TaoWeave, Inc 10-K for FY2025
TaoWeave, Inc. (TWAV)
About this 10-K
TaoWeave, Inc filed this 10-K on March 20, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.44M
- up 2.5% from $2.38M a year earlier
- Net loss
- $6.36M
- compared with a net loss of $4.04M a year earlier
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE | |
| ACT OF 1934 |
For the fiscal year ended
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| 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:
TAOWEAVE, INC.
(Exact name of registrant as specified in its charter)
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| Securities registered pursuant to Section 12(b) of the Exchange Act:
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Securities registered pursuant to Section 12(g) of the Exchange Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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 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.
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Indicate by checkmark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes
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. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant computed by reference to the price at which the common equity was last sold on June 30, 2025, the last business day of the Registrant’s most recently completed second fiscal quarter, was $
The number of shares of the Registrant’s common stock outstanding as of March 19, 2026, was
TAOWEAVE, INC.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K (this “Report”) contains statements that are considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and its rules and regulations (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, and its rules and regulations (the “Exchange Act”). These forward-looking statements include, but are not limited to, statements about the plans, objectives, expectations, and intentions of TaoWeave, Inc. (“TaoWeave” or “we” or “us” or the “Company”). All statements other than statements of current or historical fact contained in this Report, including statements regarding TaoWeave's future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” and similar expressions, as they relate to TaoWeave, are intended to identify forward-looking statements. These statements are based on TaoWeave's current plans, and TaoWeave's actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. Any or all of the forward-looking statements in this Report may turn out to be inaccurate. TaoWeave has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties, and assumptions. There are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations, intentions, and other factors that are discussed in “Item 1A. Risk Factors” and/or listed below. TaoWeave undertakes no obligation to publicly revise these forward-looking statements to reflect events occurring after the date hereof. All subsequent written and oral forward-looking statements attributable to TaoWeave or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this Report. Forward-looking statements in this Report include, among other things: the Company's plans to explore partnerships within the Bittensor ecosystem, demand for our product offerings, future revenues, expenses, capital expenditures and cash flows; our ability to fund operations and continue as a going concern; our liquidity projection; expectations regarding adjustments to our cost of revenue and other operating expenses; the future exercise of warrants; our ability to raise capital through sales of additional equity or debt securities and/or loans from financial institutions; our beliefs about the ongoing performance of our Managed Services business; statements relating to market need and evolution of the industry, our solutions and our service platforms; our beliefs about employee relations; adequacy of our internal controls; and statements regarding our information systems and ability to prevent cybersecurity incidents. For additional information regarding known material factors that could cause our actual results to differ materially from our projected results, please see “Item 1A. Risk Factors.” Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below:
RISK FACTORS SUMMARY
The following is a summary of the principal risk factors that make an investment in our company speculative or risky, all of which are further described below in the section titled “Risk Factors” in Part I, Item 1A of this Report. This summary should be read in conjunction with the “Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks facing our business.
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We own and may purchase additional digital assets, the prices of which have been, and will likely continue to be, highly volatile. |
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If any of the digital assets we hold are classified as a security, we may be subject to extensive regulation, which could result in significant costs or force us to cease certain operations. |
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Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns. |
| • | Classification of the digital assets we hold as a commodity could subject us to additional CFTC regulation, resulting in significant compliance costs or the cessation of certain operations. |
| • | We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisors. |
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Due to the unregulated nature and lack of transparency surrounding the operations of many digital asset trading venues, digital asset trading venues may experience greater fraud, security failures, or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in digital asset trading venues and adversely affect the value of digital assets. |
| • | Our historical financial statements may not reflect the potential variability in earnings that we may experience in the future relating to our holdings of digital assets. |
| • | Digital asset holdings are less liquid than cash and cash equivalents and may not serve as a source of liquidity for us to the same extent. |
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Digital asset lending arrangements may expose us to risks of borrower default, operational failures, and cybersecurity threats. |
| • | We may incur losses from staking, delegating, and other related services. |
| • | Intellectual property disputes related to digital assets technology could threaten our ability to operate. |
| • | The open-source structure of digital asset networks exposes us to risks related to software development, security vulnerabilities, and potential disruptions |
| • | We maintain crime insurance for our digital assets but there is still a risk of total loss in the event of theft or destruction and if coverage is denied. |
| • | If we, or our third-party service providers, experience a security breach or cyberattack, and unauthorized parties obtain access to our digital assets, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our digital assets, and our financial condition and results of operations could be materially adversely affected. |
| • | The irreversibility of digital asset transactions exposes us to risks of theft, loss, and human error, which could negatively impact our business. |
| • | If we fail to implement our new digital asset-related strategy, or if it is ineffective, our financial performance could be materially and adversely affected. |
| • | We may be unable to attract and retain qualified and skilled employees or consultants. |
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Our Company experienced revenue declines in recent fiscal years, and revenue may continue to decline in future periods. |
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We have a history of substantial net operating losses, and we may incur future net losses. |
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Our business activities may require additional financing that might not be obtainable on acceptable terms, if at all, which could have a material adverse effect on our financial condition, liquidity, and our ability to operate as a going concern in the future. |
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If we were deemed to be an investment company under the Investment Company Act of 1940, as amended, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition, and results of operations. |
| • | Any future disposition of assets and business could have material and adverse effects on business, financial conditions, and operations if not consummated in a timely manner. |
| • | We rely on a limited number of customers for a significant portion of our revenue, and the loss of any one of those customers, or several of our smaller customers, could materially harm our business. |
| • | We depend on our network providers and facilities infrastructure. |
| • | Our network depends on telecommunications carriers, and they may limit or deny us access to their network or fail to perform, which would have a material adverse effect on our business. |
| • | We may experience material disconnections and/or reductions in the prices of our services and may not be able to replace the resulting revenue losses. |
| • | We are exposed to the credit and other counterparty risk of our customers in the ordinary course of our business. |
| • | Failure to retain and recruit key personnel would harm our ability to meet key objectives. |
| • | If our actual liability for sales and use taxes and federal regulatory fees is different from our accrued liability, it could have a material impact on our financial condition. |
| • | The terms of the Series F Preferred Stock could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions, and engage in other business activities that may be in our best interests. |
| • | Cyber-attacks, data incidents, malware, or an intrusion into our physical security systems may disrupt our business operations, result in the loss of critical and confidential information, harm our operating results and financial condition, and damage our reputation; and cyber-attacks or data incidents on our customers’ networks, or in cloud-based services provided by or enabled by us, could result in claims of liability against us, damage our reputation or otherwise harm our business. |
| • | Vulnerabilities and critical security defects, prioritization decisions regarding remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services, or solutions could result in claims of liability against us, damage our reputation, or otherwise harm our business. |
| • | Our business, operating results, and financial condition could be materially harmed by regulatory uncertainty applicable to our products and services. |
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Our stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future, and as a result, investors in our common stock could incur substantial losses. |
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Penny stock regulations may impose certain restrictions on the marketability of our securities. |
| • | Future operating results may vary from quarter to quarter, and we may fail to meet the expectations of securities analysts and investors at any given time. |
| • | Sales of substantial amounts of common stock in the public market, or the perception that such sales may occur, could reduce the market price of our common stock and make it more difficult for us and our stockholders to sell our equity securities in the future. |
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The issuance of the securities in the 2023 Private Placement and the 2025 Private Placement significantly diluted the ownership interest of the existing holders of our Common Stock, and the market price of our Common Stock will likely decline significantly as a result of sales of such securities into the public market by the selling stockholders and subsequent investors or the perception that such sales may occur. |
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Future issuances of equity or debt securities by us may adversely affect the market price of our Common Stock. |
| • | We may not be able to comply with all applicable listing requirements or standards of the Nasdaq Capital Market, and Nasdaq could delist our Common Stock. |
| • | We may be delisted from the Nasdaq if we fail to maintain a minimum market value of $5.0 million in listed securities. |
| • | Holders of our Series F Preferred Stock will have no rights with respect to our Common Stock until the Series F Preferred Stock is converted, but may be adversely affected by certain changes in our Common Stock. |
| • | Holders of our Series F Preferred Stock may have to pay taxes if we adjust the conversion ratio of the Series F Preferred Stock in certain circumstances, even though the holders would not receive any cash. |
| • | Our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment. |
| • | We incur significant accounting and administrative costs as a publicly traded corporation that impact our financial condition. |
| • | Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold them fail. |
Overview
We are a public company focused on the Bittensor ecosystem, a decentralized, open-source protocol that coordinates the development and deployment of artificial intelligence (“AI”) models. Our principal asset is TAO, Bittensor’s native cryptocurrency, which we accumulate and stake on the Bittensor network to generate yield in the form of additional TAO tokens. Our goal is to provide public-market investors with economic exposure to the Bittensor ecosystem.
During the year ended December 31, 2025, we deployed approximately $8.7 million to acquire approximately 24,128 TAO tokens through purchases executed via BitGo Trust Company, Inc. (“BitGo”) and the Kraken exchange (“Kraken”, and together with BitGo, the “TAO Custodians”). As of December 31, 2025, we held approximately 24,665 TAO tokens, inclusive of approximately 544 TAO earned through staking rewards during the period. All of our TAO is staked.
Since our private placement financing in June 2025 (the “2025 Private Placement”), we have also been evaluating opportunities to participate more directly in the Bittensor network, including potential investments in or partnerships with teams operating subnets on the platform. During 2025, we conducted due diligence on a number of subnet projects to assess their viability, technology, and potential alignment with our strategy. As of the date of this Report, we have not entered into any binding commitments with respect to subnet investments or partnerships, and no assurance can be given that any such opportunities will be pursued or, if pursued, will be completed on terms favorable to the Company or at all.
We also operate legacy businesses centered around our patented Mezzanine™ product line and managed services for video collaboration and network solutions. In conjunction with our 2025 Private Placement, we began transitioning our focus from these legacy operations to the Bittensor ecosystem.
Background on Bittensor and TAO
Bittensor is a decentralized network, built on a dedicated Layer 1 blockchain called “Subtensor” using the Substrate framework, that creates an open marketplace for AI. The network is organized into independent sub-networks called “subnets,” each focused on a specific type of AI task such as text generation, image recognition, or data analysis. Within each subnet, independent contributors (commonly referred to as “miners”) produce AI outputs, and other participants (commonly referred to as “validators”) evaluate the quality of that work. An on-chain algorithm called Yuma Consensus aggregates validator evaluations across the network and allocates newly minted TAO rewards accordingly—a process commonly referred to as “Proof-of-Intelligence.” Contributors who produce higher-quality outputs earn more TAO; validators who evaluate accurately also earn more TAO.
TAO serves three functions within the network: it is the unit of value used to reward participants, the staking asset that determines a participant’s influence and share of rewards, and the token used to pay transaction fees on the Subtensor blockchain.
TAO has a fixed supply cap of 21,000,000 tokens. New TAO is emitted as rewards to network participants at a rate that declines over time through periodic “halving” events, similar in structure to Bitcoin’s supply schedule. The first halving occurred in December 2025, reducing daily emissions from approximately 7,200 TAO to approximately 3,600 TAO. As of the filing of this Report, TAO’s circulating supply was approximately 10.8 million tokens with a market capitalization of approximately $3.0 billion, according to publicly available sources. Circulating supply is dynamic: daily emissions are partially offset by tokens consumed through subnet registration and other protocol mechanisms.
Our Cryptocurrency Asset Strategy
Our current primary activity is accumulating and staking TAO. We have adopted a long-only TAO accumulation policy under which we allocate substantial portions of our available cash to purchase TAO with the goal of maximizing TAO holdings per outstanding common share. As of December 31, 2025, approximately 66% of our total assets (including cash) were held in TAO. We intend to continue allocating substantial portions of our excess cash to TAO without a formal cap on the percentage of assets invested.
We do not hedge our TAO exposure and do not hold any other digital assets. We have not sold any TAO since inception of our digital asset strategy. All TAO is staked as soon as trade settlement permits, and we currently spread staking across both of our TAO Custodians. There are significant risks associated with our concentrated, unhedged position in a single digital asset. 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. See “Item 1A. Risk Factors.”
Our Staking Program
We stake substantially all of our TAO through our TAO Custodians, who delegate our tokens to validators on the Bittensor network. In exchange for our staked TAO supporting a validator’s operations, we receive a proportional share of the TAO rewards earned by that validator, net of the validator’s commission (commonly referred to as the validator’s “take”). Rewards are calculated and distributed directly to our digital wallets by the network as part of its consensus mechanism.
During the year ended December 31, 2025, we earned approximately 544 TAO through staking, representing approximately $186,000 in revenue. Staking yields are variable and depend on several factors, including validator performance, total network stake, and the dynamics of the specific subnets to which our TAO is delegated. The Bittensor protocol does not impose lock-up periods or unbonding delays; as of December 31, 2025, all of our staked TAO could be unstaked and transferred without protocol-enforced waiting periods. We do not currently engage in direct subnet mining or validation but may explore such activities in the future.
In February 2025, the Bittensor network implemented an upgrade known as Dynamic TAO (“dTAO”), which changed how staking rewards flow through the network. Prior to dTAO, stakers received a share of rewards based on their overall network delegation. Under dTAO, staking is directed into specific subnets, where TAO is exchanged for that subnet’s internal token (“alpha”). Rewards flow to stakers within each subnet based on their alpha holdings, and exiting a subnet position converts alpha back to TAO at prevailing market rates. This means our staking returns are now influenced by which subnets we stake into and how those subnets perform relative to the broader network, adding a layer of variability that did not exist before the upgrade. See “Item 1A. Risk Factors” for further discussion of risks related to dTAO.
Mezzanine™ Product Offerings
Our product is called Mezzanine™, a family of turn-key products that enable dynamic and immersive visual collaboration across multi-users, multiple screens, multiple devices, and multiple locations. Mezzanine™ allows multiple people to share, control, and arrange content simultaneously, from any location, enabling all participants to see the same content in its entirety at the same time in identical formats, resulting in dramatic enhancements to both in-room and virtual videoconference presentations. Applications include video telepresence, laptop and application sharing, whiteboard sharing, and slides. Spatial input allows content to be spread across screens spanning different walls, be scalable to an arbitrary number of displays, and interact with our proprietary wand device. Mezzanine™ substantially enhances day-to-day virtual meetings with technology that accelerates decision making, improves communication, and increases productivity. Mezzanine™ scales up to support the most immersive and commanding innovation centers; across to link labs, conference spaces, and situation rooms; and down for the smallest work groups. Mezzanine’s digital collaboration platform can be sold as delivered systems in various configurations for small teams to total immersion experiences. The family includes the 200 Series (two display screens), 300 Series (three screens), and 600 Series (six screens). We also sell maintenance and support contracts related to Mezzanine™.
Historically, customers have used Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces. Sales of our Mezzanine™ product have been adversely affected during the last several years by the commercial response to the COVID-19 pandemic and its aftermath. We have not invested in research and development or sales and marketing for our Mezzanine™ product in recent years. Given the declines in sales, we announced end-of-life for Mezzanine™ in 2025, and we expect to end the sale of Mezzanine™ products and maintenance after the first quarter of 2026.
Managed Services for Network
We provide our customers with network solutions that ensure reliable, high-quality, and secure traffic of video, data, and internet. Network services are offered to our customers on a subscription basis. Our network services business incurs variable costs associated with purchasing and reselling this connectivity.
Managed Services for Video Collaboration
We provide a range of managed services for video collaboration, from automated to orchestrated, to simplify the user experience and drive adoption across our customers’ enterprises. We deliver our services through a hybrid service platform or as a service layer on top of our customers’ video infrastructure. We provide our customers with i) managed videoconferencing, where we set up and manage customer videoconferences, and ii) remote service management, where we provide 24/7 support and management of customer video environments.
Sales and Marketing – Mezzanine™ and Managed Services
We sell globally through direct customer sales and channel partners. To preserve capital, the Company significantly reduced its investments in sales and marketing during the last several years. For the years ended December 31, 2025, and 2024, sales and marketing expenses were $21,000 and $181,000, respectively.
Customers – Mezzanine™ and Managed Services
The majority of our revenue for the years ended December 31, 2025, and 2024, was generated from direct sales, with the remainder sold through distribution channels. These channels include systems integrators, channel partners, other resellers, and distributors. Sales to these service providers have been characterized by large and sporadic purchases and longer sales cycles. Historically, we have seen fluctuations in our gross margins based on changes in the balance of our distribution channels.
A significant portion of our revenue is generated from a limited number of customers. For the years ended December 31, 2025, and 2024, one major customer accounted for 79% and 85% of the Company’s total consolidated revenue, respectively. The composition of our significant customers will vary from period to period, and we expect that most of our revenue will continue, for the foreseeable future, to come from a relatively small number of customers. Consequently, our financial results may fluctuate significantly from period to period based on the actions of one or more significant customers.
Competition – Mezzanine™ and Managed Services
The market for communication and collaboration technology services is competitive and rapidly changing. Certain features of our current Mezzanine™ product offerings compete in the communication and collaboration technologies market with products offered from Cisco WebEx, Zoom, LogMeIn, and GoToMeeting, as well as with bundled productivity solutions providers that offer limited content-sharing capabilities, such as Microsoft Teams and Google G Suite. In the rapidly evolving “Ideation” market, certain elements of our application compete with Microsoft, Google, InFocus, Bluescape, Mersive, Barco, Nureva, and Prysm.
With respect to our managed services for video collaboration, we primarily compete with managed services companies, videoconferencing equipment resellers, and telecommunication providers, including BT Conferencing, AT&T, Verizon, LogMeIn, Yorktel, ConvergeOne, and AVI-SPL. We also compete with companies that offer hosted videoconference bridging solutions, including Vidyo and Zoom. Lastly, the technology and software providers, including Cisco, LifeSize, Microsoft, and Polycom, are delivering competitive cloud-based videoconferencing and calling services. With the technology advancements over the past few years, including browser-based and mobile video, the options for video collaboration solutions and services are greater than ever before. Regarding our network managed services, we primarily compete with telecommunications carriers, including British Telecom, AT&T, Verizon, and Telus. Our competitors offer services similar to ours both bundled and unbundled, creating a highly competitive environment that puts pressure on the pricing of these services. Revenue attributable to our managed services described above has declined in recent years, primarily due to customer losses to competition. We expect this trend to continue for our managed services business.
Intellectual Property – Mezzanine™ and Managed Services
G-speak is the core technology platform for Mezzanine™. It enables the development of applications that run across multiple screens and devices. Our customers use the platform to solve big data problems, collaborate more effectively, and go from viewing pixels on a single screen to interacting with pixels on every screen.
Videoconferencing has traditionally posed challenges for users, requiring a complex maze of systems and networks to navigate and closely manage. Although most of the business-quality video systems today are “standards-based,” there are inherent interoperability problems between different vendors’ video equipment, resulting in communication islands. Our suite of managed services for video collaboration can be accessed and utilized by customers regardless of their technology or network. Customers who purchase a Cisco, Polycom, Avaya, or LifeSize (Logitech) system, or use certain other third-party video communications software, such as Microsoft, WebEx, or WebRTC, may all take advantage of our services regardless of their network choice. Our services support all standard video signaling protocols, including SIP, H.323, and Integrated Services Digital Network (“ISDN”), using infrastructure from various manufacturers.
Research and Development
During the years ended December 31, 2025, and 2024, the Company incurred research and development expenses of $10,000 and $155,000, respectively, related to developing features and enhancements to our Mezzanine™ product offerings.
Employees
As of December 31, 2025, we had 7 total full-time employees. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees, advisors, and consultants. Our compensation program is designed to attract, retain, and motivate highly qualified employees and executives and comprises a mix of competitive base salaries, bonuses, equity compensation awards, and other employee benefits. Our employees are not covered by a collective bargaining agreement, and we consider our relations with our employees to be good. We are committed to diversity and inclusion as well as equitable pay within our workforce. In addition, the health and safety of our employees, customers, and communities are of primary concern to us.
Corporate History
TaoWeave, Inc. was formed as a Delaware corporation in May 2000. Prior to March 6, 2020, TaoWeave, Inc. was named Glowpoint, Inc. (“Glowpoint”). On October 1, 2019, the Company closed an acquisition of all of the outstanding equity interests of Oblong Industries, Inc., a privately held Delaware corporation founded in 2006 (“Oblong Industries”), pursuant to the terms of an Agreement and Plan of Merger (as amended, the “Merger Agreement”). Pursuant to the Merger Agreement, among other things, Oblong Industries became a wholly owned subsidiary of the Company (the “Merger”). On March 6, 2020, Glowpoint changed its name to Oblong, Inc. Oblong, Inc. changed its name to TaoWeave, Inc. on December 8, 2025, reflecting its evolution into a digital asset treasury company designed for public market investors.
Available Information
We are subject to the Exchange Act's reporting requirements. The Act requires us to file periodic reports, proxy statements, and other information with the Securities and Exchange Commission (“SEC”). The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information that we file electronically with the SEC.
In addition, we make available, free of charge, on our Internet website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file this material with, or furnish it to, the SEC. You may review these documents on our website at www.taoweave.ai by accessing the investor relations section. Our website and the information contained on or connected to our website are not incorporated by reference herein, and our web address is included as an inactive textual reference only.
Our business faces numerous risks, including those set forth below and those described elsewhere in this Report or in our other filings with the SEC. The risks described below are not the only risks that we face, nor are they necessarily listed in order of significance. Other risks and uncertainties may also affect our business. Any of these risks may have a material adverse effect on our business, financial condition, results of operations, and cash flow. When making an investment decision with respect to our common stock, you should also refer to the other information contained or incorporated by reference in this Report, including our Consolidated Financial Statements and the related notes.
Risks Related to Digital Assets
We own and may purchase additional digital assets, the prices of which have been, and will likely continue to be, highly volatile. We currently own digital assets and expect to purchase more in the future. Digital assets are generally highly volatile assets. In addition, digital assets do not pay interest or other returns, so the ability to generate a return on investment from the net proceeds of the June 2025 and future offerings will depend on whether their value appreciates following our purchases of digital assets with those proceeds. Future fluctuations in digital asset trading prices may result in our converting digital assets purchased into cash with a value substantially below the purchase price.
If any of the digital assets that we hold are classified as a security, we may be subject to extensive regulation, which could result in significant costs or force us to cease certain operations. Regulatory changes or interpretations that classify digital assets that we hold as a security under the Securities Act of 1933, as amended (the “Securities Act”), or the Investment Company Act of 1940, as amended (the “Investment Company Act”), could require us to register and comply with additional regulations. Compliance with these requirements could impose extraordinary, non-recurring expenses on our business. If the costs and regulatory burdens become too great, we may be forced to modify or cease certain operations, which could be detrimental to our investors.
The SEC has previously indicated that certain digital assets may be considered securities depending on their structure and use. Future developments could change the legal status of digital assets that we may hold, requiring us to comply with securities laws. If we fail to do so, we may be forced to discontinue some or all of our business activities, which could negatively impact investments in our securities.
If the SEC or other regulators determine that digital assets that we may hold qualify as securities, we may be required to register as an investment company under the Investment Company Act. This classification would subject us to additional periodic reporting, disclosure requirements, and regulatory compliance obligations, significantly increasing our operational costs.
Although we do not currently engage in investing, reinvesting, or trading in securities, and we do not hold ourselves out as an investment company, we could inadvertently be deemed an investment company under the Investment Company Act. If we are unable to rely on an exclusion, we would be required to register with the SEC, which could impose additional financial and regulatory burdens.
Furthermore, state regulators may conclude that the digital assets we hold are securities under state laws, requiring us to comply with state-specific securities regulations. States like California have stricter definitions of “investment contracts” than the SEC, increasing the risk of additional regulatory scrutiny.
Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns. If regulatory changes or interpretations require us to register as a money services business with FinCEN under the U.S. Bank Secrecy Act, or as a money transmitter under state laws, we may be subject to extensive regulatory requirements, resulting in significant compliance costs and operational burdens. In such a case, we may incur extraordinary expenses to meet these requirements or, alternatively, may determine that continued operations are not viable. If we decide to cease certain operations in response to new regulatory obligations, such actions could occur at an unfavorable time for investors.
Multiple states have implemented or proposed regulatory frameworks for digital asset businesses. Compliance with such state-specific regulations may increase costs or impact our business operations. Furthermore, if we or our service providers are unable to comply with evolving federal or state regulations, we may be forced to dissolve or liquidate certain operations, which could materially impact our investors.
The classification of digital assets we hold as commodities could subject us to additional CFTC regulation, resulting in significant compliance costs or the cessation of certain operations. If our activities require CFTC registration, we may be required to comply with extensive regulatory obligations, which could result in significant costs and operational disruptions. Additionally, current and future legislative or regulatory developments, including new CFTC interpretations, could further impact how digital assets are classified and traded.
If the digital assets we may hold are further regulated as commodities, we may be required to register as a commodity pool operator and to register the Company as a commodity pool with the CFTC through the National Futures Association. Compliance with these additional regulatory requirements could result in substantial, non-recurring expenses, adversely affecting an investment in our securities. If we determine not to comply with such regulations, we may be forced to cease certain operations, which could negatively impact our investors.
We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers. Mutual funds, ETFs, and their directors and management are subject to extensive regulation as “investment companies” and “investment advisers” under U.S. federal and state law; this regulation is intended to benefit and protect investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of our changes to our digital asset strategy, our use of leverage, our ability to engage in transactions with affiliated parties, and our operating and investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies and investment advisers.
Due to the unregulated nature and lack of transparency surrounding the operations of many digital asset trading venues, digital asset trading venues may experience greater fraud, security failures, or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in digital asset trading venues and adversely affect the value of digital assets. Digital asset trading venues are relatively new and, in many cases, unregulated. Furthermore, many digital asset trading venues do not provide the public with significant information about their ownership structures, management teams, corporate practices, and regulatory compliance. As a result, the marketplace may lose confidence in digital asset trading venues, including prominent exchanges that handle a significant volume of such trading and/or are subject to regulatory oversight, in the event one or more digital asset trading venues cease or pause for a prolonged period the trading of digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational problems.
Negative perception, a lack of stability in the broader digital asset markets and the closure, temporary shutdown or operational disruption of digital asset trading venues, lending institutions, institutional investors, institutional miners, custodians, or other major participants in the digital asset ecosystem, due to fraud, business failure, cybersecurity events, government-mandated regulation, bankruptcy, or for any other reason, may result in a decline in confidence in digital assets and the broader digital asset ecosystem and greater volatility in the price of digital assets. The price of our listed securities may be affected by the value of our future digital asset holdings, and the failure of a major participant in the ecosystem could have a material adverse effect on the market price of our listed securities.
Our historical financial statements may not reflect the potential variability in earnings that we may experience in the future relating to our holdings of digital assets. Our historical financial statements reflect unrealized losses in 2025 from the price decline in TAO but may not fully reflect the potential variability in earnings we may experience from holding or selling digital assets. The prices of digital assets have historically been highly volatile, subject to dramatic fluctuations. We will need to perform an analysis each quarter to identify whether events or changes in circumstances indicate that our digital assets are impaired. As a result, volatility in our earnings may be significantly greater than we have experienced in prior periods.
Digital asset holdings are less liquid than cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent. Historically, the digital asset market has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our digital assets at favorable prices or at all. As a result, digital asset holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, digital assets we hold with our custodians and transact with our trade execution partners do not enjoy the same protections as those available to cash or securities deposited with or transacted by institutions regulated by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital-raising transactions collateralized by our unencumbered digital assets, or to otherwise generate funds using our digital asset holdings, including during times of market instability or when the price of digital assets has declined significantly. If we are unable to sell our digital assets, enter into additional capital raising transactions, including capital raising transactions using bitcoin as collateral, or otherwise generate funds using our bitcoin holdings, or if we are forced to sell our digital assets at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
Digital asset lending arrangements may expose us to risks of borrower default, operational failures, and cybersecurity threats. From time to time in the future, we may generate income through the lending of digital assets, which carries significant risks. The volatility of such digital assets increases the likelihood of borrower defaults due to market downturns, liquidity crises, fraud, or other financial distress. These lending transactions may be unsecured and therefore subordinated to the borrower's secured debt. If a borrower becomes insolvent, we may be unable to recover the loaned digital asset, leading to substantial financial losses.
Additionally, digital asset lending platforms are vulnerable to operational and cybersecurity risks. Technical failures, software bugs, or system outages could disrupt lending activities, delay transactions, or result in inaccurate record-keeping. Cybersecurity threats, including hacking, phishing, and other malicious attacks, pose further risks, potentially leading to the loss, theft, or misappropriation of our loaned bitcoin. A successful cyberattack or security breach could materially and adversely impact our financial position, reputation, and ability to conduct future lending activities.
We may incur losses from staking, delegating, and other related services. Crypto assets that utilize PoS consensus mechanisms enable holders to earn rewards by participating in decentralized governance, bookkeeping, and transaction confirmation activities on their underlying blockchain networks. We stake certain of our crypto assets on blockchain networks through BitGo. Most PoS networks require crypto assets to be transferred into smart contracts on the underlying blockchain networks, not under our or anyone’s control. If any third-party service providers, or smart contracts, fail to behave as expected, suffer cybersecurity attacks, experience security issues, or encounter other problems, our crypto assets may be irretrievably lost. In addition, most PoS blockchain networks dictate requirements for participation in the relevant decentralized governance activity, and may impose penalties, or “slashing,” if the relevant activities are not performed correctly, such as if the node operator acts maliciously on the network, “double-signs” any transactions, or experiences extended downtimes. Slashing penalties can apply due to prolonged inactivity on a blockchain network, inadvertent errors (such as computing or hardware issues), or more serious behavior, such as intentional malfeasance. If we are slashed by an underlying blockchain network, our crypto assets may be confiscated, withdrawn, or burnt by the network, resulting in permanent, irrecoverable losses that could materially impact our financial position. Any penalties or slashing events could damage our brand and reputation, cause financial losses, and adversely impact our business.
Intellectual property disputes related to digital asset technology could threaten our ability to operate. The legal landscape for digital assets remains uncertain, and third parties may assert intellectual property claims related to blockchain technology, digital asset transactions, or source code. Any litigation, regardless of its merit, could create uncertainty about the long-term viability of digital asset networks and reduce investor confidence in our business. If a court upholds an intellectual property claim, we and other market participants could be restricted from accessing certain digital asset networks or conducting transactions, which could materially impact our business, results of operations, and financial condition.
The open-source structure of digital asset networks exposes us to risks related to software development, security vulnerabilities, and potential disruptions. Digital asset networks are open-source projects, and although there may be an influential group of leaders within the network community, there is generally no official developer or group of developers that formally controls the network. Without guaranteed financial incentives, there may be insufficient resources to address emerging issues, enhance security, or implement necessary network improvements in a timely manner. If the digital asset network’s software is not properly maintained or developed, it could become vulnerable to security threats, operational inefficiencies, and reduced trust, all of which could negatively impact the digital assets’ long-term viability and our business.
We maintain crime insurance for our digital assets but there is still a risk of total loss in the event of theft or destruction, and if coverage is denied. We maintain third party crime insurance for coverage on digital assets. However, there is no assurance such coverage will protect us from losses if insurers were to deny coverage. If an event occurs that results in the loss of our digital assets, whether due to cyberattacks, fraud, or other malicious activities, we may have no viable legal recourse or ability to recover them. Unlike funds held in insured banking institutions, our digital assets are not protected by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. If our digital assets are lost under circumstances that render another party liable, there is no guarantee that the party responsible will have the financial resources to compensate us. As a result, we and our stockholders could face significant financial losses.
If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital assets, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our digital assets, and our financial condition and results of operations could be materially adversely affected. The digital assets we may purchase may be held in accounts at institutional-grade digital asset custodians. Blockchain-based cryptocurrencies and the entities that provide services to the participants in the cryptocurrency ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. For example, in November 2022, hackers exploited weaknesses in the security architecture of the FTX Trading digital asset exchange and reportedly stole over $400 million in customer assets. A successful security breach or cyberattack could result in:
•a partial or total loss of digital assets that we may purchase in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who may hold our digital assets;
•harm to our reputation and brand;
•improper disclosure of data and violations of applicable data privacy and other laws; or
•significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual, and financial exposure.
Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader blockchain ecosystem or in the use of digital asset networks to conduct financial transactions, which could negatively impact us.
