TaoWeave, Inc. 第一季 2026 年 10-Q 報告重點

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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.
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 for the Company.

 
Unallocated other income in Corporate is primarily related to interest income.
Includes direct labor costs (including sales and marketing costs), employment taxes, employee benefits, workers’ compensation, and office expenses.
Calculation assumes conversion of the stated value and accrued dividends of the Series F Preferred Stock into Common Stock at a conversion price of $3.77 per share as of March 31, 2026, and a conversion price of $11.17 as of March 31, 2025.
Operating expenses related to the Company's Collaboration Products Segment include sales and marketing, and other miscellaneous expenses.
Operating expenses related to the Company's Digital Assets segment include cash and stock-based advisory fees.
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 $3.77 as of March 31, 2026, and a conversion price of $11.17 as of March 31, 2025.
Other segment items include other income and expenses, net, interest expense, certain professional services, and miscellaneous taxes and fees.
Non-cash fees are related to custodian fees paid in tokens and a one-time setup and transfer fee for Kraken.
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.
Other income (expense) for the Company's Digital Assets segment includes unrealized gains and (losses) from revaluations of our digital assets. The three months ended March 31, 2026 also includes realized gains on the sale of digital assets.
Other expense for the Company's Managed Services segment includes interest expense.

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Table of Contents

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2026.

or

 

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

 

Commission file number: 001-35376

TAOWEAVE, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 Delaware
 77-0312442
 

 (State or Other Jurisdiction of Incorporation or Organization)
 (I.R.S. Employer Identification No.)
 

 

110 16th Street, Suite 1400-1024, Denver, CO 80202

(Address of Principal Executive Offices, including Zip Code)

 

(213) 683-8863 ext. 5

(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
 

 Common Stock, par value $0.0001 per share
   TWAV
   Nasdaq Capital Market
 

 

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.

Yes ☒  No ☐

 

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).

Yes ☒  No ☐

 

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 ☐
 

  

 Non-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 ☐ No ☒

 

The number of shares outstanding of the registrant’s common stock as of May 14, 2026, was 3,456,149.

 

 
 
 
  
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 

 
  
 

 
 TAOWEAVE, INC.

 Index

  

 
 
 
 PART I - FINANCIAL INFORMATION
 
  
 

 
  
  
 

 
 Item 1. Financial Statements
 
 1
 
 

 
  
  
 

 
 Condensed Consolidated Balance Sheets at March 31, 2026 (unaudited) and December 31, 2025
 
 1
 
 

 
  
  
 

 
 Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2026, and 2025
 
 2
 
 

 
  
  
 

 
 Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026, and 2025
 
 3
 
 

 
  
  
 

 
 Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026, and 2025
 
 5
 
 

 
  
  
 

 
 Notes to unaudited Condensed Consolidated Financial Statements
 
 6
 
 

 
  
  
 

 
 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 17
 
 

 
  
  
 

 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
 25
 
 

 
  
  
 

 
 Item 4. Controls and Procedures
 
 25
 
 

 
  
  
 

 
  
  
 

 
 PART II - OTHER INFORMATION
 
  
 

 
  
  
 

 
 Item 1. Legal Proceedings
 
 26
 
 

 
  
  
 

 
 Item 1A. Risk Factors
 
 26
 
 

 
  
  
 

 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 27
 
 

 
  
  
 

 
 Item 3. Defaults Upon Senior Securities
 
 27
 
 

 
  
  
 

 
 Item 4. Mine Safety Disclosures
 
 27
 
 

 
  
  
 

 
 Item 5. Other Information
 
 27
 
 

 
  
  
 

 
 Item 6. Exhibits
 
 28
 
 

 
  
  
 

 
 Signatures
 
 29
 
 

 
 
  

 
 
 
 
  
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 

  

 

 
  
 

 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.
 
 

 
 
  

 
 
 
 
  
 

 

 

 
 
 
 
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 PART I - FINANCIAL INFORMATION

  

 ITEM 1. FINANCIAL STATEMENTS

  

 TAOWEAVE, INC.

 CONDENSED CONSOLIDATED BALANCE SHEETS

 (In thousands, except shares, par value, and stated value)

  

 
    March 31, 2026
    December 31, 2025
  

   (Unaudited)
     

 ASSETS
         

 Current assets:
         

 Cash and cash equivalents
  $2,130  $2,258 

 Digital assets
   7,209   5,395 

 Accounts receivable, net
   135   138 

 Prepaid expenses and other current assets
   500   424 

 Total current assets
   9,974   8,215 

 Other assets
   3   4 

 Total assets
  $9,977  $8,219 

 LIABILITIES AND STOCKHOLDERS’ EQUITY
         

 Current liabilities:
         

 Accounts payable
  $272  $112 

 Accrued expenses and other current liabilities
   973   1,061 

 Deferred revenue
   6   13 

 Total current liabilities
   1,251   1,186 

 Total liabilities
   1,251   1,186 

 Commitments and contingencies (see Note 10)
           

 Stockholders’ equity:
         

 Preferred stock Series F, convertible; $0.0001 par value; $176,000 stated value; 42,000 shares authorized, 150 shares issued and outstanding as of March 31, 2026 and December 31, 2025
   —   — 

 Common stock; $0.0001 par value; 150,000,000 shares authorized, 3,327,399 shares issued, and 3,327,210 outstanding as of March 31, 2026 and December 31, 2025
   —   — 

 Treasury Stock, 189 common shares
   (181)  (181)

 Additional paid-in capital
   245,839   245,843 

 Accumulated deficit
   (236,932)  (238,629)

 Total stockholders’ equity
   8,726   7,033 

 Total liabilities and stockholders’ equity
  $9,977  $8,219 

 

  

 See accompanying notes to condensed consolidated financial statements.

