and for both 2026 and 2025, interest income on funds deposited in interest-bearing money market accounts and investments in short-term U.S. treasury bills, and changes in fair value of warrant and derivative liabilities. The decrease in interest income and unrealized gains on treasury bills totaling $127,543 is primarily attributable to the decrease in cash balances over the period and lower interest rates. The total decrease in other expense is primarily attributable to the decrease in the fair values of warrant and derivative liabilities of approximately $15.6 million, partially offset by the unrealized loss on digital asset investments of approximately $8.4 million, losses attributable to the Yuma partnership investments of $318,870 and the decrease in interest income as noted above.
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Net Loss
We recognized a net loss of $9,298,966 and $17,516,078 for the three months ended June 30, 2026 and 2025, respectively. The decreased loss was primarily attributable to the decrease in research and development expenses and general and administrative expenses partially offset by the decrease in other expenses.
Comparison of the six months ended June 30, 2026 and 2025
The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:
Six Months ended |
| |||||||||||
June 30, | Dollar | % |
| |||||||||
| 2026 | | 2025 | | Change | | Change |
| ||||
Revenues | $ | 477,400 | $ | 3,962 | $ | 473,438 |
| 11,949.5 | % | |||
Operating Expenses: |
| |
| |
| |
| | ||||
Research and development expenses | $ | 60,455 | $ | 209,371 | $ | (148,916) |
| (71.1) | % | |||
General and administrative expenses | $ | 3,303,945 | $ | 3,199,744 | $ | 104,201 |
| 3.3 | % | |||
Warrant issuance costs | $ | — | $ | 699,845 | $ | (699,845) |
| (100.0) | % | |||
Other expense, net | $ | 2,157,574 | $ | 13,025,911 | $ | (10,868,337) |
| (83.4) | % | |||
Net loss | $ | 5,044,574 | $ | 17,130,909 | $ | (12,086,335) |
| (70.6) | % | |||
Revenues
We generated operating revenues for the six months ended June 30, 2026 and 2025 from staking TAO tokens of $477,400 and $3,962, respectively. The increase is attributable to purchasing tokens and staking for the entire 2026 period versus limited purchases and staking in the 2025 period.
Operating Expenses
Overview
Total operating expenses for the six months ended June 30, 2026 were $3,364,400 as compared to $4,108,960 for the six months ended June 30, 2025, a decrease of approximately 27.2%. The decrease in total operating expenses is due to the decreases in research and development expenses and warrant issuance costs partially offset by the increase in general and administrative expenses.
Research and Development Expenses
For the six months ended June 30, 2026, we incurred $60,455 in research and development expenses as compared to $209,371 for the six months ended June 30, 2025, a decrease of approximately 71.1%. These expenses were incurred primarily in connection with developing the potential AD therapeutic product. Of these expenses, for the six months ended June 30, 2026, $20,704 was incurred principally relating to our storage of drug product, $9,525 for clinical consulting services, $10,275 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai License Agreement, $19,951 for development of alternative drug supply with Stanford University; comparatively, for the six months ended June 30, 2025, $110,648 was incurred principally relating to our product development and storage of drug product, $57,083 for clinical consulting services, $14,904 of amortization of prepaid licensing fees relating to the Stanford License Agreement and the Mount Sinai License Agreement, and $26,736 for development of alternative drug supply with Stanford University.
Our research and development expenses have decreased as our Cleveland Clinic trial for AD was concluded by the end of 2024 and our MS clinical trial was discontinued. Other development expenses might increase, as our resources permit, in order to advance our potential products. We are continuing to determine how to proceed with respect to our other current development programs for Bryostatin-1.