The irreversibility of digital asset transactions exposes us to risks of theft, loss, and human error, which could negatively impact our business. Digital asset transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction or, in theory, the control or consent of a majority of the processing power on that digital asset network. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of digital assets or a theft of digital assets, will generally not be reversible, and we may not be able to seek compensation for any such transfer or theft.
It is possible that, through computer or human error, theft, or criminal action, digital assets could be transferred in incorrect amounts or to unauthorized third parties. To the extent we are unable to seek a corrective transaction to identify the third party that has received our digital assets through error or theft, we will be unable to revert or otherwise recover the impacted digital assets, and any such loss could adversely affect our business, results of operations, and financial condition.
If we fail to implement our new digital asset-related strategy, or if it is ineffective, our financial performance could be materially and adversely affected. Our future financial performance and success depend in large part on the effectiveness of our new business strategy for the Bittensor ecosystem, our digital asset holdings, and on our ability to successfully implement it. Implementation of our strategy will require effective management of our operational, financial, and human resources and will place significant demands on those resources. There are risks involved in pursuing our strategy. In addition to the risks set forth elsewhere in this Report, the effectiveness of and the successful implementation of our business strategy could also be affected by a number of factors beyond our control, such as legal developments, government regulation, general economic conditions, increased operating costs or expenses, and changes in industry trends. We may decide to alter or discontinue certain aspects of our business strategy at any time. If we are unable to successfully implement our business strategy, our long-term growth and profitability may be adversely affected. Even if we successfully implement some or all of the initiatives in our business strategy, our operating results may not improve and could decline substantially.
We may be unable to attract and retain qualified and skilled employees or consultants. We operate in a relatively new industry that is not widely understood and requires highly skilled and technical personnel. We must be able to attract, develop, motivate, and retain highly qualified and skilled employees or consultants. Due to the nascent nature of the digital assets ecosystem, the pool of qualified talent is extremely limited, particularly for executive talent with engineering, risk management, and financial regulatory expertise. We may face intense competition for qualified individuals from numerous software and other technology companies. To attract and retain key personnel or consultants, we could incur significant costs, including salaries and benefits, and equity incentives. Even so, these measures may not be enough to attract and retain the personnel we require to operate our business effectively. A failure to attract, retain, and motivate additional highly skilled employees or consultants required for the planned expansion of our business could adversely impact our operations and impair our ability to grow.
Risks Related to Our Managed Services and Collaboration Products Business
Our Company experienced revenue declines in recent fiscal years, and revenue may continue to decline in future periods. In recent fiscal years, our Company has faced a troubling trend of decreasing revenue, a situation that may not only persist but potentially worsen in the future. Specifically, our Mezzanine™ and Managed Services revenue has suffered due to significant customer losses and a decline in demand for our offerings. This downturn can be attributed to the fiercely competitive landscape of our industry, where we face intense pressure to lower prices to remain competitive. We expect further declines in the future for these businesses.
We have a history of substantial net operating losses and may incur future losses. We reported substantial net losses in recent years. In the future, we may not be able to achieve revenue growth, profitability, or generate positive cash flow on a quarterly or annual basis. If we do not achieve profitability in the future, the value of our common stock may be adversely impacted, and we could have difficulty obtaining capital to continue our operations.
Our business activities will require additional financing that might not be obtainable on acceptable terms, if at all. This could have a material adverse effect on our financial condition, liquidity, and ability to operate as a going concern in the future. The Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2025, have been prepared on the assumption that the Company will continue as a going concern. We have experienced revenue declines in recent fiscal years and incurred net losses.
We believe our existing cash, cash equivalents, and the fair value of our TAO tokens (if converted to cash) will be sufficient to fund our operations and meet our working capital requirements for at least the next twelve months from the filing of this Report. This assessment is based on current market conditions, regulatory environment, and the Company's operational plans, all of which are subject to change. In the long term, we believe additional capital will be required to fund operations and provide growth capital, including expanding our cryptocurrency treasury. To access capital to fund operations or provide growth capital, we will need to raise capital from the exercise of outstanding common and/or preferred warrants, and/or in one or more debt and/or equity offerings. There can be no assurance that we will be successful in raising the necessary capital or that any such offering will be on terms acceptable to the Company. If we are unable to raise additional capital on terms acceptable to us, it could have a material adverse effect on the Company.
If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition, and results of operations. Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not currently believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. Although we are exploring strategic alternatives, we intend to conduct our operations so as not to be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition, and results of operations.
Any future disposition of assets and business could have material and adverse effects on business, financial conditions, and operations if not consummated in a timely manner. As part of our corporate strategy, our management considers and evaluates opportunities involving dispositions of assets and businesses. Such transactions may expose us to unknown or unforeseeable challenges resulting in disruption of business operations, loss of key personnel and ongoing tax benefits treatment, failure to obtain necessary statutory and regulatory approvals, provide ongoing indemnity, and compliance with post-closing obligations, which may affect or prevent us from consummating the transactions, and have a material and adverse effect on our business, financial conditions, and operations.
We rely on a limited number of customers for a significant portion of our revenue, and the loss of any one of those customers, or several of our smaller customers, could materially harm our business. A significant portion of our revenue is generated from a limited number of customers. For the year ended December 31, 2025, one major customer accounted for 79% of the Company’s total consolidated revenue. The composition of our significant customers will vary from period to period, and we expect that most of our revenue will continue, for the foreseeable future, to come from a relatively small number of customers. Consequently, our financial results may fluctuate significantly from period to period based on the actions of one or more significant customers. A customer may take actions that affect the Company for reasons that we cannot anticipate or control, such as reasons related to the customer’s financial condition, changes in the customer’s business strategy or operations, changes in technology, and the introduction of alternative competing products, or as a result of the perceived quality or cost-effectiveness of our products or services. Our agreements with these customers may be canceled if we materially breach the agreement or for other reasons outside of our control, such as insolvency or financial hardship that may result in a customer filing for bankruptcy court protection against unsecured creditors. If our customers were to experience losses due to a depository institution's failure to return their deposits, it could expose us to an increased risk of nonpayment under our contracts with them. In addition, our customers may seek to renegotiate the terms of current agreements or renewals, and/or choose not to renew our services. A loss of, or a reduction in, sales or anticipated sales to our most significant or several of our smaller customers, could have a material adverse effect on our business, financial condition, and results of operations.
We depend on our network providers and facilities infrastructure. Our success depends on our ability to implement, expand, and adapt our network infrastructure and support services to accommodate increasing video traffic and evolving customer requirements at an acceptable cost. This has required and will continue to require that we enter into agreements with providers of infrastructure capacity, equipment, facilities, and support services on an ongoing basis. We cannot ensure that any of these agreements can be obtained on satisfactory terms and conditions. We also anticipate that future expansions and adaptations of our network infrastructure facilities may be necessary to accommodate growth in the number of customers we serve. In addition, we utilize third-party vendors of network connectivity related to our network services business. We cannot ensure that these vendors will perform to our customers' satisfaction, which could result in lost revenue.
Our network depends on telecommunications carriers, and they may limit or deny us access to their network or fail to perform, which would have a material adverse effect on our business. We rely upon the ability and willingness of certain telecommunications carriers and other corporations to provide us with reliable high-speed telecommunications service through their networks. If these telecommunications carriers and other corporations decide not to continue to provide service to us through their networks on substantially the same terms and conditions (including, without limitation, price, early termination liability, and installation interval), if at all, it would have a material adverse effect on our business, financial condition, and results of operations. Additionally, many of our service-level objectives depend on satisfactory performance by our telecommunications carriers. If they fail to so perform, it may have a material adverse effect on our business.
We may experience material disconnections and/or reductions in the prices of our services and may not be able to replace the resulting revenue losses. Historically, we have experienced both significant service disruptions and reductions in the prices of our services. We endeavor to secure long-term commitments from new customers and expand our relationships with current customers. The disconnection of services by our significant customers or by several of our smaller customers could have a material adverse effect on our business, financial condition, and results of operations. Service contract durations and termination liabilities are defined within the terms and conditions of the Company’s agreements with our customers. Termination of services in our existing agreements typically requires a minimum of 30 days’ notice and is subject to early termination penalties equal to the amount of accrued and unpaid charges, including the remaining term length multiplied by any fixed monthly fees. The standard service agreement with us includes an auto-renewal clause at the end of each term, unless the customer chooses to terminate service at that time. Certain customers and partners negotiate master agreements with custom termination liabilities that differ from our standard form of service agreement.
We are exposed to the credit and other counterparty risk of our customers in the ordinary course of our business. Our customers have varying degrees of creditworthiness, and we may not always be able to fully anticipate or detect deterioration in their creditworthiness and overall financial condition, which could expose us to an increased risk of nonpayment under our contracts with them. In the event that a material customer or customers default on their payment obligations to us, discontinue buying services from us, or use their buying power with us to reduce their revenue, this could materially adversely affect our financial condition, results of operations, or cash flows.
Failure to retain and recruit key personnel would harm our ability to meet key objectives. We have attracted a highly skilled management team and specialized workforce. Our future success is dependent in part on our ability to attract and retain highly skilled technical, managerial, sales and marketing personnel. Competition for these personnel is intense. Our inability to hire qualified personnel on a timely basis, or the departure of key employees (including Peter Holst, the Company’s President and CEO) without a suitable replacement, could materially and adversely affect our business development and, therefore, our business, prospects, results of operations, and financial condition. Stock incentive plans are designed to reward employees for their long-term contributions and provide incentives for them to remain with us. Volatility, or lack of positive performance in our stock price or equity incentive awards, or changes to our overall compensation program, including our stock incentive program, resulting from the management of share dilution and share-based compensation expense or otherwise, may also adversely affect our ability to retain key employees. As a result of one or more of these factors, we may increase hiring in geographic areas outside the United States, which could subject us to additional geopolitical and exchange-rate risk. The loss of services of any of our key personnel, the inability to retain and attract qualified personnel in the future, or delays in hiring required personnel, particularly engineering and sales personnel, could make it difficult to meet key objectives, such as timely and effective product introductions. In addition, companies in our industry whose employees accept positions with competitors frequently claim that competitors have engaged in improper hiring practices. We have received these claims in the past and may receive additional claims to this effect in the future.
If our actual liability for sales and use taxes and federal regulatory fees is different from our accrued liability, it could have a material impact on our financial condition. Each state has different rules and regulations governing sales and use taxes, which are subject to varying interpretations that may change over time. We review these rules and regulations periodically, and when we believe our services are subject to sales and use taxes in a particular state, we voluntarily engage state tax authorities in order to determine how to comply with their rules and regulations. Vendors of services, like us, are typically held responsible by taxing authorities for the collection and payment of any applicable sales taxes and federal fees. If one or more taxing authorities determine that taxes should have been paid but were not with respect to our services, we may be liable for past taxes in addition to taxes going forward. Liability for past taxes may also include very substantial interest and penalty charges. Our customer contracts require our customers to pay all applicable sales taxes and fees. Nevertheless, customers may be reluctant to pay back taxes and may refuse to assume responsibility for any interest or penalties associated with those taxes. If we are required to collect and pay back taxes, including associated interest and penalties, and our customers fail or refuse to reimburse us for all or a portion of these amounts, we will incur unplanned expenses that may be substantial. Moreover, the imposition of such taxes on our services going forward will effectively increase the cost of those services to our customers and may adversely affect our ability to retain existing customers or attract new customers in the areas in where such taxes are imposed. We may also become subject to tax audits or similar procedures in states where we already pay sales and use taxes. The assessment of taxes, interest, and penalties arising from audits, litigation, or other sources, could be materially adverse to our current and future results of operations and financial condition.
The terms of the Series F Preferred Stock could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions, and engage in other business activities that may be in our best interests. The Certificate of Designations for the Series F Preferred Stock contains a number of affirmative and negative covenants regarding matters such as the payment of dividends, maintenance of our properties and assets, transactions with affiliates, and our ability to issue other indebtedness. No assurances can be given that we will be able to comply with the financial or other covenants contained in the Certificate of Designations. If we are unable to comply with certain terms in the Certificate of Designations:
• dividends will accrue on the Series F Preferred Stock at 20% per annum;
• the holders of the Series F Preferred Stock could foreclose against our assets; and/or
• we could be forced into bankruptcy or liquidation.
Our ability to comply with these covenants may be adversely affected by events beyond our control, and we cannot assure you that we be able to maintain compliance. The financial covenants could limit our ability to make needed expenditures or otherwise conduct necessary or desirable business activities.
Risks Related to Cybersecurity and Regulations
Cyber-attacks, data incidents, malware, or an intrusion into our physical security systems may disrupt our business operations, result in the loss of critical and confidential information, harm our operating results and financial condition, and damage our reputation; and cyber-attacks or data incidents on our customers’ networks, or in cloud-based services provided by or enabled by us, could result in claims of liability against us, damage our reputation or otherwise harm our business. In the ordinary course of providing video communications services, we transmit sensitive and proprietary customer information. We depend on the proper functioning, availability, and security of our information systems, including, without limitation, those systems used in our operations. We have undertaken measures to protect the safety and security of our inventory and information systems, as well as the data maintained within them. On an annual basis, we test the adequacy of our security measures. Despite our implementation of security measures, there can be no assurance that they will detect and prevent security incidents in a timely manner or prevent damage or interruption to our systems and operations, or inventory theft. The products and services we sell to customers, and our servers, data centers, and the cloud-based solutions on which our data, and the data of our customers, suppliers, and business partners are stored, are vulnerable to improper functioning, cyber-attacks, data incidents, malware, and similar disruptions from unauthorized access or tampering by malicious actors or inadvertent error. Any such event could compromise our products, services, and networks or those of our customers, and the proprietary information stored on our systems or those of our customers could be improperly accessed, processed, disclosed, lost, or stolen, which could subject us to liability to our customers, suppliers, business partners, and others, give rise to legal/regulatory action, and could have a material adverse effect on our business, operating results, and financial condition and may cause damage to our reputation. A security incident at any one of our physical facilities, such as that which occurred during 2022, could result in a significant loss of inventory or increase expenses relating to the resolution and future prevention of similar thefts, any of which could have an adverse effect on our business, financial condition, and results of operations. Efforts to limit malicious actors' ability disrupt the operations of the Internet or undermine our security may be costly to implement, meet resistance, and fail. Cybersecurity incidents in our customers’ networks or in cloud-based services provided by or enabled by us, whether attributable to a vulnerability in our products or services, could result in claims of liability against us, damage our reputation, or otherwise harm our business.
Vulnerabilities and critical security defects, prioritization decisions regarding remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services, or solutions could result in claims of liability against us, damage our reputation, or otherwise harm our business. The products and services we sell to customers inevitably contain vulnerabilities or critical security defects that have not been remedied and cannot be disclosed without compromising security. We may also make prioritization decisions about which vulnerabilities or security defects to fix and the timing of those fixes, which could result in an exploit that compromises security. Customers also need to test security releases before deployment, which can delay implementation. In addition, we rely on third-party software and cloud-based service providers, and we cannot control the pace at which they remediate vulnerabilities. Customers may also choose not to deploy a security release or to upgrade to the latest versions of our products, services, or cloud-based solutions that include it, leaving them vulnerable. Vulnerabilities and critical security defects, prioritization errors in remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services, or solutions could result in claims of liability against us, damage our reputation, or otherwise harm our business.
Our business, operating results, and financial condition could be materially harmed by regulatory uncertainty applicable to our products and services. Changes in regulatory requirements applicable to the industries in which we operate, in the United States and in other countries, could materially affect the sales of our products and services. In particular, changes in telecommunications regulations could affect our service provider customers’ purchase of our products and offers, as well as sales of our own regulated offers. In addition, evolving legal requirements restricting or controlling the collection, processing, or cross-border transmission of data, including regulations governing cloud-based services, could materially affect our customers’ ability to use our products and our ability to sell them. Additional areas of uncertainty that could impact sales of our products and offers include laws and regulations related to encryption technology, environmental sustainability, export control, product certification, and national security controls applicable to our supply chain. Changes in regulatory requirements in these areas could have a material adverse effect on our business, operating results, and financial condition.
Risks to Owning Our Common Stock
Our stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future, and as a result, investors in our common stock could incur substantial losses. Historically, our common stock has experienced substantial price volatility, particularly due to differences between our actual financial results and analysts' published expectations, as well as announcements by us and our competitors. Furthermore, speculation in the press or investment community about our strategic position, financial condition, results of operations, business, and security of our products or significant transactions can cause changes in our stock price. In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market prices of many technology companies, in particular, and that have often been unrelated to their operating performance. These factors, as well as general economic and political conditions and the announcement of proposed and completed acquisitions or other significant transactions, or any difficulties associated with such transactions, by our current or potential competitors or us, may materially adversely affect the market price of our common stock in the future. The market price for our common stock may be influenced by many factors, including the following:
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investor reaction to our business strategy; |
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the success of competitive products or technologies; |
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our ability to comply with the continued listing standards of the Nasdaq Capital Market; |
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regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; |
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variations in our financial results or those of companies that are perceived to be similar to us; |
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our ability or inability to raise additional capital and the terms on which we raise it; |
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declines in the market prices of stocks generally; |
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the trading volume of our common stock; |
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conversions of Series F Preferred Stock into common stock and the subsequent sales of common stock; |
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sales of our common stock by us or our stockholders; |
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general economic, industry, and market conditions; |
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fluctuations in demand for our services in part due to changes in the global economic environment; |
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the overall movement toward industry consolidation among both our competitors and our customers; |
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changes in sales and implementation cycles for our services and reduced visibility into our customers’ spending plans and associated revenue; |
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the timing, size, and mix of orders from customers; |
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how well we execute our strategy and operating plans, and the impact of changes in our business model that could result in significant restructuring charges; |
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our ability to achieve targeted cost reductions; |
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benefits anticipated from our investments; |
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changes in tax law or accounting rules, or interpretations thereof; |
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actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets, liabilities, and other items reflected in our Consolidated Financial Statements; |
| • |
other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the outbreak of COVID-19, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability; and |
| • |
the failure of any bank and the resulting economic uncertainty it causes. |
These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. Since the stock price of our common stock has fluctuated in the past, has been recently volatile, and may be volatile in the future, investors in our common stock could incur substantial losses. Following periods of market volatility, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations, and growth prospects. There can be no guarantee that our stock price will remain at current levels or that future sales of our common stock will not be at prices lower than those at which we sold to investors.
Throughout much of our corporate history, our common stock has been thinly traded and therefore susceptible to wide price swings. While our common stock has recently experienced increased trading volume, we cannot ensure that this level of trading volume will continue or that the increased trading volumes will lessen the historical volatility in the price of our common stock. Thinly traded stocks are more susceptible to significant and sudden price changes, and the liquidity of our common stock depends upon the presence in the marketplace of willing buyers and sellers. At any time, the liquidity of our common stock may decrease to the thinly traded levels it has experienced in the past, and we cannot ensure that any holder of our securities will be able to find a buyer for its shares. Further, we cannot ensure that an organized public market for our securities will continue or that there will be any private demand for our common stock.
Additionally, in recent years, the stock prices of certain companies have experienced significant volatility due to short sellers of common stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and the market, leading to their prices trading at significantly inflated levels disconnected from the companies' underlying value. Many investors who have purchased shares in those companies at an inflated rate face the risk of losing a significant portion of their original investment as the price per share has declined steadily, as interest in those stocks has abated. While we have no reason to believe our shares would be the target of a short squeeze, there can be no assurance that we will not be in the future, and you may lose a significant portion or all of your investment if you purchase our shares at a rate that is significantly disconnected from our underlying value.
Penny stock regulations may impose certain restrictions on the marketability of our securities. The SEC has adopted regulations that generally define a “penny stock” as any equity security with a market price of less than $5.00 per share, subject to certain exceptions. Our common stock is presently subject to these regulations, which impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with a net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a “penny stock,” unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the “penny stock” market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must disclose recent price information for the “penny stock” held in the account and information on the limited market for “penny stocks.” Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our securities and may negatively affect the ability of purchasers of our shares of common stock to sell such securities.
Future operating results may vary from quarter to quarter, and we may fail to meet the expectations of securities analysts and investors at any given time. We have experienced, and may continue to experience, significant quarterly fluctuations in operating results. Factors that cause fluctuations in our results of operations include a lack of revenue growth, declines in revenue, declines in gross margins, and increases in operating expenses. Accordingly, it is possible that, in one or more future quarters, our operating results will be adversely affected and fall short of the expectations of securities analysts and investors. If this happens, the trading price of our common stock may decline.
Sales of substantial amounts of common stock in the public market, or the perception that such sales may occur, could reduce the market price of our common stock and make it more difficult for us and our stockholders to sell our equity securities in the future. The sale into the public market of a significant number of shares of common stock by our existing shareholders, or the resale into the public market of shares issued in prior or future financings, could depress the trading price of our common stock and make it more difficult for us or our stockholders to sell equity securities in the future. Such transactions may include but are not limited to (i) conversions of Series F Preferred Stock into common stock and the subsequent sales of such common stock, (ii) any future issuances by us of additional shares of our common stock or of other securities that are convertible or exchangeable for shares of common stock; and (iii) the resale of any previously issued but restricted shares of our common stock that become freely available for re-sale, whether through an effective registration statement or under Rule 144 of the Securities Act.
While the sale of shares to the public might increase the trading volume of our common stock and, thus, the liquidity of our stockholders’ investments, the resulting increase in the number of shares available for public sale could drive the price of our common stock down, reducing the value of our stockholders’ investments and perhaps hindering our ability to raise additional funds in the future.
The issuance of the securities in the 2023 Private Placement and the 2025 Private Placement significantly diluted the ownership interest of the existing holders of our Common Stock, and the market price of our Common Stock will likely decline significantly as a result of sales of such securities into the public market by the selling stockholders and subsequent investors or the perception that such sales may occur. Our existing holders of Common Stock have been significantly diluted by the issuance of the securities in the 2023 Private Placement and would be subject to additional dilution as a result of the conversion of those securities and the securities issued in the 2025 Private Placement into shares of Common Stock. Our public float was significantly increased, and the market price of our Common Stock could decline significantly as a result of subsequent sales of the shares of Common Stock issued, or underlying the securities issued in the 2023 Private Placement and the 2025 Private Placement, which could occur at any time, or the perception that such sales may occur.
In addition, the exercise price or conversion price of these securities may be at prices below the current and/or then trading prices of shares of our Common Stock or at prices below the price at which our existing shareholders purchased our Common Stock. The selling stockholders may make a significant profit from the resale of the securities, depending on the trading price of our securities at the time of sale and the purchase price they paid for them. While the selling stockholders may realize a positive rate of return based on the trading price of our securities, the existing holders of our Common Stock may not realize a similar rate of return on the shares of Common Stock they purchased due to differences between the purchase price and the trading price.
Future issuances of equity or debt securities by us may adversely affect the market price of our Common Stock. Our authorized share capital consists of 150 million shares of Common Stock. As of the filing of this Report, we had an aggregate of approximately 146.7 million shares of Common Stock authorized but unissued, and approximately 127.7 million shares of Common Stock authorized but unissued after giving effect to the exercise or conversion, as applicable, of the 18.9 million shares reserved for the securities issued in the 2023 Private Placement, the 2025 Private Placement, and other outstanding awards, assuming all of the shares of Series F Preferred Stock are converted into 45,754 shares of Common Stock at the conversion price of $3.77, all of the Preferred Warrants are exercised in full and the underlying shares of Series F Preferred Stock are converted into 8,097,347 shares of Common Stock at the conversion price of $3.77, all of the 8,097,347 Common Warrants issued upon the exercise of the Preferred Warrants are then exercised at an exercise price of $3.77 in for 8,097,347 shares of Common Stock, all of the Common Warrants issued in the 2023 Private Placement are exercised at an exercise price of $3.41 for 1,749,527 shares of Common Stock, all of the 2023 Placement Agent Warrants issued in the 2023 Private Placement are exercised at an exercise price of $3.41 for 153,470 shares of Common Stock, all the Pre-Funded Warrants issued in 2025 Private Placement are exercised at an exercise price of $3.77 for 586,261 shares of Common Stock, all of the 2025 Placement Agent Warrants issued in the 2025 Private Placement are exercised at an exercise price of $4.71 for 99,470 share of Common Stock, and the Advisor Warrants are exercised at an exercise price of $3.77 for 100,000 shares of Common Stock. Additionally, depending on the trading price of our Common Stock, we may need to issue more or fewer shares of Common Stock upon exercise of the Preferred Warrants. If we do not have the shares of Common Stock available to issue in connection with such exercises, we will be required to provide the exercising holder a buy-in of cash.
In the future, we may attempt to obtain financing or to increase further our capital resources, or refinance existing obligations, by issuing additional shares of our Common Stock or offering debt or other equity securities, including commercial paper, medium-term notes, senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock. Future acquisitions could require substantial additional capital beyond cash from operations. There can be no guarantee that these offers to exchange will be successful. In addition, we also expect to issue additional shares with the exercise of our stock options under our incentive plans.
Issuing additional shares of our Common Stock or other equity securities or securities convertible into equity for financing or in connection with our incentive plans, acquisitions, or otherwise may dilute the economic and voting rights of our existing shareholders or reduce the market price of our Common Stock or both. Upon liquidation, holders of our debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our Common Stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Common Stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing, or nature of our future offerings. Thus, holders of our Common Stock bear the risk that our future offerings may reduce the market price of our Common Stock and dilute their stockholdings in us. Additionally, we may be required to secure stockholder approval to authorize additional shares of Common Stock if we desire to issue additional shares of Common Stock or other equity securities or securities convertible into equity.
We may not be able to comply with all applicable listing requirements or standards of the Nasdaq Capital Market, and Nasdaq could delist our Common Stock. Our Common Stock is listed on the Nasdaq Capital Market. To maintain that listing, we must meet the minimum financial and other continued listing requirements and standards, including but not limited to maintaining a minimum closing bid price of $1.00 per share and at least $2.5 million of stockholders’ equity.
In the event that we are unable to maintain compliance with the continued listing requirements and cannot re-establish compliance within the required timeframe, our Common Stock could be delisted from The Nasdaq Capital Market, which could have a material adverse effect on our financial condition, and which would cause the value of our Common Stock to decline. If our Common Stock is not eligible for listing or quotation on another market or exchange, trading of our Common Stock could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities, such as the Pink Sheets or the OTC Bulletin Board. In such an event, it would become more difficult to dispose of or obtain accurate price quotations for our Common Stock, and there would likely be a reduction in our coverage by security analysts and the news media, which could cause the price of our Common Stock to decline further. In addition, it may be difficult for us to raise additional capital if we are not listed on a national securities exchange.
We may be delisted from the Nasdaq if we fail to maintain a minimum market value of $5.0 million in listed securities. Nasdaq has proposed amendments to its continued listing standards that would require listed companies to maintain a minimum $5.0 million market value of listed securities (“MVLS”), and in certain circumstances could result in immediate delisting for non-compliance. As of the date of this Report, the proposed rule has been submitted to the Securities and Exchange Commission for review and is not yet effective. There can be no assurance that the proposed rule will not be approved or adopted in its current or modified form.
If the rule becomes effective and our MVLS falls below the required threshold, we may not be able to maintain our Nasdaq listing. The market value of our listed securities depends largely on the trading price of our common stock and the number of publicly held shares, both of which are subject to market volatility and factors beyond our control. As of the filing of this Report, our MVLS was approximately $4.4 million.
If we are unable to satisfy Nasdaq’s continued listing requirements or regain compliance within any applicable cure period, our common stock could be delisted. Delisting would likely reduce the liquidity and market price of our common stock, limit investor interest, and impair our ability to raise additional capital. If our common stock were to trade on an over-the-counter market, trading volume and liquidity would likely be significantly lower. Any such delisting could have a material adverse effect on our business, financial condition, and stockholders.
Holders of our Series F Preferred Stock will have no rights with in our Common Stock until the Series F Preferred Stock is converted, but may be adversely affected by certain changes made with respect to our Common Stock. Holders of our Series F Preferred Stock will have no rights with respect to our Common Stock, including voting rights, rights to respond to Common Stock tender offers, if any, and rights to receive dividends or other distributions on shares of our Common Stock, if any (other than through a conversion rate adjustment), prior to the conversion date with respect to a conversion of the Series F Preferred Stock, but holders' investment in the Series F Preferred Stock may be negatively affected by these events. Upon conversion, holders will be entitled to exercise the rights of a holder of shares of our Common Stock only as to matters for which the record date occurs on or after the conversion date. For example, in the event that an amendment is proposed to our certificate of incorporation or bylaws requiring shareholder approval and the record date for determining the shareholders of record entitled to vote on the amendment occurs prior to the conversion date, Series F holders will not be entitled to vote on the amendment (unless it would adversely affect the special rights, preferences, privileges and voting powers of the Series F Preferred Stock), although they will nevertheless be subject to any changes in the powers, preferences or special rights of our Common Stock, even if your Series F Preferred Stock has been converted into shares of our Common Stock prior to the effective date of such change.
Holders of our Series F Preferred Stock may have to pay taxes if we adjust the conversion ratio of the Series F Preferred Stock in certain circumstances, even though the holders would not receive any cash. Upon certain adjustments to (or certain failures to make adjustments to) the conversion ratio of the Series F Preferred Stock, holders may be deemed to have received a dividend distribution from us, resulting in taxable income to them for U.S. federal income tax purposes, even though holders would not receive any cash in connection with such adjustment to (or failure to adjust) the conversion ratio. If a holder is a non-U.S. holder of the Series F Preferred Stock, any deemed dividend distribution may be subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty. Please consult your tax advisor regarding the U.S. federal income tax consequences of an adjustment to the conversion ratio of the Series F Preferred Stock.
Our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment. The Company’s certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change in control of the company. These provisions could also make it difficult for stockholders to elect directors who are not nominated by the current members of the board of directors or take other corporate actions, including effecting changes in the Company’s management. These provisions include:
| • |
no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; |
| • |
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; |
| • |
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; |
| • |
the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors or a majority of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; |
| • |
the ability of our board of directors, by majority vote, to amend the Company’s amended and restated bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the amended and restated bylaws to facilitate an unsolicited takeover attempt; and |
| • |
advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company. |
General Risks
We incur significant accounting and administrative costs as a publicly traded corporation that impact our financial condition. As a publicly traded corporation, we incur certain costs to comply with regulatory requirements. If regulatory requirements become more stringent or if controls previously deemed effective later fail, we may be forced to incur additional expenditures, the amounts of which could be material. Some of our competitors are privately owned, so their comparatively lower accounting and administrative costs can be a competitive disadvantage for us. Should our sales continue to decline, or if we are unsuccessful at increasing prices to cover higher expenditures for internal controls and audits, our costs associated with regulatory compliance will rise as a percentage of sales.
Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold them fail. Actual events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, transactional counterparties, or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. If we are unable to access all or a significant portion of the amounts we have deposited at financial institutions for any extended period of time, we may not be able to pay our operational expenses or make other payments until we are able to move our funds to accounts at one or more other financial institutions, which process could cause a temporary delay in making payments to our vendors and employees and cause other operational challenges.
Item 1B. Unresolved Staff Comments
None.
Cybersecurity Risk Management and Strategy
We have developed an incident management process to coordinate activities for preparing to respond to and recover from cybersecurity incidents, including triage, severity assessment, investigation, escalation, containment, and remediation, as well as compliance with applicable legal obligations and mitigation of reputational damage.
Governance
We currently lease warehouse space in a facility in Denver, CO, to store our inventory. With the exception of the warehouse space just described, we currently operate from remote employment sites and have a remote office at 110 16th Street, Suite 1400-1024, Denver, CO 80202.
From time to time, we are subject to various legal proceedings arising in the ordinary course of business, including those covered by insurance. As of the date hereof, we are not a party to any legal proceedings that we currently believe will have a material adverse effect on our business, financial position, results of operations, or liquidity.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.
Market Information
The Company’s common stock trades on the Nasdaq Capital Market under the symbol “TWAV.”
As reported on the Nasdaq Capital Market, the closing sale price of our common stock was $1.33 per share on March 19, 2026. As of March 19, 2026, 3,327,210 shares of our common stock were issued and outstanding. As of March 19, 2026, there were 185 holders of record of our common stock. Equiniti is the transfer agent and registrar of our common stock.
Dividends
Our board of directors has never declared or paid cash dividends on our common stock and does not expect to do so for the foreseeable future. We intend to retain any earnings to finance the growth and development of our business. Our board of directors will make any future determination regarding the payment of dividends based on conditions then existing, including our earnings, financial condition, and capital requirements, as well as such economic and other conditions as our board of directors may deem relevant.
