TWAV 10-Q
TaoWeave, Inc. (TWAV)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
or
Commission file number:
TAOWEAVE, INC.
(Exact Name of Registrant as Specified in its Charter)
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| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices, including Zip Code)
(
(Registrant’s Telephone Number, including Area Code)
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| | | |
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| | Smaller reporting company |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares outstanding of the registrant’s common stock as of August 5, 2026, was
Index
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q (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 and intentions and other factors that are discussed under the section entitled “Part I. Item 1A. Risk Factors” and in our consolidated financial statements and the footnotes thereto for the fiscal year ended December 31, 2025, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on March 20, 2026, as well as under “Part II. Item 1A. Risk Factors” in this report. 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.
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:
| • |
our ability to raise capital in one or more debt and/or equity offerings in order to fund operations or any growth initiatives, and our ability to continue as a going concern; |
| • |
the impact of conversions of our Series F Preferred Stock to Common Stock, exercises of the Series F Preferred Stock warrants and Common Warrants, Pre-Funded Warrants, and sales of the underlying conversion shares; |
| • |
the rewards and costs of staking transactions on blockchains; |
| • |
fluctuations in the price of our digital assets; |
| • | potential decreases in the value of our digital assets and rewards; |
| • | risks related to the loss or theft of private withdrawal keys, resulting in the complete loss of digital assets and rewards; |
| • |
the ongoing performance of our Managed Services business; |
| • |
our ability to grow revenue; |
| • |
risks related to the concentration of our customers and the degree to which our sales, now or in the future, depend on certain large client relationships; |
| • |
increases in labor costs; |
| • |
our ability to attract and retain highly skilled personnel; |
| • |
our reliance on open-source software and technology; |
| • | use of cash related to potential repurchases under our Stock Repurchase Program; |
| • |
the costs, disruption, and diversion of management’s attention associated with campaigns commenced by activist investors; and |
| • |
our management’s ability to execute its plans, strategies, and objectives for future operations. |
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except shares, par value, and stated value)
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Digital assets | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Intangible assets, net | ||||||||
| SAFE investment | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 13) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock Series F, convertible; $ par value; $ stated value; shares authorized, shares issued and outstanding as of June 30, 2026 and December 31, 2025 | ||||||||
| Common stock; $ par value; shares authorized, shares issued, and outstanding as of June 30, 2026 and December 31, 2025 | ||||||||
| Treasury Stock, common shares | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expense) income, net | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Realized loss on digital assets, net | ( | ) | ( | ) | ||||||||||||
| Unrealized (loss) gain on digital assets, net | ( | ) | ( | ) | ||||||||||||
| Total other (expense) income, net | ( | ) | ( | ) | ||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Preferred stock dividends | ||||||||||||||||
| 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 condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
Three Months Ended June 30, 2026
(In thousands, except shares data)
(Unaudited)
| 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, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Net income | — | — | — | |||||||||||||||||||||||||||||||||
| Series F Preferred Stock dividends | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance on March 31, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Closing warrant issuance | — | — | — | |||||||||||||||||||||||||||||||||
| Pre-Funded warrant exercise | ||||||||||||||||||||||||||||||||||||
| Series F Preferred Stock dividends | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance on June 30, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
TAOWEAVE, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
Three Months Ended June 30, 2025
(In thousands, except shares data)
(Unaudited)
| 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, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
| Common warrant exercise, net of fees | — | — | — | — | ||||||||||||||||||||||||||||||||
| Series F Preferred Stock dividends | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance on March 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Proceeds from Private Placement, net of fees | — | — | — | |||||||||||||||||||||||||||||||||
| Advisor warrant issuance | — | — | — | |||||||||||||||||||||||||||||||||
| Common warrant exercise, net of fees | ||||||||||||||||||||||||||||||||||||
| Series F Preferred Stock conversions | ( | ) | ||||||||||||||||||||||||||||||||||
| Series F Preferred Stock dividends | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance on June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Bad debt recovery | ( | ) | ||||||
| Amortization expense | ||||||||
| Stock-based expense | ||||||||
| Non-cash revenue from digital assets | ( | ) | ( | ) | ||||
| Unrealized net loss (gain) on digital assets | ( | ) | ||||||
| Realized net loss on sale of digital assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of digital assets | ( | ) | ( | ) | ||||
| Proceeds from the sale of digital assets | ||||||||
| Investment in Manako Labs, Ltd. | ( | ) | ||||||
| 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 | ||||||||
| Net cash provided by financing activities | ||||||||
| (Decrease) increase in cash | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| 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 | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and Six Months Ended June 30, 2026
(Unaudited)
Note 1 - Business Description and Significant Accounting Policies
Business Description
TaoWeave, Inc. ("TaoWeave" or the "Company") was formed as a Delaware corporation in May 2000.
TaoWeave is focused on the Bittensor ecosystem, a decentralized, open-source protocol that coordinates the development and deployment of artificial intelligence (“AI”) models. The Company's principal asset is TAO, Bittensor’s native cryptocurrency, which the Company accumulates and stakes on the Bittensor network to generate yield in the form of additional TAO tokens. The Company's goal is to provide public-market investors with economic exposure to the Bittensor ecosystem. The Company also operates legacy businesses including managed services for network solutions and video collaboration and collaboration products.
Basis of Presentation
The Company’s fiscal year ends on December 31 of each calendar year. The accompanying interim Condensed Consolidated Financial Statements are unaudited and have been prepared on substantially the same basis as the Company's annual Consolidated Financial Statements for the fiscal year ended December 31, 2025. In the opinion of the Company’s management, these interim Condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the Company's financial position, results of operations, and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.
The December 31, 2025 Condensed Consolidated Balance Sheet data in this document was derived from audited consolidated financial statements. The Condensed Consolidated Financial Statements and notes included in this quarterly report on Form 10-Q do not include all disclosures required by U.S. generally accepted accounting principles and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025, and notes thereto included in the Company’s fiscal 2025 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 20, 2026 (the “2025 Annual Report”).
The results of operations and cash flows for the interim periods included in these Condensed Consolidated Financial Statements are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.
Principles of Consolidation
The Condensed Consolidated Financial Statements include the accounts of TaoWeave and the Company's
Cash and Cash Equivalents
As of June 30, 2026, the Company's total cash balance of $
Stock-Based Expense
In June 2025, the Company granted warrants to an advisor related to digital assets. See Note 8 - Capital Stock for further information. The total stock-based cost of these warrants is $
Segments
The Company currently operates in segments: (1) "Digital Assets", which represents the business surrounding the Company's 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 the Company's Mezzanine™ product offerings. See Note 12 - Segment Reporting for further discussion. The Company continually evaluates its operations for changes in its segment activity.
Use of Estimates
Preparation of the Condensed 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 could differ from the estimates made. The Company continually evaluates the reasonableness of estimates used in the preparation of the Company's consolidated financial statements. 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, the inputs used to determine the fair value of equity-based awards, fair value of the SAFE investment, and the fair value of digital assets.
Significant Accounting Policies
The significant accounting policies used in the preparation of these Condensed Consolidated Financial Statements are disclosed in the Company's 2025 Annual Report and there have been no changes, other than those listed below, to the Company’s significant accounting policies during the six months ended June 30, 2026.
Investments in Equity Securities. Investments in equity securities and other ownership interests in entities that the Company does not consolidate and over which it does not exercise significant influence are accounted for under ASC 321. The Company evaluates each investment for embedded features requiring bifurcation under ASC 815-15; where separation is required, the host instrument remains within ASC 321. Equity securities with a readily determinable fair value are measured at fair value with changes recognized in net income. For equity securities without a readily determinable fair value, the Company may elect the fair value option under ASC 825-10 on an instrument-by-instrument basis at initial recognition; absent such election, the Company applies the measurement alternative under ASC 321-10-35-2 and measures the investment at cost less impairment, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company performs a qualitative impairment assessment each reporting period and writes the investment down to fair value, with the loss recognized in net income, if that assessment indicates impairment.
Investment in Manako. Because Manako is a private company and no readily determinable fair value exists for our SAFE investment (as defined in Note 5 - Investment in Manako Labs Ltd.), we account for it under the measurement alternative in ASC 321-10-35-2, at cost of $
Intangible Assets. The Company records intangible assets when it acquires, or is granted, a contractual or other legal right to an identifiable, non-monetary asset that lacks physical substance, including licenses, distribution and commercialization rights, permits, and similar arrangements. Intangible assets are initially recorded at cost or, where acquired other than for cash at the fair value of the consideration given or the asset received, whichever is more clearly determinable, consistent with ASC 350-30 and, where applicable, ASC 718 or ASC 805. The Company’s intangible assets to date have finite useful lives. The Company amortizes finite-lived intangible assets on a straight-line basis over their estimated useful lives, which management determines based on the contractual or legal term of the underlying arrangement (including expected renewals where appropriate), the period over which the asset is expected to contribute to future cash flows, and any other pertinent factors, such as the level of required maintenance expenditures and the effects of obsolescence, demand, competition, and industry conditions. The Company does not currently hold any intangible assets with indefinite useful lives. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable, in accordance with ASC 360-10-35. Impairment indicators the Company considers include significant underperformance of the underlying arrangement relative to expectations, a significant adverse change in the manner in which an asset is used, the likelihood of early termination of a related contract, or significant negative industry or economic trends. If such indicators are present, the Company compares the carrying amount of the asset to the sum of the undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying amount exceeds those undiscounted cash flows, the Company recognizes an impairment loss equal to the amount by which the carrying amount exceeds the asset’s fair value, with fair value generally estimated using a discounted cash flow or other applicable valuation technique. The Company reassesses the remaining useful life of each intangible asset each reporting period and, if its estimate of the remaining period of benefit changes, accounts for the change prospectively as a change in accounting estimate, adjusting the periodic amortization charge over the revised remaining useful life.
Valuation of the Closing Warrant and useful life of the related intangible asset. We measured the Closing Warrant (as defined in Note 6) issued to Manako at its grant-date fair value of $
Revenue Recognition. The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. The Company applies the following five-step model: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the identified performance obligations; and (v) recognize revenue as, or when, the Company satisfies each performance obligation, either over time or at a point in time, depending on the nature of the good or service and the terms of the arrangement.
Principal versus agent determination. We evaluated our role in Customer Agreements entered into under the TLDA (as defined in Note 5 - Investment in Manako Labs Ltd.) and concluded we act as principal, based on our control over pricing (within Manako’s pricing floor), primary responsibility for customer fulfillment and first-level support, and discretion in setting price, in accordance with ASC 606-10-55-36 through 55-40. This conclusion required judgment, and a different conclusion would result in Net Revenue (as defined in Note 10) being presented net of the Revenue Share (as defined in Note 10) rather than gross, with a corresponding decrease in both revenue and cost of revenue but no effect on gross profit or net loss. See Note 10 - Revenue Recognition - Manako Technology License and Distribution Agreement for further information.