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General and Administrative Expenses
We incurred $3,303,945 and $3,199,744 of general and administrative expenses for the six months ended June 30, 2026 and 2025, respectively, an increase of approximately 3.3%. The six months ended June 30, 2025 results included warrant issuance costs associated with the Series D Private Placement of approximately $700,000. For the six months ended June 30, 2026, $537,081 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus $449,791 for the six months ended June 30, 2025. The increase resulted primarily from increased compensation for the Company’s Chairman as he became Executive Chairman during the second quarter of 2025; $299,319 was incurred for legal expenses versus $400,957 for the 2025 comparable period. The higher legal fees for 2025 are based upon the Company changing its business strategy, restructuring and financing; $1,178,823 was incurred for outside operations consulting services during the six months ended June 30, 2026, versus $504,289 for the comparable period in 2025. The higher amount for the 2026 period reflects non-cash expenses associated with warrants issued to cryptocurrency experts totaling $796,612; $18,269 was incurred for travel expenses during the six months ended June 30, 2026, versus $26,328 for the comparable period in 2025 as Company officers and directors conducted due diligence for strategic investments in 2025; $238,133 was incurred for investor relations services during the six months ended June 30, 2026, versus $204,435 for the comparable period in 2025; $138,541 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services during the six months ended June 30, 2026, versus $140,711 for the comparable period in 2025; $330,902 was incurred for insurance during the six months ended June 30, 2026, versus $279,934 for the comparable period in 2025. The increase is attributable to higher premiums relating to the Company’s cryptocurrency treasury strategy; $244,552 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other during the six months ended June 30, 2026, versus $220,358 for the comparable period in 2025; and $318,325 was recorded as non-cash stock options compensation expense during the six months ended June 30, 2026, versus $972,941 for the comparable period in 2025. The decrease for the current period is attributable to granting of stock options awards during the third quarter of 2025 partially offset by the issuance of stock options awards during the current quarter.
Other Income / Expense
We recognized total other expense of $2,157,574 for the six months ended June 30, 2026 as compared to other expenses of $13,025,911 for the six months ended June 30, 2025, which consisted, for the periods 2026 and 2025, of unrealized gains on digital assets, and for both 2026 and 2025, interest income on funds deposited in interest-bearing money market accounts and investments in short-term U.S. treasury bills, and changes in fair value of warrant and derivative liabilities. The decrease in interest income and unrealized gains on treasury bills totaling $274,398 is primarily attributable to the decrease in cash balances over the period and lower interest rates. The total decrease in other expense is primarily attributable to the decrease in the fair values of warrant and derivative liabilities of approximately $12.7 million and income attributable to the Yuma partnership investments of $31,870, partially offset by the unrealized loss on digital asset investments of approximately $1.6 million and the decrease in interest income as noted above.
Net Loss
We recognized a net loss of $5,044,574 and $17,130,909 for the six months ended June 30, 2026 and 2025, respectively. The decreased losses were primarily attributable to the decrease in research and development expenses and general and administrative expenses and warrant issuance costs partially offset by the decrease in other expenses.
Financial Condition, Liquidity and Capital Resources
Cash and Working Capital
Since inception, we have incurred negative cash flows from operations. As of June 30, 2026, we had working capital of $19,585,415 as compared to working capital of $23,564,919 as of December 31, 2025. The $3,979,504 decrease in working capital was primarily attributable to operating expenses of approximately $2.9 million, decrease in digital assets of approximately $1.1 million and dividends on preferred stock of approximately $600,000, partially offset by approximately $600,000 from consultant warrant issuances and approximately $61,000 of interest income.
We expect that our current cash and cash equivalents and digital assets of approximately $18.8 million will be sufficient to support our projected operating requirements for at least the next 12 months from the date of this Quarterly Report on Form 10-Q, which may include the continuing development of Bryostatin-1, our initiation and possible development of a therapeutic for MS and other possible therapeutics.
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We expect to require additional capital in order to initiate, pursue and complete all potential AD clinical trials and obtain regulatory approval of one or more therapeutic candidates. However, additional future funding may not be available to us on acceptable terms, or at all. If we are unable to access additional funds when needed, we may not be able to initiate, pursue and complete all planned clinical trials or continue the development of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and operations. Any additional equity financing, if available, may not be available on favorable terms, would most likely be significantly dilutive to our current stockholders and debt financing, if available, and may involve restrictive covenants. If we are able to access funds through collaborative or licensing arrangements, we may be required to relinquish rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize on our own, on terms that are not favorable to us. Our ability to access capital when needed is not assured and, if not achieved on a timely basis, would likely materially harm our business and financial condition.
Sources and Uses of Liquidity
We expect to continue to incur expenses, resulting in losses and negative cash flows from operations, over at least the next several years as we continue to develop AD and other therapeutic products. We anticipate that this development may include clinical trials in addition to our current ongoing clinical trial and additional research and development expenditures.