Recent Sales of Unregistered Securities
Except as previously reported by us on our Current Reports on Form 8-K, we did not sell any securities during the period covered by this Annual Report that were not registered under the Securities Act.
Purchases of Equity Securities by the Issuer
On April 17, 2025, the Company’s Board of Directors authorized a stock repurchase program (the “Stock Repurchase Program”) granting the Company authority to repurchase up to $500,000 of the Company’s common stock. The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2025. As of December 31, 2025, $500,000 remained available for repurchase under the Stock Repurchase Program.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our consolidated balance sheets as of December 31, 2025, and 2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years ended December 31, 2025, and 2024, and the related notes attached thereto. All statements contained herein that are not historical facts, including, but not limited to, statements regarding anticipated future capital requirements, our future development plans, our ability to obtain debt, equity, or other financing, and our ability to generate cash from operations, are based on current expectations. The discussion of results, causes, and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future.
Business
We are a digital asset treasury company dedicated exclusively to Bittensor, a decentralized blockchain network for artificial intelligence ("AI") development and machine learning. Bittensor allows individuals and organizations to contribute computational power to train, validate, and improve AI models while earning rewards through TAO, Bittensor’s native cryptocurrency. In 2025, the Company invested $8,736,000 to acquire 24,128 TAO tokens. As of December 31, 2025, the Company holds 24,665 TAO tokens. The Company’s TAO holdings are all fully staked in the Bittensor network, enabling the Company to generate revenue and yield through earning staking rewards in the form of TAO tokens.
The Company is also operating legacy businesses centered around our patented Mezzanine™ product line and our managed services for video collaboration and network solutions. In conjunction with the Company's June 2025 financing, the Company began migrating its product focus from Mezzanine™ and managed services to building a digital asset treasury company.
The Company currently operates in three segments: (1) "Digital Assets", which represents the business surrounding our treasury activity with Bittensor, (2) “Managed Services”, which represents the business surrounding managed services for video collaboration and network solutions, and (3) “Collaboration Products”, which represents the business surrounding our Mezzanine™ product offerings.
Digital Assets
As a digital asset treasury company dedicated exclusively to Bittensor, a decentralized blockchain network for AI development and machine learning, the Company generates revenue and yield through earning staking rewards. Bittensor allows individuals and organizations to contribute computational power to train, validate, and improve AI models while earning rewards through TAO, Bittensor’s native cryptocurrency. We generally stake all our TAO token holdings, subject to various liquidity and operational considerations, and we review this allocation periodically. All staking services are provided through the TAO Custodians, enabling yield generation while maintaining the highest standards of security and regulatory compliance. Through their staking services, our TAO Custodians hold and stake our TAO through their selected validators.
Mezzanine™ Product Offerings
Our product is called Mezzanine™, a family of turn-key products that enable dynamic and immersive visual collaboration across multi-users, multiple screens, multiple devices, and multiple locations. Mezzanine™ allows multiple people to share, control, and arrange content simultaneously, from any location, enabling all participants to see the same content in its entirety at the same time in identical formats, resulting in dramatic enhancements to both in-room and virtual videoconference presentations. Applications include video telepresence, laptop and application sharing, whiteboard sharing, and slides. Spatial input allows content to be spread across screens spanning different walls, be scalable to an arbitrary number of displays, and interact with our proprietary wand device. Mezzanine™ substantially enhances day-to-day virtual meetings with technology that accelerates decision making, improves communication, and increases productivity. Mezzanine™ scales up to support the most immersive and commanding innovation centers; across to link labs, conference spaces, and situation rooms; and down for the smallest work groups. Mezzanine’s digital collaboration platform can be sold as delivered systems in various configurations for small teams to total immersion experiences. The family includes the 200 Series (two display screens), 300 Series (three screens), and 600 Series (six screens). We also sell maintenance and support contracts related to Mezzanine™.
Historically, customers have used Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces. Sales of our Mezzanine™ product have been adversely affected during the last several years by the commercial response to the COVID-19 pandemic and its aftermath. We have not invested in research and development or sales and marketing for our Mezzanine™ product in recent years. Given the declines in sales, we announced end-of-life for Mezzanine™ in December 2025, and we expect to end the sale of Mezzanine™ products and maintenance after the first quarter of 2026.
Managed Services for Network
We provide our customers with network solutions that ensure reliable, high-quality, and secure traffic of video, data, and internet. Network services are offered to our customers on a subscription basis. Our network services business incurs variable costs for purchasing and reselling this connectivity.
Managed Services for Video Collaboration
We provide a range of managed services for video collaboration, from automated to orchestrated, to simplify the user experience and drive adoption across our customers’ enterprises. We deliver our services through a hybrid service platform or as a service layer on top of our customers’ video infrastructure. We provide our customers with i) managed videoconferencing, where we set up and manage customer videoconferences, and ii) remote service management, where we provide 24/7 support and management of customer video environments.
Results of Operations
Year Ended December 31, 2025 (“2025”) versus Year Ended December 31, 2024 (“2024”)
Segment Reporting
The Company currently operates in three segments: (1) "Digital Assets", which represents the business surrounding our treasury activity with Bittensor, (2) “Managed Services”, which represents the business surrounding managed services for video collaboration and network solutions, and (3) “Collaboration Products”, which represents the business surrounding our Mezzanine™ product offerings.
The following table summarizes the key income statement components that we use to evaluate our financial performance on a consolidated and reportable segment basis for the years ended December 31, 2025, and 2024 (in thousands):
| For the Years Ended December 31, |
||||||||||||
| 2025 |
2024 |
% Change |
||||||||||
| Revenue |
||||||||||||
| Digital Assets |
$ | 186 | $ | — | 100 | % | ||||||
| Managed Services |
1,957 | 2,062 | (5 | )% | ||||||||
| Collaboration Products |
294 | 316 | (7 | )% | ||||||||
| Consolidated |
$ | 2,437 | $ | 2,378 | 2 | % | ||||||
| Cost of revenues |
||||||||||||
| Digital Assets |
$ | 24 | $ | — | 100 | % | ||||||
| Managed Services |
1,384 | 1,337 | 4 | % | ||||||||
| Collaboration Products |
15 | 710 | (98 | )% | ||||||||
| Consolidated |
$ | 1,423 | $ | 2,047 | (30 | )% | ||||||
| Gross Margin |
||||||||||||
| Digital Assets |
$ | 162 | $ | — | 100 | % | ||||||
| Managed Services |
573 | 725 | (21 | )% | ||||||||
| Collaboration Products |
279 | (394 | ) | (171 | )% | |||||||
| Consolidated |
$ | 1,014 | $ | 331 | 206 | % | ||||||
| Operating expenses |
||||||||||||
| Digital Assets (1) |
$ | 209 | $ | — | 100 | % | ||||||
| Managed Services (2) |
— | — | 0 | % | ||||||||
| Collaboration Products (3) |
11 | 341 | (97 | )% | ||||||||
| Corporate (4) |
3,756 | 4,192 | (10 | )% | ||||||||
| Consolidated |
$ | 3,976 | $ | 4,533 | (12 | )% | ||||||
| Other income (expense), net |
||||||||||||
| Digital Assets (5) |
$ | (3,519 | ) | $ | — | (100 | )% | |||||
| Managed Services (6) |
— | (1 | ) | (100 | )% | |||||||
| Collaboration Products (6) |
— | 16 | 100 | % | ||||||||
| Corporate (7) |
128 | 154 | (17 | )% | ||||||||
| Consolidated |
(3,391 | ) | 169 | (2107 | )% | |||||||
| Net loss before taxes |
(6,353 | ) | (4,033 | ) | 58 | % | ||||||
| Income tax expense |
2 | 10 | (80 | )% | ||||||||
| Net loss |
$ | (6,355 | ) | $ | (4,043 | ) | 57 | % | ||||
| As of December 31, |
||||||||||||
| Total assets |
2025 |
2024 |
% Change |
|||||||||
| Digital Assets (8) |
$ | 5,562 | $ | — | 100 | % | ||||||
| Managed Services (9) |
401 | 422 | (5 | )% | ||||||||
| Collaboration Products (10) |
258 | 285 | (9 | )% | ||||||||
| Corporate (11) |
1,998 | 4,568 | (56 | )% | ||||||||
| Consolidated |
$ | 8,219 | $ | 5,275 | 56 | % | ||||||
| (1) |
Operating expenses related to our Digital Assets segment include cash and stock-based advisory fees. |
| (2) | There were no operating expenses related to our Managed Service segment in 2025 and 2024. |
| (3) | Operating expenses related to our Collaboration Products segment include non-capitalized software costs and commission expenses. During 2025, and 2024, $18,000 bad debt recovery and $2,000 bad debt expense were recorded, respectively. |
| (4) | Corporate operating expenses include costs that are not specific to a particular segment but are general to the group. These include expenses for administrative, information technology, and accounting staff; general liability and other insurance; professional fees; and similar corporate expenses. |
| (5) | Other expense for our Digital Assets segment includes unrealized losses from revaluations of our digital assets. |
| (6) | Other income (expense) for Managed Services and Collaboration Products segments includes interest expense and non-operating income. |
| (7) | Unallocated other income in Corporate is primarily related to interest income. |
| (8) | Digital Asset assets include the fair value of the Company's digital asset holdings as of the end of the period and unamortized stock-based compensation expense. |
| (9) | Managed Services assets include cash equivalents, accounts receivable, and prepaid expenses. |
| (10) | Collaboration Products' assets include cash equivalents and prepaid expenses. |
| (11) | Unallocated assets in Corporate include cash and prepaid expenses that are corporate in nature and don't apply to a single segment. |
Revenue. Total revenue increased 2.5% for the year ended December 31, 2025, compared to the year ended December 31, 2024. The following table summarizes the changes in components of our revenue, and the significant changes in revenue are discussed in more detail below (in thousands):
| Year Ended December 31, |
||||||||||||||||
| 2025 |
% of Revenue |
2024 |
% of Revenue |
|||||||||||||
| Revenue: Digital Assets |
||||||||||||||||
| Staking rewards |
$ | 186 | 8 | % | $ | — | 0 | % | ||||||||
| Total Digital Assets revenue |
$ | 186 | 8 | % | $ | — | 0 | % | ||||||||
| Revenue: Managed Services |
||||||||||||||||
| Network services |
$ | 1,898 | 78 | % | $ | 1,990 | 84 | % | ||||||||
| Video collaboration |
44 | 2 | % | 56 | 2 | % | ||||||||||
| Professional and other services |
15 | 1 | % | 16 | 1 | % | ||||||||||
| Total Managed Services revenue |
$ | 1,957 | 80 | % | $ | 2,062 | 87 | % | ||||||||
| Revenue: Collaboration Products |
||||||||||||||||
| Visual collaboration product offerings |
$ | 294 | 12 | % | $ | 316 | 13 | % | ||||||||
| Total Collaboration Products revenue |
$ | 294 | 12 | % | $ | 316 | 13 | % | ||||||||
| Total consolidated revenue |
$ | 2,437 | 100 | % | $ | 2,378 | 100 | % | ||||||||
Digital Assets
| • | During the year ended December 31, 2025, we earned 544 TAO tokens through staking, or $186,000 in revenue. |
| • | In exchange for staking TAO on the Bittensor blockchain network, 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 validator node's native token (TAO) and is referred to as a staking reward. The Company’s staking reward received from delegating to a third-party validator node is proportional to the Company's staked digital assets relative to the total staked by all delegators to that node at that time. TAO 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. |
Managed Services
| • |
The decrease in revenue for network services is mainly attributable to disconnects at certain customer locations. |
| • |
The decrease in revenue from video collaboration services is mainly attributable to lower revenue from existing customers (due to price or service level reductions) and to customer losses to competitors. |
| • |
For the year ended December 31, 2025, one customer accounted for 98% of Managed Services revenue and 79% of consolidated revenue. For the year ended December 31, 2024, this same customer made up 98% of Managed Services revenue and 85% of consolidated revenue. |
Collaboration Products
| • |
Customers generally use our Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces. The year-over-year decrease in revenue for our Collaboration Products business is mainly attributable to lower sales of our Mezzanine™ products, driven by lower demand. |
Cost of Revenue (exclusive of depreciation and amortization). Cost of revenue, exclusive of depreciation, amortization, and casualty gain, includes all internal and external costs related to the delivery of revenue. Cost of revenue also includes taxes, which have been billed to customers. Cost of revenue by segment is presented in the following table (in thousands):
| Year Ended December 31, |
||||||||
| 2025 |
2024 |
|||||||
| Cost of Revenue |
||||||||
| Digital Assets |
$ | 24 | $ | — | ||||
| Managed Services |
1,384 | 1,337 | ||||||
| Collaboration Products |
15 | 710 | ||||||
| Total cost of revenue |
$ | 1,423 | $ | 2,047 | ||||
Digital Assets
Our Digital Assets segment recorded a gross profit percentage of 87% in 2025. Our cost of revenue for digital assets consists of custodian fees and advisor fees on our staked digital assets.
Managed Services
Our Managed Services segment recorded a gross profit percentage of 29% and 35% for 2025 and 2024, respectively. The year-over-year decrease was primarily due to the reallocation of personnel following our September 2024 headcount reduction.
Collaboration Products
Our Collaboration Products segment recorded a gross profit percentage of 95% for 2025, compared to a negative gross profit percentage of 125% for 2024. The year-over-year decrease in cost of revenue for our Collaborations Products segment is mainly attributable to lower personnel costs in 2025, driven by headcount reductions in September 2024, and a reduction in inventory-related expenses. As of December 31, 2024, the Company recorded a full reserve against our inventory on hand, resulting in zero net inventory.
Consolidated
The year-over-year decrease in the cost of revenue is mainly attributable to lower costs in our Collaboration Products segment. The Company’s consolidated gross profit percentage was 42% in 2025 compared to 14% in 2024.
Operating expenses are presented in the following table (in thousands):
| Year Ended December 31, |
||||||||||||||||
| 2025 |
2024 |
$ Change |
% Change |
|||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
$ | 10 | $ | 155 | $ | (145 | ) | (94 | )% | |||||||
| Sales and marketing |
21 | 181 | (160 | ) | (88 | )% | ||||||||||
| General and administrative |
3,945 | 4,197 | (252 | ) | (6 | )% | ||||||||||
| Total operating expenses |
$ | 3,976 | $ | 4,533 | $ | (557 | ) | (12 | )% | |||||||
Research and Development. Research and development expenses include internal and external costs related to developing features and enhancements to our existing product offerings for our Collaboration Products segment. The year-over-year decrease in research and development expenses in 2025 relative to 2024 is primarily attributable to lower consulting and outsourced labor costs. There were no research and development costs for our Managed Services segment in 2025 or 2024, and there were none for our Digital Assets segment in 2025.
Sales and Marketing. The year-over-year decrease in sales and marketing expenses for our Collaboration Products segment in 2025 compared to 2024 is primarily attributable to lower personnel costs, driven by our headcount reduction in September 2024. There were no sales and marketing expenses for our Managed Services segment in 2025 or 2024, and there were none for our Digital Assets segment in 2025.
General and Administrative. General and administrative expenses primarily include direct corporate expenses for personnel across the following corporate support categories: executive, legal, finance and accounting, human resources, and information technology. The year-over-year decrease in general and administrative expenses in 2025 compared to 2024 is mainly attributable to decreases in personnel costs resulting from our headcount reduction in September 2024 and a recovery in bad debt, partially offset by increases in professional service, stock-based expense, and insurance expense.
Loss from Operations. The year-over-year decrease in the Company’s loss from operations is mainly attributable to the reduction in operating expenses, as addressed above, and the introduction of our Digital Assets segment.
Other (Expense) Income, Net. Other expense, net for 2025, is primarily comprised of unrealized losses on the revaluation of our digital assets, slightly offset by interest income related to our cash accounts. Other income, net for 2024, is primarily comprised of interest income related to our cash accounts.
Income Tax Expense. We recorded income tax expense of $2,000 in 2025, compared to $10,000 in 2024 (see Note 11 - Income Taxes to our Consolidated Financial Statements).
Liquidity and Capital Resources
As of December 31, 2025, we had $2,258,000 in cash and cash equivalents, $5,395,000 in digital asset balances, and $7,029,000 in working capital. For the year ended December 31, 2025, we incurred a net loss of $6,355,000, and we used $3,015,000 of net cash in operating activities.
Cash used in investing activities for 2025 was $8,736,000, consisting of new investments in digital assets. No cash was used in investing activities in 2024.
Net cash provided by financing activities for 2025 was $9,043,000, consisting of net proceeds from the 2025 Private Placement and warrant exercises. Net cash provided by financing activities for 2024 was $2,381,000, consisting of net proceeds from warrant exercises (see Note 5 - Capital Stock and Note 6 - Preferred Stock to our Consolidated Financial Statements).
Future Capital Requirements
We believe our existing cash, cash equivalents, and the fair value of our TAO tokens (if converted to cash) will be sufficient to fund our operations and meet our working capital requirements for at least the next twelve months from the filing of this Report. This assessment is based on current market conditions, regulatory environment, and the Company's operational plans, all of which are subject to change. In the long term, we believe additional capital will be required to fund operations and provide growth capital, including expanding our cryptocurrency treasury. To access capital to fund operations or provide growth capital, we will need to raise capital from the exercise of outstanding common and/or preferred warrants, and/or in one or more debt and/or equity offerings. There can be no assurance that we will be successful in raising the necessary capital or that any such offering will be on terms acceptable to the Company. If we are unable to raise additional capital on terms acceptable to us, it could have a material adverse effect on the Company.
See Note 10 - Commitments and Contingencies to our Consolidated Financial Statements for discussion regarding certain additional factors that could impact the Company’s liquidity in the future.
Critical Accounting Policies
We prepare our Consolidated Financial Statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Our significant accounting policies are described in Note 1 - Business Description and Significant Accounting Policies to our Consolidated Financial Statements attached hereto. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our Consolidated Financial Statements.
Revenue Recognition
The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606.
The Company recognizes revenue using the five-step model as prescribed by Topic 606:
| • |
Identification of the contract, or contracts, with a customer; |
| • |
Identification of the distinct performance obligations in the contract; |
| • |
Determination of the transaction price; |
| • |
Allocation of the transaction price to the performance obligations in the contract; and |
| • |
Recognition of revenue when or as the Company satisfies a performance obligation. |
The Company had staked $5,395,000 of digital assets as of December 31, 2025. The Company’s ability to sell or transfer staked digital assets is subject to restrictions related to unbonding periods, which are based on network traffic on the respective blockchains. As of December 31, 2025, all staked digital assets could be unbonded immediately. The $186,000 in rewards generated from proprietary staking activities for the year ended December 31, 2025, was recorded as point-in-time revenue. The Company stakes its TAO directly from BitGo and Kraken custody, qualified custodians, enabling yield generation while maintaining the highest standards of security and regulatory compliance.
The Company’s managed videoconferencing services are offered to our customers on either a usage- or subscription-based model. Our network services are offered to our customers on a subscription basis. Revenue for these services is generally recognized on a monthly basis as services are performed. Revenue from professional services is recognized when the services are performed. The costs associated with obtaining a customer contract are deferred on our consolidated balance sheet and amortized over the expected life of the customer contract. There was no deferred revenue recorded or recognized to Managed Services as of December 31, 2025, or December 31, 2024.
The Company’s visual collaboration products are composed of hardware and embedded software sold as a complete package and generally include installation and maintenance services. Revenue for hardware and software is recognized upon shipment to the customer. Installation revenue is recognized upon completion of the installation, triggering recognition of revenue for maintenance services, ranging from one to three years. Revenue from maintenance services is recognized over time. Deferred revenue, as of December 31, 2025, totaled $13,000 as certain performance obligations were not satisfied as of this date. During the year ended December 31, 2025, the Company recorded $36,000 of revenue that was included in deferred revenue as of December 31, 2024. During the year ended December 31, 2024, the Company recorded $132,000 of revenue that was included in deferred revenue as of December 31, 2023.
Revenue recorded over time for the years ended December 31, 2025, and 2024, was $63,000 and $156,000, respectively. Revenue recorded at a period in time for the years ended December 31, 2025, and 2024, was $2,374,000 and $2,222,000, respectively.
Off-Balance Sheet Arrangements
As of December 31, 2025, and 2024, we had no off-balance sheet arrangements.
Recent Accounting Pronouncements
See the sections titled “Summary of Significant Accounting Policies-Recently adopted accounting pronouncements” and “Recent accounting pronouncements not yet adopted” in Note 1 - Business Description and Significant Accounting Policies to our Consolidated Financial Statements for more information.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
The information required by Item 8 is incorporated by reference herein from Item 15, Part IV of this Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2025. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2025, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and are designed to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated changes in internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2025, and have concluded that no change has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Consolidated Financial Statements for external purposes in accordance with U.S. GAAP. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025, based on the 2013 framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. Based on this evaluation, the Company’s management concluded that our internal control over financial reporting was effective as of December 31, 2025.
Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 10. Directors, Executive Officers, and Corporate Governance
Board of Directors
Our Board of Directors currently consists of four directors. The current Board members include three independent directors and our chief executive officer. The core responsibility of our Board of Directors is to exercise its business judgment to act in what it reasonably believes to be in the best interests of the Company and its stockholders. Further, members of the Board fulfill their responsibilities in accordance with their fiduciary duties to the stockholders and in compliance with all applicable laws and regulations. The primary responsibilities of the Board include:
| • |
Oversight of management performance and assurance that stockholder interests are served; |
| • |
Oversight of the Company’s business affairs and long-term strategy; and |
| • |
Monitoring adherence to the Company’s standards and policies, including, among other things, policies governing internal controls over financial reporting. |
Our Board of Directors conducts its business through Board meetings and through activities of the standing committees, as further described below. The Board and each of the standing committees meet throughout the year and also hold special meetings and act by written consent from time to time, as appropriate. Board agendas include regularly scheduled executive sessions for independent directors to meet without management present. The Board has delegated various responsibilities and authority to different committees of the Board, as described below. Members of the Board have access to all members of management outside of Board meetings.
Our Board of Directors met and/or acted by written consent nine times during the year ended December 31, 2025. During this period, each director attended 75% or more of the aggregate of (i) the total number of meetings of the Board of Directors held during the period for which he/she was a director and (ii) the total number of meetings of committees of the Board of Directors on which he served, held during the period for which he/she served. The Company does not have a policy regarding directors’ attendance at our annual meetings of stockholders.
The following table sets forth information with respect to our Board of Directors as of the date of this Report.
| Name |
Age |
Position with Company |
||
| Jason Adelman (1)(2)(3) |
56 | Director, Chair of the Audit Committee |
||
| Jonathan Schechter (1)(2)(3)(4) |
52 | Director, Chairman of the Board, Chair of the Compensation Committee |
||
| Peter Holst |
57 | Director, President, and Chief Executive Officer |
||
| Deborah Meredith (1)(2)(3) |
66 | Director, Chair of the Nominating Committee |
| (1) Member of the Audit Committee |
|||||
| (2) Member of the Compensation Committee |
|||||
| (3) Member of the Nominating Committee |
|||||
| (4) Appointed pursuant to that certain Securities Purchase Agreement, dated March 30, 2023, by and among the Company and the investors named therein. |
Biographies for Board of Directors
Jason Adelman, Director. Mr. Adelman joined our Board of Directors in July 2019. Mr. Adelman is the Founder and Managing Member of Burnham Hill Capital Group, LLC, a privately held financial advisory firm, and serves as Managing Member of Cipher Capital Partners LLC, a private investment fund. Mr. Adelman also serves on the board of directors of Trio-Tech International (Nasdaq Capital Market: TRT). Prior to founding Burnham Hill Capital Group, LLC in 2003, Mr. Adelman served as Managing Director of Investment Banking at H.C. Wainwright and Co., Inc. Mr. Adelman graduated from the University of Pennsylvania with a B.A. in Economics, cum laude, and from Cornell Law School with a J.D.
In considering Mr. Adelman as a director of the Company, the Board reviewed, among other qualifications, his experience and expertise in finance, accounting, banking, and management. Based on his experience with Burnham Hill Capital Group LLC, Cipher Capital Partners LLC, and H. C. Wainwright & Co., Mr. Adelman qualifies as an "audit committee financial expert" under the applicable SEC rules and accordingly contributes to the Board of Directors his understanding of generally accepted accounting principles and his skills in auditing, as well as in analyzing and evaluating financial statements.
Jonathan Schechter, Director. Mr. Schechter joined our Board of Directors in May 2023. Mr. Schechter has served as Chairman of the Board since December 18, 2024. Mr. Schechter is a partner of The Special Equities Group, a division of Dawson James Securities, Inc., a full-service investment bank specializing in healthcare, biotechnology, technology, and clean-tech sectors, since April 2021. Mr. Schechter is one of the founding partners of The Special Equities Opportunity Fund, a long-only fund that makes direct investments in micro-cap companies and has served in this capacity since August 2019. Mr. Schechter currently serves on the Board of Directors of PharmaCyte Biotech, Inc. (Nasdaq: PMCB), a biotechnology company developing pharmaceutical products. He previously served as a director of TAO Synergies Inc. (Nasdaq: TAOX) and DropCar, Inc. He has extensive experience analyzing and evaluating the financial statements of public companies. Mr. Schechter earned his A.B. in Public Policy/Political Science from Duke University and his J.D. from Fordham University School of Law.
In considering Mr. Schechter as a director of the Company, the Board reviewed, among other qualifications, his experience and expertise in finance and banking. Based on his experience with The Special Equities Group, Mr. Schechter qualifies as an “audit committee financial expert” under the applicable SEC rules and accordingly contributes to the Board of Directors his understanding of capital markets, as well as his analysis and evaluation of financial statements.
Peter Holst, Chairman, President, and Chief Executive Officer. Prior to being named President and CEO in January 2013, Mr. Holst served as the Company’s Senior Vice President for Business Development since October 1, 2012. Mr. Holst has served as a director of the Company since January 2013 and as Chairman of the Board from July 2019 to December 15, 2021, and from May 28, 2023 to December 18, 2024. Mr. Holst has more than 28 years of experience in the collaboration industry. Prior to joining the Company, Mr. Holst served as the Chief Executive Officer of Affinity VideoNet, Inc., and as the President and Chief Operating Officer of Raindance Communications. Mr. Holst holds a degree in Business Administration from the University of Ottawa.
In considering Mr. Holst as a director of the Company, the Board reviewed his extensive knowledge and expertise in the communication services industry, as well as the leadership he has demonstrated in his positions with our Company and prior companies.
Deborah Meredith, Director. Ms. Meredith joined our Board of Directors in August 2021. Ms. Meredith currently serves as a board member, advisor, and consultant to several high-tech companies, with extensive experience in strategic roles with privately-held start-up companies such as Proofpoint, Aviatrix, Qventus, Alation, and Kinsa Health. Ms. Meredith has more than three decades of experience working hands-on with company founders to assemble world-class teams, architect software products and establish a roadmap for operational success. Ms. Meredith earned a master's degree in computer science from Stanford University and an undergraduate degree in both computer science and mathematics from the University of Michigan.
In considering Ms. Meredith as a director of the Company, the Board reviewed her experience and expertise in the technology industry and the leadership she has demonstrated in her prior positions.
Director Independence
Our Board of Directors has determined that each of our current directors, other than Mr. Holst, qualifies as “independent” in accordance with the rules of the Nasdaq Capital Market (“Nasdaq”). Because Mr. Holst is an employee of the Company, he does not qualify as independent.
The Nasdaq independence definition includes a series of objective tests, such as that the director is neither an executive officer nor an employee of the Company and has not engaged in various types of business dealings with the Company. In addition, required by the Nasdaq rules, the Board has made a subjective determination for each independent director that no relationship exists which, in the Board's opinion, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the directors reviewed and discussed information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and the Company’s management, including each of the matters set forth under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence.” below.
Board Committees
The Board has an audit committee, a compensation committee, and a nominating committee, and may form special committees as required from time to time. Each committee regularly reports on its activities and actions to the full Board. The charters for the audit committee, the compensation committee, and the nominating committee are available on the Company’s website at www.taoweave.ai. The contents of our website are not incorporated by reference into this document for any purpose.
Audit Committee
The audit committee currently consists of Jason Adelman (chair), Jonathan Schechter, and Deborah Meredith. Our Board of Directors has determined that all members of the audit committee are “independent” within the meaning of the corporate governance standards of the Nasdaq Capital Market and the SEC rules governing audit committees and “financially literate” for purposes of applicable Nasdaq Capital Market listing standards. In addition, our Board of Directors has determined that each of Messrs. Adelman and Schechter has the accounting and related financial management expertise to satisfy the requirements of an “audit committee financial expert,” as defined under the SEC's rules and regulations. The audit committee consults with and meets with our independent registered public accounting firm, the Chief Financial Officer, and accounting personnel; reviews potential conflict of interest situations where appropriate; and reports and makes recommendations to the full Board of Directors regarding such matters. The audit committee met four times during the year ended December 31, 2025.
Compensation Committee
Our compensation committee currently consists of Jonathan Schechter (chair), Jason Adelman, and Deborah Meredith. Each member meets the applicable independence requirements of the Nasdaq Capital Market. The committee met and/or acted by written consent two times during the year ending December 31, 2025.
The compensation committee is responsible for establishing and administering our executive compensation policies. The role of the compensation committee is to (i) formulate, evaluate, and approve the compensation of the Company’s directors, executive officers, and key employees, (ii) oversee all compensation programs involving the use of the Company’s stock, and (iii) produce, if required under applicable securities laws, a report on executive compensation for inclusion in the Company’s proxy statement for its annual meeting of stockholders. The duties and responsibilities of the compensation committee under its charter include:
| • |
annually reviewing and making recommendations to the Board with respect to the compensation of directors, executive officers, and key employees of the Company; |
| • |
annually reviewing and approving corporate goals and objectives relevant to the Chief Executive Officer's compensation, evaluating the Chief Executive Officer’s performance in light of those goals and objectives, and recommending to the Board the Chief Executive Officer’s compensation levels based on this evaluation; |
| • |
reviewing competitive practices and trends to determine the adequacy of the executive compensation program; |
| • |
approving and overseeing compensation programs for executive officers involving the use of the Company’s stock; |
| • |
approving and administering cash incentives for executives, including oversight of achievement of performance objectives and funding for executive incentive plans; |
| • |
annually performing a self-evaluation on the performance of the compensation committee; and |
| • |
making regular reports to the Board concerning the activities of the compensation committee. |
When appropriate, the compensation committee may, in carrying out its responsibilities, form and delegate authority to subcommittees. The Chief Executive Officer plays a role in determining the compensation of our other executive officers by evaluating their performance. The Chief Executive Officer’s evaluations are then reviewed by the compensation committee. This process leads to recommendations for any changes to salary, bonus terms, and equity awards, if any, based on performance, which recommendations are then reviewed and approved by the compensation committee.
Nominating Committee
Our nominating committee currently consists of Deborah Meredith (chair), Jason Adelman, and Jonathan Schechter. Each member meets the independence requirements of the Nasdaq Capital Market. The committee is responsible for assessing the performance of our Board of Directors and making recommendations to the Board regarding nominees. The committee met and/or acted by written consent two times during the year ended December 31, 2025.
The nominating committee considers qualified candidates suggested by our stockholders to serve on our Board of Directors. Nominees recommended by stockholders will be given appropriate consideration and evaluated in the same manner as other nominees. Stockholders can suggest qualified candidates for the board of directors by writing to our Corporate Secretary at 110 16th Street, Suite 1400-1024, Denver, CO 80202. Stockholder submissions that are received in accordance with our bylaws and that meet the criteria outlined in the nominating committee charter are forwarded to the members of the nominating committee for review. Stockholder submissions must include the following information:
| • |
a statement that the writer is our stockholder and is proposing a candidate for our Board of Directors for consideration by the nominating committee; |
| • |
the name of and contact information for the candidate; |
| • |
a statement of the candidate’s business and educational experience; |
| • |
information regarding each of the factors set forth in the nominating committee charter sufficient to enable the nominating committee to evaluate the candidate; |
| • |
a statement detailing any relationship between the candidate and any of our customers, suppliers, or competitors; |
| • |
detailed information about any relationship or understanding between the proposing stockholder and the candidate; and |
| • |
a statement that the candidate is willing to be considered and willing to serve as our director if nominated and elected. |
In considering potential new directors, the nominating committee will review individuals from various disciplines and backgrounds. Among the qualifications to be considered in selecting candidates are broad experience in business, finance, or administration; familiarity with national and international business matters; familiarity with our industry; and prominence and reputation. While there is no formal policy regarding the consideration of diversity in identifying director nominees, the nominating committee will consider diversity in business experience, professional expertise, gender, ethnic background, and other factors when evaluating director nominees. The nominating committee will also consider whether the individual has the time available to devote to the work of our Board of Directors and one or more of its committees.