Recently Issued Accounting Pronouncements
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.
As of June 30, 2026, the Company had $
The Company believes its existing cash and cash equivalents, and the fair value of its TAO tokens (if converted to cash), will be sufficient to fund the Company's operations and meet the Company's working capital requirements for at least the next twelve months from the date of this Report.
The Company's Cryptocurrency Asset Strategy
The Company's current primary activity is accumulating and staking TAO, and the Company allocates substantial portions of its available cash to purchase TAO with the goal of maximizing TAO holdings per outstanding common share. As of June 30, 2026 and December 31, 2025, approximately
The Company does not hedge its TAO exposure and does not hold any other digital assets. All TAO is staked as soon as trade settlement permits, and the Company currently spreads staking across both BitGo Trust Company, Inc. ("BitGo") and the Kraken exchange ("Kraken", and together with BitGo, the "TAO Custodians").
Digital assets are measured at their fair market value using the last close price of the day in the UTC time zone at the end of each reporting period. The unrealized gains and losses resulting from remeasurement of digital assets are recorded in other income on the Condensed Consolidated Statement of Operations.
The Company recorded net unrealized losses of $
As of June 30, 2026, the Company held
The Company's Staking Program
As holders of TAO tokens, the Company can stake any amount of the liquidity it holds to a validator. The Company stakes substantially all of its TAO through its TAO Custodians, who delegate the Company's tokens to validators on the Bittensor network. 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. In exchange for the Company's staked TAO supporting a validator’s operations, the Company receives 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 in proportion to the Company's staked digital assets relative to the total staked by all delegators to the node at that time, and distributed directly to the Company's digital wallets in the validator node's native token (TAO) by the network as part of its consensus mechanism. The Company records these rewards as revenue in its Condensed Consolidated Statement of Operations.
As of June 30, 2026 and December 31, 2025, all of the Company's TAO token holdings were staked. The Bittensor protocol does not impose lock-up periods or unbonding delays; as of June 30, 2026, all of the Company's staked TAO could be unstaked and transferred without protocol-enforced waiting periods. The Company does not currently engage in direct subnet mining or validation, but may explore such activities in the future.
Staking yields are variable and depend on several factors, including validator performance, total network stake, and the dynamics of the specific subnets to which the Company's TAO is delegated. The following tables summarize the Company's staking rewards for the three and six months ended June 30, 2026, and 2025 (in thousands except for tokens):
| For the Three Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Asset | Token Rewards | Revenue ($USD) | Token Rewards | Revenue ($USD) | ||||||||||||
| TAO | $ | $ | ||||||||||||||
| For the Six Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Asset | Token Rewards | Revenue ($USD) | Token Rewards | Revenue ($USD) | ||||||||||||
| TAO | $ | $ | ||||||||||||||
The Company's cost of revenue for digital assets consists of custodian fees and advisor fees on its staked digital assets. For the three and six months ended June 30, 2026, the Company recorded cost of revenue of $
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| Cost | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Cash Transaction Fees | $ | $ | $ | $ | ||||||||||||
| Advisory fees related to staking | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
During the three and six months ended June 30, 2026, the Company purchased
During the three and six months ended June 30, 2026, the Company sold
The following tables summarize disposition activity for the three and six months ended June 30, 2026 (in thousands except for tokens):
| For the Three Months Ended June 30, 2026 | ||||||||||||||||
| Asset | Tokens Sold | Proceeds $USD | Cost $USD | Realized Net Loss | ||||||||||||
| TAO | $ | $ | ( | ) | ||||||||||||
| For the Six Months Ended June 30, 2026 | ||||||||||||||||
| Asset | Tokens Sold | Proceeds $USD | Cost $USD | Realized Net Loss | ||||||||||||
| TAO | $ | $ | ( | ) | ||||||||||||
The following table summarizes the Company's digital asset activity for the year ended December 31, 2025, and the three and six months ended June 30, 2026. The fair value is presented as of June 30, 2026 (in thousands except for tokens):
| TAO Tokens | $USD | |||||||
| Digital asset balance on December 31, 2024 | $ | |||||||
| TAO Token Purchases | ||||||||
| TAO Staking Rewards | ||||||||
| Non-Cash Fees | ( | ) | ( | ) | ||||
| Unrealized Net Loss on Fair Value Remeasurement | — | ( | ) | |||||
| Digital asset balance on December 31, 2025 | ||||||||
| TAO Token Purchases | ||||||||
| TAO Staking Rewards | ||||||||
| TAO Token Sales | ( | ) | ( | ) | ||||
| Unrealized Net Loss on Fair Value Remeasurement | — | ( | ) | |||||
| Digital asset balance on June 30, 2026 | $ | |||||||
Prepaid expenses and other current assets consisted of the following (in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Other current assets | ||||||||
| Prepaid software licenses | ||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
Note 5 - Investment in Manako Labs Ltd.
On May 28, 2026, the “Company entered into a Technology License and Distribution Agreement (the “TLDA”) with Manako Labs Ltd, a company organized under the laws of England and Wales (“Manako”). The TLDA establishes an integration partnership combining Manako’s Score AI computer vision platform operating on Bittensor Subnet 44 and related technologies with the Company’s North American enterprise relationships, commercial infrastructure, and public market credibility. See Note 10 - Revenue Recognition - Manako Technology License and Distribution Agreement for further discussion on the TLDA.
Concurrently with the TLDA, we entered into a Simple Agreement for Future Equity (the “SAFE”) pursuant to which we invested $
Under the SAFE, upon a future qualifying equity financing by Manako, the SAFE will automatically convert into shares of Manako capital stock at a conversion price equal to the lesser of (i) $
The SAFE requires the Company to receive equity securities (or a cash payment only upon a liquidity or dissolution event that neither party can unilaterally force), and it does not permit routine net cash settlement. The SAFE does not provide the Company with significant influence over Manako — the Company receives no voting rights, board representation, or participating rights over Manako’s operating and financing decisions.
Accordingly, the Company has accounted for the Manako Investment as an equity security without a readily determinable fair value under ASC 321-10-35-2 (the “measurement alternative”). The Manako Investment is initially measured at cost and is subsequently remeasured only for (a) impairment and (b) observable price changes in orderly transactions for identical or similar Manako securities. As of June 30, 2026, the carrying value of the Manako Investment was $
In connection with the TLDA described in Note 10 - Revenue Recognition - Manako Technology License and Distribution Agreement, on the Commercial Commencement Date, the Company issued Manako a warrant to purchase up to
Because the award was issued to a non-employee in exchange for rights received rather than for cash, the Company measured the Closing Warrant at its grant-date fair value under ASC 718-10 (as amended by ASU 2018-07), using the Black-Scholes option-pricing model with the following assumptions: TaoWeave’s quoted closing stock price of $
Management's best estimate of the useful life of this intangible asset is years, and the asset will be amortized on a straight-line basis. Amortization began in June 2026 and is recorded within general and administrative expense on its Condensed Consolidated Statement of Operations.
Amortization expense was $
Contingent Tranche A and Tranche B warrants. The TLDA also contemplates the issuance of up to
Note 7 - Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Compensation costs | $ | $ | ||||||
| Customer deposits | ||||||||
| Professional fees | ||||||||
| Taxes and regulatory fees | ||||||||
| Accrued rent | ||||||||
| Accrued dividends on Series F Preferred Stock | ||||||||
| Other accrued expenses and liabilities | ||||||||
| Accrued expenses and other liabilities | $ | $ | ||||||
As of June 30, 2026, and December 31, 2025, the Company's Digital Assets segment had accrued expenses of $
As of June 30, 2026, and December 31, 2025, the Company's Managed Services segment had accrued expenses and other current liabilities of $
As of June 30, 2026, and December 31, 2025, accrued expenses and other current liabilities for the Company's Collaboration Products segment were $
Unallocated accrued expenses were $
Common Stock
The Company’s common stock, par value $
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 $
Common Stock activity for the year ended December 31, 2025 and the six months ended June 30, 2026, is presented below. During the three and six months ended June 30, 2026,
| Issued Shares as of December 31, 2024 | ||||
| Issuances from Common Warrant exercises | ||||
| Issuances from Preferred Stock conversions | ||||
| Issuances from Pre-Funded Warrant exercises | ||||
| Issued Shares as of December 31, 2025 | ||||
| Issuances from Pre-Funded Warrant exercises | ||||
| Issued Shares as of June 30, 2026 | ||||
| Less Treasury Shares: | ( | ) | ||
| Outstanding Shares as of June 30, 2026 |
Common Stock Warrants
Common Warrants
On March 30, 2023, the Company entered into a Securities Purchase Agreement (the “2023 Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company issued and sold, in a private placement transaction (the “Private Placement”) (i) shares of the Company’s Series F convertible preferred stock, $
The Common Warrants have a term of five years from the date that is six months and one day from the date of issuance. Pursuant to the terms of the 2023 Purchase Agreement, additional Common Warrants were issued in 2024 and 2025. The Common Warrants are currently exercisable at $
2023 Placement Agent Warrants
In connection with the 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
Advisor Warrants
On June 5, 2025, the Company issued warrants to purchase
Pre-Funded Warrants
On June 6, 2025, the Company entered into a securities purchase agreement, dated as of June 5, 2025 (the “2025 Purchase Agreement”), pursuant to which the Company issued pre-funded warrants to acquire up to
2025 Placement Agent Warrants
On June 10, 2025, pursuant to the 2025 Purchase Agreement, the Company issued warrants to purchase shares of the Company's Common Stock to the Placement Agent (the "2025 Placement Agent Warrants"). The 2025 Placement Agent Warrants are exercisable immediately upon issuance. The terms of the 2025 Placement Agent Warrants are substantially the same as those of the Pre-Funded Warrants, except that the 2025 Placement Agent Warrants will expire on June 10, 2030, and are exercisable at a price of $
Manako Warrants
On May 29, 2026, in connection with the SAFE discussed in Note 5 - Investment in Manako Labs Ltd., and the TLDA discussed in Note 10 - Revenue Recognition - Manako Technology License and Distribution Agreement the Company issued warrants to purchase up to
In connection with potential joint development of the Company’s own subnet on the Bittensor network, the Company may issue additional warrants to Manako as follows: (i) warrants to purchase up to
The exercise price of each Manako Warrant is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like and dilutive issuances (in each case, subject to certain exceptions). There is no established public trading market for the Warrants, and the Company does not intend to list the Warrants on any national securities exchange or nationally recognized trading system.
Manako may not exercise any portion of such Manako Warrants to the extent that they, together with any affiliates, would beneficially own more than
The Manako Warrants and the shares of Common Stock underlying the Manako Warrants (the “Warrant Shares”) have not been registered under the Securities Act. Pursuant to the TLDA, the Company, within 180 days of the Effective Date, must file a registration statement for the resale of the Warrant Shares. The Company must use commercially reasonable efforts to cause such registration statement to become effective as soon as practicable thereafter and to keep such registration statement effective at all times until no Warrants or Warrants Shares are outstanding.