Six Months Ended June 30, | ||||||
| 2026 | | 2025 | |||
Cash used in operating activities | $ | 2,557,837 | $ | 2,749,668 | ||
Cash used in investing activities | $ | — | $ | 4,500,000 | ||
Cash (used in) provided by financing activities | $ | (571,377) | $ | 3,963,165 | ||
Net Cash Used in Operating Activities
Cash used in operating activities was $2,557,837 for the six months ended June 30, 2026, compared to $2,749,668 for the six months ended June 30, 2025. The $191,831 decrease primarily resulted from the decrease in net loss of approximately $12.1 million and the increased loss on digital assets, net of the change in unrealized revenues, of approximately $1.1 million and changes in current assets and liabilities of approximately $600,000, partially offset by the decrease in derivative liabilities of approximately $12.7 million, the decrease in warrant issuance costs of approximately $700,000 and the decrease in non-cash compensation of approximately $200,000.
Net Cash Provided by (Used in) Investing Activities
Net cash used in investing activities was $0 for the six months ended June 30, 2026 compared to $4.5 million for the six months ended June 30, 2025. The cash used in investing activities for the six months ended June 30, 2026 was $0 versus the six months ended June 30, 2025 which was for the purchase of crypto currency for the Company’s treasury strategy.
Net Cash Provided by / Used in Financing Activities
Net cash used in financing activities was $571,377 for the six months ended June 30, 2026 compared to $3,963,165 for the six months ended June 30, 2025. For the six months ended June 30, 2026, the entire amount was used to pay dividends on Convertible Preferred Stock. For the six months ended June 30, 2025 consisted of proceeds from the Company’s Series D Preferred Stock offering and proceeds from exercise of investor warrants partially offset by principal and dividend payments applied to our outstanding Series C Preferred Stock outstanding.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable to a smaller reporting company.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and our principal financial and accounting officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on their evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures are not effective due to: inadequate segregation of duties consistent with control objectives in the areas over certain payroll and banking systems and user access controls; ineffective processes over period end financial disclosure and reporting including documentation of GAAP disclosure and reporting reviews supporting the financial reporting process and changes to chart of accounts; and ineffective information technology (IT) general computing controls including lack of risk and design assessments supporting IT security policies and procedures, user access, and IT controls within third party contracts. These weaknesses may affect management’s ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.
We previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, that our management, including the then Chairman of the Board, principal executive officer and principal financial and accounting officer, assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in the 2013 Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by the Annual Report on Form 10-K for the fiscal year ended December 31, 2025, such internal controls and procedures were not effective to detect the inappropriate application of U.S. generally accepted accounting principles.
Based on management’s review, our Executive Chairman of the Board and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of June 30, 2026. Notwithstanding the material weaknesses described above, our management has concluded that financial statements, and other financial information included in this Quarterly Report on Form 10-Q, fairly present in all material respects our financial condition, results of operations, and cash flows as of and for the periods presented in this Quarterly Report on Form 10-Q.
Changes in Internal Controls over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
You should carefully review and consider the information regarding certain factors that could materially affect our business, condensed consolidated financial condition or results of operations set forth under Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no material changes from the risk factors disclosed in such Form 10-K. We may disclose changes to risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On January 16, 2026, we issued 22,563 shares of Common Stock to IRTH Communications, on March 6 and June 8, 2026, we issued 1,025 and 1,181 shares of Common Stock to Neil Cataldi, both issuances in exchange for investor relations services.
The foregoing transaction did not involve any underwriters or any public offering. The sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering. The recipient of the securities in the transaction represented their intentions to acquire the securities for investment only and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions. The recipient received or had, through his relationships with us, adequate access to information about us.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
During the fiscal quarter ended June 30, 2026, none of our directors or executive officers
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Item 6. Exhibits.
Exhibit | | |
3.1.1 | ||
3.1.2 | ||
3.1.3 | ||
3.2 | ||
3.3 | ||
3.4 | ||
31.1* | ||
31.2* | ||
32** | ||
101* | The following financial information from this Quarterly Report on Form 10-Q for the period ended June 30, 2026, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Balance Sheets; (iii) the Condensed Consolidated Statements of Cash Flows; and (iv) the Notes to Financial Statements, tagged as blocks of text. | |
104* | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
* Filed herewith.
** The certifications attached as Exhibit 32 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of TAO Synergies Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of such Form 10-Q), irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TAO Synergies Inc. | |
|
| |
Date: August 13, 2026 | By: | /s/ Joshua N. Silverman |
| Joshua N. Silverman | |
|
| Executive Chairman of the Board of Directors |
|
| (principal executive officer) |
|
| |
Date: August 13, 2026 | By: | /s/ Robert Weinstein |
|
| Robert Weinstein |
|
| Chief Financial Officer, Executive Vice President, Secretary and Treasurer |
(principal financial officer and principal accounting officer) | ||
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