The nominating committee will also review each candidate's activities and associations to ensure that there is no legal impediment, conflict of interest, or other consideration that might hinder or prevent service on our Board of Directors. In making its selection, the nominating committee will keep in mind that the foremost responsibility of a corporation's director is to represent the interests of the stockholders as a whole. The nominating committee will periodically review and reassess the adequacy of its charter and propose any changes to the Board of Directors for approval.
Contacting the Board of Directors
Any stockholder who desires to contact our Board of Directors, committees of the Board of Directors, and individual directors may do so by writing to TaoWeave, Inc., 110 16th Street, Suite 1400-1024, Denver, CO 80202, Attention: David Clark, Corporate Secretary. Mr. Clark will direct such communication to the appropriate persons.
Board Leadership Structure and Role in Risk Oversight
Mr. Schechter has served as the Chairman of the Company's Board of Directors since December 2024, succeeding Mr. Holst. Mr. Holst served as the Chairman of the Company's Board of Directors from May 2023 to December 2024 and from July 2019 to December 2021. Mr. Holst has served as the Company’s President and Chief Executive Officer since January 2013.
To ensure a strong and independent Board, as discussed herein, the Board has affirmatively determined that all directors of the Company, other than Mr. Holst, are independent within the meaning of the Nasdaq Capital Market listing standards currently in effect. Our Corporate Governance Guidelines provide that non-management directors shall meet in regular executive sessions without management present.
The Board plays an active role, directly and through its committees, in overseeing the Company’s risk management efforts. The Board carries out this oversight role through several levels of review. The Board regularly reviews and discusses with management information regarding the management of risks inherent in the Company’s business operations and the implementation of the Company’s strategic plan, including the Company’s risk mitigation efforts.
Each of the Board’s committees also oversees the management of the Company’s risks within its area of responsibility. For example, the audit committee oversees the management of accounting, auditing, external reporting, internal controls, and cash investment risks. The nominating committee oversees and assesses the Board's performance and, from time to time, makes recommendations regarding nominees to the Board. The compensation committee oversees risks arising from compensation practices and policies. While each committee has specific responsibilities for oversight of risk, the Board is regularly informed by each committee about the risks it oversees. In this manner, the Board can coordinate its risk oversight.
We have adopted a code of conduct and ethics, as amended effective October 12, 2015, that applies to all of our employees, directors, and officers, including our Chief Executive Officer, Chief Financial Officer, and our finance team. The full text of our code of conduct and ethics (as amended) is posted on our website at www.taoweave.ai and will be made available to stockholders without charge, upon request, in writing to the Corporate Secretary at 110 16th Street, Suite 1400 - 1024, Denver, CO 80202. Disclosure regarding any amendments to, or waivers from, provisions of the code of conduct and ethics that apply to our principal executive officer, principal financial officer, principal accounting officer or controller or person performing similar functions will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting of such amendments or waivers is then permitted by the rules of the national securities exchange on which the Company trades.
We have adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of securities of TWAV by directors, officers, and employees, which we believe are reasonably designed to promote compliance with insider trading laws, rules, and regulations, as well as applicable Nasdaq listing standards. Our insider trading policy states, among other things, that our directors, officers, and employees are prohibited from disclosing material non-public information and from trading in such securities while in possession of it. The foregoing summary of our insider trading policies and procedures does not purport to be complete and is qualified by reference to our TaoWeave, Inc. Insider Trading Policy filed as an exhibit to this Annual Report on Form -K.
Biographies for Executive Officers
Peter Holst, President and Chief Executive Officer (CEO). See “Biographies for Board of Directors” above for Mr. Holst’s biography.
David Clark, Chief Financial Officer. Mr. Clark, 57, joined the Company in March 2013 as Chief Financial Officer (“CFO”). Mr. Clark has more than 30 years of experience in finance and accounting. Prior to joining the Company, Mr. Clark served as Vice President of Finance, Treasurer, and acting CFO for Allos Therapeutics, a publicly traded biopharmaceutical company, and as CFO of Seurat Company (formerly XOR, Inc.), an e-commerce managed services company. Mr. Clark began his career with seven years in the audit practice of PricewaterhouseCoopers LLP. Mr. Clark is an active Certified Public Accountant and received a Master of Accountancy and a B.S. in Accounting from the University of Denver.
Family Relationships
There are no family relationships between the officers and directors of the Company.
Legal Proceedings
None of our directors or executive officers was involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K during the past ten years.
Item 11. Executive Compensation
Director Compensation
For the year ended December 31, 2025, the Company’s director compensation plan provided that non-employee directors were generally entitled to receive annually: (i) a grant of restricted stock or restricted stock units ("RSUs") (pro-rated as necessary for the period of service from the director’s date of appointment to the Board of Directors until the next annual meeting of stockholders); and (ii) a retainer fee of $50,000. The annual fee is payable in equal quarterly installments on the first business day following the end of the calendar quarter, in cash or shares of Restricted Stock, as chosen by the director, on an annual basis on or before December 31 of the applicable fiscal year. The annual equity grants to directors are normally made as of the date of the annual meeting of the Company’s stockholders. Grants of Restricted Stock or RSUs vest on the first anniversary of the grant date or earlier upon the occurrence of certain termination events or upon a change in control of the Company. Vested RSUs are settled in shares of Common Stock on a 1-for-1 basis upon the earliest of (i) the tenth anniversary of the grant date of the RSUs, (ii) a change in control (as defined in the award agreement) of the Company, and (iii) the date of a director’s separation from service. Additionally, the Company also paid the chairman of its Board of Directors an additional cash payment of $30,000 per year, the Chairperson of its audit committee an additional cash payment of $15,000 per year, the Chairperson of its compensation committee an additional cash payment of $10,000 per year, the Chairperson of its nominating committee an additional cash payment of $7,500 per year, and each non-chair member of any standing committee an additional cash payment of $5,000 per year, in each case payable in equal quarterly installments in arrears. In addition, the Company may, from time to time, establish special committees of the Board and provide additional retainers in connection therewith.
The following table represents compensation for the Company’s non-employee directors during the year ended December 31, 2025. All compensation for Peter Holst, the Company’s President and CEO, during the year ended December 31, 2025, is included in the Summary Compensation Table under “Executive Compensation” below.
| Name | Cash Fees Earned ($) | Stock Awards($) | Total($) | |||||||||
| Jason Adelman (1) | 68,000 | None | 68,000 | |||||||||
| Deborah Meredith | 64,000 | None | 64,000 | |||||||||
| Jonathan Schechter | 100,000 | None | 100,000 | |||||||||
| Robert Weinstein (2) | 99,000 | None | 99,000 | |||||||||
| (1) Mr. Adelman was appointed Chair of the Audit Committee, effective September 10, 2025, upon the resignation of Mr. Weinstein. |
| (2) Mr. Weinstein resigned as a director of the Company, effective September 10, 2025. |
No equity awards were outstanding as of December 31, 2025, for any director.
Executive Compensation
Summary Compensation Table
The following table sets forth the compensation awarded to, paid to, or earned by Peter Holst, President, and CEO, and David Clark, CFO, Treasurer, and Secretary, for the years ended December 31, 2025, and 2024. No other executive officer earned more than $100,000 during these years, so the Company only has two named executive officers.
| Salary | Bonus | Stock Awards | All Other Compensation | Total | |||||||||||||||||
| Name and Principal Positions | Year | ($) | ($) | ($) | ($) (1) | ($) | |||||||||||||||
| Peter Holst | 2025 | 295,000 | 442,500 | — | 11,000 | 748,500 | |||||||||||||||
| Director, President, and CEO | 2024 | 295,000 | 197,000 | — | 11,000 | 503,000 | |||||||||||||||
| David Clark | 2025 | 260,000 | 195,000 | — | 11,000 | 466,000 | |||||||||||||||
| CFO, Treasurer, and Secretary | 2024 | 260,000 | 87,000 | — | 11,000 | 358,000 | |||||||||||||||
| (1) Other compensation represents i) matching contributions under the Company’s 401(k) Plan of $10,000 for 2025 and 2024; and ii) company-paid life insurance premiums of $1,000 for 2025 and 2024, for both Mr. Holst and Mr. Clark. |
Outstanding Equity Awards at 2025 Fiscal Year-End
No equity awards were outstanding for our named executive officers as of December 31, 2025.
401(k) Plan
The Company maintains a tax-qualified 401(k) plan for its eligible employees, including its named executive officers. Pursuant to the plan's terms, for fiscal years 2025 and 2024, eligible employees may defer up to 80% of their salary each year. The company matches 50% of an employee’s contributions on the first 6% of the employee’s salary. This matching contribution vests over four years.
Agreements with Named Executive Officers
We have entered into employment agreements with our current named executive officers. All named executive officers, whether or not subject to an employment agreement, are “at will” employees of the Company.
Peter Holst Employment Agreement.
On January 13, 2013, the Board appointed Peter Holst as the Company’s President and Chief Executive Officer and as a member of the Board. In connection with his appointment, the Company entered into an employment agreement with Mr. Holst, which was subsequently amended and restated as of January 28, 2016, and July 19, 2019 (as amended and restated, the “Holst Employment Agreement”). Pursuant to the Holst Employment Agreement, Mr. Holst receives an annual base salary of $295,000 and is eligible to receive an annual incentive bonus equal to 100% of his base salary at the discretion of the compensation committee of the Board based on meeting certain financial and non-financial goals.
Under the terms of the Holst Employment Agreement, if Mr. Holst’s employment is terminated outside of a “change in control” (as defined in the Holst Employment Agreement) (i) by the Company without “cause” or by Mr. Holst for “good reason” (as such terms are defined therein) or (ii) as a result of the expiration of the term of the Holst Employment Agreement caused by the Company’s election not to renew such agreement, then he will be entitled to receive the following payments and benefits, subject to his execution and non-revocation of an effective general release of claims in favor of the Company:
| • | 12 months’ base salary, payable in equal monthly installments in accordance with the Company’s normal payroll practices; |
| • | 100% of his maximum annual target bonus payable for the calendar year in which such termination occurs; |
| • | 100% accelerated vesting of Mr. Holst’s then-unvested shares of restricted stock and RSUs (if any); and |
| • | payment (or reimbursement) of the COBRA premiums for the continuation of coverage for Mr. Holst and his eligible dependents under the Company’s then-existing medical, dental, and prescription insurance plans for a period of 12 months. |
In addition to the above payments and benefits, in the event that Mr. Holst’s employment is terminated during the 18-month period following a “change in control” (i) by the Company without “cause” or by Mr. Holst for “good reason” or (ii) as a result of the expiration of the term of the Holst Employment Agreement caused by the Company’s election not to renew such agreement, then he will be entitled to receive the following payments and benefits, subject to his execution and non-revocation of an effective general release of claims in favor of the Company:
| • | 24 months’ base salary, payable in equal monthly installments in accordance with the Company’s normal payroll practices; |
| • | 100% of his maximum annual target bonus payable for the calendar year in which such termination occurs; |
| • | a pro-rated portion of his maximum annual target bonus for the calendar year in which the effective date of termination occurs; |
| • | 80% accelerated vesting of Mr. Holst’s then-unvested shares of restricted stock and RSUs (if any); and |
| • | payment (or reimbursement) of the COBRA premiums for the continuation of coverage for Mr. Holst and his eligible dependents under the Company’s then-existing medical, dental, and prescription insurance plans for a period of 12 months. |
In consideration of the payments and benefits under the Holst Employment Agreement, Mr. Holst is restricted from engaging in competitive activities for 12 months after the termination of his employment, as well as prohibited from soliciting the Company’s clients and employees and from disclosing the Company’s confidential information.
The Holst Employment Agreement contains a “best after-tax benefit” provision, which provides that, to the extent that any amounts payable under the Holst Employment Agreement would be subject to the federal tax levied on certain “excess parachute payments” under Section 4999 of the Code, the Company will either pay Mr. Holst the full amount due under the Holst Employment Agreement or, alternatively, reduce his payments to the extent that no Section 4999 excise tax would be due, whichever provides the highest net after-tax benefit to Mr. Holst.
David Clark Employment Agreement.
On March 25, 2013, the Company entered into an employment agreement with David Clark in connection with his appointment as Chief Financial Officer of the Company, which was subsequently amended and restated on July 19, 2019 (as amended and restated, the “Clark Employment Agreement”). Pursuant to the Clark Employment Agreement, Mr. Clark receives an annual base salary of $260,000 and is eligible to receive an annual incentive bonus equal to 50% of his base salary at the discretion of the compensation committee of the Board, based on meeting certain financial and non-financial goals.
Under the terms of the Clark Employment Agreement, if Mr. Clark’s employment is terminated outside of a “change in control” (as defined in the Clark Employment Agreement) (i) by the Company without “cause” or by Mr. Clark with or without “good reason” (as such terms are defined therein) or (ii) as a result of the expiration of the term of the Clark Employment Agreement caused by the Company’s election not to renew such agreement, then he will be entitled to receive the following payments and benefits, subject to his execution and non-revocation of an effective general release of claims in favor of the Company:
| • | Six months’ base salary, payable in equal monthly installments in accordance with the Company’s normal payroll practices; |
| • | 50% of his maximum annual target bonus payable for the calendar year in which such termination occurs; |
| • | a pro-rated portion of his maximum annual target bonus for the calendar year in which the effective date of termination occurs; |
| • | 100% accelerated vesting of Mr. Clark’s then-unvested shares of restricted stock and RSUs (if any); and |
| • | payment (or reimbursement) of the COBRA premiums for the continuation of coverage for Mr. Clark and his eligible dependents under the Company’s then-existing medical, dental, and prescription insurance plans for a period of six months. |
In addition to the above payments and benefits, in the event that Mr. Clark’s employment is terminated during the 18-month period following a “change in control” by the Company without “cause” or by Mr. Clark for “good reason,” then he will also be entitled to receive (i) increased severance equal to 18 months’ base salary, (ii) 100% of his maximum annual target bonus payable for the calendar year in which such termination occurs, and (iii) extended payment (or reimbursement) of the COBRA premiums for 12 months. In such an event, Mr. Clark will be entitled to receive 80% accelerated vesting of his then-unvested shares of restricted stock and RSUs (if any).
In consideration of the payments and benefits under the Clark Employment Agreement, Mr. Clark is restricted from engaging in competitive activities for six months after the termination of his employment, as well as prohibited from soliciting the Company’s clients and employees and from disclosing the Company’s confidential information.
Potential Payments to Named Executive Officers upon Termination or Change-in-Control
No named executive officer holds outstanding equity incentive awards, and no named executive officer is entitled to accelerated vesting upon termination for cause. In accordance with the terms of the Company’s Amended and Restated 2019 Equity Incentive Plan, the Company is given authority to accelerate the timing of the exercise/vesting provisions of awards under such plan in the event of certain changes in control or other corporate transactions.
See “Agreements with Named Executive Officers” above for a discussion of certain payments the Company could be required to make upon the termination of a Named Executive Officer.
Pay Versus Performance
In August 2022, the SEC adopted final rules requiring companies to disclose information about the relationship between executive compensation actually paid and the Company's financial performance. The information below is provided pursuant to Item 402(v) of SEC Regulation S-K with respect to "smaller reporting companies," as that term is defined in Item 10(f)(1) of SEC Regulation S-K.
| (f) Value of Initial Fixed | ||||||||||||||||||||||||
| (b) Summary Comp | (d) Average Summary | (e) Average Comp. | $100 Investment Based | |||||||||||||||||||||
| Table Total for PEO | (c) Comp. Actually | Comp. Table for | Actually Paid to | On Total Shareholder | (g) Net Income | |||||||||||||||||||
| (a) Year | ($)(1) | Paid to PEO ($)(2) | Non-PEO NEOs ($)(3) | Non-PEO NEOs ($)(4) | Return ($)(5) | ($)(6) | ||||||||||||||||||
| 2023 | $ | 699,000 | $ | 699,000 | $ | 443,000 | $ | 443,000 | $ | 11.11 | $ | (4,384,000 | ) | |||||||||||
| 2024 | $ | 503,000 | $ | 503,000 | $ | 358,000 | $ | 358,000 | $ | 5.39 | $ | (4,043,000 | ) | |||||||||||
| 2025 | $ | 748,500 | $ | 748,500 | $ | 466,000 | $ | 466,000 | $ | 2.51 | $ | (6,355,000 | ) | |||||||||||
| (1) | The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Holst (Chief Executive Officer) for each corresponding year in the "Total" column of the Summary Compensation Table. See "Executive Compensation - Summary Compensation Table." |
| (2) | The dollar amounts reported in column (c) represent the amount of "compensation actually paid" to Mr. Holst as computed in accordance with Item 402(v)(2)(iii) of SEC Regulation S-K, which prescribes certain specified additions and subtractions from the amount in column (b). In accordance with the requirements of Item 402(v)(2)(iii) of Regulation S-K, there were no adjustments required to be made to Mr. Holst's total compensation for each year to determine the compensation actually paid. |
| (3) | The dollar amounts reported in column (d) represent the amount of compensation reported for Mr. Clark (Chief Financial Officer) for each corresponding year in the "Total" column of the Summary Compensation Table. See "Executive Compensation - Summary Compensation Table." |
| (4) | The dollar amounts reported in column (e) represent the amount of "compensation actually paid" to Mr. Clark as computed in accordance with Item 402(v)(2)(iii) of SEC Regulation S-K, which prescribes certain specified additions and subtractions from the amount in column (d). |
| (5) | Total Shareholder Return is determined based on the value of an initial fixed investment in the Company's common stock of $100 on December 31, 2022, and calculated in accordance with Item 201(e) of SEC Regulation S-K. |
| (6) | The dollar amounts reported in column (g) represent the amount of net income reflected in our consolidated audited financial statements for the applicable year. |
Analysis of the Information Presented in the Pay Versus Performance Table
The Compensation Committee of the Board of Directors of the Company does not have a policy or practice regarding evaluating Total Shareholder Return as part of its determination of compensation decisions for the named executive officers. The Compensation Committee considers various factors in determining the competitiveness of its executive compensation. Over the past three fiscal years, the Compensation Committee has recognized the significant time and effort required by the executive officers and others to manage the Company’s liquidity by raising capital while reducing operating expenses and cash used in operations, secure and maintain the Company’s listing on the Nasdaq Capital Market, and to source and evaluate merger and acquisition opportunities. To retain qualified executive management, the Compensation Committee: i) increased the salaries of named executive officers in July 2021 (the salaries of the named executive officers were last increased in 2014), ii) in 2024 paid bonuses that were earned during May through December of fiscal year 2023, and iii) in 2025 paid bonuses that were earned during January through December of fiscal year 2024 and during January through June of fiscal year 2025. The current named executive officers last received equity awards in 2019.
All information provided above under the “Pay Versus Performance Information” heading will be deemed to be incorporated by reference in any filing of our company under the Securities Act of 1933, as amended, whether made before or after the date hereof, and irrespective of any general incorporation language in any such filing.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth information regarding the beneficial ownership of our capital stock as of March 19, 2026, by each of the following:
| • |
each person (or group within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) known by us to own beneficially more than 5% of any class of our voting securities; |
| • |
the named executive officers set forth in the Summary Compensation Table under “Executive Compensation” above; |
| • |
each of our directors and director nominees; and |
| • |
all of our directors and executive officers as a group. |
The amounts and percentages in the table below are based on 3,327,210 shares of Common Stock issued and outstanding as of March 19, 2026. As used in this table, “beneficial ownership” means the sole or shared power to vote or direct the voting, or to dispose of or direct the disposition of, any security. A person is considered the beneficial owner of securities that can be acquired within 60 days of such date through the exercise or conversion of any option, warrant, or other derivative security. Shares of Common Stock subject to options, restricted stock units (“RSUs”), warrants, or other derivative securities that are currently exercisable or convertible or are exercisable or convertible within such 60 days are considered outstanding for computing the ownership percentage of the person holding such options, RSUs, warrants or other derivative security, but are not considered outstanding for computing the ownership percentage of any other person.
| Common Stock |
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| Name and Address of Beneficial Owners (1) |
Amount and Nature of Beneficial Ownership (2) |
Percent of Class |
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| Named Executive Officers and Directors: |
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| Peter Holst |
15,544 | (3 | ) | 0.5 | % | ||||
| David Clark |
82 | (4 | ) | 0.0 | % | ||||
| Jason Adelman |
10,000 | (5 | ) | 0.3 | % | ||||
| Jonathan Schechter |
86,351 | (6 | ) | 2.6 | % | ||||
| Deborah Meredith |
— | (7 | ) | 0.0 | % | ||||
| All directors and executive officers as a group (5 people) |
111,977 | 3.4 | % | ||||||
| Greater than 5% Owners: |
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| Jon Matthew Hall |
233,415 | (8 | ) | 7.0 | % | ||||
| (1) Unless otherwise noted, the address of each person listed is c/o TaoWeave, Inc., 110 16th Street, Suite 1400-1024, Denver, CO, 80202 |
| (2) Unless otherwise indicated by footnote, the named persons have sole voting and investment power with respect to the shares of Common Stock beneficially owned. |
| (3) Includes 15,544 shares of Common Stock held. |
| (4) Includes 82 shares of Common Stock held. |
| (5) Based on ownership information from the Form 4 filed by Mr. Adelman with the SEC on September 9, 2025. |
| (6) Based on ownership information from the Form 4 filed by Mr. Schechter with the SEC on November 17, 2025. Represents 25,000 shares of Common Stock and 61,351 warrants to purchase common stock of the issuer with an exercise price of $3.41 per share. The warrants expire on September 30, 2028. |
| (7) Based on ownership information from the Form 4 filed by Ms. Meredith with the SEC on June 20, 2023. |
| (8) Based on ownership information from Schedule 13G/A filed by Jon Matthew Hall on August 7, 2025. The Address of Jon Matthew Hall is 6722 Hensley Ct. Newburgh, IN 47630. |
Equity Compensation Plan Information
The following table sets forth, as of December 31, 2025, information regarding our common stock that may be issued under the Company’s equity compensation plan:
| Number of Securities |
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| Number of Securities |
Remaining Available |
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| Number of Securities |
to be Issued Upon |
for Future Issuance |
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| to be Issued Upon |
Weighted Average |
Vesting of |
Under Equity |
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| Exercise of |
Exercise Price of |
Outstanding |
Compensation Plans |
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| Outstanding |
Outstanding |
Restricted |
(Excluding Securities |
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| Stock Options |
Stock Options |
Stock Units |
Reflected in Columns |
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| Plan Category |
(a) |
(b) |
(c) |
(a) & (c)) (1) |
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| Equity compensation plans approved by security holders |
— | $ | — | — | 2,000,000 | |||||||||||
| (1) On January 1, 2026, the number of shares available under the Company's Amended and Restated 2019 Equity Incentive Plan automatically increased to 2,166,360 under the terms of the plan. |
Item 13. Certain Relationships and Related Transactions, and Director Independence
Other than compensation arrangements for our directors and named executive officers, which are described elsewhere in this Annual Report, and as described below, there have been no transactions since January 1, 2024, to which we were a party or will be a party, in which:
| • |
the amounts involved exceeded or will exceed the lesser of (1) $120,000 or (2) one percent of the average of our total assets at year-end for the last two completed fiscal years; and |
| • |
any of our directors, executive officers, or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest. |
One of our directors, Jonathan Schechter, is currently a partner at The Special Equities Group ("SEG"), a division of Dawson James Securities, Inc. ("Dawson James"). In March 2023, prior to Mr. Schechter's appointment to our board, Dawson James acted as placement agent in connection with our private placement of shares of Series F Preferred Stock, Series F Preferred warrants, and Common Warrants. Pursuant to the terms of the 2023 Placement Agent Agreement, we paid the placement agent a cash fee of approximately $511,000 (equal to 8% of the aggregate gross proceeds raised) and granted the placement agent warrants to purchase 153,470 shares of Common Stock (with a current exercise price of $3.41)(the "2023 Placement Agent Warrants"). Mr. Schechter received 61,351 of the 2023 Placement Agent Warrants and did not receive any of the fees.
Subsequently, through December 31, 2025, 2,223 Series F Preferred Warrants and 804,039 Common Warrants were exercised. Pursuant to the terms of the 2023 Placement Agent Agreement, we paid Dawson James fees of approximately $393,000 (or 8% of the aggregate gross proceeds raised from the exercises). Mr. Schechter did not receive any of the fees paid.
On June 6, 2025, Dawson James acted as placement agent in connection with our private placement of Pre-Funded Common Stock Warrants. Pursuant to the terms of the 2025 Placement Agent Agreement, we paid Dawson James a cash fee equal to $375,000 (or 5% of the aggregate gross proceeds raised from the 2025 Private Placement), $50,000 in expenses, and issued 99,470 placement agent warrants (the "2025 Placement Agent Warrants"). Mr. Schechter did not receive any of the fees paid, nor were any of the 2025 Placement Agent Warrants issued to him.
Policy on Future Related Party Transactions
Transactions with related parties, including the transactions referred to above, are reviewed and approved by independent members of the Board of Directors of the Company in accordance with the Company’s written Code of Business Conduct and Ethics.
Director Independence
For information about the independence of our directors, see Item 10, Director Independence, and Item 10, Board Leadership Structure and Role in Risk Oversight.
Item 14. Principal Accounting Fees and Services
The audit committee, composed entirely of independent, non-employee members of the Board of Directors, appointed the firm of
Audit Fees
EisnerAmper, our principal accountant, billed the Company approximately $239,000 for professional services related to the audit of our annual Consolidated Financial Statements for the 2025 fiscal year and the reviews of the Consolidated Financial Statements included in our quarterly reports on Form 10-Q for the 2025 fiscal year. EisnerAmper billed us $251,000 for professional services for the audit of our annual Consolidated Financial Statements for the 2024 fiscal year, and the reviews of the Consolidated Financial Statements included in our quarterly reports on Form 10-Q for the 2024 fiscal year.
Audit-Related Fees
EisnerAmper did not bill the Company for any audit-related fees in the 2025 and 2024 fiscal years.
Tax Fees
EisnerAmper did not bill the Company for any professional services rendered for tax compliance, tax advice, or tax planning in the 2025 and 2024 fiscal years.
All Other Fees
EisnerAmper did not bill the Company for any products and services other than the audit described above during the 2025 and 2024 fiscal years.
Audit Committee Pre-Approval Policy
The audit committee is required to pre-approve the EisnerAmper engagement to perform audit and other services for the Company. Our procedures for the audit committee's pre-approval of all services provided by EisnerAmper comply with SEC regulations regarding pre-approval of services. Services subject to these SEC requirements include audit services, audit-related services, tax services, and other services. The audit engagement is specifically approved, and the auditors are retained by the audit committee. The audit committee has also adopted policies and procedures for pre-approving all non-audit work performed by EisnerAmper. In accordance with audit committee policy and the requirements of law, all services provided by EisnerAmper in the 2025 and 2024 fiscal years were pre-approved by the audit committee, and all services to be provided by EisnerAmper will be pre-approved. Pre-approval includes audit services, audit-related services, tax services, and other services. To avoid certain potential conflicts of interest, the law prohibits a publicly traded company from obtaining certain non-audit services from its auditing firm. We obtain these services from other service providers as needed.
Item 15. Exhibits, Financial Statement Schedules
A. The following documents are filed as part of this Report:
1. Consolidated Financial Statements:
2. Financial Statement Schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.
3. Exhibits:
A list of exhibits required to be filed as part of this Report is set forth in the Exhibit Index on page 46 of this Form 10-K, which immediately precedes such exhibits and is incorporated by reference.
Item 16. Form 10-K Summary
None.
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———————
# Constitutes a management contract, compensatory plan, or arrangement.
* Filed herewith.
** Furnished herewith.
† Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.
Pursuant to the requirement of Section 13 or 15(d) 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.
March 20, 2026
| TAOWEAVE, INC. |
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| By: |
/s/ Peter Holst |
|
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| Peter Holst |
|
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| Chief Executive Officer and President |
|
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KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Peter Holst and David Clark jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on Form 10-K, and file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant as of this 20th day of March 2026 in the capacities indicated.
| /s/ Peter Holst |
Director, President, and Chief Executive Officer |
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| Peter Holst |
| /s/ David Clark |
Chief Financial Officer (Principal Financial and Accounting Officer) |
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| David Clark |
| /s/ Jonathan Schechter |
Chairman of the Board | |||||||
| Jonathan Schechter |
| /s/ Jason Adelman |
Director |
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| Jason Adelman |
| /s/ Deborah Meredith |
Director |
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| Deborah Meredith |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
TaoWeave, Inc. (formerly Oblong, Inc.)
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of TaoWeave, Inc. (formerly Oblong, Inc.) and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of audit evidence pertaining to the existence of and rights to digital assets
As discussed in Note 3 to the consolidated financial statements, the Company held a material balance of digital assets acquired as part of a newly implemented digital asset treasury strategy. These digital assets are held by third-party custodians and are measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such digital assets recognized in net income each reporting period. These assets are held through custodial arrangements with qualified third-party custodians and include assets staked on the Bittensor blockchain. As of December 31, 2025, the carrying amount of the Company’s digital assets was approximately $5,395,000. Management exercised significant judgment in determining whether the Company controls the digital assets for financial reporting purposes and the appropriate accounting and presentation through evaluating the terms of the custodial agreement, assessing the Company’s contractual rights to the assets and interpreting and applying the authoritative accounting guidance.
We identified the evaluation of the existence of and the Company’s rights to digital assets as a critical audit matter due to the significant judgement exercised by Management in regards to custodial rights. A high degree of auditor judgment was involved in determining the nature and extent of the procedures performed and audit evidence obtained to assess the existence of and rights to the digital assets.
Addressing the critical audit matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. Our audit procedures related to this matter included:
| ● |
We evaluated the design and implementation of key internal controls over the existence of and the Company’s rights to its digital assets, including those staked on the Bittensor blockchain. |
| ● |
We obtained and evaluated the terms of the contractual arrangements between the Company and its custodians, to assess the Company’s ownership rights to its digital assets as of December 31, 2025. |
| ● |
We obtained confirmation of the Company’s digital assets held in custody and staked as of December 31, 2025, the Company’s rights to those digital assets, digital assets transactions during the year, and digital wallets owned by the Company, and reconciled the confirmed information to the Company’s record of its digital assets. |
| ● |
We compared the Company’s record of digital assets held in custody and for a sample of staked digital assets, as well as digital assets transactions, to the records on the public blockchain using software audit tools. We also evaluated the reliability of audit evidence obtained from public blockchains. |
/s/ EisnerAmper LLP
We have served as the Company’s auditor since 2010.