In connection with the TLDA, on May 28, 2026, the Company and Manako entered into a Lock-Up Agreement (the “Lock-Up Agreement”), pursuant to which the Manako Warrants are subject to a lock-up period of six (6) months following issuance or until effective registration of Warrant Shares, whichever is later, followed by twenty-four (24) months of post-lock-up trading restrictions including a daily volume cap of ten percent (10%) of average daily trading volume, a price floor of one hundred twenty percent (120%) of the relevant exercise price, and three (3) trading days’ advance notice of sales. The Lock-Up Agreement provides carve-outs from the post-lock-up trading restrictions for (i) block trades to institutional investors through a registered broker-dealer, (ii) private transfers to Manako affiliates bound by the same obligations, (iii) transfers in connection with any merger, tender offer, or similar transaction involving the Company as issuer, and (iv) sales pursuant to a Rule 10b5-1 plan established outside a blackout period.
Outstanding warrants for the Company's Common Stock, as of June 30, 2026, are presented below.
| Issue Date and Description | Warrants Outstanding | 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 - 2025 Placement Agent Warrants | $ | Q2 2030 | |||||||
| Q2 2025 - Pre-Funded Warrants (1) | $ | Q2 2030 | |||||||
| Q3 2025 - Common Warrants | $ | Q3 2030 | |||||||
| Q2 2026 - Closing Warrant | $ | Q4 2027 | |||||||
| (1) | The exercise price for the Pre-Funded Warrants was paid upon issuance of the Pre-Funded Warrants. The exercise of the Pre-Funded Warrants will not result in additional proceeds to the Company. |
Common warrant activity for the year ended December 31, 2025 and the six months ended June 30, 2026 is presented below.
| Outstanding and Exercisable | ||||||||
| Number of Warrants | Weighted Average Exercise Price | |||||||
| Warrants outstanding and exercisable, December 31, 2024 | $ | |||||||
| Granted | $ | |||||||
| Exercised | ( | ) | $ | |||||
| Warrants outstanding and exercisable, December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Exercised | ( | ) | $ | |||||
| Warrants outstanding and exercisable, June 30, 2026 | $ | |||||||
Treasury Shares
The Company maintains treasury stock for the Common Stock shares repurchased when withholding shares to cover taxes on equity award transactions. There were no treasury stock transactions during the three and six months ended June 30, 2026, or the year ended December 31, 2025.
The Company 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 the current conversion price of $
Under the Certificate of Designations, shares of 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 entered into concurrently with the 2023 Purchase 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 three and six months ended June 30, 2025,
Series F Preferred Stock transactions are summarized in the table below:
| Series F Preferred Stock Shares | Preferred Stock Dividends | Weighted Average Conversion Price | Common Shares Issued from Conversions | |||||||||||||
| December 31, 2024 Balance | $ | $ | ||||||||||||||
| 2025 Issuances | — | — | ||||||||||||||
| 2025 Accrued Dividends | — | — | ||||||||||||||
| 2025 Conversions | ( | ) | ( | ) | $ | |||||||||||
| December 31, 2025 Balance | $ | |||||||||||||||
| 2026 Accrued Dividends | — | — | ||||||||||||||
| June 30, 2026 Balance | $ | $ | ||||||||||||||
Series F Preferred Stock Warrants
The Preferred Warrants are exercisable for Series F Preferred Shares at an exercise price of $
The Preferred Warrants were initially set to expire three years from the date of issuance, or March 31, 2026, and are exercisable for cash. On March 31, 2026, the Company and the Preferred Warrant holders agreed to extend the terms of the Preferred Warrants to expire May 15, 2026. On May 15, 2026, the Company and the Preferred Warrant holders agreed to extend the terms of the Preferred Warrants to expire June 30, 2026. On June 30, 2026, the Company and the Preferred Warrant holders agreed to extend the terms of the Preferred Warrants to expire September 30, 2026.
Note 10 - Revenue Recognition - Manako Technology License and Distribution Agreement
On May 28, 2026, the Company entered into the TLDA with Manako, under which Manako granted the Company a non-exclusive, non-transferable, sublicensable license during the License Term to market, demonstrate, sell, and distribute Manako’s Score AI computer vision platform (the “Platform”) to enterprise customers in the United States and Canada (the “Territory”). The TLDA has an initial one-year term beginning May 28, 2026, which automatically renews for successive 12-month periods unless either party gives at least 60 days’ prior notice of non-renewal. The Platform is a computer vision technology that operates on Bittensor Subnet 44, an external, third-party-operated blockchain subnet not controlled by the Company or, following certain governance actions described below, entirely by Manako.
The Company contracts directly with Territory end-customers under customer agreements (the "Customer Agreements") it negotiates, controls pricing within Manako’s established pricing floor, and is primarily responsible for first-level customer support and overall fulfillment of the customer relationship, while Manako retains ownership of the underlying platform intellectual property and provides second-level support. Applying the indicators of control in ASC 606-10-55-36 through 55-40, the Company concluded it acts as principal in Customer Agreements it enters into directly, and recognizes gross net revenue ("Net Revenue") from those arrangements as it satisfies its performance obligation of providing access to and use of the Platform together with first-level support. In consideration for the license and rights granted under the TLDA, the Company pays Manako a revenue share equal to a certain percentage of Net Revenue (the "Revenue Share"), which the Company records as a variable, usage-based cost of revenue rather than as a reduction of revenue. Net revenue is defined generally as gross revenue received from customers under Customer Agreements, less refunds, credits, applicable taxes, and third-party payment processing fees.
Where Manako instead enters into a direct customer agreement with a Territory customer that was sourced by the Company, is a previously agreed Company-named account, or was closed with the Company’s material involvement, Manako pays the Company a referral fee equal to a certain percentage of the customer contract value. Where Manako sources, leads, and closes a Territory opportunity directly without the Company’s material involvement (subject to customary exclusions for Manako’s pre-existing relationships), Manako pays the Company a market development fee equal to a certain percentage of the first twelve months of the customer contract value, provided the Company has maintained an active Territory commercial program. The Company recognizes referral fees and market development fees received from Manako as revenue when earned under the applicable provisions of the TLDA.
The commercial terms of the TLDA, including Manako’s obligation to make the Platform available and the Company’s obligation to pay the Revenue Share, did not become operative until the Company funded the SAFE investment described in Note 5 - Investment in Manako Labs Ltd. on May 29, 2026.
As of June 30, 2026, the Company has not recognized any revenue or associated Revenue Share cost of revenue under Customer Agreements entered into pursuant to the TLDA.
Subnet Disruption Event. Because the Platform operates on Bittensor Subnet 44, its availability depends on the continued operation of that third-party network. The TLDA defines a “Subnet Disruption Event” to include the suspension or material reduction of network emissions to Subnet 44, adverse governance actions affecting Subnet 44, deregistration or forced migration of Subnet 44, or material disruption to the arrangements between Manako and the other parties that operate or support Subnet 44. During any Subnet Disruption Event, Manako’s platform-availability obligations and the Company’s obligation to pay the Revenue Share are both suspended, and if a Subnet Disruption Event continues for more than 20 consecutive days, the Company may terminate the TLDA immediately upon written notice.
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 ("Restricted Stock").
Diluted net loss per share is computed by giving effect to all potential shares of Common Stock, including stock options, preferred stock, warrants, and unvested Restricted Stock, to the extent they are dilutive. For the three and six months ended June 30, 2026, and 2025, all such Common Stock equivalents have been excluded from diluted net loss per share as the effect would be anti-dilutive.
The following table sets forth the computation of the Company’s basic and diluted net loss per share (in thousands, except share and per share data):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less: preferred stock dividends | ||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted-average number of shares of Common Stock for basic and diluted net loss per share | ||||||||||||||||
| Basic and diluted net income (loss) per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The following table represents the potential shares of Common Stock that were excluded from the computation of diluted weighted-average number of shares for the six months ended June 30, 2026, and 2025, because including them would have had an anti-dilutive effect:
| As of June 30, | ||||||||
| 2026 | 2025 | |||||||
| Common stock issuable upon conversion of Series F Preferred Stock (1) | ||||||||
| Common stock issuable upon conversion of Preferred Warrants (2) | ||||||||
| Common stock issuable upon exercise of warrants for Common Stock | ||||||||
| (1) | Calculation assumes conversion of the stated value and accrued dividends of the Series F Preferred Stock into Common Stock at a conversion price of $ |
| (2) | Calculation assumes exercise of the Preferred Warrants for cash into Series F Preferred Stock and subsequent conversion of the Series F Preferred Stock into Common Stock at a conversion price of $ |
The Pre-Funded warrants are included in the weighted average shares outstanding.
The Company currently operates in segments: (1) "Digital Assets", which represents the business surrounding the Company's 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 the Company's Mezzanine™ product offerings. The Company continually evaluates its operations for changes in its segment activity. Although operations resulting from the Manako TLDA could become a separate segment in the future, its operations are currently reported in the Corporate, or unallocated segment. Management will continue to evaluate the materiality of the operations and its impact on the Company for possible separation.
For the three and six months ended June 30, 2026, and 2025, the CODM for the segments, was Peter 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 three and six months ended June 30, 2026, and 2025, is presented in the following tables (in thousands):
| Three Months Ended June 30, 2026 | ||||||||||||
| 2026 | 2025 | % 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) | % | |||||||||||
| Collaboration Products (2) | ( | )% | ||||||||||
| Corporate (3) | % | |||||||||||
| Consolidated | % | |||||||||||
| Other income (expense), net | ||||||||||||
| Digital Assets (4) | ( | ) | ( | )% | ||||||||
| Corporate (5) | ( | )% | ||||||||||
| Consolidated | ( | ) | ( | )% | ||||||||
| Net loss before taxes | ( | ) | ( | ) | % | |||||||
| Income tax expense | % | |||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | % | |||||
| Six Months Ended June 30, 2026 | ||||||||||||
| 2026 | 2025 | % 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) | % | |||||||||||
| Collaboration Products (2) | % | |||||||||||
| Corporate (3) | % | |||||||||||
| Consolidated | % | |||||||||||
| Other income (expense), net | ||||||||||||
| Digital Assets (4) | ( | ) | ( | )% | ||||||||
| Managed Services | ( | ) | ( | )% | ||||||||
| Corporate (5) | ( | )% | ||||||||||
| Consolidated | ( | ) | ( | )% | ||||||||
| Net loss before taxes | ( | ) | ( | ) | % | |||||||
| Income tax expense | ( | )% | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | % | |||||
| (1) | Operating expenses related to the Company's Digital Assets segment include cash and stock-based advisory fees. | |
| (2) | Operating expenses related to the Company's Collaboration Products Segment include sales and marketing and other miscellaneous expenses. | |
| (3) | 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. | |
| (4) | Other income (expense) for the Company's Digital Assets segment includes unrealized gains and losses from revaluations of the Company's digital assets. The three and six months ended June 30, 2026 also include realized gains and losses on the sale of digital assets. | |
| (5) | Unallocated other income in Corporate is primarily related to interest income. |
The Company’s SSEs for each segment include direct labor costs and segment-based management expenses (collectively, “labor and labor related”), costs to purchase, store, and ship inventory, and inventory impairments (inventory and inventory related), circuit and network cost of revenue, other non-inventory cost of revenue, research and development costs, and bad debt recovery, as 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 the cost of labor and supplies, to assess segment performance.