EISNERAMPER LLP
Iselin, New Jersey
March 20, 2026
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value, stated value, and shares)
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Digital assets | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Current portion deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 10) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock Series F, convertible; $ par value; $ stated value; shares authorized, and shares issued and outstanding on December 31, 2025, and December 31, 2024, respectively | ||||||||
| Common stock, $ par value; shares authorized; shares issued and shares outstanding on December 31, 2025, respectively, and shares issued and outstanding on December 31, 2024, respectively | ||||||||
| Treasury stock, common shares on December 31, 2025, and 2024 | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Research and development | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (expense) income, net | ||||||||
| Interest income, net | ||||||||
| Unrealized loss on digital assets | ( | ) | ||||||
| Total interest and other (expense) income, net | ( | ) | ||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Preferred stock dividends | ||||||||
| Deemed dividend | ||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss attributable to common stockholders per share: | ||||||||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | ||
| Weighted-average number of shares of common stock: | ||||||||
| Basic and diluted | ||||||||
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
| Series F Preferred Stock | Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||||
| Additional | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Paid-In Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance on December 31, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Proceeds from common warrant exercise, net of fees | ||||||||||||||||||||||||||||||||||||
| Proceeds from preferred warrant exercise, net of fees | ||||||||||||||||||||||||||||||||||||
| Conversions of Series F Preferred Stock and accrued dividends | ( | ) | ||||||||||||||||||||||||||||||||||
| Series F Preferred Stock dividends | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance on December 31, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
| Proceeds from Private Placement, net of fees | ||||||||||||||||||||||||||||||||||||
| Advisor warrant issuance | — | — | — | |||||||||||||||||||||||||||||||||
| Common warrant exercise, net of fees | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Pre-funded warrant exercise, net of fees | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Series F Preferred Stock warrants exercised, net of fees | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Series F Preferred Stock conversions | ( | ) | ||||||||||||||||||||||||||||||||||
| Series F Preferred Stock dividends | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance on December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Bad debt (recovery) expense | ( | ) | ||||||
| Non-cash lease expense from right-of-use assets | ||||||||
| Stock-based compensation | ||||||||
| Non-cash revenue from digital assets | ( | ) | ||||||
| Non-cash expenses from digital assets | ||||||||
| Unrealized loss on digital assets | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Inventory | ||||||||
| Other assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Lease liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from Investing Activities: | ||||||||
| Purchases of digital assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from Financing Activities: | ||||||||
| Proceeds from private placement, net of issuance costs | ||||||||
| Proceeds from exercise of common stock warrants, net of costs | ||||||||
| Proceeds from exercise of preferred stock warrants, net of costs | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and restricted cash at beginning of year | ||||||||
| Cash and cash equivalents at end of year | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Reconciliation of cash and cash equivalents | ||||||||
| Cash | $ | $ | ||||||
| Current certificates of deposit | ||||||||
| Total cash and cash equivalents | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Common warrant issuance | $ | $ | ||||||
| Series F Preferred Stock conversion | $ | $ | ||||||
| Series F Preferred Stock dividends | $ | $ | ||||||
| Deemed dividend | $ | $ | ||||||
See accompanying notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Business Description and Significant Accounting Policies
Business Description
TaoWeave, Inc. (“TaoWeave” or “we” or “us” or the “Company”) was formed as a Delaware corporation in May 2000, and we are a digital asset treasury company dedicated exclusively to Bittensor, a decentralized blockchain network for artificial intelligence ("AI") development and machine learning. The Company is also operating legacy businesses centered around our patented Mezzanine™ product line and our managed services for video collaboration and network solutions. In conjunction with the Company's June 2025 financing, the Company began migrating its product focus from Mezzanine™ and managed services to building a digital asset treasury company. Prior to December 11, 2025, TaoWeave, Inc. was named Oblong, Inc.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of TaoWeave and our
Segments
The Company currently operates in
Use of Estimates
Preparation of the Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts may differ from the estimates. We continually evaluate estimates used in the preparation of our Consolidated Financial Statements for reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. The significant areas of estimation include determining estimated credit losses and the inputs used to measure the fair value of equity-based awards.
Cash and Cash Equivalents
As of December 31, 2025, and 2024, our total cash balances were $
Digital Assets
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets ("ASU 2023-08"). ASU 2023-08 requires in-scope digital assets (including the Company's digital asset holdings) to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such digital assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within its scope. The Company adopted this guidance during the year ended December 31, 2025.
The Company's TAO tokens are held with
Digital assets are measured at their fair market values using the last close price of the day in the UTC time zone at each reporting period end, as reflected 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.
Due to the availability of unadjusted quoted prices in active markets, the Company has determined that its digital assets are measured using Level 1 input. The unrealized gains and losses resulting from remeasurement of digital assets are recorded in other income on the Consolidated Statement of Operations. The Company recorded an unrealized loss of $
The cost basis of the Company's digital assets is measured at fair value based on the spot price at the time of receipt if obtained through staking rewards, or the purchase price if obtained by cash, 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 Consolidated Statements of Operations. The Company had realized gains or losses from the disposal of digital assets for the year ended December 31, 2025.
Accounts Receivable and Provision for Estimated Credit Losses
Accounts receivable are customer obligations due under normal trade terms. The Company sells its Managed Services to end-users and its Collaboration Products to both resell partners and end-users. The Company extends credit to its customers based on their creditworthiness and historical data and performs ongoing credit evaluations of their financial condition. The Company maintains an allowance for estimated credit losses on accounts receivable for future expected bad debt resulting from customers' inability or unwillingness to make required payments. We estimate our allowance for estimated credit losses based on relevant information, including historical experience, current economic conditions, and future expectations for specifically identified customer balances. This allowance is adjusted as appropriate to reflect current conditions. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. We do not obtain collateral from our customers to secure accounts receivable.
As of December 31, 2025, the Company's accounts receivable balance of $
The company recorded a recovery of bad debt of $
Inventory
Inventory consists of finished goods for our Mezzanine™ products in our Collaboration Products segment, and is determined using average costs and stated at the lower of cost or net realizable value. The Company periodically performs analyses to identify obsolete or slow-moving inventory. Due to declining sales of our Mezzanine™ products, management has determined that there is no guarantee our inventory on hand will be sold, and as a result, has recorded a full reserve, resulting in
| Inventory | Reserve | |||||||
| Balance as of December 31, 2023 | $ | ( | ) | |||||
| Purchases | — | |||||||
| Sales | ( | ) | ||||||
| Reserve adjustments | — | ( | ) | |||||
| Balance as of December 31, 2024 | ( | ) | ||||||
| Purchases | — | |||||||
| Sales | ( | ) | ||||||
| Reserve adjustments | — | ( | ) | |||||
| Balance as of December 31, 2025 | $ | $ | ( | ) | ||||
Prepaid Expenses
As of December 31, 2025, and 2024, consolidated prepaid expenses and other current assets were $
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Other current assets | ||||||||
| Prepaid software licenses | ||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
Fair Value Measurements
The Company considers its cash and cash equivalents, digital assets, accounts receivable, and accounts payable to meet the definition of financial instruments. The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximated their fair value due to the short maturities of these instruments. Due to the availability of unadjusted quoted prices in active markets, the Company has determined that its digital assets are measured using Level 1 input.
The Company measures fair value as required by Accounting Standards Codification (“ASC”) Topic 820“Fair Value Measurements and Disclosures” (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework, provides guidance on the methods used to measure fair value, and expands disclosures about fair value measurements. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined using assumptions that market participants would use to price an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| • | Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. |
| • | Level 2 - inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability, or indirectly observable through corroboration with observable market data. |
| • | Level 3 - unobservable inputs for the asset or liability are only used when there is little, if any, market activity for the asset or liability at the measurement date. |
This hierarchy requires the Company to use observable market data when available and to minimize the use of unobservable inputs when determining fair value.
Revenue Recognition
The Company accounts for revenue in accordance with ASC Topic 606.
The Company recognizes revenue using the five-step model as prescribed by Topic 606:
| • | Identification of the contract, or contracts, with a customer; |
| • | Identification of the distinct performance obligations in the contract; |
| • | Determination of the transaction price; |
| • | Allocation of the transaction price to the performance obligations in the contract; and |
| • | Recognition of revenue when or as the Company satisfies a performance obligation. |
Digital Assets
The Company had 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 validator node's native token and is referred to as a staking reward. The Company’s staking reward received from delegating to a third-party validator node is proportional to the Company's staked digital assets relative to the total staked by all delegators to that node at that time. Token rewards earned from staking are calculated and distributed directly to TaoWeave's digital wallets by the blockchain networks as part of their consensus mechanisms.
The Company considers the provision of validating blockchain transactions an output of the Company’s ordinary activities, providing a service to the blockchain network, and accounts for the 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. Once the Company has acquired the reward, the tokens are added to our digital asset holdings, and their fair value is accounted for in accordance with ASC 820.
Managed Services
The Company’s managed videoconferencing services are offered to our customers on either a usage or subscription-based model. Our network services are offered to our customers on a subscription basis. Revenue for these services is generally recognized on a monthly basis as services are performed. Revenue from professional services is recognized when the services are performed. The costs associated with obtaining a customer contract, under Topic 606, are deferred on our consolidated balance sheets and amortized over the expected life of the customer contract. During the year ended December 31, 2025, the Company recorded $
Collaboration Products
The Company’s visual collaboration products are composed of hardware and embedded software sold as a complete package and generally include installation and maintenance services. Revenue for hardware and software is recognized upon shipment to the customer. Installation revenue is recognized upon completion of the installation, triggering the commencement of revenue recognition for maintenance services, ranging from to years. Revenue from maintenance services is recognized over time. During the year ended December 31, 2025, the Company recorded $
Consolidated revenue recorded over time for the years ended December 31, 2025, and 2024 was $
The Company disaggregates its revenue by geographic region. See Note 9 - Segment Reporting for more information.
Taxes Billed to Customers and Remitted to Taxing Authorities
We recognize taxes billed to customers in revenue and taxes remitted to taxing authorities in our cost of revenue. For the years ended December 31, 2025, and 2024, we included taxes of $
Concentration of Credit Risk
Financial instruments that may subject us to significant concentrations of credit risk consist principally of cash and trade accounts receivable. We place our cash needed for operations in commercial checking accounts, and the majority of our cash is held in a money market fund. Commercial bank balances may, from time to time, exceed federal insurance limits. Deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) in an amount up to $250,000 for any depositor; any deposit in excess of this insured amount could be lost.
Income Taxes
On July 4, 2025, the U.S. H.R.1, an act to provide for reconciliation pursuant to title II of H. Con. Res. 14. (the “OBBBA”) was enacted. The OBBBA introduces multiple tax law and other legislative changes, including modifications to income tax provisions such as existing 21% corporate income tax rate made permanent, domestic research and development expenses, the restoration of 100% bonus depreciation, changes to Section 163(j) interest limitations, and U.S. taxation of international earnings; the repeal or acceleration of the sunset of certain tax credits under the 2022 Inflation Reduction Act and elimination of certain penalties for violations of certain regulatory credit programs. We have recognized the effects of the OBBBA provisions in our financial results to the extent they are applicable to the year ended December 31, 2025.
Stock-based Compensation
Stock-based awards have been accounted for as required by ASC Topic 718 “Compensation – Stock Compensation” (“ASC Topic 718”). Under ASC Topic 718, stock-based awards are valued at fair value on the date of grant, and that fair value is recognized over the requisite service period. The Company accounts for forfeitures when they occur. The Company recorded $
Stock-based Expense
In June 2025, the Company granted warrants to an advisor related to digital assets. See Note 5 - Capital Stock for further information. The total stock-based cost of these warrants is $
Research and Development
Research and development expenses include internal and external costs related to developing new service offerings, features, and enhancements to our existing product offerings.
Treasury Stock
Purchases and sales of treasury stock are recorded under the cost method. Under this method, shares acquired are recorded at the acquisition price directly to the treasury stock account. Upon sale, the treasury stock account is reduced by the original acquisition price of the shares, and any excess is recorded in additional paid-in capital on a first-in, first-out basis. The Company does not recognize a gain or loss to income from the purchase and sale of treasury stock.
Recent Accounting Pronouncements
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023‑09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency of income tax disclosures by requiring additional disaggregation in the effective tax rate reconciliation and disclosures of income taxes paid by jurisdiction. The guidance does not change the recognition or measurement of income taxes. The Company adopted ASU 2023‑09 effective January 1, 2025, on a prospective basis. The adoption impacted the Company’s income tax disclosures but did not have a material impact on its consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses, which requires public business entities to disclose additional information about certain expenses in the notes to the financial statements. This guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.
Note 2 - Liquidity
As of December 31, 2025, we had $
Cash used in investing activities for the year ended December 31, 2025, was $
Net cash provided by financing activities during the year ended December 31, 2025, was $
Future Capital Requirements
We believe our existing cash, cash equivalents, and the fair value of our TAO tokens (if converted to cash) will be sufficient to fund our operations and meet our working capital requirements for at least the next twelve months from the filing of this Report. This assessment is based on current market conditions, regulatory environment, and the Company's operational plans, all of which are subject to change. In the long term, we believe additional capital will be required to fund operations and provide growth capital, including expanding our cryptocurrency treasury. To access capital to fund operations or provide growth capital, we will need to raise capital from the exercise of outstanding common and/or preferred warrants, and/or in one or more debt and/or equity offerings. There can be no assurance that we will be successful in raising the necessary capital or that any such offering will be on terms acceptable to the Company. If we are unable to raise additional capital on terms acceptable to us, it could have a material adverse effect on the Company.
Note 3 - Digital Assets
Our Cryptocurrency Asset Strategy
In connection with the Company’s financing in June 2025, we adopted a differentiated cryptocurrency treasury strategy focused on TAO, the native cryptocurrency of Bittensor. See Note 5 - Capital Stock for further details of the financing. We seek to stake TAO for revenue generation and capital appreciation, a strategy that underscores our mission to create significant value for shareholders. The Company accounts for its digital assets, comprised solely of TAO tokens, as indefinite-lived intangible assets in accordance with ASC 350. The Company’s digital assets are initially recorded at cost and measured at fair value at each reporting period. TAO tokens are available as partial tokens. The Company shows its token holdings rounded to the nearest one-hundredth of a token.
The Company has adopted a long-only TAO accumulation policy under which we allocate substantial portions of our excess cash to purchase TAO to maximize tokens per share. As of December 31, 2025, approximately
Although a liquid market for TAO exists, we have not monetized (i.e., sold) any TAO to date. All TAO is staked as soon as trade settlement permits, and we currently spread staking between the Company’s TAO Custodians.
The following table summarizes the Company's digital asset activity for the year ended December 31, 2025, and the fair value is presented as of December 31, 2025 (in thousands except for tokens):
| TAO Tokens | $USD Fair Value (1) | |||||||
| Digital asset balance on January 1, 2025 | $ | |||||||
| TAO Token Purchases | ||||||||
| TAO Staking Rewards | ||||||||
| Non-Cash Fees (1) | ( | ) | ( | ) | ||||
| Unrealized Loss on Fair Value Remeasurement | — | ( | ) | |||||
| Digital asset balance on December 31, 2025 | $ | |||||||
| (1) | Non-cash fees are related to custodian fees paid in tokens and a one-time setup and transfer fee for Kraken. |
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.
In exchange for staking TAO on the Bittensor blockchain network, 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 validator node's native token (TAO) and is referred to as a staking reward. The Company’s staking reward received from delegating to a third-party validator node is proportional to the Company's staked digital assets relative to the total staked by all delegators to that node at that time. TAO 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.
As of December 31, 2025, all of our TAO token holdings were staked. All staking services are provided through the Company’s TAO Custodians, enabling yield generation while maintaining the highest standards of security and regulatory compliance. We rely on these custodians to facilitate our TAO token staking activities. Through their staking services, our TAO Custodians hold and stake our TAO through their selected validators. The Bittensor blockchain does not impose protocol-enforced delays or unbonding periods. As of December 31, 2025, the Company's staked TAO tokens have immediate terms, meaning there is no lock-up period upon the asset being unstaked.
The following table summarizes the Company's Staking Rewards as of December 31, 2025 (in thousands except for tokens):
| As of December 31, 2025 | ||||||||
| Asset | Token Rewards | Revenue ($USD) | ||||||
| TAO | $ | |||||||
Our cost of revenue for digital assets consists of custodian fees and advisor fees on our staked digital assets. For the year ended December 31, 2025, the Company recorded a cost of revenue of $
Digital assets are measured at their fair market values using the last close price of the day in the UTC time zone at each reporting period end. The unrealized gains and losses resulting from remeasurement of digital assets are recorded in other income on the Consolidated Statement of Operations. The following table summarizes the Company's digital asset holdings as of December 31, 2025 (in thousands except for tokens):
| As of December 31, 2025 | ||||||||||||||||
| Asset | Tokens | Cost | Fair Market Value | Unrealized Loss | ||||||||||||
| Staked TAO | $ | $ | $ | |||||||||||||
| Un-staked TAO | — | |||||||||||||||
| $ | $ | $ | ||||||||||||||
The Company recorded an unrealized loss of $
Note 4 - Accrued Expenses and Other Current Liabilities
Consolidated accrued expenses and other current liabilities were $
Our consolidated balances for the years ended December 31, 2025, and 2024 consisted of the following (in thousands):
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Compensation costs | $ | $ | ||||||
| Customer deposits | ||||||||
| Professional fees | ||||||||
| Taxes and regulatory fees | ||||||||
| Accrued rent | ||||||||
| Accrued dividends on Series F Preferred Stock | ||||||||
| Other accrued expenses and liabilities | ||||||||
| $ | $ |
| ||||||
As of December 31, 2025, and 2024, our Managed Services segment had accrued expenses and other current liabilities of $
As of December 31, 2025, and 2024, accrued expenses and other current liabilities for our Collaboration Products segment were $
Unallocated accrued expenses were $
Note 5 - Capital Stock
Common Stock
The Company’s Common Stock is listed on the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “TWAV.” As of December 31, 2025, we had
On April 17, 2025, the Company’s Board of Directors authorized a stock repurchase program (the “Stock Repurchase Program”) granting the Company authority to repurchase up to $
During the year ended December 31, 2025,
During the year ended December 31, 2025,
During the year ended December 31, 2025,
Common Stock activity for the years ended December 31, 2025, and 2024 is presented below.
| Issued Shares as of December 31, 2023 | ||||
| Issuances from Preferred Stock conversions | ||||
| Issuances related to Common Warrant exercises | ||||
| Issued Shares as of December 31, 2024 | ||||
| Issuances related to Common Warrant exercises | ||||
| Issuances related to Pre-Funded Warrant exercises | ||||
| Issuances related to Preferred Stock conversions | ||||
| Issued Shares as of December 31, 2025 | ||||
| Less Treasury Shares: | ( | ) | ||
| Outstanding Shares as of December 31, 2025 |
Common Stock Warrants and 2023 Placement Agent Warrants
On March 30, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which we issued and sold, in a private placement (the “2023 Private Placement”) (i)
In connection with the 2023 Private Placement, pursuant to an engagement letter dated March 30, 2023 (the "Engagement Letter"), between the Company and Dawson James Securities, Inc. (the “Placement Agent”), the Company agreed to (i) pay the Placement Agent a cash fee equal to
On March 31, 2023, the Company issued the Common Warrants and the Placement Agent Warrants to purchase an aggregate of
On October 6, 2023, the Company and the Investors holding a majority of the outstanding shares of the Preferred Stock agreed to waive any and all provisions, terms, covenants, and obligations in the Certificate of Designations or Common Warrants to the extent such provisions permit the conversion or exercise of the Preferred Stock and the Common Warrants, respectively, to occur at a price below $
During the year ended December 31, 2024,
Pursuant to Sections 2(a) and 2(c) of the Common Warrants (the "Make-whole Provision"), as a result of the 1-for-
| Warrant Tranche | Original Warrants Issued | Original Exercise Price (1) | Warrants Post Reverse Split (2) | Exercise Price Post Reverse Split (2) | Warrants Post Make-whole Provision (3) | Exercise Price Post Make-whole Provision (4) | Deemed Dividend | |||||||||||||||||||||
| Common Warrants issued in 2023 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Common Warrants issued in 2024 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Placement Agent Warrants | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||||||
| Aggregate Exercise Price | $ | $ | $ | |||||||||||||||||||||||||
| (1) Original exercise price based on the March 30, 2023 Purchase Agreement. |
| (2) Adjusted by the Reverse Split. |
| (3) Based on the original aggregate exercise price divided by the Make Whole Provision exercise price. |
| (4) Calculated by dividing (x) the sum of the dollar volume-weighted average price of the Company's Common Stock for each of the five lowest trading days during the sixteen trading days after the Reverse Split by (y) five. |
During the year ended December 31, 2025,
During the year ended December 31, 2025,
As of December 31, 2025,
One of our directors, Jonathan Schechter, is currently a partner at The Special Equities Group (“SEG”), a division of Dawson James Securities, Inc. (“Dawson James”). In March 2023, prior to Mr. Schechter’s appointment to our board in May 2023, and pursuant to our 2023 Engagement Letter, Dawson James acted as placement agent in connection with our March 30, 2023 Purchase Agreement. During the year ended December 31, 2025, pursuant to the terms of the 2023 Placement Agent Agreement, we paid Dawson James a cash fee equal to
2025 Private Placement and Pre-Funded Warrants
On June 6, 2025, we entered into a securities purchase agreement, dated as of June 5, 2025 (the “2025 Securities Purchase Agreement”), with certain accredited investors (the “Investors”), pursuant to which we issued and sold, in a private placement (the “2025 Private Placement”), pre-funded warrants to acquire up to
During the year ended December 31, 2025,
The exercise price upon exercise of each Pre-Funded Warrant is $
The Pre-Funded Warrants are exercisable immediately upon issuance, subject to the conditions and limitations on exercise set forth in each Pre-Funded Warrant. A holder of the Pre-Funded Warrants may not exercise any portion of such holder’s Pre-Funded Warrants to the extent that the holder, together with its affiliates, would beneficially own more than
Pursuant to the 2025 Private Placement, the Company agreed to prepare and file a registration statement with the Securities and Exchange Commission (the “SEC”) registering the resale of the shares of Common Stock underlying the Pre-Funded Warrants no later than 15 days after the date of the Purchase Agreement, and to use commercially reasonable efforts to have the registration statement declared effective within 60 days following the date of the Purchase Agreement (or 90 days following the date of the Purchase Agreement in the event of a “full review” by the SEC). The Company filed the registration statement on June 20, 2025, and it was declared effective on August 1, 2025.
The 2025 Private Placement is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws. Each of the Investors has represented to the Company that it is an accredited investor within the meaning of Rule 501(a) of Regulation D and that it is acquiring the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The Pre-Funded Warrants are being offered without any general solicitation by the Company or its representatives.
Subject to applicable laws and the restriction on transfer set forth in the Pre-Funded Warrants, the Pre-Funded Warrants may be transferred. Upon the consummation of a fundamental transaction (as described in the Pre-Funded Warrants, and generally including any reorganization, recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all or substantially all of our assets, our consolidation or merger with or into another person in which we are not the surviving entity, the acquisition of more than
2025 Placement Agent Warrants
Dawson James again served as the Company’s exclusive Placement Agent in connection with the 2025 Private Placement, pursuant to that engagement letter, dated as of June 4, 2025, as amended, between the Company and Placement Agent (the “2025 Engagement Letter”). Pursuant to the 2025 Engagement Letter, the Company paid the Placement Agent (i) a total cash fee equal to
The 2025 Placement Agent Warrants were issued on June 10, 2025, and as of December 31, 2025,
As discussed above, one of our directors is currently a partner at SEG, a division of Dawson James. During the year ended December 31, 2025, pursuant to the terms of the 2025 Placement Agent Agreement, we paid Dawson James a cash fee equal to $
Advisor Warrants
On June 5, 2025, the Company issued warrants to acquire up to
As of December 31, 2025,
Outstanding warrants for the Company's Common Stock, as of December 31, 2025, are as follows:
| Issue Date | Warrants Issued | Exercise Price | Expiration Date | ||||||
| Q1 2023 Common Warrants | $ | Q3 2028 | |||||||
| Q1 2023 Placement Agent Warrants | $ | Q3 2028 | |||||||
| Q2 2024 Common Warrants | $ | Q4 2029 | |||||||
| Q2 2025 Advisor Warrants | $ | Q2 2028 | |||||||
| Q2 2025 Placement Agent Warrants | $ | Q2 2030 | |||||||
| Q2 2025 Pre-Funded Warrants (1) | $ | Q2 2030 | |||||||
| Q3 2025 Common Warrants | $ | Q1 2030 | |||||||
(1) The aggregate exercise price for the Pre-Funded Warrants is $
Warrant activity for the years ended December 31, 2025, and 2024 is presented below:
| Outstanding | ||||||||
| Number of Warrants | Weighted Average Exercise Price | |||||||
| Warrants outstanding and exercisable, December 31, 2023 | $ | |||||||
| Granted | ||||||||
| Make-whole provision | ||||||||
| Exercised | ( | ) | ||||||
| Expired | ( | ) | ||||||
| Warrants outstanding and exercisable, December 31, 2024 | ||||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Warrants outstanding and exercisable, December 31, 2025 | $ | |||||||
Treasury Shares
The Company maintains Treasury Stock for the Common Stock shares it buys when it withholds shares to cover taxes on stock compensation transactions. There were no treasury stock transactions during the years ended December 31, 2025, and 2024, and the treasury shares outstanding were
Note 6 - Preferred Stock
Our Certificate of Incorporation authorizes the issuance of up to
Series F Preferred Stock
The terms of the Series F Preferred Stock are as set forth in the Certificate of Designations of Series F Preferred Stock of TaoWeave, Inc. (the “Certificate of Designations”), which was filed and became effective with the Secretary of State of the State of Delaware on March 31, 2023. The 2023 Private Placement closed on March 31, 2023, in exchange for gross and net proceeds of $
The Series F Preferred Shares are convertible into fully paid and non-assessable shares of the Company’s Common Stock at the election of the holder at any time at an initial conversion price of $
On October 6, 2023, the Company and Investors holding a majority of the outstanding shares of the Preferred Stock agreed to waive any and all provisions, terms, covenants, and obligations in the Certificate of Designations to the extent such provisions permit the conversion or exercise of the Preferred Stock to occur at a price below $
Under the Certificate of Designations, the Series F Preferred Shares have an initial stated value of $
Our ability to settle conversions is subject to certain limitations set forth in the Certificate of Designations. Further, the Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of common stock issuable upon conversion of the Series F Preferred Shares.
The Certificate of Designations includes certain Triggering Events (as defined in the Certificate of Designations), including, among other things, (i) the failure to file and maintain an effective registration statement covering the sale of the holder’s securities registrable pursuant to the Registration Rights Agreement, (ii) the failure to pay any amounts due to the holders of the Series F Preferred Shares when due, and (iii) if Peter Holst ceases to be the chief executive officer of the Company other than because of his death, and a qualified replacement, reasonably acceptable to a majority of the holders of the Series F Preferred Shares, is not appointed within thirty (30) business days. In connection with a Triggering Event, the Default Rate is triggered. We are subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Certificate of Designations), maintenance of properties, and the transfer of assets, among other matters.
During the years ended December 31, 2025, and 2024,
| Series F Preferred | Accrued | Weighted Average | Common Shares Issued | |||||||||||||
| Stock Shares | Dividends | Conversion Price | from Conversions | |||||||||||||
| Balance on December 31, 2023 | $ | |||||||||||||||
| 2024 Issuance | — | |||||||||||||||
| 2024 Accrued Dividends | ||||||||||||||||
| 2024 Conversions | ( | ) | ( | ) | $ | |||||||||||
| Balance on December 31, 2024 | ||||||||||||||||
| 2025 Issuance | — | |||||||||||||||
| 2025 Accrued Dividends | ||||||||||||||||
| 2025 Conversions | ( | ) | ( | ) | $ | |||||||||||
| Balance on December 31, 2025 | $ | $ | ||||||||||||||
Series F Preferred Stock Warrants
The Preferred Warrants are exercisable for Series F Preferred Shares at an exercise price of $
During the year ended December 31, 2025,
| Outstanding and Exercisable | ||||||||
| Number of Warrants | Weighted Average Exercise Price | |||||||
| Warrants outstanding and exercisable, December 31, 2023 | $ | |||||||
| Exercised | ( | ) | $ | |||||
| Warrants outstanding and exercisable, December 31, 2024 | $ | |||||||
| Exercised | ( | ) | $ | |||||
| Warrants outstanding and exercisable, December 31, 2025 | $ | |||||||
As discussed in Note 5 - Capital Stock, one of our directors is currently a partner at The Special Equities Group ("SEG"), a division of Dawson James Securities, Inc. During the year ended December 31, 2025, pursuant to the terms of the Placement Agent Agreement, we paid Dawson James a cash fee equal to
Note 7 - Stock-Based Compensation
Amended and Restated 2019 Equity Incentive Plan
On December 19, 2019, the TaoWeave, Inc. 2019 Equity Incentive Plan (the “2019 Plan”) was approved by the Company’s stockholders at the Company’s 2019 Annual Meeting of Stockholders. The 2019 Plan is an omnibus equity incentive plan pursuant to which the Company may grant equity and cash incentive awards to certain key service providers of the Company and its subsidiaries. As of December 31, 2024, there were
During the year ended December 31, 2024,
Stock compensation expense recorded for the year ended December 31, 2024, was $
Note 8 - Net Loss Per Share
Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. The weighted average number of shares of common stock outstanding does not include any potentially dilutive securities or unvested restricted shares of common stock. Vested RSUs (for which shares of common stock have not yet been delivered) are included in the calculations of basic net loss per share.
Diluted net loss per share is computed by giving effect to all potential shares of common stock, including warrants, stock options, RSUs, and unvested restricted stock awards, to the extent they are dilutive. For the years ended December 31, 2025 and 2024,all such common stock equivalents have been excluded from diluted net loss per share as the effect on net loss per share would be anti-dilutive (due to the net losses).
The following table sets forth the computation of the Company’s basic and diluted net loss per share (in thousands, except per share data):
| Year Ended December 31, | ||||||||
| Numerator: | 2025 | 2024 | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Less: preferred stock dividends | ||||||||
| Less: deemed dividend | ||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted-average number of shares of common stock for basic and diluted net loss per share | ||||||||
| Basic net loss per share | $ | ( | ) | $ | ( | ) | ||
The following table represents the potential shares that were excluded from the computation of the weighted average number of shares of common stock in computing the diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect:
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Common stock issuable upon conversion of Series F Preferred Stock (1) | ||||||||
| Common stock issuable upon conversion of Series F Preferred Warrants (2) | ||||||||
| Common stock issuable upon conversion of Common Stock Warrants | ||||||||
| (1) | Calculation assumes the conversion of the stated value and accrued dividends of the Series F Preferred Stock into Common Stock at the current exercise price of $ |
| (2) | Calculation assumes the exercise of the Series F Preferred Warrants for cash into Series F Preferred Stock and subsequent conversion of the Series F Preferred Stock into Common Stock at the Floor Price of $ |
Note 9 - Segment Reporting
The Company currently operates in segments: (1) "Digital Assets," which represents the business surrounding our treasury activity with Bittensor, (2) “Managed Services,” which represents the business surrounding managed services for video collaboration and network solutions, and (3) “Collaboration Products,” which represents the business surrounding our Mezzanine™ product offerings.
For each of the years ended December 31, 2025, and 2024, the CODM for and segments, respectively, was Pete Holst, the Company's President and Chief Executive Officer. Management reviewed the information provided to the CODM and updated the presentation of that information, including Significant Segment Expenses ("SSEs").
Certain information concerning the Company’s segments for the years ended December 31, 2025, and 2024 is presented in the following tables (in thousands):
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | % Change | ||||||||||
| Revenue | ||||||||||||
| Digital Assets | $ | $ | % | |||||||||
| Managed Services | ( | )% | ||||||||||
| Collaboration Products | ( | )% | ||||||||||
| Consolidated | $ | $ | % | |||||||||
| Cost of revenues | ||||||||||||
| Digital Assets | $ | $ | % | |||||||||
| Managed Services | % | |||||||||||
| Collaboration Products | ( | )% | ||||||||||
| Consolidated | $ | $ | ( | )% | ||||||||
| Gross Margin | ||||||||||||
| Digital Assets | $ | $ | % | |||||||||
| Managed Services | ( | )% | ||||||||||
| Collaboration Products | ( | ) | ( | )% | ||||||||
| Consolidated | $ | $ | % | |||||||||
| Operating expenses | ||||||||||||
| Digital Assets (1) | $ | $ | % | |||||||||
| Managed Services (2) | % | |||||||||||
| Collaboration Products (3) | ( | )% | ||||||||||
| Corporate (4) | ( | )% | ||||||||||
| Consolidated | $ | $ | ( | )% | ||||||||
| Other income (expense), net | ||||||||||||
| Digital Assets (5) | $ | ( | ) | $ | ( | )% | ||||||
| Managed Services (6) | ( | ) | ( | )% | ||||||||
| Collaboration Products (6) | % | |||||||||||
| Corporate (7) | ( | )% | ||||||||||
| Consolidated | $ | ( | ) | $ | ( | )% | ||||||
| Net loss before taxes | $ | ( | ) | $ | ( | ) | % | |||||
| Income tax expense | $ | $ | ( | )% | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | % | |||||
| As of December 31, | ||||||||||||
| Total assets | 2025 | 2024 | % Change | |||||||||
| Digital Assets (8) | $ | $ | % | |||||||||
| Managed Services (9) | ( | )% | ||||||||||
| Collaboration Products (10) | ( | )% | ||||||||||
| Corporate (11) | ( | )% | ||||||||||
| Consolidated | $ | $ | % | |||||||||
| (1) | Operating expenses related to our Digital Assets segment include cash and stock-based advisory fees. |
| (2) | There were |
| (3) | Operating expenses related to our Collaboration Products segment include non-capitalized software costs and commission expenses. In 2025 and 2024, $ |
| (4) | Corporate operating expenses include costs that are not specific to a particular segment but are general to the group. These include expenses for administrative, information technology, and accounting staff; general liability and other insurance; professional fees; and similar corporate expenses. |
| (5) | Other expense for our Digital Assets segment includes unrealized losses from revaluations of our digital assets. |
| (6) | Other income (expense) for Managed Services and Collaboration Products segments include interest expense and non-operating income. |
| (7) | Unallocated other income in Corporate is primarily related to interest income. |
| (8) | Digital Asset assets include the fair value of the Company's digital asset holdings as of the end of the period, and unamortized stock-based advisor expense. |
| (9) | Managed Services assets include cash equivalents, accounts receivable, and prepaid expenses. |
| (10) | Collaboration Products' assets include cash equivalents and prepaid expenses. |
| (11) | Unallocated assets in Corporate include cash and prepaid expenses that are corporate in nature and don't apply to a single segment. |
The Company's SSEs for our Digital Assets segment include cash and non-cash transaction fees, cash and stock-based advisory expenses, and unrealized losses on revaluation. The Company’s SSEs for our Managed Services and Collaboration Products segments include direct labor costs and segment-based management expenses (collectively, “labor and labor-related”), circuit and network cost of revenue, other non-inventory cost of revenue, research and development costs, and bad debt (recovery) expense. These are specific costs regularly provided to the CODM and used to evaluate segment performance. Other segment items include expenses recorded within cost of revenue and operating expenses, which are not regularly provided to the CODM. The CODM evaluates segment profit each period against historical results, factoring in macroeconomic factors such as labor and supply costs, to assess segment performance.
| Year Ended December 31, 2025 | ||||||||||||||||
| Digital Assets | Managed Services | Collaboration Products | Total | |||||||||||||
| Revenue | ||||||||||||||||
| Digital Assets | $ | $ | $ | $ | ||||||||||||
| Network Services | ||||||||||||||||
| Video Collaboration | ||||||||||||||||
| Professional and other services | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Significant Segment Expenses | ||||||||||||||||
| Labor and labor-related (1) | ||||||||||||||||
| Property and office expense | ||||||||||||||||
| Cash digital asset transaction fees | ||||||||||||||||
| Non-cash digital asset transaction fees | ||||||||||||||||
| Stock-based expense | ||||||||||||||||
| Circuit and network cost of revenue | ||||||||||||||||
| Advisory fees | ||||||||||||||||
| Unrealized loss on digital asset revaluation | ||||||||||||||||
| Bad debt recovery | ( | ) | ( | ) | ||||||||||||
| Other segment items (2) | ||||||||||||||||
| Segment profit (loss) | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
| Segment margin | ( | )% | % | % | ||||||||||||
| Unallocated expenses (income) | ||||||||||||||||
| Corporate expenses (3) | $ | |||||||||||||||
| Interest income | ( | ) | ||||||||||||||
| Loss before income tax expense | $ | ( | ) | |||||||||||||
| Year Ended December 31, 2024 | ||||||||||||
| Managed Services | Collaboration Products | Total | ||||||||||
| Revenue | ||||||||||||
| Network services | $ | $ | $ | |||||||||
| Video collaboration | ||||||||||||
| Professional and other services | ||||||||||||
| Total revenue | ||||||||||||
| Significant Segment Expenses | ||||||||||||
| Labor and labor-related (1) | ||||||||||||
| Severance | ||||||||||||
| Circuit and network cost of revenue | ||||||||||||
| Inventory and inventory-related | ||||||||||||
| Other non-inventory cost of revenue | ||||||||||||
| Research and development | ||||||||||||
| Bad debt expense | ||||||||||||
| Segment profit (loss) | $ | $ | ( | ) | $ | |||||||
| Segment margin | % | ( | )% | |||||||||
| Unallocated expenses (income) (3) | ||||||||||||
| Corporate expenses | $ | |||||||||||
| Stock compensation | ||||||||||||
| Severance | ||||||||||||
| Interest income | ( | ) | ||||||||||
| Loss before income tax expense | $ | ( | ) | |||||||||
| (1) | Includes direct labor costs (including sales and marketing costs), employment taxes, employee benefits, workers' compensation, and office expenses. For the year ended December 31, 2024, this also includes $ |
| (2) | Other segment items include other income and expenses, net; interest expense; certain professional services; and miscellaneous taxes and fees. |
| (3) | Represents general and administrative costs, less the amounts allocated to the segments for labor and benefits, general liability insurance, professional services, property taxes, and interest income. For the year ended December 31, 2024, this also includes severance costs of $ |
For the years ended December 31, 2025, and 2024, no material revenue was attributable to any individual foreign country. Approximately
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Domestic | $ | $ | ||||||
| Foreign | ||||||||
| $ | $ | |||||||
The Company considers a significant customer to be one that comprises more than 10% of its consolidated revenues or accounts receivable. Losing or reducing sales or anticipated sales to our most significant customer or several of our smaller customers could have a material adverse effect on our business, financial condition, and results of operations.
Concentration of consolidated revenues was as follows:
| Year Ended December 31, 2025 | |||||||||
| 2025 | 2024 | ||||||||
| Segment | % of Revenue | % of Revenue | |||||||
| Customer A | Managed Services | % | % | ||||||
Concentration of consolidated accounts receivable was as follows:
| As of December 31, | |||||||||
| 2025 | 2024 | ||||||||
| Segment | % of Accounts Receivable | % of Accounts Receivable | |||||||
| Customer A | Managed Services | % | % | ||||||
Note 10 - Commitments and Contingencies
From time to time, we are subject to various legal proceedings arising in the ordinary course of business, including those covered by insurance. As of the date hereof, we are not a party to any legal proceedings that we currently believe will have a material adverse effect on our business, financial position, results of operations, or liquidity.
Note 11 - Income Taxes
In December 2023, the FASB issued ASU No. 2023‑09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency of income tax disclosures by requiring additional disaggregation in the effective tax rate reconciliation and disclosures of income taxes paid by jurisdiction. The guidance does not change the recognition or measurement of income taxes. The Company adopted ASU 2023‑09 effective January 1, 2025, on a prospective basis. The adoption impacted the Company’s income tax disclosures but did not have a material impact on its consolidated financial statements
The following table sets forth pretax book loss (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| United States | $ | ( | ) | $ | ( | ) | ||
| Foreign | ||||||||
| Total | $ | ( | ) | $ | ( | ) | ||
The following table sets forth income before taxes and the income tax expense for the years ended December 31, 2025, and 2024 (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Current: | ||||||||
| Federal | $ | $ | ||||||
| Foreign | ||||||||
| State | ||||||||
| Total current | ||||||||
| Total deferred | ||||||||
| Income tax expense | $ | $ | ||||||
Upon adoption of ASU 2023-09, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025, was as follows (in thousands, except for percentages):
| Amount | Percent | |||||||
| U.S. federal statutory rate | $ | ( | ) | % | ||||
| State and local taxes, net of federal effects (1) | ( | )% | ||||||
| Change in valuation allowance | ( | )% | ||||||
| Nontaxable or nondeductible items | ( | )% | ||||||
| Other Reconciling Items | ( | )% | ||||||
| Effective tax rates | $ | ( | )% | |||||
| (1) | The states and local jurisdictions that contribute to the majority (greater than 50% of the tax effect in this category include California, Colorado, and Pennsylvania. |
The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2024, in accordance with the guidance prior to the adoption of ASU 2023-0, was as follows (in thousands):
| Amount | ||||
| U.S. federal income taxes at the statutory rate | $ | ( | ) | |
| State Taxes, Net of Federal Effects | ( | ) | ||
| U.S Federal and State NOL Carryforward adjustment for expired NOLs and other | ||||
| Stock Compensation Adjust for Expired Options | ||||
| Change in valuation allowance | ||||
| State Taxes, Change in Apportionment Rate | ( | ) | ||
| Other | ||||
| Income tax expense | $ | |||
Upon adoption of ASU 2023-09, cash paid for income taxes, net of refunds, during the year ended December 31, 2025, was as follows (in thousands):
| Federal | $ | |||
| State | ||||
| California | ||||
| New Jersey | ||||
| Other States | ||||
| Total cash paid for income taxes, net of refunds | $ |
The tax effect of the temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2025, and 2024 is presented below (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets (liabilities): | ||||||||
| Tax benefit of operating loss carry forward - Federal | $ | $ | ||||||
| Tax benefit of operating loss carry forward - State | ||||||||
| Accrued expenses | ||||||||
| Deferred revenue | ||||||||
| Fixed assets | ||||||||
| Inventory | ||||||||
| Intangible amortization | ||||||||
| Section 174 research and experimentation | ||||||||
| R&D credit | ||||||||
| Texas margin tax temporary credit | ||||||||
| Charitable contributions | ||||||||
| Unrealized loss - digital assets | ||||||||
| Total deferred tax asset, net of deferred tax liabilities | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset | $ | $ | ||||||
The ending balances of the deferred tax asset have been fully reserved, reflecting uncertainties regarding the realizability, as evidenced by the Company’s historical results. The change in the valuation allowance for the year ended December 31, 2025, is an increase of $
We and our subsidiary file federal and state tax returns on a consolidated basis. On October 1, 2019, TaoWeave, Inc. (fka Oblong, Inc.) acquired the stock of Oblong Industries Inc., resulting in Oblong Industries Inc.'s shareholders owning 75% of TaoWeave, Inc. Therefore, an “ownership change” occurred on this date (as defined under Section 382 of the Internal Revenue Code of 1986, as amended), which places an annual limitation on the utilization of the net operating loss (“NOL”) carryforwards accumulated before the ownership change. If additional ownership changes have occured or do occur in the future, the use of NOL carryforwards and research and development credits could be subject to further limitation. As a result of this annual limitation and the limited carryforward life of the accumulated NOLs, we determined the 2019 ownership change resulted in a permanent loss of approximately $
The Company had federal net operating loss carryforwards of $
There were no significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC Topic 740 “Income Taxes” (“ASC 740”), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements, that have been recorded on the Company’s Consolidated Financial Statements for the years ended December 31, 2025, and 2024. The Company does anticipate any material change to its unrecognized tax benefits in the next twelve months.
Additionally, ASC 740 provides guidance on the recognition of interest and penalties related to unrecognized tax benefits. There were interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended December 31, 2025, and 2024.
The Internal Revenue Service may generally assess additional income tax for the last three years. This would generally prevent the Service from opening an examination for years ended on or before December 31, 2022. However, there are exceptions that can extend the statute of limitations to six years and, in some cases, prevent it from ever expiring.
Note 12 - 401(k) Plan
We have adopted a Section 401(k) retirement plan under the Internal Revenue Code. The 401(k) plan covers substantially all employees who meet minimum age and service requirements. Company contributions to the 401(k) plan for the years ended December 31, 2025, and 2024 were $
Exhibit 3.1
CONFORMED COPY TO REFLECT AMENDMENTS MADE
THROUGH DECEMBER 2, 2025
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
TAOWEAVE, INC.
FIRST: The name of the Corporation is TaoWeave, Inc.
SECOND: The address of its registered office in the State of Delaware is 2711 Centerville Road, Suite 400, in the City of Wilmington, 19808, County of New Castle. The name of its registered agent at such address is Corporation Service Company.
THIRD: The nature of the business of the Corporation and the objects or purposes to be transacted, promoted or carried on by it are as follows: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law (the “GCL”) of the State of Delaware.
FOURTH: The total number of shares of all classes of stock that the Corporation is authorized to issue is one hundred fifty-five million (155,000,000) shares, consisting of one hundred fifty million (150,000,000) shares of Common Stock with a par value of $0.0001 per share and five million (5,000,000) shares of Preferred Stock with a par value of $0.0001 per share.
Upon the effectiveness of this Certificate of Amendment [filed with the Secretary of State of the State of Delaware on January 10, 2011], every four (4) issued and outstanding shares of Common Stock of the Corporation shall be changed and reclassified into one (1) share of Common Stock, which shares shall be fully paid and nonassessable shares of Common Stock of the Corporation; provided, however, that in lieu of fractional interests in shares of Common Stock to which any stockholder would otherwise be entitled pursuant hereto (taking into account all shares of Common Stock owned by such stockholder), any such fractional interests in shares of Common Stock shall be paid in cash in an amount equal to such fraction multiplied by the average of the high and low trading prices of the Corporation’s Common Stock on the OTC Bulletin Board during regular trading hours for the five trading days immediately preceding the effectiveness of this Certificate of Amendment [on January 10, 2011].
Upon the filing and effectiveness (the “[2019] Effective Time”), pursuant to the Delaware General Corporation Law, of this Certificate of Amendment to the Certificate of Incorporation of the Corporation [filed with the Secretary of State of the State of Delaware on April 17, 2019], each ten (10) shares of Common Stock either issued and outstanding or held by the Corporation in treasury stock immediately prior to the [2019] Effective Time shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one (1) fully paid and nonassessable share of Common Stock (the “[2019] Reverse Stock Split”). No fractional shares shall be issued in connection with the [2019] Reverse Stock Split. In lieu of any fractional share of Common Stock to which a stockholder would otherwise be entitled in connection with the [2019] Reverse Stock Split (taking into consideration all shares of Common Stock owned by such stockholder), the Corporation will issue that number of shares of Common Stock resulting from the [2019] Reverse Stock Split as rounded up to the nearest whole share upon the submission of a transmission letter by a stockholder holding the shares in book-entry form and, where shares are held in certificated form, upon the surrender of the stockholder’s Old Certificates (as defined below). Each certificate that immediately prior to the [2019] Effective Time represented shares of Common Stock (“[2019] Old Certificates”), shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the [2019] Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above.
The par value per share of the Corporation’s capital stock and the total number of shares of all classes of capital stock that the Corporation is authorized to issue pursuant to this Article IV shall, in each case, not be affected by the [2019] Reverse Stock Split.
Upon the filing and effectiveness (the “[2023] Effective Time”), pursuant to the Delaware General Corporation Law, of this Certificate of Amendment to the Certificate of Incorporation of the Corporation [filed with the Secretary of State of the State of Delaware on December 30, 2022 and effective on January 3, 2023], each fifteen (15) shares of Common Stock either issued and outstanding or held by the Corporation in treasury stock immediately prior to the [2023] Effective Time, shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one (1) fully paid and nonassessable share of Common Stock (the “[2023] Reverse Stock Split”). No fractional shares shall be issued in connection with the [2023] Reverse Stock Split. In lieu of any fractional share of Common Stock to which a stockholder would otherwise be entitled in connection with the [2023] Reverse Stock Split (taking into consideration all shares of Common Stock owned by such stockholder), the Corporation will issue that number of shares of Common Stock resulting from the [2023] Reverse Stock Split as rounded up to the nearest whole share upon the submission of a transmission letter by a stockholder holding the shares in book-entry form and, where shares are held in certificated form, upon the surrender of the stockholder’s [2023] Old Certificates (as defined below). Each certificate that immediately prior to the [2023] Effective Time, represented shares of Common Stock (“[2023] Old Certificates”), shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the [2023] Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above in this paragraph.
The par value per share of the Corporation’s capital stock and the total number of shares of all classes of capital stock that the Corporation is authorized to issue pursuant to this Article IV shall, in each case, not be affected by the [2023] Reverse Stock Split.
Upon the filing and effectiveness (the “[2024] Effective Time”), pursuant to the Delaware General Corporation Law, of this Certificate of Amendment to the Certificate of Incorporation of the Corporation [filed with the Secretary of State of the State of Delaware on August 22, 2024 and effective on August 23, 2024], each forty (40) shares of Common Stock either issued and outstanding or held by the Corporation in treasury stock immediately prior to the [2024] Effective Time shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one (1) fully paid and nonassessable share of Common Stock (the “[2024] Reverse Stock Split”). No fractional shares shall be issued in connection with the [2024] Reverse Stock Split. In lieu of any fractional share of Common Stock to which a stockholder would otherwise be entitled in connection with the [2024] Reverse Stock Split (taking into consideration all shares of Common Stock owned by such stockholder), the Corporation will issue that number of shares of Common Stock resulting from the [2024] Reverse Stock Split as rounded up to the nearest whole share upon the submission of a transmission letter by a stockholder holding the shares in book-entry form and, where shares are held in certificated form, upon the surrender of the stockholder’s [2024] Old Certificates (as defined below). Each certificate that immediately prior to the [2024] Effective Time represented shares of Common Stock (“[2024] Old Certificates”), shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the [2024] Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above.
The par value per share of the Corporation’s capital stock and the total number of shares of all classes of capital stock that the Corporation is authorized to issue pursuant to this Article IV shall, in each case, not be affected by the [2024] Reverse Stock Split.
FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
a) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
b) The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation.
c) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide.
d) No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Article Seventh by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.
e) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as my be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.
SIXTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation my be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as my be designated from time to time by the Board of Directors or in the By-Laws of the Corporation.
SEVENTH: The Board of Directors shall not be divided into classes. Each director shall be elected to serve a one-year term expiring at the next Annual Meeting of Shareholders and until her or her successor is duly elected and qualified.
EIGHTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders of any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.
NINTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
ANNEX I
Certificates of Designation and Certificates Eliminating Reference
The Corporation has filed the following Certificates of Designation, Preferences and Rights of Preferred Stock and Certificates Eliminating Reference with the Secretary of State of the State of Delaware:
|
1. |
Series A Preferred Stock of Wire One Technologies, Inc. filed June 14, 2000; |
|
a. |
Certificate of Amendment filed June 22, 2001; |
|
b. |
Certificate Eliminating Reference to Series A Preferred Stock from the Certificate of Incorporation of Glowpoint, Inc. filed December 6, 2007*; |
|
2. |
Series B Convertible Preferred Stock of Glowpoint, Inc. filed January 22, 2004; |
|
a. |
Certificate Eliminating Reference to Series B Convertible Preferred Stock from the Certificate of Incorporation of Glowpoint, Inc. filed December6, 2007*; |
|
3. |
Series C Preferred Stock of Glowpoint, Inc. filed September 21, 2007; |
|
a. |
Certificate Eliminating Reference to Series C Preferred Stock from the Certificate of Incorporation of Glowpoint, Inc. filed August 6, 2009*; |
|
4. |
Series D Preferred Stock of Glowpoint, Inc. filed September 21, 2007*; |
|
5. |
Series A Preferred Stock of Glowpoint, Inc. filed November 25, 2008; |
|
a. |
Certificate Eliminating Reference to Series A Preferred Stock from the Certificate of Incorporation of Glowpoint, Inc. filed August 6, 2009*; |
|
6. |
Series A-1 Convertible Preferred Stock of Glowpoint, Inc. filed March 16, 2009; |
|
a. |
Certificate Eliminating Reference to Series A-1 Convertible Preferred Stock from the Certificate of Incorporation of Glowpoint, Inc. filed April 6, 2010*; |
|
7. |
Series A-2 Convertible Preferred Stock of Glowpoint, Inc. filed August 10, 2009*; |
|
8. |
Perpetual Series B Preferred Stock of Glowpoint, Inc. filed March 29, 2010*; |
|
9. |
Series B-1 Preferred Stock of Glowpoint, Inc. filed August 3, 2011*; |
|
10. |
0% Series B Convertible Preferred Stock of Glowpoint, Inc. filed October 23, 2017*; |
|
a. |
a Certificate of Correction to the Certificate of Designation of the 0% Series B Convertible Preferred Stock of Glowpoint. Inc., filed November 9, 2017*; |
|
11. |
0% Series C Convertible Preferred Stock of Glowpoint, Inc. filed January 22, 2018*; |
|
12. |
6.0% Series D Convertible Preferred Stock of Glowpoint, Inc. filed October 1, 2019*; |
|
13. |
6.0% Series E Convertible Preferred Stock of Glowpoint, Inc. filed October 1, 2019*; and |
|
14. |
Series F Convertible Preferred Stock of Oblong, Inc. filed March 31, 2023*. |
* Publicly filed as an exhibit to the Corporation’s filings with the Securities and Exchange Commission.
Exhibit 10.21
TAOWEAVE, INC.
AMENDED AND RESTATED
2019 EQUITY INCENTIVE PLAN
Amended by the Board of Directors: October 20, 2025
Approved by the Stockholders: December 17, 2025
I.PURPOSE. The TaoWeave, Inc. 2019 Equity Incentive Plan is adopted effective December 19, 2019. The Plan is designed to attract, retain, and motivate selected Eligible Employees and Key Non-Employees of the Company and its Affiliates, and reward them for making major contributions to the success of the Company and its Affiliates. These objectives are accomplished by making long-term incentive awards under the Plan that will offer Participants an opportunity to have a greater proprietary interest in, and closer identity with, the Company and its Affiliates and their financial success.
The Awards may consist of:
|
1. |
Incentive Options; |
2. Nonstatutory Options;
3. Restricted Stock;
4. Rights;
5. Dividend Equivalents;
6. Other Stock-Based Awards;
7. Performance Awards; or
8. Cash Awards;
or any combination of the foregoing, as the Committee may determine.
|
II. |
DEFINITIONS |
|
A. |
Affiliate means any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated association or other entity (other than the Company) that, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect. |
|
B. |
Award means the grant to any Eligible Employee or Key Non-Employee of any form of Option, Restricted Stock, Right, Dividend Equivalent, Other Stock-Based Award, Performance Award, or Cash Award, whether granted singly, in combination, or in tandem, and pursuant to such terms, conditions, and limitations as the Committee may establish in order to fulfill the objectives of the Plan. |
|
C. |
Award Agreement means a written agreement entered into between the Company and a Participant under which an Award is granted and which sets forth the terms, conditions, and limitations applicable to the Award. |
|
D. |
Board means the Board of Directors of the Company. |
|
E. |
Cash Award means an Award of cash, subject to the requirements of Article XIII and such other restrictions as the Committee deems appropriate or desirable. |
|
F. |
Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. References to any provision of the Code shall be deemed to include regulations thereunder and successor provisions and regulations thereto. |
|
G. |
Committee means the committee to which the Board delegates the power to act under or pursuant to the provisions of the Plan, or the Board if no committee is selected. If the Board delegates powers to a committee, and if the Company is or becomes subject to Section 16 of the Exchange Act, then, if necessary for compliance therewith, such committee shall consist of not less than two (2) members of the Board, each member of which must be a "non-employee director," within the meaning of the applicable rules promulgated pursuant to the Exchange Act. If the Company is or becomes subject to Section 16 of the Exchange Act, no member of the Committee shall receive any Award pursuant to the Plan or any similar plan of the Company or any Affiliate while serving on the Committee, unless the Board determines that the grant of such an Award satisfies the then current Rule 16b-3 requirements under the Exchange Act. |
|
H. |
Common Stock means the common stock of the Company. |
|
I. |
Company means TaoWeave, Inc., a Delaware corporation, and includes any successor or assignee entity or entities into which the Company may be merged, changed, or consolidated; any entity for whose securities the securities of the Company shall be exchanged; and any assignee of or successor to substantially all of the assets of the Company. |
|
J. |
Disability or Disabled means a permanent and total disability as defined in Section 22(e)(3) of the Code. |
|
K. |
Dividend Equivalent means an Award subject to the requirements of Article X. |
|
L. |
Eligible Employee means an employee of the Company or of an Affiliate who is designated by the Committee as being eligible to be granted one or more Awards under the Plan. |
|
M. |
Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute thereto. References to any provision of the Exchange Act shall be deemed to include rules promulgated thereunder and successor provisions and rules thereto. |
|
N. |
Fair Market Value means, if the Shares are listed on any national securities exchange or quoted on the New York Stock Exchange ("NYSE") (including, as applicable, the NYSE American), the closing sales price, if any, on the largest such exchange or on the NYSE, as applicable, on the valuation date, or, if none, on the most recent trade date immediately prior to the valuation date provided such trade date is no more than thirty (30) days prior to the valuation date. If the Shares are not then either listed on any such exchange or quoted on the NYSE, or there has been no trade date within such thirty (30) day period, the fair market value shall be the mean between the average of the "Bid" and the average of the "Ask" prices, if any, as reported by the Electronic Quotation Service or OTC Markets Group, Inc. (or such equivalent reporting service) for the valuation date, or, if none, for the most recent trade date immediately prior to the valuation date provided such trade date is no more than thirty (30) days prior to the valuation date. If the fair market value cannot be determined under the preceding three sentences, it shall be determined in good faith by the Committee. |
|
O. |
Incentive Option means an Option that, when granted, is intended to be an "incentive stock option," as defined in Section 422 of the Code. |
|
P. |
Key Non-Employee means a Non-Employee Board Member, consultant, advisor or independent contractor of the Company or of an Affiliate who is designated by the Committee as being eligible to be granted one or more Awards under the Plan. |
|
Q. |
Non-Employee Board Member means a director of the Company who is not an employee of the Company or any of its Affiliates. For purposes of the Plan, a Non-Employee Board Member shall be deemed to include the employer or other designee of such Non-Employee Board Member, if the Non-Employee Board Member is required, as a condition of his or her employment, to provide that any Award granted hereunder be made to the employer or other designee. |
|
R. |
Nonstatutory Option means an Option that, when granted, is not intended to be an "incentive stock option," as defined in Section 422 of the Code, or that subsequently fails to comply with the requirements of Section 422 of the Code. |
|
S. |
Option means a right or option to purchase Common Stock, including Restricted Stock if the Committee so determines. |
|
T. |
Other Stock-Based Award means a grant or sale of Common Stock that is valued in whole or in part based upon the Fair Market Value of Common Stock. |
|
U. |
Participant means an Eligible Employee or Key Non-Employee to whom one or more Awards are granted under the Plan. |
|
V. |
Performance Award means an Award subject to the requirements of Article XII, and such performance conditions as the Committee deems appropriate or desirable. |
|
W. |
Plan means the TaoWeave, Inc. 2019 Equity Incentive Plan, as amended from time to time. |
|
X. |
Restricted Stock means an Award made in Common Stock or denominated in units of Common Stock and delivered under the Plan, subject to the requirements of Article VIII, such other restrictions as the Committee deems appropriate or desirable, and as awarded in accordance with the terms of the Plan. |
|
Y. |
Right means a stock appreciation right delivered under the Plan, subject to the requirements of Article IX and as awarded in accordance with the terms of the Plan. |
|
Z. |
Shares means the following shares of the capital stock of the Company as to which Options or Restricted Stock have been or may be granted under the Plan and upon which Rights, units of Restricted Stock or Other Stock-Based Awards may be based: treasury or authorized but unissued Common Stock, $0.0001 par value, of the Company, or any shares of capital stock or securities into which the Shares are changed or for which they are exchanged within the provisions of Article XIX of the Plan. |
|
III. |
SHARES SUBJECT TO THE PLAN |
The aggregate number of Shares as to which Awards may be granted from time to time shall be 2,000,000 Shares, subject to adjustment for stock splits, stock dividends, and other adjustments described in Article XIX hereof (the "Initial Limit"). The aggregate number of Shares as to which Incentive Options may be granted from time to time shall not exceed the Initial Limit, subject to adjustment for stock splits, stock dividends and other adjustments described in Article XIX hereof. The aggregate number of shares of Common Stock that may be delivered pursuant to the Plan as specified in this Article III will automatically increase on January 1 of each year, commencing on January 1, 2026 and ending on (and including) January 1, 2029, in an amount equal to five percent (5%) of the total number of shares of Common Stock outstanding on December 31 of the preceding calendar year. Notwithstanding the foregoing, the Committee may act prior to January 1 of a given year to provide that there will be no January 1 increase for such year or that the increase for such year will be a lesser number of shares of Common Stock than provided herein.
Unless otherwise approved by the Company’s stockholders, the aggregate number of Shares as to which Awards may be granted in any one calendar year to any member of the Board shall not exceed 250,000 Shares (subject to adjustment for stock splits, stock dividends, and other adjustments described in Article XIX hereof).
From time to time, the Committee and/or appropriate officers of the Company shall take whatever actions are necessary to file required documents with governmental authorities and/or stock exchanges so as to make Shares available for issuance pursuant to the Plan. Shares subject to Awards under the Plan that are forfeited, terminated, expire unexercised, canceled by agreement of the Company and the Participant (whether for the purpose of repricing such Awards or otherwise), settled in cash in lieu of Common Stock or in such manner that all or some of the Shares covered by such Awards are not issued to a Participant (or, if issued to the Participant, are returned to the Company by the Participant pursuant to a right of repurchase or right of first refusal exercised by the Company), or are exchanged for Awards that do not involve Common Stock, shall immediately become available for Awards. In addition, if the exercise price of any Award is satisfied by tendering Shares to the Company (by actual delivery or attestation), only the number of Shares issued net of the Shares tendered shall be deemed delivered for purposes of determining the maximum number of Shares available for Awards. Awards payable in cash shall not reduce the number of Shares available for Awards under the Plan. The foregoing notwithstanding, if the exercise price of any Award is satisfied by tendering Shares to the Company, or if Shares are withheld from an Award to pay a Participant’s tax withholding obligations in connection with the Award, the Shares so tendered or withheld shall not again become available for Awards.
IV.ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. A majority of the Committee shall constitute a quorum at any meeting thereof (including by telephone conference) and the acts of a majority of the members present, or acts approved in writing by a majority of the entire Committee without a meeting, shall be the acts of the Committee for purposes of this Plan. The Committee may authorize one or more of its members or an officer of the Company to execute and deliver documents on behalf of the Committee. A member of the Committee shall not exercise any discretion respecting Awards to himself or herself under the Plan, other than as applies to the Participants or a class of similarly situated Participants as a whole. The Board shall have the authority to remove or replace any member of, and to fill any vacancy on, the Committee upon notice to the Committee and the affected member, if any. Any member of the Committee may resign upon notice to the Board. The Committee may allocate among one or more of its members, or may delegate to one or more of its agents, such duties and responsibilities as it determines. Subject to the provisions of the Plan, the Committee is authorized to:
|
A. |
Interpret the provisions of the Plan and any Award or Award Agreement, and make all rules and determinations that it deems necessary or advisable to the administration of the Plan; |
|
B. |
Determine which employees of the Company or an Affiliate shall be designated as Eligible Employees and which of the Eligible Employees shall be granted Awards; |
|
C. |
Determine the Key Non-Employees to whom Awards, other than Incentive Options and Performance Awards for which Key Non-Employees shall not be eligible, shall be granted; |
|
D. |
Determine whether an Option to be granted shall be an Incentive Option or Nonstatutory Option; |
|
E. |
Determine the number of Shares for which an Option, Restricted Stock or Other Stock-Based Award shall be granted; |
|
F. |
Determine the number of Rights, the Cash Award or the Performance Award to be granted; |
|
G. |
Provide for the acceleration of the right to exercise any Award; and |
|
H. |
Specify the terms, conditions, and limitations upon which Awards may be granted; provided, however, that with respect to Incentive Options, all such interpretations, rules, determinations, terms, and conditions shall be made and prescribed in the context of preserving the tax status of the Incentive Options as "incentive stock options" within the meaning of Section 422 of the Code. Notwithstanding anything in this Plan to the contrary, no Award shall vest or become exercisable over a period of less than one (1) year unless otherwise set forth in an Award Agreement. |
If permitted by applicable law, and in accordance with any such law, the Committee may delegate to the chief executive officer and to other senior officers of the Company or its Affiliates its duties under the Plan pursuant to such conditions or limitations as the Committee may establish, except that only the Committee may select, and grant Awards to, Participants who are subject to Section 16 of the Exchange Act. Any such delegation by the Committee shall be made by a majority of its members. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award.
The Committee shall have the authority at any time to cancel Awards for reasonable cause and/or to provide for the conditions and circumstances under which Awards shall be forfeited.
Any determination made by the Committee pursuant to the provisions of the Plan shall be made in its sole discretion, and in the case of any determination relating to an Award, may be made at the time of the grant of the Award or, unless in contravention of any express term of the Plan or any Award Agreement, at any time thereafter. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and the Participants. No determination shall be subject to de novo review if challenged in court.
|
V. |
ELIGIBILITY FOR PARTICIPATION |
Awards may be granted under this Plan only to Eligible Employees and Key Non-Employees of the Company or its Affiliates. The foregoing notwithstanding, each Participant receiving an Incentive Option must be an Eligible Employee of the Company or of an Affiliate at the time the Incentive Option is granted.