| Three Months Ended June 30, 2026 | ||||||||||||||||
| 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) | ||||||||||||||||
| Cash digital asset transaction fees | ||||||||||||||||
| Advisory fees | ||||||||||||||||
| Stock-based expense | ||||||||||||||||
| Circuit and network cost of revenue | ||||||||||||||||
| Unrealized net loss on digital asset revaluation | ||||||||||||||||
| Realized net loss on disposal of digital assets | ||||||||||||||||
| Segment net profit | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Segment net profit margin % | ( | )% | % | ( | )% | |||||||||||
| Unallocated (income) expense | ||||||||||||||||
| Corporate expenses (3) | ||||||||||||||||
| Amortization expense | ||||||||||||||||
| Interest income | ( | ) | ||||||||||||||
| Loss before income tax expense | $ | ( | ) | |||||||||||||
| Three Months Ended June 30, 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) | ||||||||||||||||
| Circuit and network cost of revenue | ||||||||||||||||
| Unrealized net gain on digital asset revaluation | ( | ) | ( | ) | ||||||||||||
| Other segment items (2) | ||||||||||||||||
| Segment profit | $ | $ | $ | $ | ||||||||||||
| Segment profit margin % | % | % | % | |||||||||||||
| Unallocated (income) expense | ||||||||||||||||
| Corporate expenses (3) | ||||||||||||||||
| 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. | |
| (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 three and six months ended June 30, 2026, and 2025, no material revenue was attributable to any individual foreign country, and all foreign revenue is billed in US Dollar. Revenue by geographic area is allocated as follows (in thousands):
| Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Domestic | $ | $ | ||||||
| Foreign | ||||||||
| $ | $ | |||||||
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Domestic | $ | $ | ||||||
| Foreign | ||||||||
| $ | $ | |||||||
The Company considers a significant customer to be one that comprises more than 10% of the Company’s consolidated revenues or accounts receivable. The loss of or a reduction in sales or anticipated sales to the Company's most significant or several of its smaller customers could have a material adverse effect on the Company's business, financial condition, and results of operations.
Concentration of consolidated revenues was as follows:
| Three Months Ended June 30, | |||||||||
| 2026 | 2025 | ||||||||
| Segment | % of Revenue | % of Revenue | |||||||
| Customer A | Managed Services | % | % | ||||||
| Six Months Ended June 30, | |||||||||
| 2026 | 2025 | ||||||||
| Segment | % of Revenue | % of Revenue | |||||||
| Customer A | Managed Services | % | % | ||||||
Staking rewards on the Company's digital assets made up
Concentration of consolidated accounts receivable was as follows:
| As of June 30, | |||||||||
| 2026 | 2025 | ||||||||
| Segment | % of Accounts Receivable | % of Accounts Receivable | |||||||
| Customer A | Managed Services | % | % | ||||||
| Customer B | Collaboration Products | % | % | ||||||
| Customer C | Collaboration Products | % | % | ||||||
| Customer D | Managed Services | % | % | ||||||
Note 13 - Commitments and Contingencies
Registration rights. The Company is required to file a registration statement on Form S-3 (or other form then available) covering the resale of the shares of common stock issuable upon exercise of the Closing Warrant, and any Tranche A and Tranche B warrants that may become issuable, no later than November 24, 2026 (180 days after May 28, 2026), and to use commercially reasonable efforts to cause the registration statement to become effective as soon as practicable thereafter and to keep it effective until no such warrants or underlying shares remain outstanding. The TLDA does not provide for cash liquidated damages if the Company fails to timely file or maintain the effectiveness of this registration statement; accordingly, the Company has not recognized a separate liability under the registration payment arrangement guidance in ASC 825-20 with respect to this obligation. The Company will continue to evaluate this conclusion if the terms of the registration obligation change.
Lock-up and resale restrictions. In connection with the TLDA, Manako agreed to a lock-up period with respect to the Closing Warrant shares (and any Tranche A/B warrant shares) ending on the later of six months after issuance or the effective date of the registration statement described above, followed by 24 months of post-lock-up trading restrictions, including a daily volume cap of 10% of average trading volume, a price floor of 120% of the applicable exercise price, and three trading days’ advance notice of sales, subject to customary carve-outs for block trades, permitted affiliate transfers, change-of-control transactions, and Rule 10b5-1 plans. The Company considered this transfer restriction in estimating the grant-date fair value of the Closing Warrant as a marketability discount, consistent with ASC 820-10-35, rather than as a separate unit of account.
Contingent warrants. As described in Note 8 - Capital Stock, the Company may become obligated to issue up to
Indemnification. The TLDA contains mutual indemnification obligations customary for arrangements of this type, subject in each direction to an aggregate liability cap generally equal to two times the amounts paid or payable under the TLDA (subject to certain carve-outs, including for a Manako indemnification obligation related to certain regulatory filing exposure). The Company has not recorded a liability for these indemnification obligations as of June 30, 2026, as no claims have been asserted and no loss is probable and estimable.
Right of first refusal / post-termination distribution rights. Following expiration or termination of the TLDA (other than termination by Manako for cause), the Company’s distribution rights terminate but it retains a right of first refusal on new Territory business opportunities for a period of 12 to 18 months, depending on cumulative Net Revenue generated during the License Term, together with a post-termination continuation license (up to 24 months) to service existing Customer Agreements and a 12-month transition period. These provisions do not currently give rise to a recognizable asset or liability.
From time to time, the Company is subject to various legal proceedings arising in the ordinary course of business, including proceedings for which the Company has insurance coverage. As of the date hereof, the Company is not party to any legal proceedings that it currently believes will have a material adverse effect on the Company's business, financial position, results of operations, or liquidity.
On July 28, 2026 and August 6, 2026, the Company issued
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise indicates, as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “we,” “us,” “our,” “TaoWeave, Inc,” the “Company,” and similar terms refer to TaoWeave, Inc and its subsidiaries. This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 (this “Report”). The matters discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain certain forward-looking statements that reflect the Company’s current expectations, the actual outcomes of which involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Critical Accounting Estimates
The preparation of the unaudited condensed consolidated financial statements requires us to make assumptions, estimates, and judgments that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Certain of our more critical accounting policies require management to exercise significant judgment in selecting appropriate assumptions when calculating financial estimates. By their nature, these judgments are subject to a degree of inherent uncertainty. On an ongoing basis, we evaluate our judgments, including but not limited to those related to income taxes, litigation, and contingencies. We use historical experience and other assumptions as the basis for our judgments and estimates. Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in those estimates will be reflected in our consolidated financial statements as they occur.
In addition to the critical accounting estimates described in Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 20, 2026, the transaction with Manako Labs Ltd ("Manako") introduced the following estimates during the current period:
Investment in Manako. Because Manako is a private company and no readily determinable fair value exists for our SAFE investment (as defined below), we account for it under the measurement alternative in ASC 321-10-35-2, at cost of $1.0 million, less impairment, if any, adjusted for any observable price changes in orderly transactions for identical or similar Manako securities. Determining whether an impairment indicator exists, and the amount of any impairment or upward adjustment, requires significant judgment, including with respect to Manako’s cash runway, the continued operation of Subnet 44, and the occurrence of any future Manako financing transactions that could serve as an observable price input. We reassess this investment for observable price changes and impairment indicators each reporting period.
Valuation of the Closing Warrant and useful life of the related intangible asset. We measured the Closing Warrant (as defined below) issued to Manako at its grant-date fair value of $60,595 using the Black-Scholes option-pricing model, which requires management to select assumptions for expected volatility, the risk-free interest rate, and the expected term. We capitalized this amount as an intangible commercialization and licensing rights asset because it represents consideration for a multi-period contractual right rather than a currently consumed good or service, and we are amortizing it on a straight-line basis over an estimated three-year useful life — the low end of the two-to-seven-year range of the underlying License Term and renewal expectations — reflecting management’s judgment that a conservative estimate is appropriate given that this is our first arrangement of this kind. A change in the estimated useful life, or a determination that the asset is impaired, would affect the timing and amount of amortization expense recognized in future periods.
Principal versus agent determination. We evaluated our role in customer agreements entered into under the TLDA and concluded we act as principal, based on our control over pricing (within Manako’s pricing floor), primary responsibility for customer fulfillment and first-level support, and discretion in setting price, in accordance with ASC 606-10-55-36 through 55-40. This conclusion required judgment, and a different conclusion would result in Net Revenue (as defined below) being presented net of the Revenue Share (as defined below) rather than gross, with a corresponding decrease in both revenue and cost of revenue but no effect on gross profit or net loss.
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. As of June 30, 2026, we held approximately 23,335 TAO tokens valued at $4.7 million, with BitGo Trust Company, Inc. (“BitGo”) and the Kraken exchange (“Kraken”, and together with BitGo, the “TAO Custodians”). All of our TAO is staked through our TAO Custodians.
The Company is also operating legacy businesses including managed services for network solutions and video collaboration, and collaboration products. In conjunction with the Company's June 2025 financing, the Company began migrating its product focus from our legacy businesses 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.
Our Cryptocurrency Asset Strategy
Our current primary activity is accumulating and staking TAO, and we allocate substantial portions of our available cash to purchase TAO with the goal of maximizing TAO holdings per outstanding common share. As of June 30, 2026, and December 31, 2025, approximately 69% and 66% of our total assets (including cash) were held in TAO, respectively. We intend to continue allocating substantial portions of our excess cash to TAO without a formal cap on the percentage of assets invested. While our strategy is to accumulate and hold TAO over the long term, we may, from time to time, sell a portion of our TAO holdings to fund operating expenses or otherwise manage the Company's cash and liquidity position. During the three and six months ended June 30, 2026, we sold 2,502.23 and 3,959.23 TAO tokens, respectively, for this purpose. See Note 3 - Digital Assets for further details.
We do not hedge our TAO exposure and do not hold any other digital assets. 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. 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.
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, and through the date of this Report, we conducted due diligence on a number of subnet projects to assess their viability, technology, and potential alignment with our strategy. This diligence led to the Company's investment in Manako, discussed below.
Manako Labs, Ltd.
On May 28, 2026, we entered into a Technology License and Distribution Agreement (the “TLDA”) with Manako Labs Ltd. (“Manako”), a company organized under the laws of England and Wales that owns and operates the Score AI computer vision platform on Bittensor Subnet 44 (the “Platform”). Under the TLDA, Manako granted us a non-exclusive, non-transferable, sublicensable license to market, demonstrate, sell, and distribute the Platform to enterprise customers in the United States and Canada (the “Territory”) during an initial one-year term that automatically renews for successive 12-month periods unless either party gives at least 60 days’ prior notice of non-renewal.
Concurrently with the TLDA, we entered into a Simple Agreement for Future Equity (the “SAFE”) pursuant to which we invested $1.0 million in Manako, and a related SAFE Side Letter Agreement providing us with certain information, key-person notice, and pro rata investment rights. The TLDA’s commercial terms, including Manako’s platform-availability obligations and our revenue-share payment obligations, did not become operative until we funded the full SAFE investment amount, which occurred on May 29, 2026 (the “Commercial Commencement Date”). In consideration of the rights granted under the TLDA, on the Commercial Commencement Date we issued Manako a warrant to purchase up to 100,000 shares of our common stock at an exercise price of $3.41 per share, exercisable through November 29, 2027 (the “Closing Warrant”). We may also become obligated to issue Manako up to an additional 200,000 warrants (100,000 at a $4.50 exercise price and 100,000 at a $5.50 exercise price) in connection with potential advisory support for a prospective Company-operated Bittensor subnet. Issuance of those warrants is contingent on execution of a statement of work not yet in place and on our discretionary decision to pursue that initiative, and no obligation to issue those warrants has been incurred as of June 30, 2026.
We believe the Manako arrangement provides us access to computer-vision platform technology that we can commercialize with our existing enterprise customer base in the Territory, in exchange for a certain percentage of revenue share (the "Revenue Share") on net revenue we generate from Platform customers ("Net Revenue").
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.
Historically, customers 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 the end of life for Mezzanine™ in December 2025, and we expect no product revenue from Mezzanine™ products and only minor maintenance revenue for the remainder 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
Three Months Ended June 30, 2026 (the “2026 Second Quarter”), compared to the Three Months Ended June 30, 2025 (the “2025 Second Quarter”)
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 2026 Second Quarter and the 2025 Second Quarter (in thousands):
| Three Months Ended June 30, 2026 |
||||||||||||
| 2026 |
2025 |
% Change |
||||||||||
| Revenue |
||||||||||||
| Digital Assets |
$ | 105 | $ | 2 | 5150 | % | ||||||
| Managed Services |
415 | 497 | (16 | )% | ||||||||
| Collaboration Products |
2 | 93 | (98 | )% | ||||||||
| Consolidated |
522 | 592 | (12 | )% | ||||||||
| Cost of revenues |
||||||||||||
| Digital Assets |
6 | — | 100 | % | ||||||||
| Managed Services |
239 | 360 | (34 | )% | ||||||||
| Collaboration Products |
3 | 4 | (25 | )% | ||||||||
| Consolidated |
248 | 364 | (32 | )% | ||||||||
| Gross Margin |
||||||||||||
| Digital Assets |
99 | 2 | 4850 | % | ||||||||
| Managed Services |
176 | 137 | 28 | % | ||||||||
| Collaboration Products |
(1 | ) | 89 | (101 | )% | |||||||
| Consolidated |
274 | 228 | 20 | % | ||||||||
| Operating expenses |
||||||||||||
| Digital Assets (1) |
100 | — | 100 | % | ||||||||
| Collaboration Products (2) |
— | 8 | (100 | )% | ||||||||
| Corporate (3) |
1,015 | 903 | 12 | % | ||||||||
| Consolidated |
1,115 | 911 | 22 | % | ||||||||
| Other income (expense), net |
||||||||||||
| Digital Assets (4) |
(2,461 | ) | 31 | (8039 | )% | |||||||
| Corporate (5) |
13 | 47 | (72 | )% | ||||||||
| Consolidated |
(2,448 | ) | 78 | (3238 | )% | |||||||
| Net loss before taxes |
(3,289 | ) | (605 | ) | 444 | % | ||||||
| Income tax expense |
1 | — | 100 | % | ||||||||
| Net loss |
$ | (3,290 | ) | $ | (605 | ) | 444 | % | ||||
| (1) | Operating expenses related to our Digital Assets segment include cash and stock-based advisory fees. | |
| (2) | Operating expenses related to our Collaboration Products Segment include sales and marketing, and other miscellaneous expenses. |
|
| (3) | 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. |
|
| (4) | Other income (expense) for our Digital Assets segment includes unrealized gains and (losses) from revaluations of our digital assets. The three months ended June 30, 2026 also includes realized gains and losses on the sale of digital assets. | |
| (5) | Unallocated other income in Corporate is primarily related to interest income. |
Revenue. Total revenue was $522,000 and $592,000 for the 2026 Second Quarter and the 2025 Second Quarter, respectively, a decrease of $70,000 or 12%. The decrease was driven by a reduction in Managed Services and Collaboration Products revenue, partially offset by an increase of $103,000 in Digital Asset staking revenue, a new revenue stream that commenced in the second half of fiscal year 2025. The following table summarizes the changes in components of our revenue (in thousands), and the significant changes in revenue are discussed in more detail below.
| Three Months Ended June 30, |
||||||||||||||||
| 2026 |
% of Revenue |
2025 |
% of Revenue |
|||||||||||||
| Revenue: Digital Assets |
||||||||||||||||
| Total Digital Assets revenue |
$ | 105 | 20 | % | $ | 2 | 0 | % | ||||||||
| Revenue: Managed Services |
||||||||||||||||
| Network services |
$ | 400 | 77 | % | $ | 481 | 81 | % | ||||||||
| Video collaboration |
13 | 2 | % | 11 | 2 | % | ||||||||||
| Professional and other services |
2 | 0 | % | 5 | 1 | % | ||||||||||
| Total Managed Services revenue |
$ | 415 | 80 | % | $ | 497 | 84 | % | ||||||||
| Revenue: Collaboration Products |
||||||||||||||||
| Visual collaboration product offerings |
$ | 2 | 0 | % | $ | 93 | 16 | % | ||||||||
| Total revenue |
$ | 522 | 100 | % | $ | 592 | 100 | % | ||||||||
Digital Assets
Digital Assets revenue was $105,000 and $2,000 for the 2026 Second Quarter and 2025 Second Quarter, respectively. The increase resulted from the Company beginning its digital asset treasury strategy in June 2025. The revenue was entirely comprised of TAO staking rewards.
| • |
During the three months ended June 30, 2026, and 2025, we earned 380.53 and 6.57 TAO tokens, respectively, through staking, or $105,000 and $2,000 in revenue, respectively. |
| • |
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
Managed Services revenue was $415,000 and $497,000 for the 2026 Second Quarter and the 2025 Second Quarter, respectively, a decrease of $82,000, or 16%. The decrease was primarily attributable to a:
|
|
• |
Decrease in revenue for network services; mainly attributable to disconnects at certain customer locations. |
| • |
In the 2026 Second Quarter, one customer accounted for 97% of Managed Services revenue. In the 2025 Second Quarter, this customer accounted for 98% of Managed Services revenue. |
Collaboration Products
Collaboration Products revenue was $2,000 and $93,000 for the 2026 Second Quarter and the 2025 Second Quarter, respectively, a decrease of $91,000, or 98%. This decrease was due to the December 2025 end of life announcement for Mezzanine™ products. We expect no product revenue and only minor maintenance revenue for the remainder of 2026.
Cost of Revenue. Total cost of revenue was $248,000 and $364,000 for the 2026 Second Quarter and the 2025 Second Quarter, respectively, a decrease of $116,000, or 32%. Cost of revenue includes all internal and external costs related to the delivery of revenue, including taxes billed to customers. Cost of revenue by segment is presented in the following table (in thousands):
| Three Months Ended June 30, |
||||||||
| 2026 |
2025 |
|||||||
| Cost of Revenue |
||||||||
| Digital Assets |
$ | 6 | $ | — | ||||
| Managed Services |
239 | 360 | ||||||
| Collaboration Products |
3 | 4 | ||||||
| Total cost of revenue |
$ | 248 | $ | 364 | ||||
Digital Assets
The Digital Assets segment recorded a cost of revenue of $6,000 and a gross profit of $99,000, or 94%, for the 2026 Second Quarter. The Company did not have cost of revenue related to its Digital Assets operations during the 2025 Second Quarter. Cost of revenue for digital assets consists of custodian fees and advisor fees on the Company’s staked digital assets.
Managed Services
The Managed Services segment recorded a cost of revenue of $239,000 and $360,000 for the 2026 Second Quarter and the 2025 Second Quarter, respectively, a decrease of $121,000, or 34%. The Managed Services segment recorded a gross profit percentage of 42% and 28% for the 2026 Second Quarter and the 2025 Second Quarter, respectively. The increase in gross margin was primarily due to reduced personnel expenses for the 2026 Second Quarter.
Collaboration Products
The Collaboration Products segment recorded a cost of revenue of $3,000 and $4,000 for the 2026 Second Quarter and the 2025 Second Quarter, respectively, a decrease of $1,000. The Collaboration Products segment recorded a gross profit percentage of -50% and 96% for the 2026 Second Quarter and the 2025 Second Quarter, respectively. The decrease in gross margin is mainly attributable to the reduction in revenue quarter over quarter.
Operating expenses are presented in the following table (in thousands):
| Three Months Ended June 30, |
||||||||||||||||
| 2026 |
2025 |
$ Change |
% Change |
|||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
$ | — | $ | 3 | $ | (3 | ) | (100 | )% | |||||||
| Sales and marketing |
— | 6 | (6 | ) | (100 | )% | ||||||||||
| General and administrative |
1,115 | 902 | 213 | 24 | % | |||||||||||
| Total operating expenses |
$ | 1,115 | $ | 911 | $ | 204 | 22 | % | ||||||||
Research and Development. Research and development expenses were $3,000 for the 2025 Second Quarter, and there were no research and development expenses for the 2026 Second Quarter. Research and development expenses include internal and external costs related to developing features and enhancements to existing product offerings. This decrease is primarily attributable to the Company’s change in focus to digital asset treasury.
Sales and Marketing Expenses. Sales and marketing expenses were $6,000 for the 2025 Second Quarter, and there were no sales and marketing expenses for the 2026 Second Quarter. The decrease is primarily attributable to reduced personnel expenses.
General and Administrative Expenses. General and administrative expenses were $1,115,000 and $902,000 for the 2026 Second Quarter and the 2025 Second Quarter, respectively, an increase of $213,000, or 24%. General and administrative expenses include direct corporate expenses and personnel costs in the various corporate support categories, including executive, finance and accounting, legal, human resources, and information technology. The increase is primarily attributable to higher professional service fees, stock-based expense, and insurance expenses, driven by the transition into the digital asset space and the Manako deal.