The Committee may, at any time and from time to time, grant one or more Awards to one or more Eligible Employees or Key Non-Employees and may designate the number of Shares, if applicable, to be subject to each Award so granted, provided, however that no Incentive Option shall be granted after the expiration of ten (10) years from the earlier of the date of the adoption of the Plan by the Company or the approval of the Plan by the stockholders of the Company, and provided further, that the Fair Market Value of the Shares (determined at the time the Option is granted) as to which Incentive Options are exercisable for the first time by any Eligible Employee during any single calendar year (under the Plan and under any other incentive stock option plan of the Company or an Affiliate) shall not exceed One Hundred Thousand Dollars ($100,000). To the extent that the Fair Market Value of such Shares exceeds One Hundred Thousand Dollars ($100,000), the Shares subject to Option in excess of One Hundred Thousand Dollars ($100,000) shall, without further action by the Committee, automatically be converted to Nonstatutory Options.
Notwithstanding any of the foregoing provisions, (i) the Committee may authorize the grant of an Award to a person not then in the employ of, or engaged by, the Company or of an Affiliate, conditioned upon such person becoming eligible to be granted an Award at or prior to the execution of the Award Agreement evidencing the actual grant of such Award; and (ii) if the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, then the Committee may authorize the grant of an Award under this Plan to a person who resides in the State of California only if such grant meets the requirements of Section 25102(o) of the California Securities Law.
VI. AWARDS UNDER THIS PLAN
As the Committee may determine, the following types of Awards may be granted under the Plan on a stand-alone, combination, or tandem basis:
|
A. |
Incentive Option An Award in the form of an Option that shall comply with the requirements of Section 422 of the Code. Subject to adjustments in accordance with the provisions of Article XIX, the aggregate number of Shares that may be subject to Incentive Options under the Plan shall not exceed the Initial Limit. |
|
B. |
Nonstatutory Option An Award in the form of an Option that shall not be intended to, or has otherwise failed to, comply with the requirements of Section 422 of the Code. |
|
C. |
Restricted Stock An Award made to a Participant in Common Stock or denominated in units of Common Stock, subject to future service and/or such other restrictions and conditions as may be established by the Committee, and as set forth in the Award Agreement, including but not limited to continuous service with the Company or its Affiliates, achievement of specific business objectives, increases in specified indices, attainment of growth rates, and/or other measurements of Company or Affiliate performance. |
|
D. |
Stock Appreciation Right An Award in the form of a Right to receive the excess of the Fair Market Value of a Share on the date the Right is exercised over the Fair Market Value of a Share on the date the Right was granted. |
|
E. |
Dividend Equivalents An Award in the form of, and based upon the value of, dividends on Shares. |
|
F. |
Other Stock-Based Awards An Award made to a Participant that is valued in whole or in part by reference to, or is otherwise based upon, the Fair Market Value of Shares. |
|
G. |
Performance Awards An Award made to a Participant that is subject to performance conditions specified by the Committee, including, but not limited to, continuous service with the Company and/or its Affiliates, achievement of specific business objectives, increases in specified indices, attainment of growth rates, and/or other measurements of Company or Affiliate performance. |
|
H. |
Cash Awards An Award made to a Participant and denominated in cash, with the eventual payment subject to future service and/or such other restrictions and conditions as may be established by the Committee, and as set forth in the Award Agreement. |
Each Award under the Plan shall be evidenced by an Award Agreement. Delivery of an Award Agreement to each Participant shall constitute an agreement between the Company and the Participant as to the terms and conditions of the Award.
VII.TERMS AND CONDITIONS OF INCENTIVE OPTIONS AND NONSTATUTORY OPTIONS
Each Option shall be set forth in an Award Agreement, duly executed on behalf of the Company and by the Participant to whom such Option is granted. Except for the setting of the Option price under Paragraph A, no Option shall be granted and no purported grant of any Option shall be effective until such Award Agreement shall have been duly executed on behalf of the Company and by the Participant. Each such Award Agreement shall be subject to at least the following terms and conditions:
|
A. |
Option Price In the case of an Incentive Option granted to a Participant that owns, directly or by reason of the applicable attribution rules, ten percent (10%) or less of the total combined voting power of all classes of stock of the Company, and in the case of a Nonstatutory Option, the Option price per share of the Shares covered by each such Incentive Option or Nonstatutory Option shall be not less than the Fair Market Value of the Shares on the date of the grant of the Option. In all other cases of Incentive Options, the Option price shall be not less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. |
|
B. |
Number of Shares Each Option shall state the number of Shares to which it pertains. |
|
C. |
Term of Option Each Incentive Option shall terminate not more than ten (10) years from the date of the grant thereof, or at such earlier time as the Award Agreement may provide, and shall be subject to earlier termination as herein provided, except that if the Option price is required under Paragraph A of this Article VII to be at least one hundred ten percent (110%) of Fair Market Value, each such Incentive Option shall terminate not more than five (5) years from the date of the grant thereof, and shall be subject to earlier termination as herein provided. The Committee shall determine the time at which a Nonstatutory Option shall terminate. |
|
D. |
Date of Exercise Upon the authorization of the grant of an Option, or at any time thereafter, the Committee may, subject to the provisions of Paragraph C of this Article VII, prescribe the date or dates on which the Option becomes exercisable, and may provide that the Option rights become exercisable in installments over a period of years, and/or upon the attainment of stated goals. Unless the Committee otherwise provides in writing, or unless otherwise required by law (including, if applicable, the Uniformed Services Employment and Reemployment Rights Act), the date or dates on which the Option becomes exercisable shall be tolled during any unpaid leave of absence. It is expressly understood that Options hereunder shall, unless otherwise provided for in writing by the Committee, be granted in contemplation of, and earned by the Participant through the completion of, future employment or service with the Company. |
|
E. |
Medium of Payment The Option price shall be payable upon the exercise of the Option, as set forth in Paragraph I. It shall be payable in such form (permitted by Section 422 of the Code in the case of Incentive Options) as the Committee shall, either by rules promulgated pursuant to the provisions of Article IV of the Plan, or in the particular Award Agreement, provide. |
|
F. |
Termination of Employment |
|
1. |
A Participant who ceases to be an employee or Key Non-Employee of the Company or of an Affiliate for any reason other than death, Disability, or termination "for cause," as defined in subparagraph (2) below, may exercise any Option granted to such Participant, to the extent that the right to purchase Shares thereunder has become exercisable by the date of such termination, but only within three (3) months (or such other period of time as the Committee may determine, with such determination in the case of an Incentive Option being made at the time of the grant of the Option and not exceeding three (3) months) after such date, or, if earlier, within the originally prescribed term of the Option, and subject to the conditions that (i) no Option shall be exercisable after the expiration of the term of the Option and (ii) unless the Committee otherwise provides, no Option that has not become exercisable by the date of such termination shall at any time thereafter be or become exercisable. A Participant’s employment shall not be deemed terminated by reason of a transfer to another employer that is the Company or an Affiliate. |
|
2. |
A Participant who ceases to be an employee or Key Non-Employee of the Company or of an Affiliate "for cause" shall, upon such termination, cease to have any right to exercise any Option. For purposes of this Plan, cause shall be as defined in any employment or other agreement between the Participant and the Company (or an Affiliate) or, if there is no such agreement or definition therein, cause shall be defined to include (i) a Participant’s theft or embezzlement, or attempted theft or embezzlement, of money or property of the Company or of an Affiliate, a Participant’s perpetration or attempted perpetration of fraud, or a Participant’s participation in a fraud or attempted fraud, on the Company or an Affiliate or a Participant’s unauthorized appropriation of, or a Participant’s attempt to misappropriate, any tangible or intangible assets or property of the Company or an Affiliate; (ii) any act or acts by a Participant of disloyalty, dishonesty, misconduct, moral turpitude, or any other act or acts by a Participant injurious to the interest, property, operations, business or reputation of the Company or an Affiliate; (iii) a Participant’s commission of a felony or any other crime the commission of which results in injury to the Company or an Affiliate; (iv) any violation of any restriction on the disclosure or use of confidential information of the Company or an Affiliate, client, customer, prospect, or merger or acquisition target, or on competition with the Company or an Affiliate or any of its businesses as then conducted; or (v) any other action that the Board or the Committee, in their sole discretion, may deem to be sufficiently injurious to the interests of the Company or an Affiliate to constitute substantial cause for termination. A Participant who ceases to be an employee or Key Non-Employee of the Company or an Affiliate for reasons other than cause at a time when grounds for cause exist shall be deemed terminated for cause for purposes of the Plan. The determination of the Committee as to the existence of cause shall be conclusive and binding upon the Participant and the Company. |
|
3. |
Except as the Committee may otherwise expressly provide or determine (consistent with Section 422 of the Code, if applicable), a Participant who is absent from work with the Company or an Affiliate because of temporary disability (any disability other than a Disability), or who is on leave of absence for any purpose permitted by the Company or by any authoritative interpretation (i.e., regulation, ruling, case law, etc.) of Section 422 of the Code, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated his or her employment or relationship with the Company or with an Affiliate. For purposes of Incentive Options, no leave of absence may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract (or the Committee approves such longer leave of absence, in which event the Incentive Option held by the Participant shall be treated for tax purposes as a Nonstatutory Option on the date that is six (6) months following the first day of such leave). |
|
4. |
Paragraph F(1) shall control and fix the rights of a Participant who ceases to be an employee or Key Non-Employee of the Company or of an Affiliate for any reason other than Disability, death, or termination "for cause," and who subsequently becomes Disabled or dies. Nothing in Paragraphs G and H of this Article VII shall be applicable in any such case except that, in the event of such a subsequent Disability or death within the three (3) month period after the termination of employment or, if earlier, within the originally prescribed term of the Option, the Participant or the Participant’s estate or personal representative may exercise the Option permitted by this Paragraph F, in the event of Disability, within twelve (12) months after the date that the Participant ceased to be an employee or Key Non-Employee of the Company or an Affiliate, or, in the event of death, within twelve (12) months after the date of death of such Participant. |
|
G. |
Total and Permanent Disability A Participant who ceases to be an employee or Key Non-Employee of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant to the extent that the right to purchase Shares thereunder has become exercisable on or before the date such Participant becomes Disabled as determined by the Committee. |
A Disabled Participant, or his estate or personal representative, shall exercise such rights, if at all, only within a period of not more than twelve (12) months after the date that the Participant became Disabled as determined by the Committee (notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not become Disabled) or, if earlier, within the originally prescribed term of the Option.
|
H. |
Death In the event that a Participant to whom an Option has been granted ceases to be an employee or Key Non-Employee of the Company or of an Affiliate by reason of such Participant’s death, such Option, to the extent that the right is exercisable but not exercised on the date of death, may be exercised by the Participant’s estate or personal representative within twelve (12) months after the date of death of such Participant or, if earlier, within the originally prescribed term of the Option, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant were alive and had continued to be an employee or Key Non-Employee of the Company or of an Affiliate. |
|
I. |
Exercise of Option and Issuance of Stock Options shall be exercised by giving written notice to the Company. Such written notice shall: (i) be signed by the person exercising the Option, (ii) state the number of Shares with respect to which the Option is being exercised, (iii) contain the warranty required by Paragraph M of this Article VII, if applicable, and (iv) specify a date (other than a Saturday, Sunday or legal holiday) not more than ten (10) days after the date of such written notice, as the date on which the Shares will be purchased. Such tender and conveyance shall take place at the principal office of the Company during ordinary business hours, or at such other hour and place agreed upon by the Company and the person or persons exercising the Option. On the date specified in such written notice (which date may be extended by the Company in order to comply with any blackout limitations, or with laws or regulations that require the Company to take any action with respect to the Option Shares prior to the issuance thereof), the Company shall accept payment for the Option Shares in cash, by bank or certified check, by wire transfer, or by such other means as may be approved by the Committee. In the event of any failure to pay for the number of Shares specified in such written notice on the date set forth therein (or on the extended date as above provided), the right to exercise the Option shall terminate with respect to such number of Shares, but shall continue with respect to the remaining Shares covered by the Option and not yet acquired pursuant thereto. |
If approved in advance by the Committee, and subject to compliance with the Sarbanes-Oxley Act of 2002 or the requirements of any applicable securities laws, payment in full or in part also may be made (i) by delivering Shares, or by attestation of Shares, which have a total Fair Market Value on the date of such delivery equal to the Option price and provided that accepting such Shares, in the sole discretion of the Committee, shall not result in any adverse accounting consequences to the Company; (ii) by the execution and delivery of a note or other evidence of indebtedness (and any security agreement thereunder) satisfactory to the Committee; (iii) by authorizing the Company to retain Shares that otherwise would be issuable upon exercise of the Option having a total Fair Market Value on the date of delivery equal to the Option price; (iv) by the delivery of cash or the extension of credit by a broker-dealer to whom the Participant has submitted a notice of exercise or otherwise indicated an intent to exercise an Option (in accordance with part 220, Chapter II, Title 12 of the Code of Federal Regulations, a so-called "cashless" exercise); or (v) by any combination of the foregoing.
|
J. |
Rights as a Stockholder No Participant to whom an Option has been granted shall have rights as a stockholder with respect to any Shares covered by such Option except as to such Shares as have been registered in the Company’s share register in the name of such Participant upon the due exercise of the Option and tender of the full Option price. |
|
K. |
Assignability and Transferability of Option Unless otherwise permitted by the Code, by Rule 16b-3 of the Exchange Act and by the exemption set forth under Section 12(g) of the Exchange Act (Release No. 34-56887), if applicable, and approved in advance by the Committee, an Option granted to a Participant shall not be transferable by the Participant and shall be exercisable, during the Participant’s lifetime, only by such Participant or, in the event of the Participant’s incapacity, his guardian or legal representative. Except as otherwise permitted herein, such Option shall not be assigned, pledged, or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment, or similar process and any attempted transfer, assignment, pledge, hypothecation or other disposition of any Option or of any rights granted thereunder contrary to the provisions of this Paragraph K, or the levy of any attachment or similar process upon an Option or such rights, shall be null and void. |
|
L. |
Other Provisions The Award Agreement for an Incentive Option shall contain such limitations and restrictions upon the exercise of the Option as shall be necessary in order that such Option qualifies as an "incentive stock option" within the meaning of Section 422 of the Code. Further, the Award Agreements authorized under the Plan shall be subject to such other terms and conditions including, without limitation, restrictions upon the exercise of the Option, as the Committee shall deem advisable and which, in the case of Incentive Options, are not inconsistent with the requirements of Section 422 of the Code. |
VIII.TERMS AND CONDITIONS OF RESTRICTED STOCK
|
A. |
The Committee may from time to time grant an Award in Shares of Common Stock or grant an Award denominated in units of Common Stock, for such consideration as the Committee deems appropriate (which amount may be less than the Fair Market Value of the Common Stock on the date of the Award), and subject to such restrictions and conditions and other terms as the Committee may determine at the time of the Award (including, but not limited to, continuous service with the Company or its Affiliates, achievement of specific business objectives, increases in specified indices, attainment of growth rates, and/or other measurements of Company or Affiliate performance), and subject further to the general provisions of the Plan, the applicable Award Agreement, and the following specific rules. |
|
B. |
If Shares of Restricted Stock are awarded, such Shares cannot be assigned, sold, transferred, pledged, or hypothecated prior to the lapse of the restrictions applicable thereto, and, in no event, absent Committee approval, prior to one (1) year from the date of the Award. |
|
C. |
Restricted Stock issued to a Participant under the Plan shall be governed by an Award Agreement that shall specify whether Shares of Common Stock are awarded to the Participant, or whether the Award shall be one not of Shares of Common Stock but one denominated in units of Common Stock, any consideration required thereto, and such other provisions as the Committee shall determine. |
|
D. |
Subject to the provisions of Paragraphs B and E hereof and the restrictions set forth in the related Award Agreement, the Participant receiving an Award of Shares of Restricted Stock shall thereupon be a stockholder with respect to all of such Shares and shall have the rights of a stockholder with respect to such Shares, including the right to vote such Shares and to receive dividends and other distributions made with respect to such Shares; provided, however, if the lapse of restrictions with respect to the Restricted Stock is tied to the attainment of performance goals, any dividends paid by the Company to the Participant during the performance period shall accrue and shall not be paid to the Participant until and to the extent the performance goals are met with respect to the Award. All Common Stock received by a Participant as the result of any dividend on the Shares of Restricted Stock, or as the result of any stock split, stock distribution, or combination of the Shares affecting Restricted Stock, shall be subject to the restrictions set forth in the related Award Agreement. |
|
E. |
Restricted Stock or units of Restricted Stock awarded to a Participant pursuant to the Plan will be forfeited, and any Shares of Restricted Stock or units of Restricted Stock sold to a Participant pursuant to the Plan may, at the Company’s option, be resold to the Company for an amount equal to the price paid therefor, and in either case, such |
Restricted Stock or units of Restricted Stock shall revert to the Company, if the Company so determines in accordance with Article XV or any other condition set forth in the Award Agreement, or, alternatively, if the Participant’s employment with the Company or its Affiliates terminates, other than for reasons set forth in Article XIV, prior to the expiration of the forfeiture or restriction provisions set forth in the Award Agreement.
|
F. |
The Committee, in its discretion, shall have the power to accelerate the date on which the restrictions contained in the Award Agreement shall lapse with respect to any or all Restricted Stock awarded under the Plan. |
|
G. |
Any Restricted Stock denominated in units of Common Stock, if not previously forfeited, shall be payable in accordance with Article XVI at the time set forth in the Award Agreement. |
|
H. |
The Committee may prescribe such other restrictions, conditions, and terms applicable to Restricted Stock issued to a Participant under the Plan that are neither inconsistent with nor prohibited by the Plan or the Award Agreement, including, without limitation, terms providing for a lapse of the restrictions of this Article or any Award Agreement in installments. |
IX.TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
If deemed by the Committee to be in the best interests of the Company, a Participant may be granted a Right. Each Right shall be granted subject to such restrictions and conditions and other terms as the Committee may specify in the Award Agreement at the time the Right is granted, subject to the general provisions of the Plan, and the following specific rules.
|
A. |
Rights may be granted, if at all, either singly, in combination with another Award, or in tandem with another Award. At the time of grant of a Right, the Committee shall specify the base price of Common Stock to be used in connection with the calculation described in Paragraph B below, provided that the base price shall not be less than one hundred percent (100%) of the Fair Market Value of a Share of Common Stock on the date of grant, unless approved by the stockholders of the Company. |
|
B. |
Upon exercise of a Right, which shall, absent Committee approval, be not less than one (1) year from the date of the grant, the Participant shall be entitled to receive in accordance with Article XVI, and as soon as practicable after exercise, the excess of the Fair Market Value of one Share of Common Stock on the date of exercise over the base price specified in such Right, multiplied by the number of Shares of Common Stock then subject to the Right, or the portion thereof being exercised. |
|
C. |
Notwithstanding anything herein to the contrary, if the Award granted to a Participant allows him or her to elect to cancel all or any portion of an unexercised Option by exercising an additional or tandem Right, then the Option price per Share of Common Stock shall be used as the base price specified in Paragraph A to determine the value of the Right upon such exercise and, in the event of the exercise of such Right, the Company’s obligation with respect to such Option or portion thereof shall be discharged by payment of the Right so exercised. In the event of such a cancellation, the number of Shares as to which such Option was canceled shall become available for use under the Plan, less the number of Shares, if any, received by the Participant upon such cancellation in accordance with Article XVI. |
|
D. |
A Right may be exercised only by the Participant (or, if applicable under Article XIV, by a legatee or legatees of such Right, or by the Participant’s executors, personal representatives, or distributees). |
X.TERMS AND CONDITIONS OF DIVIDEND EQUIVALENTS
A Participant may be granted an Award in the form of Dividend Equivalents. Such an Award shall entitle the Participant to receive cash, Shares, other Awards or other property equal in value to dividends paid with respect to a specified number of Shares. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares, Awards or other investment vehicles, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify.
XI.TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS
The Committee, in its sole discretion, may grant Awards of Shares and/or Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares or on the Fair Market Value thereof ("Other Stock-Based Awards"). Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive, or vest with respect to, one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine the number of Shares to be awarded to a Participant under (or otherwise related to) such Other Stock-Based Awards and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable).
XII.TERMS AND CONDITIONS OF PERFORMANCE AWARDS
|
A. |
A Participant may be granted an Award that is subject to performance conditions specified by the Committee. The Committee may use business criteria and/or other measures of performance as it deems appropriate in establishing any performance conditions (including, but not limited to, continuous service with the Company or its Affiliates, achievement of specific business objectives, increases in specified indices, attainment of growth rates, and/or other measurements of Company or Affiliate performance), and may exercise its discretion to reduce or increase the amounts payable under any Award subject to performance conditions. |
|
B. |
Any Performance Award will be forfeited if the Company so determines in accordance with Article XV or any other condition set forth in the Award Agreement, or, alternatively, if the Participant’s employment with the Company or its Affiliates terminates, other than for reasons set forth in Article XIV, prior to the expiration of the time period over which the performance conditions are to be measured. |
|
C. |
Achievement of performance goals in respect of such Performance Awards shall be measured over such periods as may be specified by the Committee. |
|
D. |
Settlement of Performance Awards may be in cash or Shares, or other property, in the discretion of the Committee. The Committee may, in its discretion, reduce or increase the amount of a settlement otherwise to be made in connection with such Performance Award. |
XIII.TERMS AND CONDITIONS OF CASH AWARDS
|
A. |
The Committee may from time to time authorize the award of cash payments under the Plan to Participants, subject to such restrictions and conditions and other terms as the Committee may determine at the time of authorization (including, but not limited to, continuous service with the Company or its Affiliates, achievement of specific business objectives, increases in specified indices, attainment of growth rates, and/or other measurements of Company or Affiliate performance), and subject to the general provisions of the Plan, the applicable Award Agreement, and the following specific rules. |
|
B. |
Any Cash Award will be forfeited if the Company so determines in accordance with Article XV or any other condition set forth in the Award Agreement, or, alternatively, if the Participant’s employment or engagement with the Company or its Affiliates terminates, other than for reasons set forth in Article XIV, prior to the attainment of any goals set forth in the Award Agreement or prior to the expiration of the forfeiture or restriction provisions set forth in the Award Agreement, whichever is applicable. |
|
C. |
The Committee, in its discretion, shall have the power to change the date on which the restrictions contained in the Award Agreement shall lapse, or the date on which goals are to be measured, with respect to any Cash Award. |
|
D. |
Any Cash Award, if not previously forfeited, shall be payable in accordance with Article XVI on or about March 15 of the fiscal year immediately following the fiscal year during which the goals are attained, and in no event later than December 31 of such year. |
|
E. |
The Committee may prescribe such other restrictions, conditions, and terms applicable to the Cash Awards issued to a Participant under the Plan that are neither inconsistent with nor prohibited by the Plan or the Award Agreement, including, without limitation, terms providing for a lapse of the restrictions, or a measurement of the goals, in installments. |
XIV.TERMINATION OF EMPLOYMENT OR SERVICE
Except as may otherwise be (i) provided in Article VII for Options, (ii) provided for under the Award Agreement, or (iii) permitted pursuant to Paragraphs A through C of this Article XIV (subject to the limitations under the Code for Incentive Options), if the employment or service of a Participant terminates, all unexpired, unpaid, unexercised, or deferred Awards shall be canceled immediately.
|
A. |
Retirement under a Company or Affiliate Retirement Plan. When a Participant’s employment or service terminates as a result of retirement as defined under a Company or Affiliate tax-qualified retirement plan, the Committee may permit Awards to continue in effect beyond the date of retirement in accordance with the applicable Award Agreement, and/or the exercisability and vesting of any Award may be accelerated. |
|
B. |
Termination in the Best Interests of the Company or an Affiliate. When a Participant’s employment or service with the Company or an Affiliate terminates and, in the judgment of the chief executive officer or other senior officer designated by the Committee, the acceleration and/or continuation of outstanding Awards would be in the best interests of the Company, the Committee may (i) authorize, where appropriate, the acceleration and/or continuation of all or any part of Awards granted prior to such termination and/or (ii) permit the exercise, vesting, and payment of such Awards for such period as may be set forth in the applicable Award Agreement, subject to earlier cancellation pursuant to Article XV or at such time as the Committee shall deem the continuation of all or any part of the Participant’s Awards are not in the Company’s or its Affiliate’s best interests. |
|
C. |
Death or Disability of a Participant. |
1.In the event of a Participant’s death, the Participant’s estate or beneficiaries shall have a period up to the earlier of (i) the expiration date specified in the Award Agreement, or (ii) the expiration date specified in Paragraph H of Article VII, within which to receive or exercise any outstanding Awards held by the Participant under such terms as may be specified in the applicable Award Agreement. Rights to any such outstanding Awards shall pass by will or the laws of descent and distribution in the following order: (a) to beneficiaries so designated by the Participant; (b) to a legal representative of the Participant; or (c) to the persons entitled thereto as determined by a court of competent jurisdiction. Awards so passing shall be paid and/or may be exercised at such times and in such manner as if the Participant were living.
2.In the event a Participant is determined by the Company to be Disabled, and subject to the limitations of Paragraph G of Article VII, Awards may be paid to, or exercised by, the Participant, if legally competent, or by a legally designated guardian or other representative if the Participant is legally incompetent by virtue of such Disability.
3.After the death or Disability of a Participant, the Committee may in its sole discretion at any time (i) terminate restrictions in Award Agreements; (ii) accelerate any or all installments and rights; and/or (iii) instruct the Company to pay the total of any accelerated payments in a lump sum to the Participant, the Participant’s estate, beneficiaries or representative, notwithstanding that, in the absence of such termination of restrictions or acceleration of payments, any or all of the payments due under the Awards ultimately might have become payable to other beneficiaries.
XV.CANCELLATION AND RESCISSION OF AWARDS
Unless the Award Agreement specifies otherwise, the Committee may cancel any unexpired, unpaid, unexercised, or deferred Awards at any time if the Participant is not in compliance with the applicable provisions of the Award Agreement, the Plan, or with the following conditions:
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A. |
A Participant shall not breach any restrictive covenant, employment, consulting or other agreement entered into between him or her and the Company or any Affiliates, or render services for any organization or engage directly or indirectly in any business which, in the judgment of the Committee or a senior officer designated by the Committee, is or becomes competitive with the Company, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company. For a Participant whose employment or engagement has terminated, the judgment of the Committee shall be based on the terms of the restrictive covenant agreement, if applicable, or on the Participant’s position and responsibilities while employed or engaged by the Company or its Affiliates, the Participant’s post-employment/engagement responsibilities and position with the other organization or business, the extent of past, current, and potential competition or conflict between the Company and the other organization or business, the effect of the Participant’s assuming the post-employment/engagement position on the Company’s or its Affiliate’s customers, suppliers, investors, and competitors, and such other considerations as are deemed relevant given the applicable facts and circumstances. A Participant may, however, purchase as an investment or otherwise, stock or other securities of any organization or business so long as they are listed upon a recognized securities exchange or traded over-the-counter, and such investment does not represent a substantial investment to the Participant or a greater than one percent (1%) equity interest in the organization or business. |
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A Participant shall not, without prior written authorization from the Company, disclose to anyone outside the Company or its Affiliates, or use in other than the Company’s or Affiliate’s business, any confidential information or materials relating to the business of the Company or its Affiliates, acquired by the Participant either during or after his or her employment or engagement with the Company or its Affiliates. Notwithstanding anything herein to the contrary, each Participant is hereby notified, in accordance with the Defend Trade Secrets Act of 2016, that the Participant will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Participants are further notified that if they file a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Participant may disclose the Company’s trade secrets to his or her attorney and use the trade secret information in the court proceeding if the Participant (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order. |
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A Participant shall disclose promptly and assign to the Company all right, title, and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment or engagement with the Company or an Affiliate, relating in any manner to the actual or anticipated business, research, or development work of the Company or its Affiliates, and shall do anything reasonably necessary to enable the Company or its Affiliates to secure a patent, trademark, copyright, or other protectable interest where appropriate in the United States and in foreign countries. |
Upon exercise, payment, or delivery pursuant to an Award, the Participant shall certify on a form acceptable to the Committee that he or she is in compliance with the terms and conditions of the Plan, including the provisions of Paragraphs A, B and C of this Article XV. Failure to comply with the provisions of Paragraphs A, B and C of this Article XV at any time prior to, or during the one (1) year period after, the date Participant’s employment or engagement with the Company or any Affiliate terminates shall cause any exercise, payment, or delivery which occurred during the two (2) year period prior to the breach of Paragraph A, B or C of this Article XV to be rescinded. The Company shall notify the Participant in writing of any such rescission within one (1) year of the date it acquires actual knowledge of such breach. Within ten (10) days after receiving such a notice from the Company, the Participant shall pay to the Company the amount of any gain realized or payment received as a result of the exercise, payment, or delivery pursuant to the Award. Such payment shall be made either in cash or by returning to the Company the number of Shares of Common Stock that the Participant received in connection with the rescinded exercise, payment, or delivery. The Company’s rights of rescission hereunder shall be in addition to any and all other remedies that may be available to the Company at law or in equity in such event, including, without limitation, the right to request any court of competent jurisdiction to issue a decree of specific performance or issue a temporary and permanent injunction, without the necessity of the Company posting bond or furnishing other security and without proving special damages or irreparable injury, enjoining and restricting the breach, or threatened breach, of any such covenant.
XVI.PAYMENT OF RESTRICTED STOCK, RIGHTS, OTHER STOCK-BASED AWARDS, PERFORMANCE AWARDS AND CASH AWARDS
Payment of Restricted Stock, Rights, Other Stock-Based Awards, Performance Awards and Cash Awards may be made, as the Committee shall specify, in the form of cash, Shares of Common Stock, or combinations thereof; provided, however, that a fractional Share of Common Stock shall be paid in cash equal to the Fair Market Value of the fractional Share of Common Stock at the time of payment.
XVII.WITHHOLDING
Except as otherwise provided by the Committee,
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the Company shall have the power and right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy the federal, state, and local taxes required by law to be withheld with respect to any grant, exercise, or payment made under or as a result of this Plan; and |
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B. |
in the case of payments of Awards, or upon any other taxable event hereunder, a Participant may elect, subject to the approval in advance by the Committee, to satisfy the withholding requirement, if any, in whole or in part, by having the Company withhold Shares of Common Stock that would otherwise be transferred to the Participant having a Fair Market Value, on the date the tax is to be determined, equal to the marginal tax that could be imposed on the transaction; provided, however, that the amount withheld does not exceed the maximum statutory tax rate or such lesser amount as is necessary to avoid liability accounting treatment. All elections shall be made in writing and signed by the Participant. |
XVIII.SAVINGS CLAUSE
This Plan is intended to comply in all respects with applicable law and regulations, including, (i) with respect to those Participants who are officers or directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 of the Securities and Exchange Commission, if applicable, (ii) Section 402 of the Sarbanes-Oxley Act, and (iii) Section 409A of the Code. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on a Participant by Section 409A of the Code or damages for failing to comply with Section 409A of the Code. In case any one or more provisions of this Plan shall be held invalid, illegal, or unenforceable in any respect under applicable law and regulation (including Rule 16b-3 and Section 409A of the Code), the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal, or unenforceable provision shall be deemed null and void; however, to the extent permitted by law, any provision that could be deemed null and void shall first be construed, interpreted, or revised retroactively to permit this Plan to be construed in compliance with all applicable law (including Rule 16b-3 and Section 409A of the Code) so as to foster the intent of this Plan. Notwithstanding anything herein to the contrary, with respect to Participants who are officers and directors for purposes of Section 16 of the Exchange Act, if applicable, and if required to comply with rules promulgated thereunder, no grant of, or Option to purchase, Shares shall permit unrestricted ownership of Shares by the Participant for at least six (6) months from the date of grant or Option, unless the Board determines that the grant of, or Option to purchase, Shares otherwise satisfies the then current Rule 16b-3 requirements.