Loss from Operations. The Company recorded an operating loss of $841,000 and $683,000 for the 2026 Second Quarter and the 2025 Second Quarter, respectively, an increase in operating loss of $158,000, or 23%. This increase was mainly attributable to the increase in total operating expenses of $204,000, partially offset by an increase in gross profit of $46,000.
Other (Expense) Income, Net. Other expense, net, was $2,448,000 for the 2026 Second Quarter and other income, net, was $78,000 for the 2025 Second Quarter, a decrease of $2,526,000. The decrease was primarily driven by $2,295,000 of unrealized losses and $166,000 of realized losses on the Company’s digital assets during the 2026 Second Quarter and a reduction of interest income of $34,000 quarter over quarter. Other income for the 2025 Second Quarter was primarily comprised of $47,000 in interest income related to the Company’s cash accounts and an unrealized gain of $31,000 on the Company's digital assets.
Results of Operations
Six Months Ended June 30, 2026, compared to the Six Months Ended June 30, 2025
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 six months ended June 30, 2026 and the six months ended June 30, 2025 (in thousands):
| Six Months Ended June 30, 2026 |
||||||||||||
| 2026 |
2025 |
% Change |
||||||||||
| Revenue |
||||||||||||
| Digital Assets |
$ | 191 | $ | 2 | 9450 | % | ||||||
| Managed Services |
836 | 1,005 | (17 | )% | ||||||||
| Collaboration Products |
202 | 207 | (2 | )% | ||||||||
| Consolidated |
1,229 | 1,214 | 1 | % | ||||||||
| Cost of revenues |
||||||||||||
| Digital Assets |
12 | — | 100 | % | ||||||||
| Managed Services |
462 | 731 | (37 | )% | ||||||||
| Collaboration Products |
11 | 6 | 83 | % | ||||||||
| Consolidated |
485 | 737 | (34 | )% | ||||||||
| Gross Margin |
||||||||||||
| Digital Assets |
179 | 2 | 8850 | % | ||||||||
| Managed Services |
374 | 274 | 36 | % | ||||||||
| Collaboration Products |
191 | 201 | (5 | )% | ||||||||
| Consolidated |
744 | 477 | 56 | % | ||||||||
| Operating expenses |
||||||||||||
| Digital Assets (1) |
199 | — | 100 | % | ||||||||
| Collaboration Products (2) |
7 | — | 100 | % | ||||||||
| Corporate (3) |
1,938 | 1,851 | 5 | % | ||||||||
| Consolidated |
2,144 | 1,851 | 16 | % | ||||||||
| Other income (expense), net |
||||||||||||
| Digital Assets (4) |
(211 | ) | 31 | (781 | )% | |||||||
| Managed Services |
— | (1 | ) | (100 | )% | |||||||
| Corporate (5) |
19 | 74 | (74 | )% | ||||||||
| Consolidated |
(192 | ) | 104 | (285 | )% | |||||||
| Net loss before taxes |
(1,592 | ) | (1,270 | ) | 25 | % | ||||||
| Income tax expense |
1 | 7 | (86 | )% | ||||||||
| Net loss |
$ | (1,593 | ) | $ | (1,277 | ) | 25 | % | ||||
| (1) | Operating expenses related to our Digital Assets segment include cash and stock-based advisory fees. | |
| (2) | Operating expenses related to our Collaboration Products Segment include sales and marketing and other miscellaneous expenses. |
|
| (3) | 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. |
|
| (4) | Other income (expense) for our Digital Assets segment includes unrealized gains and losses from revaluations of our digital assets. The six months ended June 30, 2026 also includes realized gains and losses on the sale of digital assets. | |
| (5) | Other expense for our Managed Services segment includes interest expense. | |
| (6) | Unallocated other income in Corporate is primarily related to interest income. |
Revenue. Total revenue was $1,229,000 and $1,214,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, an increase of $15,000 or 1%. The increase was driven by $191,000 of Digital Asset staking revenue, a new revenue stream that commenced in the second half of fiscal year 2025, partially offset by a decrease of $174,000 in Managed Services and Collaboration Products revenue. The following table summarizes the changes in components of our revenue (in thousands), and the significant changes in revenue are discussed in more detail below.
| Six Months Ended June 30, |
||||||||||||||||
| 2026 |
% of Revenue |
2025 |
% of Revenue |
|||||||||||||
| Revenue: Digital Assets |
||||||||||||||||
| Total Digital Assets revenue |
$ | 191 | 15.5 | % | $ | 2 | 0.2 | % | ||||||||
| Revenue: Managed Services |
||||||||||||||||
| Network services |
$ | 805 | 66 | % | $ | 980 | 81 | % | ||||||||
| Video collaboration |
26 | 2 | % | 18 | 1 | % | ||||||||||
| Professional and other services |
5 | 0 | % | 7 | 1 | % | ||||||||||
| Total Managed Services revenue |
$ | 836 | 68 | % | $ | 1,005 | 83 | % | ||||||||
| Revenue: Collaboration Products |
||||||||||||||||
| Visual collaboration product offerings |
$ | 202 | 16 | % | $ | 207 | 17 | % | ||||||||
| Total revenue |
$ | 1,229 | 100 | % | $ | 1,214 | 100 | % | ||||||||
Digital Assets
Digital Assets revenue was $191,000 and $2,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively. The Company began its digital asset treasury strategy in June 2025. The revenue was entirely comprised of TAO staking rewards.
| • |
During the six months ended June 30, 2026, we earned 728.97 TAO tokens through staking, or $191,000 in revenue. During the six months ended June 30, 2025, we earned 6.57 TAO tokens through staking, or $2,000 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
Managed Services revenue was $836,000 and $1,005,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, a decrease of $169,000, or 17%. The decrease was primarily attributable to a:
|
|
• |
Decrease in revenue for network services; mainly attributable to disconnects at certain customer locations. |
| • |
In the six months ended June 30, 2026, one customer accounted for 97% of Managed Services revenue. In the six months ended June 30, 2025, this customer accounted for 99% of Managed Services revenue. |
Collaboration Products
Collaboration Products revenue was $202,000 and $207,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, a decrease of $5,000, or 2%.
| • |
As discussed above, we announced the end of life for Mezzanine™ in 2025, and we expect no product revenue for Mezzanine™ products and minor amounts of maintenance revenue for the remainder of 2026. |
Cost of Revenue. Total cost of revenue was $485,000 and $737,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, a decrease of $252,000, or 34%. Cost of revenue includes all internal and external costs related to the delivery of revenue, including taxes billed to customers. Cost of revenue by segment is presented in the following table (in thousands):
| Six Months Ended June 30, |
||||||||
| 2026 |
2025 |
|||||||
| Cost of Revenue |
||||||||
| Digital Assets |
$ | 12 | $ | — | ||||
| Managed Services |
462 | 731 | ||||||
| Collaboration Products |
11 | 6 | ||||||
| Total cost of revenue |
$ | 485 | $ | 737 | ||||
Digital Assets
The Digital Assets segment recorded a cost of revenue of $12,000 and a gross profit of $179,000, or 94%, for the six months ended June 30, 2026. The Company did not have cost of revenue related to its Digital Assets operations during the six months ended June 30, 2025. Cost of revenue for digital assets consists of custodian fees and advisor fees on the Company’s staked digital assets.
Managed Services
The Managed Services segment recorded a cost of revenue of $462,000 and $731,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, a decrease of $269,000, or 37%. The Managed Services segment recorded a gross profit percentage of 45% and 27% for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively. The increase in gross margin was primarily due to reduced personnel expenses for the six months ended June 30, 2026.
Collaboration Products
The Collaboration Products segment recorded a cost of revenue of $11,000 and $6,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, an increase of $5,000. The Collaboration Products segment recorded a gross profit percentage of 95% and 97% for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively. The decrease in gross margin is mainly attributable to a bad debt recovery during the six months ended June 30, 2025.
Operating expenses are presented in the following table (in thousands):
| Six Months Ended June 30, |
||||||||||||||||
| 2026 |
2025 |
$ Change |
% Change |
|||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
$ | — | $ | 6 | $ | (6 | ) | (100 | )% | |||||||
| Sales and marketing |
7 | 14 | (7 | ) | (50 | )% | ||||||||||
| General and administrative |
2,137 | 1,831 | 306 | 17 | % | |||||||||||
| Total operating expenses |
$ | 2,144 | $ | 1,851 | $ | 293 | 16 | % | ||||||||
Research and Development. Research and development expenses were $6,000 for the six months ended June 30, 2026, and there were no research and development expenses for the six months ended June 30, 2025. Research and development expenses include internal and external costs related to developing features and enhancements to existing product offerings. This decrease is primarily attributable to the Company’s change in focus to digital asset treasury.
Sales and Marketing Expenses. Sales and marketing expenses were $7,000 and $14,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, a decrease of $7,000, or 50%. The decrease is primarily attributable to reduced personnel expenses during the six months ended June 30, 2026.
General and Administrative Expenses. General and administrative expenses were $2,137,000 and $1,831,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, an increase of $306,000, or 17%. General and administrative expenses include direct corporate expenses and personnel costs in the various corporate support categories, including executive, finance and accounting, legal, human resources, and information technology. The increase is primarily attributable to higher professional service fees, stock-based expense, and insurance expenses, driven by the transition into the digital asset space.
Loss from Operations. The Company recorded an operating loss of $1,400,000 and $1,374,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, an increase in operating loss of $26,000, or 2%. The increase was mainly attributable to the increase in total operating expenses of $293,000, partially offset by an increase in gross profit of $267,000.
Other (Expense) Income, Net. Other expense, net, was $192,000 for the six months ended June 30, 2026, and other income, net, was $104,000 for the six months ended June 30, 2025, a decrease of $296,000. The decrease was primarily driven by $97,000 of unrealized losses and $114,000 of realized losses on the Company’s digital assets during the six months ended June 30, 2026, and reduced interest income of $54,000 quarter over quarter. Other income for the six months ended June 30, 2025 was primarily comprised of $73,000 in interest income related to the Company’s cash accounts and an unrealized gain of $31,000 on the Company's digital assets.
Off-Balance Sheet Arrangements
As of June 30, 2026, we had no off-balance sheet arrangements.
Inflation
Management does not believe inflation had a significant effect on the Condensed Consolidated Financial Statements for the periods presented.
Liquidity and Capital Resources
As of June 30, 2026, we had $735,000 in cash and cash equivalents, $4,709,000 in digital assets, and working capital of $4,432,000. For the six months ended June 30, 2026, we recorded a net loss of $1,593,000, and we used $1,189,000 of net cash in operating activities.
Investing activities used $334,000 of net cash for the six months ended June 30, 2026, consisting of proceeds from the sale of digital assets of $1.2 million, purchases of digital assets of $0.5 million, and the $1.0 million investment in Manako Labs, Ltd. While our long-term strategy is to accumulate and hold TAO, we expect to continue to sell portions of our TAO holdings from time to time to fund operating expenses and manage our cash and liquidity position. The amount and timing of future sales will depend on our operating cash needs, prevailing TAO market prices, and our assessment of market liquidity conditions at the time. However, in practice, our ability to convert TAO to cash depends on available market liquidity on the exchanges where TAO trades, and we have not entered into any committed credit facilities or other arrangements that would provide liquidity independent of our digital asset holdings. TAO prices are highly volatile and could decline significantly from current levels, which would reduce the fair value of our holdings and potentially impair our ability to fund operations through digital asset sales without depleting our token position at unfavorable prices
During the six months ended June 30, 2026, we used $1.0 million of cash to fund our investment in Manako under the SAFE, which we have classified as an investing activity. This investment did not affect our results of operations, other than through any future impairment we may be required to recognize (see “Critical Accounting Policies and Estimates” below). The issuance of the Closing Warrant to Manako was a non-cash financing transaction; we recognized $60,000 of additional paid-in capital, offset by a corresponding increase in intangible assets, with no cash impact.
Our TLDA and SAFE-related commitments over the next twelve months include: (i) filing a resale registration statement on Form S-3 (or other available form) covering the shares underlying the Closing Warrant no later than November 24, 2026 (180 days after May 28, 2026), and using commercially reasonable efforts to cause it to become and remain effective; (ii) our ongoing obligation to pay Manako a certain percentage of Revenue Share on Net Revenue generated under Territory customer agreements, which will increase our cost of revenue as our Manako-related sales activity grows, but which is contingent on, and proportionate to, revenue we generate; and (iii) our right, but not obligation, to make an additional equity investment in Manako’s next priced equity financing round pursuant to our pro rata rights under the SAFE Side Letter. None of these commitments currently requires the use of cash beyond amounts already funded, other than usual-course legal and registration-related costs and the contingent Revenue Share described above.
We do not currently anticipate that the Manako transaction will have a material adverse effect on our short-term or long-term liquidity, although our ability to realize the expected commercial benefits of the TLDA depends on factors outside our control, including the continued availability and operation of the Bittensor Subnet 44 network on which the Platform operates. See Note 10 - Revenue Recognition - Manako Technology License and Distribution Agreement for a discussion of a “Subnet Disruption Event,” which, if it continues for more than 20 consecutive days, would give us the right to terminate the TLDA and would suspend both Manako’s platform-availability obligations and our Revenue Share payment obligations during its pendency.
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 increasing the size of our cryptocurrency treasury. To access capital to fund operations or provide growth capital, we will need to raise capital through the exercise of outstanding common and/or preferred warrants, and/or through 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 that may be needed on terms acceptable to us, it could have a material adverse effect on the Company.
Long-Term Capital Needs
In the long term, we believe additional capital will be required to fund operations and provide growth capital, including increasing the size of our cryptocurrency treasury. To fund operations or provide growth capital, we will need to raise capital through the exercise of outstanding warrants and/or one or more debt 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 that may be needed on terms acceptable to us, it could have a material adverse effect on the Company.
Outstanding warrants to purchase shares of the Company's Common Stock, as of June 30, 2026, are presented below.
| Issue Date and Description |
Warrants Outstanding |
Exercise Price |
Expiration Date |
||||||
| Q1 2023 - Common Warrants |
1,206,049 | $ | 3.41 | Q3 2028 |
|||||
| Q1 2023 - Placement Agent Warrants |
153,470 | $ | 3.41 | Q3 2028 |
|||||
| Q2 2024 - Common Warrants |
390,959 | $ | 3.41 | Q4 2029 |
|||||
| Q2 2025 - Advisor Warrants |
100,000 | $ | 3.77 | Q2 2028 |
|||||
| Q2 2025 - 2025 Placement Agent Warrants |
99,470 | $ | 4.71 | Q2 2030 |
|||||
| Q2 2025 - Pre-Funded Warrants (1) |
342,070 | $ | 3.77 | Q2 2030 |
|||||
| Q3 2025 - Common Warrants |
152,519 | $ | 3.77 | Q3 2030 |
|||||
| Q2 2026 - Closing Warrant |
100,000 | $ | 3.41 | Q4 2027 |
|||||
| 2,544,537 | |||||||||
| (1) | The exercise price for the Pre-Funded Warrants was paid upon issuance of the Pre-Funded Warrants. The exercise of the Pre-Funded Warrants will not result in additional proceeds to the Company. |
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) 6,550 shares of our newly designated Series F Preferred Stock, $0.0001 par value per share (the “Series F Preferred Stock”), (ii) preferred warrants (the “Preferred Warrants”) to acquire 32,750 shares of Series F Preferred Stock, and (iii) common warrants (“Common Warrants” and with the Preferred Warrants the “Investor Warrants”) to acquire up to 95,764 shares of Common Stock.
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 8% of the aggregate gross proceeds raised in the 2023 Private Placement, and (ii) grant to the Placement Agent warrants (the “2023 Placement Agent Warrants”) to purchase 7,663 shares of Common Stock.
On March 31, 2023, the Company issued the Common Warrants and the Placement Agent Warrants to purchase an aggregate of 103,427 shares of the Company’s Common Stock. The Common Warrants and Placement Agent Warrants have a term of 5 years, commencing six months and one day from the date of issuance, and are currently exercisable for $3.41 per share. The exercise price is subject to customary adjustments for stock splits, stock dividends, stock combination, recapitalization, or other similar transactions involving the Common Stock, and subject to price-based adjustment on a full ratchet basis in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable exercise price for the Common Warrants (subject to certain exceptions). The Common Warrants and Placement Agent Warrants are exercisable for cash, provided that if there is no effective registration statement available permitting the resale of the common shares, they may be exercised on a cashless basis. Exercise of the Common Warrants and Placement Agent Warrants is subject to certain limitations, including a 4.99% beneficial ownership limitation.
During the years ended December 31, 2024 and 2025, 24,104 and 152,519 additional Common Warrants were issued, respectively, in accordance with the exercise provisions of the Preferred Warrants. These Common Warrants are exercisable at an exercise price of $3.41 and have a term of five years.
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 1,989,392 shares of our Common Stock (the "Pre-Funded Warrants") in exchange for gross proceeds of approximately $7.5 million. Net proceeds to the Company were approximately $6,888,000, after deducting placement agent fees of $375,000 and other offering expenses of $237,000 payable by the Company.
The exercise price upon exercise of each Pre-Funded Warrant is $0.0001 per share of Common Stock, with an aggregate exercise price of $3.77 per share of Common Stock, of which $3.7699 per share of Common Stock was paid by the holders at the closing on June 10, 2025. The exercise price of the Pre-Funded Warrants is subject to appropriate adjustment in the event of stock dividends, subdivisions, stock splits, stock combinations, cash distributions, reclassifications, exchanges, combinations, or substitutions affecting our Common Stock. In lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holders of Pre-Funded Warrants may elect instead to receive upon such exercise the net number of shares of Common Stock determined according to a formula set forth in the Pre-Funded Warrants.
The Pre-Funded Warrants were 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 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to the Company, the holder may increase the beneficial ownership limitation to up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.
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 5% of the aggregate gross proceeds raised in the 2025 Private Placement and (ii) up to $50,000 for fees and expenses of legal counsel and other out-of-pocket expenses. In addition, the Company issued to the Placement Agent or its designees warrants (the “2025 Placement Agent Warrants”) to purchase up to an aggregate of 99,470 shares of Common Stock. The Placement Agent Warrants are exercisable immediately upon issuance. The terms of the Placement Agent Warrants are substantially the same as those of the Pre-Funded Warrants, except that the Placement Agent Warrants will expire on June 10, 2030, are initially exercisable at a price of $4.71 per share of Common Stock, may only be exercised a cashless basis if there is no effective registration statement registering the underlying shares, and in the event of a Fundamental Transaction as defined in the Placement Agent Warrants, warrant holders may require the company to purchase the remaining unexercised portion of a Placement Agent Warrant for an amount equal to the Black-Scholes Value of that portion, as of the date of the Fundamental Transaction, unless the Fundamental Transaction is not within the Company’s control, as described in the Placement Agent Warrants. There is no established public trading market for the Placement Agent Warrants, and we do not intend to list the Placement Agent Warrants on any national securities exchange or nationally recognized trading system.
Advisor Warrants
On June 5, 2025, the Company issued warrants to acquire up to 100,000 shares of our Common Stock (the "Advisor Warrants") to Brandon Sofer, our advisory agent (in such capacity, the "Advisory Agent"), in connection with the Advisory Agent's provision of certain treasury advisory services. The terms of the Advisor Warrants are identical to those of the Placement Agent Warrants, except that the Advisor Warrants will expire on June 5, 2028, are initially exercisable in part beginning on July 7, 2025 at a price of $3.77 per share of Common Stock, and will vest in equal installments at a rate of 1/12th (8.33%) per month, beginning on the thirty day anniversary of the issue date, for twelve months.
Manako Warrants
On May 29, 2026, the Company issued warrants to purchase up to 100,000 shares of the Company’s Common Stock, to Manako Labs, Ltd., at an exercise price of $3.41 per share (the “Closing Warrants”). The Closing Warrant will expire on November 29, 2027. In connection with potential joint development of the Company’s own subnet on the Bittensor network, the Company may issue additional warrants to Manako as follows: (i) warrants to purchase up to 100,000 shares of Common Stock at an exercise price of $4.50 per share, issuable upon the satisfaction of certain conditions (“Tranche A Warrants”), and (ii) warrants to purchase up to 100,000 shares of Common Stock at an exercise price of $5.50 per share, issuable upon the achievement of certain milestones (“Tranche B Warrants” and together with the Closing Warrant and Tranche A Warrants, the “Manako Warrants”).
The exercise price of each Manako Warrant is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like and dilutive issuances (in each case, subject to certain exceptions). There is no established public trading market for the Manako Warrants, and the Company does not intend to list the Warrants on any national securities exchange or nationally recognized trading system. Manako may not exercise any portion of such Manako Warrants to the extent that they, together with any affiliates, would beneficially own more than 9.99% of the Company’s outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to the Company, Manako may increase or decrease the beneficial ownership limitation, subject to a maximum of up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.
In connection with the TLDA, on May 28, 2026, the Company and Manako entered into a Lock-Up Agreement (the “Lock-Up Agreement”), pursuant to which the Manako Warrants are subject to a lock-up period of six (6) months following issuance or until effective registration of the shares of Common Stock issuable upon exercise of the Manako Warrants, whichever is later, followed by twenty-four (24) months of post-lock-up trading restrictions including a daily volume cap of ten percent (10%) of average daily trading volume, a price floor of one hundred twenty percent (120%) of the relevant exercise price, and three (3) trading days’ advance notice of sales. The Lock-Up Agreement provides carve-outs from the post-lock-up trading restrictions for (i) block trades to institutional investors through a registered broker-dealer, (ii) private transfers to Manako affiliates bound by the same obligations, (iii) transfers in connection with any merger, tender offer, or similar transaction involving the Company as issuer, and (iv) sales pursuant to a Rule 10b5-1 plan established outside a blackout period.