XIX.ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS
If the outstanding Shares of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another entity by reason of any reorganization, merger, or consolidation, or if a change is made to the Common Stock of the Company by reason of any recapitalization, reclassification, change in par value, stock split, reverse stock split, combination of shares or dividends payable in capital stock, or the like, the Company shall make adjustments to such Awards (including, by way of example and not by way of limitation, the grant of substitute Awards under the Plan or under the plan of such other entity or the suspension of the right to exercise an Award for a specified period of time in connection with a corporate transaction) as it may determine to be appropriate under the circumstances, and, in addition, appropriate adjustments shall be made in the number and kind of shares or securities and in the option price per share or security subject to outstanding Awards under the Plan or under the plan of such successor entity. The foregoing notwithstanding, unless the Committee otherwise determines, no such adjustment shall be made to an Option which shall, within the meaning of Sections 424 and 409A of the Code, as applicable, constitute such a modification, extension, or renewal of an option as to cause it to be considered as the grant of a new option.
Notwithstanding anything herein to the contrary, the Company may, in its sole discretion, accelerate the timing of the exercise provisions of any Award in the event of (i) the adoption of a plan of merger or consolidation under which a majority of the Shares of the Company would be converted into or exercised for cash or securities of any other corporation or entity, or (ii) a sale or exchange of all or any portion of the Company’s assets or equity securities. Alternatively, the Company may, in its sole discretion and without the consent of the Participants, provide for one or more of the following in the event of any merger, consolidation, recapitalization, sale of all or any portion of the Company’s assets or capital stock, including but not limited to a "going-private" transaction: (i) the assumption of the Plan and outstanding Awards by the surviving entity or its parent; (ii) the substitution by the surviving entity or its parent of awards with substantially the same terms for such outstanding Awards; (iii) notice to the holders of vested and exercisable Options and Rights of their ability to exercise vested and exercisable Options and Rights effective contingent upon and immediately prior to such transaction followed by the cancellation of all unexercised Options and Rights (whether or not then vested and exercisable); (iv) settlement of the intrinsic value of the outstanding vested Options and Rights in cash or cash equivalents or equity followed by the cancellation of all Options and Rights (whether or not then vested or exercisable); and (v) cancellation of all unvested or unexercisable Awards; provided, however, that in connection with an assumption or substitution of Awards under subsections (i) or (ii) above, the Awards so assumed or substituted shall continue to vest or become exercisable pursuant to the terms of the original Award, except to the extent such terms are otherwise rendered inoperative. In connection with any such transaction, each Participant shall, to the extent so provided under the definitive transaction agreement, (i) be subject to any earn-outs, purchase price adjustments, holdbacks, escrows and other contingent payments on the terms set forth in the definitive transaction agreement, (ii) be subject to all indemnification and other obligations of the Company’s equityholders in connection with such transaction, (iii) be bound by the appointment of any equityholder representative who shall represent the Company’s equityholders under the definitive transaction agreement as the representative, agent, proxy, and attorney-in-fact for the Participant, with the power and authority to act on the Participant’s behalf with respect to the definitive transaction agreement, and (iv) execute such additional agreements or documentation, if any, as may be required under the definitive transaction agreement to reflect the foregoing or the treatment of the Participant’s Awards, including without limitation, letters of transmittal or cash-out agreements.
Upon a business combination by the Company or any of its Affiliates with any corporation or other entity through the adoption of a plan of merger or consolidation or a share exchange or through the purchase of all or substantially all of the capital stock or assets of such other corporation or entity, the Board or the Committee may, in its sole discretion, grant Options pursuant hereto to all or any persons who, on the effective date of such transaction, hold outstanding options to purchase securities of such other corporation or entity and who, on and after the effective date of such transaction, will become employees or directors of, or consultants or advisors to, the Company or its Affiliates. The number of Shares subject to such substitute Options shall be determined in accordance with the terms of the transaction by which the business combination is effectuated. Notwithstanding the other provisions of this Plan, the other terms of such substitute Options shall be substantially the same as or economically equivalent to the terms of the options for which such Options are substituted, all as determined by the Board or by the Committee, as the case may be. Upon the grant of substitute Options pursuant hereto, the options to purchase securities of such other corporation or entity for which such Options are substituted shall be canceled immediately.
XX.DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in connection with a transaction to which Article XIX is applicable, all Awards granted hereunder shall terminate and become null and void; provided, however, that if the rights of a Participant under the applicable Award have not otherwise terminated and expired, the Participant may, if the Committee, in its sole discretion, so permits, have the right immediately prior to such dissolution or liquidation to exercise any Award granted hereunder to the extent that the right thereunder has become exercisable as of the date immediately prior to such dissolution or liquidation.
XXI.TERMINATION OF THE PLAN
The Plan shall terminate ten (10) years from the earlier of the date of its adoption by the Board or the date of its approval by the stockholders. The Plan may be terminated at an earlier date by vote of the stockholders or the Board; provided, however, that any such earlier termination shall not affect any Award Agreements executed prior to the effective date of such termination. Notwithstanding anything in this Plan to the contrary, any Options granted prior to the effective date of the Plan’s termination may be exercised until the earlier of (i) the date set forth in the Award Agreement, or (ii) in the case of an Incentive Option, ten (10) years from the date the Option is granted; and the provisions of the Plan with respect to the full and final authority of the Committee under the Plan shall continue to control.
XXII.AMENDMENT OF THE PLAN AND AWARDS
The Plan may be amended by the Board and such amendment shall become effective upon adoption by the Board; provided, however, that any amendment shall be subject to the approval of the stockholders of the Company at or before the next annual meeting of the stockholders of the Company if such stockholder approval is required by the Code, any federal or state law or regulation, the rules of any stock exchange or automated quotation system on which the Shares may be listed or quoted, or if the Board, in its discretion, determines to submit such changes to the Plan to its stockholders for approval. Further, no amendment to the Plan which reduces the Option exercise price below that provided for in Article VII of the Plan shall be effective unless it is approved by the stockholders of the Company.
The Board may amend the terms of any Award theretofore granted, prospectively or retroactively, but no such amendment shall (a) materially impair the rights of any Participant without his or her consent or (b) except for adjustments made pursuant to Article XIX, reduce the exercise price of outstanding Options or Rights or cancel or amend outstanding Options or Rights for the purpose of repricing, replacing, or regranting such Options or Rights with an exercise price that is less than the exercise price of the original Options or Rights or cancel or amend outstanding Options or Rights with an exercise price that is greater than the Fair Market Value of a Share for the purpose of exchanging such Options or Rights for cash or any other Awards without stockholder approval. Notwithstanding anything herein to the contrary, the Board may amend the terms of any Award theretofore granted if the Board, in its discretion, determines that such amendment is necessary to comply with the requirements of Section 409A of the Code, the rules of any stock exchange or automated quotation systems on which the Shares may be listed or traded, or changes in tax or other applicable laws or regulatory requirements.
XXIII.EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an Affiliate from terminating the employment of a Participant, nor to prevent a Participant from terminating the Participant’s employment with the Company or an Affiliate, unless otherwise limited by an agreement between the Company (or an Affiliate) and the Participant.
XXIV.INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as directors or as members of the Committee, the members of the Committee shall, to the extent permitted by the laws of the State of Delaware, be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and reasonably incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken by them as directors or members of the Committee and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Board) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that the director or Committee member is liable for gross negligence or willful misconduct in the performance of his or her duties. To receive such indemnification, a director or Committee member must first offer in writing to the Company the opportunity, at its own expense, to defend any such action, suit or proceeding.
XXV.UNFUNDED PLAN
Insofar as it provides for payments in cash in accordance with Article XVI, or otherwise, the Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants who are entitled to cash, Common Stock, or rights thereto under the Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock, or rights thereto, nor shall the Plan be construed as providing for such segregation, nor shall the Company, the Board, or the Committee be deemed to be a trustee of any cash, Common Stock, or rights thereto to be granted under the Plan. Any liability of the Company to any Participant with respect to a grant of cash, Common Stock, or rights thereto under the Plan shall be based solely upon any contractual obligations that may be created by the Plan and any Award Agreement; no such obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by the Plan.
XXVI.MITIGATION OF EXCISE TAX
Unless otherwise provided for in the Award Agreement or in any other agreement between the Company (or an Affiliate) and the Participant, if any payment or right accruing to a Participant under this Plan (without the application of this Article XXVI), either alone or together with other payments or rights accruing to the Participant from the Company or an Affiliate, would constitute a "parachute payment" (as defined in Section 280G of the Code and regulations thereunder), such payment or right shall be reduced to the largest amount or greatest right that will result in no portion of the amount payable or right accruing under the Plan being subject to an excise tax under Section 4999 of the Code or being disallowed as a deduction under Section 280G of the Code. The determination of whether any reduction in the rights or payments under this Plan is necessary shall be made by the Company. The Participant shall cooperate in good faith with the Company in making such determination and providing any necessary information for this purpose.
XXVII.EFFECTIVE DATE
This Plan shall become effective upon adoption by the Board, provided that the adoption of the Plan shall be subject to the approval of the stockholders of the Company if such stockholder approval is required by the Code, any federal or state law or regulations, the rules of any stock exchange or automated quotation system on which the Shares may be listed or quoted, or if the Board, in its discretion, desires to submit the Plan to its stockholders for approval.
XXVIII.RECOVERY
If the Company is or becomes subject to regulations or listing standards adopted pursuant to Section 10D of the Exchange Act, then each Award granted pursuant to the Plan, each Share acquired pursuant to the Plan, and all proceeds in respect of any such Awards or Shares shall be subject to any "clawback" or similar policy of the Company adopted pursuant to such regulations or listing standards that may be in effect from time to time, whether before or after the grant, exercise or settlement of such Awards or Shares.
XXIX.FOREIGN JURISDICTIONS
To the extent the Committee determines that the restrictions imposed by the Plan preclude the achievement of the material purposes of the Plan in jurisdictions outside the United States of America, the Committee in its discretion may modify those restrictions as it determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States of America.
XXX.DEFERRAL OF AWARDS
At the time of the grant of an Award, the Company may permit a Participant to elect to:
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have cash that otherwise would be paid to such Participant as a result of the exercise of an Award credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books; |
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B. |
have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Award converted into an equal number of Rights; or |
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have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Award converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of the Shares as of the date on which they otherwise would have been delivered to such Participant. |
A deferred compensation account established under this Article XXX may be credited with interest or other forms of investment return, as determined by the Committee and shall be subject to compliance with Section 409A of the Code. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Article XXX.
XXXI.GOVERNING LAW
This Plan shall be governed by the laws of the State of Delaware and construed in accordance therewith.
XXXII.STATUTE OF LIMITATIONS
If a Participant believes that the Committee has not followed his or her directions, or the Participant believes that he or she has a claim against the Plan, the Company or the Committee under the terms of the Plan and/or any applicable Award Agreement, the Participant must file a written claim with the Committee within one (1) year after the direction was allegedly made. The Committee will furnish each Participant with a statement of his or her vested Options/shares of Stock at least annually. The Participant should review this statement for accuracy.
Adopted this 19th day of December, 2019.
EXHIBIT 19.1
OBLONG, INC. INSIDER TRADING POLICY
AS AMENDED EFFECTIVE January 1, 2021
OBLONG, INC. INSIDER TRADING POLICY
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Purpose: |
This Insider Trading Policy (the “Policy”) provides guidelines with respect to transactions in the securities of Oblong, Inc. (“Oblong”). This Policy applies to directors, officers and employees at all levels of Oblong and of each domestic and foreign subsidiary, partnership, venture or other business association that is effectively controlled by Oblong directly or indirectly (together, the “Company”). Oblong may also determine that other persons should be subject to this Policy, such as contractors or consultants who have access to Material Nonpublic Information. This Policy also applies to family members, other members of a person’s household and entities controlled by a person covered by this Policy, as described below.
The Company and its directors, officers and employees worldwide must act in a manner that does not disclose financial material or other material information that has not been publicly disclosed. Failure to do so breaches our integrity value. Also, in the United States and several other countries, insider trading violates laws that impose strict penalties upon both companies and individuals, including both financial sanctions and possibly imprisonment.
Maintaining the confidence of stockholders and the public markets is important. The principle underlying Oblong’s policy is fairness in dealings with other persons, which requires that employees of Oblong and its subsidiaries do not take personal advantage of undisclosed information to the detriment of others who do not have the information.
It is important that you understand the breadth of activities that constitute illegal insider trading and the consequences, which can be severe. Both the U.S. Securities and Exchange Commission (“SEC”) and the NYSE MKT investigate and are very effective at detecting insider trading. The SEC pursues insider trading violations vigorously. Cases have been successfully prosecuted against trading by employees through foreign accounts, trading by family members and friends, and trading involving only a small number of shares.
Punishment for insider trading violations is severe, and could include significant fines and imprisonment. While the regulatory authorities concentrate their efforts on the individuals who trade, or who tip inside information to others who trade, the federal securities laws also impose potential liability on companies and other “controlling persons” if they fail to take reasonable steps to prevent insider trading by Company personnel.
This Policy is designed to prevent insider trading or allegations of insider trading, and to protect the Company’s reputation for integrity and ethical conduct. It is your obligation to understand and comply with this Policy. Should you have any questions regarding this Policy, please contact David Clark, the Company’s Chief Financial Officer (“CFO”), at (303) 640-3822 or dclark@Oblong.com.
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Transactions Subject to this Policy: |
This Policy applies to transactions in Oblong’s securities (collectively referred to in this Policy as “Company Securities”), including Oblong’s common stock, options to purchase common stock, or any other type of securities that the Company may issue, including (but not limited to) preferred stock, convertible debentures and warrants, as well as derivative securities that are not issued by the Company, such as exchange-traded put or call options or swaps relating to the Company’s securities.
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Individual Responsibility: |
Persons subject to this Policy have ethical and legal obligations to maintain Oblong’s confidential information and to not engage in transactions in Company Securities while in possession of Material Nonpublic Information. Each individual is responsible for making sure that he or she complies with this Policy, and that any family member, household member or entity whose transactions are subject to this Policy, as discussed below, also comply with this Policy. In all cases, the responsibility for determining whether an individual is in possession of Material Nonpublic Information rests with that individual, and any action on the part of the Company, the Compliance Officer or any other employee or director pursuant to this Policy (or otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws.
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Administration of the Policy: |
The Company has appointed Oblong’s Chief Financial Officer as the Compliance Officer for this Policy. The Compliance Officer (or any other person designated by this Policy or by the Compliance Officer) shall be responsible for administration of this Policy. All determinations and interpretations by the Compliance Officer shall be final and not subject to further review. In certain circumstances, the Compliance Officer may consult with the Company’s outside legal counsel to assist in making in any determinations under this Policy.
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Statement of Policy: |
It is the policy of the Company that no director, officer or other employee of the Company (or any other person designated by this Policy or by the Compliance Officer as subject to this Policy) who is aware of Material Nonpublic Information relating to the Company may, directly, or indirectly through family members or other persons or entities:
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engage in transactions in Company Securities except in accordance with the terms of this Policy; |
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recommend the purchase or sale of any Company Securities; |
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disclose Material Nonpublic Information to persons within the Company whose jobs do not require them to have that information, or outside of the Company to other persons, including, but not limited to, family, friends, business associates, investors and expert consulting firms, unless any such disclosure is made in accordance with the Company’s policies regarding the protection or authorized external disclosure of information regarding the Company; or |
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assist any other person or entity engaged in the above activities. |
In addition, it is the policy of Oblong that no director, officer or other employee of the Company (or any other person designated as subject to this Policy) who, in the course of working for the Company, learns of Material Nonpublic Information about a company with which the Company does business, including any customer or supplier of the Company, may trade in such company’s securities until such information becomes public or is no longer material.
There are no exceptions to this Policy, except as specifically noted herein. Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure), or small transactions, are not excepted from this Policy. The securities laws do not recognize any mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct.
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Definition of Material Nonpublic Information: |
“Material Information” means:
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information that is likely to be viewed by a reasonable investor as significant in deciding to buy or sell securities; |
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information that one could assume would have a direct impact on the market price of Company Securities (positive or negative); or |
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information that if publicly disclosed would be expected to significantly alter the total mix of information in the marketplace about the Company. |
There is no bright-line standard for assessing materiality; rather, materiality is based on an assessment of all of the facts and circumstances, and is often evaluated by enforcement authorities with the benefit of hindsight. While it is not possible to define all categories of material information, some examples of information that ordinarily would be regarding as material are:
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any information about financial results, significant changes in financial results and/or financial condition, and financial projections; |
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significant changes in the Company’s prospects; |
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major new contracts, or the loss thereof; |
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changes in management or control; |
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liquidity problems; |
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significant increases or decreases in the amount of outstanding indebtedness or extraordinary borrowings; |
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offerings of Company securities; |
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material grants of equity awards or material increases in compensation or bonus payments to directors or officers; |
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proposals, plans or agreements involving mergers, acquisitions, divestitures, recapitalizations, strategic alliances, licensing arrangements, or purchases or sales of substantial assets; |
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dividends and share splits; |
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significant litigation or governmental investigation or other government action; |
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changes in Oblong’s certifying accountants; or |
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any other information that might have a significant impact on the market value of Company Securities. |
“Material Nonpublic Information” is any Material Information that has not been publicly disclosed. The Company may make public disclosure by issuing a press release through a major news service, making a public filing with the SEC or other regulatory agency, or otherwise making information widely available to the public. Once the information has been publicly disclosed and has been available for a period of time (generally two business days) sufficient to allow the market to understand and react to the information, it is no longer Material Nonpublic Information.
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Transactions by Family Members and Others: |
This Policy applies to your family members who reside with you (including a spouse, a child, a child away at college, stepchildren, grandchildren, parents, stepparents, grandparents, siblings, and in-laws), anyone else who lives in your household, and any family members who do not live in your household but whose transactions in Company Securities are directed by you or are subject to your influence or control, such as parents or children who consult with you before they trade in Company Securities (collectively referred to as “Family Members”). You are responsible for the transactions of these other persons and therefore should make them aware of the need to confer with you before they trade in Company Securities, and you should treat all such transactions for the purposes of this Policy and applicable securities laws as if the transactions were for your own account. This Policy does not, however, apply to personal securities transactions of Family Members where the purchase or sale decision is made by a third party not controlled by, influenced by or related to you or your Family Members.
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Transactions by Entities that You Influence or Control: |
This Policy applies to any entities that you influence or control, including any corporations, partnerships or trusts (collectively referred to as “Controlled Entities”), and transactions by these Controlled Entities should be treated for the purposes of this Policy and applicable securities laws as if they were for your own account.
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Transactions Under Company Plans: |
Restricted Stock Awards. This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding right pursuant to which you elect to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. The Policy does apply, however, to any subsequent market sale of vested restricted stock.
401(k) Plan. This Policy does not apply to purchases of Company Securities in the Company’s 401(k) plan resulting from your periodic contribution of money to the plan pursuant to your payroll deduction election. Notwithstanding the foregoing, if you are in possession of Material Nonpublic Information you may not instruct your broker, plan administrator or any other similar individual to make:
(a) an election to increase or decrease the percentage of your periodic contributions that will be allocated to Company Securities; (b) an election to make an intra-plan transfer of an existing account balance into or out of Company Securities; (c) an election to borrow money against your 401(k) plan account if the loan will result in a liquidation of some or all of your Company Securities; and (d) an election to pre-pay a plan loan if the prepayment will result in allocation of loan proceeds to Company Securities.
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Transactions Not Involving a Purchase or Sale: |
A bona fide gift of securities are not transactions subject to this Policy, unless the person making the gift believes the recipient may have knowledge of Material Nonpublic Information and intends to sell Company Securities as a result of such information. Further, transactions in mutual funds that are invested in Company Securities are not transactions subject to this Policy.
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11. |
Special and Prohibited Transactions: |
The Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate conduct if the persons subject to this Policy engage in certain types of transactions. It therefore is the Company’s policy that any persons covered by this Policy may not engage in any of the following transactions, or should otherwise consider the Company’s preferences as described below:
Short-Term Trading. Short-term trading of Company Securities may be distracting to the person and may unduly focus the person on the Company’s short-term stock market performance instead of the Company’s long-term business objectives. For these reasons, any director, officer or other employee of the Company who purchases Company Securities in the open market may not sell any Company Securities of the same class during the six months following the purchase (or vice versa).
Short Sales. Short sales of Company Securities (i.e., the sale of a security that the seller does not own) may evidence an expectation on the part of the seller that the securities will decline in value, and therefore have the potential to signal to the market that the seller lacks confidence in the Company’s prospects. Short sales may reduce a seller’s incentive to seek to improve the Company’s performance. In addition, Section 16(c) of the Exchange Act prohibits officers and directors from engaging in short sales. For these reasons, short sales of Company Securities are prohibited. (Short sales arising from certain types of hedging transactions are governed by the paragraph below captioned “Hedging Transactions.”)
Publicly-Traded Options. Given the relatively short term of publicly-traded options, transactions in options may create the appearance that a director, officer or employee is trading based on Material Nonpublic Information and focus a director’s, officer’s or other employee’s attention on short-term performance at the expense of the Company’s long-term objectives. Accordingly, transactions in put options, call options or other derivative securities, on an exchange or in any other organized market, are prohibited by this Policy. (Option positions arising from certain types of hedging transactions are governed by the paragraph below captioned “Hedging Transactions”.)
Hedging Transactions. Hedging or monetization transactions can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. Such hedging transactions may permit a director, officer or employee to continue to own Company Securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership. When that occurs, the director, officer or employee may no longer have the same objectives as the Company’s other stockholders. Therefore, the Company strongly discourages you from engaging in such transactions. Any person wishing to enter into such an arrangement must first submit the proposed transaction for approval by the Compliance Officer. Any request for pre-clearance of a hedging or similar arrangement must be submitted to the Compliance Officer at least two weeks prior to the proposed execution of documents evidencing the proposed transaction and must set forth a justification for the proposed transaction.
Margin/Pledge of Stock. In addition, because purchasing Company Securities on margin can raise potential problems under the U.S. securities laws, it is strongly recommended those individuals subject to this Policy consult with their own counsel or Oblong’s outside legal counsel before purchasing or selling Company Securities in margin accounts.
|
12. |
Additional Procedures: |
The Company has established additional procedures in order to assist the Company in the administration of this Policy, to facilitate compliance with laws prohibiting insider trading while in possession of Material Nonpublic Information, and to avoid the appearance of any impropriety. These additional procedures are applicable only to those individuals described below.
Pre-Clearance Procedures. Members of the Board of Directors, the Company’s Section 16 officers, the Company’s vice presidents and officers of any Company Subsidiary, other persons designated by the Compliance Officer from time to time, and the Family Members and Controlled Entities of all such persons, are subject to the pre-clearance procedures set forth herein. These persons may not engage in any transaction in Company Securities without first obtaining pre-clearance of the transaction from the Compliance Officer.
A request for pre-clearance via a Form B (attached as Exhibit A) should be submitted to the Compliance Officer at least two business days in advance of the proposed transaction. The Compliance Officer is under no obligation to approve a transaction submitted for pre-clearance, and may determine not to permit the transaction. If a person seeks pre-clearance and permission to engage in the transaction is denied, then he or she should refrain from initiating any transaction in Company Securities, and should not inform any other person of the restriction. When a request for pre-clearance is made, the requestor should carefully consider whether he or she may be aware of any Material Nonpublic Information about the Company, and should describe fully those circumstances to the Compliance Officer. The requestor should also indicate whether he or she has effected any non-exempt “opposite-way” transactions within the past six months, and, for those subject to Section 16 reporting requirements, should be prepared to report the proposed transaction on an appropriate Form 4 or Form 5. The requestor should also be prepared to comply with SEC Rule 144 and file Form 144, if necessary, at the time of any sale. Any transactions approved by the Compliance Officer must be completed within five days of receiving such pre-clearance approval; otherwise the request must be resubmitted to the Compliance Officer.
Quarterly Trading Restrictions. The persons designated by the Compliance Officer as subject to this restriction, as well as their Family Members or Controlled Entities, may not conduct any transactions involving Company Securities (other than as specified by this Policy), during a “Blackout Period” which begins ten days prior to the end of each fiscal quarter and ends two full trading days after the Company’s financial results for that quarter, or for the full year with respect to the fourth quarter, have been announced publicly. For example, if the Company issued its quarterly earnings release (or filed its 10-Q if no earnings release is issued) on a Thursday, an individual may begin trading in Company Securities the following Tuesday. Under certain very limited circumstances, a person subject to this restriction may be permitted to trade during a Blackout Period, but only if the Compliance Officer and the Company’s outside securities legal counsel concludes that the person does not in fact possess Material Nonpublic Information. Persons wishing to trade during a Blackout Period must contact the Compliance Officer for approval at least two business days in advance of any proposed transaction involving Company Securities.
Event-Specific Trading Restriction Periods. From time to time, an event may occur that is material to the Company and is known by only certain directors, officers and/or employees. So long as the event remains material and nonpublic, the persons designated by the Compliance Officer may not trade Company Securities. In that situation, the Compliance Officer will notify these persons that they should not trade in Company Securities.
In addition, the Company’s financial results may be sufficiently material in a particular fiscal quarter that, in the judgment of the Compliance Officer, designated persons should refrain from trading in Company Securities even sooner than the typical Blackout Period described above. In that situation, the Compliance Officer may notify these persons that they should not trade in Company Securities,
without disclosing the reason for the restriction. The existence of an event-specific trading restriction period or extension of a Blackout Period will not be announced to the Company as a whole, and should not be communicated to any other person. Even if the Compliance Officer has not designated you as a person who should not trade due to an event-specific restriction, you should not trade while aware of Material Nonpublic Information. Exceptions will not be granted during an event-specific trading restriction period.
Exceptions. The quarterly trading restrictions and event-driven trading restrictions do not apply to those transactions to which this Policy does not apply, as described above under the headings “Transactions Under Company Plans” and “Transactions Not Involving a Purchase or Sale.” Further, the requirement for pre-clearance, the quarterly trading restrictions and event-driven trading restrictions do not apply to transactions conducted pursuant to approved Rule 10b5-1 plans, described under the heading “Rule 10b5-1 Plans.”
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13. |
Rule 10b5-1 Plans: |
Rule 10b5-1 under the Exchange Act provides a defense from insider trading liability under Rule 10b-5. In order to be eligible to rely on this defense, a person subject to this Policy must enter into a Rule 10b5-1 plan for transactions in Company Securities that meets certain conditions specified in Rule 10b5- 1 (a “Rule 10b5-1 Plan”). If the plan meets the requirements of Rule 10b5-1, Company Securities may be purchased or sold without regard to certain insider trading restrictions. To comply with the Policy, a Rule 10b5-1 Plan must be approved by the Compliance Officer and meet the requirements of Rule 10b5-1.
In general, a Rule 10b5-1 Plan must be entered into at a time when the person entering into the plan is not aware of Material Nonpublic Information. Once the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these matters to an independent third party.
Any Rule 10b5-1 Plan must be submitted for approval ten days prior to the entry into the Rule 10b5-1 Plan. No further pre-approval of transactions conducted pursuant to the Rule 10b5-1 Plan will be required.
Oblong encourages its executive officers to utilize a Rule 10b5-1 Plan, if appropriate. Oblong reserves the right to require that additional provisions be included in a Rule 10b5-1 Plan with the objective of complying with Rule 10b5-1. Oblong may make public disclosures regarding the existence or terms of a Rule 10b5-1 Plan if Oblong deems it desirable, and may establish procedures with third parties to ensure timely compliance with Section 16 requirements. Oblong also reserves the right to require that transactions under a Rule 10b5-1 Plan be suspended during periods when Oblong believes that legal, contractual or regulatory restrictions could prohibit such transactions or make them undesirable. These might include periods during which certain Oblong’s executives have agreed with underwriters that they will not sell Company Securities for specified periods before and after a public offering, or periods in proximity to a public offering during which SEC Regulation M prohibits purchases by affiliates.
Oblong Insiders are encouraged to consult with their financial, tax and legal advisors to help ensure that a Rule 10b5-1 Plan meets their objectives.
|
14. |
Post-Termination Transactions |
Upon termination of services to the Company, directors and executive officers will have continuing obligations under the federal securities laws, which arise primarily under Section 16 of the Exchange Act, and Rule 144 of the Securities Act of 1933, as amended, as well as the general application of Rule 10b-5 under the Exchange Act with respect to trading in Company Securities while in possession of Material Nonpublic Information.
|
15. |
Consequences of Violations: |
The purchase or sale of securities while aware of Material Nonpublic Information, or the disclosure of Material Nonpublic Information to others who then trade in Company Securities, is prohibited by the federal and state laws. Insider trading violations are pursued vigorously by the SEC, U.S. Attorneys and state enforcement authorities as well as the laws of foreign jurisdictions. Punishment for insider trading violations is severe, and could include significant fines and imprisonment. While the regulatory authorities concentrate their efforts on the individuals who trade, or who tip inside information to others who trade, the federal securities laws also impose potential liability on companies and other “controlling persons” if they fail to take reasonable steps to prevent insider trading by company personnel.
In addition, an individual’s failure to comply with this Policy may subject the individual to Company imposed sanctions, including dismissal for cause, whether or not the employee’s failure to comply results in a violation of law. Needless to say, a violation of law, or even an SEC investigation that does not result in prosecution, can tarnish a person’s reputation and irreparably damage a career.
Any person who has a question about this Policy or its application to any proposed transaction may obtain additional guidance from the Compliance Officer, who can be reached by telephone at (720) 726-8333 or by e-mail at dclark@oblong.com.
CERTIFICATION
I certify that:
|
1. |
I have read and understand the Company’s Insider Trading Policy (the “Policy”). I understand that the Compliance Officer is available to answer any questions I have regarding the Policy. |
|
2. |
Since the date the Policy became effective, or such shorter period of time that I have been an employee of the Company, I have complied with the Policy. |
|
3. |
I will continue to comply with the Policy for as long as I am subject to the Policy. |
Print name:______________________
Signature:_______________________
Date:___________________________
EXHIBIT A
FORM B
Request for Approval to Engage
in Transactions in Securities of OBLONG, Inc.
|
To: _____________________________________ |
|
From: ___________________________________ |
|
Print Name |
| ________________________________________ |
|
Signature |
|
Date: ____________________________ |
|
Time:____________________________ |
I hereby request approval for myself (or a member of my immediate family or household) to execute the following transaction relating to securities of Oblong, Inc.:
Type of Transaction (circle one):
PURCHASE
SALE
EXERCISE OPTION (AND HOLD SHARES)
EXERCISE OPTION (AND SELL SHARES) OTHER
Securities Involved in Transaction:
Number of ordinary shares:______________________
Number of registered shares represented by option: ________________
Other (please explain): _______________________________________
Beneficial Ownership (if not applicable, please write “N/A”)
Name of beneficial owner if other than yourself:
Relationship of beneficial owner to yourself:
THIS AUTHORIZATION IS VALID FOR ONLY 5 DAYS AFTER THE TIME OF APPROVAL.
|
Approved by:_______________________ |
|
Name:_____________________________ |
|
Date: _____________________________ |
|
Time: _____________________________ |
EXHIBIT 21.1
SUBSIDIARIES OF OBLONG, INC.
The following is a list of subsidiaries of Oblong, Inc.
|
Company |
Jurisdiction of Organization |
||||
|
GP Communications, LLC |
Delaware |
||||
|
Oblong Industries, Inc. |
Delaware |
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements of TaoWeave, Inc. (formerly Oblong, Inc.) on Form S‐3 (Nos. 333-261480, 333-251543, 333-192129,333-272094, 333-276322, 333-282515, and 333-288217) and Form S‐8 (Nos. 333-239802, 333-226719, 333-196474, and 333-150436) of our report dated March 20, 2026, on our audits of the financial statements as of December 31, 2025 and 2024 and for each of the years then ended, which report is included in this Annual Report on Form 10-K to be filed on or about March 20, 2026.
/s/ EisnerAmper LLP
EISNERAMPER LLP
Iselin, New Jersey
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Peter Holst, certify that:
|
1. |
I have reviewed this annual report on Form 10-K of Oblong, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: March 20, 2026
| /s/ Peter Holst | |
| Peter Holst | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, David Clark, certify that:
|
1. |
I have reviewed this annual report on Form 10-K of Oblong, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: March 20, 2026
| /s/ David Clark | |
| David Clark | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
The undersigned officers of Oblong, Inc., a Delaware corporation (the “Company”), do hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
1) |
The accompanying Annual Report on Form 10-K of the Company for the year ended December 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
|
2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: March 20, 2026
| /s/ Peter Holst | |
| Peter Holst | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| /s/ David Clark | |
| David Clark | |
| Chief Financial Officer | |
| (Principal Financial Officer) |