Series F Preferred Stock Obligations
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.
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 a current conversion price of $3.77 (the “Conversion Price”). The holders of the Series F Preferred Shares may also elect to convert their shares at an alternative conversion price equal to the lower of (i) 80% of the applicable Conversion Price as in effect on the date of the conversion, (ii) 80% of the closing price on the trading day immediately preceding the delivery of the conversion notice, and (iii) the greater of (a) the Floor Price (as defined in the Certificate of Designations) and (b) the quotient of (x) the sum of the five lowest Closing Bid Prices (as defined in the Certificate of Designations) for trading days in the 30 consecutive trading day period ending and including the trading day immediately preceding the delivery of the applicable Conversion Notice, divided by (y) five. The Conversion Price is subject to customary adjustments for stock splits, stock dividends, stock combination recapitalization, or other similar transactions involving the Common Stock and subject to price-based adjustment on a full ratchet basis in the event of any issuances of our common stock, or securities convertible, exercisable, or exchangeable for Common Stock, at a price below the then-applicable Conversion Price (subject to certain exceptions).
Under the Certificate of Designations, the Series F Preferred Shares have an initial stated value of $1,000 per share (the “Stated Value”). The holders of the Series F Preferred Shares are entitled to dividends of 9% per annum, which will be payable in arrears quarterly. Accrued dividends may be paid, at our option, in cash, and if not paid, shall increase the stated value of the Series F Preferred Shares. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Certificate of Designations), the Series F Preferred Shares will accrue dividends at the rate of 20% per annum (the “Default Rate”). The Series F Preferred Shares have no voting rights, other than with respect to certain matters affecting the rights of the Series F Preferred Shares. On matters with respect to which the holders of the Series F Preferred Shares have a right to vote, holders of the Preferred Shares will have voting rights on an as-converted basis.
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 entered into concurrently with the 2023 Purchase 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.
As of June 30, 2026, there were 150 shares of Series F Preferred Stock issued and outstanding, and accrued dividends of $30,000.
Series F Preferred Stock Warrants
The Preferred Warrants are exercisable for Series F Preferred Shares at an exercise price of $975. The exercise price is subject to customary adjustments for stock splits, stock dividends, stock combination recapitalization, or other similar transactions involving the Common Stock. The Preferred Warrants expire three years from the date of issuance and are exercisable for cash. For each Preferred Warrant exercised, the Investors shall receive Common Warrants to purchase a number of shares of Common Stock equal to 100% of the number of shares of Common Stock the Investors would receive if the Series F Preferred Shares issuable upon exercise of such Warrant were converted at the applicable Conversion Price. The fair value of the Preferred Warrants was recorded within additional paid-in capital upon issuance.
The Preferred Warrants were set to expire three years from the date of issuance, or March 31, 2026, and are exercisable for cash. On March 31, 2026, the Company and the Preferred Warrant holders agreed to extend the terms of the Preferred Warrants to expire May 15, 2026. On May 15, 2026, the Company and the Preferred Warrant holders agreed to extend the terms of the Preferred Warrants to expire June 30, 2026. On June 30, 2026, the Company and the Preferred Warrant holders agreed to extend the terms of the Preferred Warrants to expire September 30, 2026.
As of June 30, 2026, 30,527 Preferred Warrants remained outstanding.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide this information.
ITEM 4. 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 Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2026. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, 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
No change in our internal control over financial reporting occurred during the fiscal quarter ended June 30, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
From time to time, we are subject to various legal proceedings arising in the ordinary course of business, including proceedings for which we have insurance coverage. As of the date hereof, we are not 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.
A description of the risks associated with our business, financial conditions, and results of operations is set forth in “Part I. Item 1A. Risk Factors” of our 2025 Annual Report. Except as set forth below, there have been no material changes to these risks during the three months ended June 30, 2026. The risks described in the 2025 Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, or future results.
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 three and six months ended June 30, 2026, and 2025, one major customer accounted for 77%, 66%, 82%, and 82% 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. 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. Our agreements with these customers may be canceled if we materially breach the agreement or for other reasons outside 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. The 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, liquidity, financial condition, and results of operations.
Our ability to realize the anticipated benefits of the TLDA depends on the continued operation of Bittensor Subnet 44, a third-party network that we do not control, and any material disruption to that network could suspend or terminate our commercial rights. The Platform that we license and distribute under the TLDA with Manako is Manako's Score AI computer vision platform, which operates on Bittensor Subnet 44, an external, third-party-operated blockchain subnet that is not controlled by us and, following certain governance actions, may not be entirely controlled by Manako either. Any prolonged disruption, deregistration, or unfavorable migration of Subnet 44 could impair the Platform's availability to us and our customers, disrupt our ability to generate Revenue Share or referral fee income, and result in impairment of the related intangible asset we carry on our balance sheet.
Our distribution rights under the TLDA are non-exclusive, and Manako's contractual commitment to preferred-partner status is limited in duration and contingent on our performance, which could allow Manako to grant competing rights to third parties. The license we hold under the TLDA to market, demonstrate, sell, and distribute the Platform in the United States and Canada is non-exclusive, non-transferable, and sublicensable only as permitted under the TLDA. While Manako has acknowledged us as its preferred commercialization partner in the Territory during the initial term of the TLDA and has agreed not to grant certain competing distribution arrangements without first offering us a right of first refusal, this preferred-partner status automatically continues into each renewal term only if we have met our minimum performance expectations under the TLDA for the immediately preceding term. If we fail to meet those performance expectations, or if Manako pursues arrangements that fall outside the specific characteristics subject to our right of first refusal, Manako could grant distribution or sublicensing rights to competitors in our Territory, which could materially impair our ability to realize the anticipated commercial benefits of the TLDA.
The commercial relationship established under the TLDA is new and unproven, has not yet generated any revenue, and our ability to realize its intended benefits is subject to significant execution risk. As of June 30, 2026, we had not recognized any revenue or associated Revenue Share cost of revenue under Customer Agreements entered into pursuant to the TLDA. The TLDA's commercial terms, including Manako's obligation to make the Platform available and our obligation to pay the Revenue Share, only became operative on May 29, 2026, when we funded the full SAFE investment amount. Our preferred commercialization partner status is not indefinite: it continues into each renewal term only if we have met minimum performance expectations under the TLDA for the preceding term, and either party may terminate the TLDA for convenience on 90 days' notice. Achievement of milestones for the Platform — which affect the service levels Manako is obligated to provide — depends on criteria such as minimum customer deployments and the absence of critical defects that are outside of our control. Because this is our first arrangement of this kind, actual commercial results could differ materially from our current expectations.
Our investment in Manako is illiquid, could result in a complete loss, and does not give us control, board representation, or voting rights over Manako's business or financing decisions. Concurrently with the TLDA, we invested $1.0 million in Manako pursuant to the SAFE, which will convert into Manako equity only upon a future qualifying equity financing, liquidity event, or dissolution event, or automatically on December 1, 2027 if none of those events has occurred by then. Because Manako is a private company for which no readily determinable fair value exists, we account for the investment under the measurement alternative in ASC 321-10-35-2, carrying it at cost of $1.0 million, subject to remeasurement only for impairment or observable price changes in orderly transactions involving similar Manako securities. Determining whether an impairment indicator exists requires significant judgment regarding Manako's cash runway, the continued operation of Subnet 44, and the occurrence of future Manako financing transactions, and there can be no assurance that we will not be required to record an impairment of some or all of this investment in future periods. If Manako is unable to complete a qualifying financing before the Longstop Date, or if it experiences a liquidity or dissolution event, our recovery may be limited to the greater of our $1,000,000 investment or its as-converted value, and there is no assurance Manako will have sufficient assets to satisfy that obligation.
We may be delisted from the Nasdaq if we fail to maintain a minimum market value of $5.0 million in listed securities. On July 22, 2026, the SEC issued an order approving Nasdaq's amendments to its continued listing standards that would require listed companies to maintain a minimum $5.0 million market value of listed securities (“MVLS”). On July 29, 2026, in response to notices received for petition for review of the delegated action and in accordance with Rule 431(e) of the SEC’s Rules of Practice, the July 22 order is stayed until the SEC orders otherwise. If the stay is lifted, and if our MVLS falls below the required threshold for 30 consecutive business days, Nasdaq staff will issue a staff delisting determination, the Company's securities will be immediately suspended from trading, and delisting procedures will commence. Shares will then, generally, begin trading on the over-the-counter market. 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. 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 $5.5 million.
Unlike certain other continued listing deficiencies, which afford companies an opportunity to submit a compliance plan or benefit from a cure period, the MVLS requirement provides no such relief. A timely request for a hearing before the Nasdaq Hearings Panel will not automatically stay the suspension of trading. The Hearings Panel may, in its discretion: a) reverse the delisting determination, only if it was made in error, or b) grant an exception for up to 180 days for the Company to demonstrate compliance with Nasdaq's initial listing standards (which are generally higher than continued listing standards). An adverse decision may be further appealed to the Nasdaq Listing and Hearing Review Council; however, there can be no assurances that an appeal would be successful.
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 146.4 million shares of Common Stock authorized but unissued, and approximately 18.8 million shares of Common Stock authorized but unissued after giving effect to the exercise or conversion, as applicable, of the securities issued in the 2023 Private Placement and the 2025 Private Placement and other outstanding awards, assuming all of the shares of Series F Preferred Stock are converted into 47,835 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 exchange 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 342,070 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 shares of Common Stock, the Advisor Warrants are exercised at an exercise price of $3.77 for 100,000 shares of Common Stock, and the Manako Closing Warrants are exercised at an exercise price of $3.41 for 100,000 shares of Common Stock. Additionally, depending on the trading prices of our Common Stock, we may need to issue more or fewer shares of Common Stock in connection with the 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 in excess of 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 in connection with the exercise of our stock options under our incentive plan.
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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities by the Company
There have been no unregistered sales of securities by the Company during the period covered by this Report that have not been previously reported in a Current Report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
(c) During the period covered by this Quarterly Report on Form 10-Q, director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
* Filed herewith.
** Furnished herewith.
+Certain portions of this exhibit have been redacted in accordance with Item 601(a)(5) and Item 601(b)(10)(iv) of Regulation S-K under the Securities Act. The registrant hereby agrees to furnish an unredacted copy of the exhibit to the SEC upon its request.
In accordance with the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TAOWEAVE, INC. |
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| August 7, 2026 |
By: |
/s/ Peter Holst |
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| Peter Holst |
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| Chief Executive Officer |
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| (Principal Executive Officer) |
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| August 7, 2026 | By: |
/s/ David Clark |
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| David Clark |
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| Chief Financial Officer |
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| (Principal Financial and Principal Accounting Officer) |
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