 
  
 

  

 
 
 
 
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 TAOWEAVE, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (In thousands, except share and per share data)

 (Unaudited)

  

 
    Three Months Ended
  

   March 31,
  

   2026
    2025
  

 Revenue
  $707  $622 

 Cost of revenue
   237   373 

 Gross profit
   470   249 

         

 Operating expenses:
         

 Research and development
   —   3 

 Sales and marketing
   7   8 

 General and administrative
   1,022   929 

 Total operating expenses
   1,029   940 

 Operating loss
   (559)  (691)

 Other income, net
         

 Interest income, net
   6   26 

 Realized gain on digital assets
   52   — 

 Unrealized gain on digital assets
   2,198   — 

 Total other income, net
   2,256   26 

 Income (loss) before income taxes
   1,697   (665)

 Income tax expense
   —   7 

 Net income (loss)
   1,697   (672)

 Preferred stock dividends
   4   12 

 Net income (loss) attributable to common stockholders
  $1,693  $(684)

         

 Net loss attributable to common stockholders per share:
         

 Basic net income (loss) per share
  $0.43  $(0.59)

 Diluted net income (loss) per share
  $0.43  $(0.59)

 Weighted-average number of shares of Common Stock:
         

 Basic
   3,913,471   1,151,482 

 Diluted
   3,913,471   1,151,482 

  

 

  

 See accompanying notes to condensed consolidated financial statements.

  

 
 
 
 
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 TAOWEAVE, INC.

 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

 Three Months Ended March 31, 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
   150  $—   3,327,399  $—   189  $(181) $245,843  $(238,629) $7,033 

 Net income
   —   —   —   —   —   —   —   1,697   1,697 

 Series F Preferred Stock dividends
   —   —   —   —   —   —   (4)  —   (4)

 Balance on March 31, 2026
   150  $—   3,327,399  $—   189  $(181) $245,839  $(236,932) $8,726 

 

  

  

  

  

 
 
 
 
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 TAOWEAVE, INC.

 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

 Three Months Ended March 31, 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
   545  $—   1,144,926  $—   189  $(181) $236,458  $(232,274) $4,003 

 Net loss
   —   —   —   —   —   —   —   (672)  (672)

 Common warrant exercise, net of fees
   —   —   10,000   —   —   —   31   —   31 

 Series F Preferred Stock dividends
   —   —   —   —   —   —   (12)  —   (12)

 Balance on March 31, 2025
   545  $—   1,154,926  $—   189  $(181) $236,477  $(232,946) $3,350 

 

  

 See accompanying notes to condensed consolidated financial statements.

  

 
 
 
 
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 TAOWEAVE, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands)

 (Unaudited)

  

 
    Three Months Ended March 31,
  

   2026
    2025
  

 Cash flows from operating activities:
         

 Net income (loss)
  $1,697  $(672)

 Adjustments to reconcile net loss to net cash used in operating activities:
         

 Bad debt recovery
   —   (18)

 Stock-based expense
   84   — 

 Non-cash revenue from digital assets
   (86)  — 

 Unrealized gain on digital assets
   (2,198)  — 

 Realized gain on sale of digital assets
   (52)  — 

 Changes in operating assets and liabilities:
         

 Accounts receivable
   3   91 

 Prepaid expenses and other current assets
   (160)  (203)

 Other assets
   1   1 

 Accounts payable
   160   (35)

 Accrued expenses and other current liabilities
   (92)  151 

 Deferred revenue
   (7)  5 

 Net cash used in operating activities
   (650)  (680)

 Cash flows from investing activities:
         

 Proceeds from the sale of TAO tokens
   522   — 

 Net cash provided by investing activities
   522   — 

 Cash flows from financing activities:
         

 Proceeds from exercise of common stock warrants, net of costs
   —   31 

 Net cash provided by financing activities
   —   31 

 Decrease in cash
   (128)  (649)

 Cash and cash equivalents at beginning of period
   2,258   4,965 

 Cash and cash equivalents at end of period
  $2,130  $4,316 

         

 Supplemental disclosures of cash flow information:
         

         

 Reconciliation of cash and cash equivalents
         

 Cash
  $1,630  $3,816 

 Current certificates of deposit
   500   500 

 Total cash and cash equivalents
  $2,130  $4,316 

         

 Non-cash investing and financing activities:
         

 Series F Preferred Stock dividends
  $4  $12 

  

 

  

  

 See accompanying notes to condensed consolidated financial statements.

  

 
 
 
 
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 TAOWEAVE, INC.

 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 Three Months Ended March 31, 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 centered around its patented Mezzanine™ product line and managed services for video collaboration and network solutions.

  

 
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 100%-owned subsidiaries (i) GP Communications, LLC (“GP Communications”), whose business function is to provide interstate telecommunications services for regulatory purposes, and (ii) Oblong Industries, Inc. All inter-company balances and transactions have been eliminated in consolidation. The U.S. Dollar is the functional currency for all subsidiaries.

  

 
Cash and Cash Equivalents

  

 As of March 31, 2026, the Company's total cash balance of $2,130,000 is available. Of this balance, $500,000 was held in short-term certificates of deposit with MidFirst Bank. As of December 31, 2025, the Company's total cash balance of $2,258,000 was available, with $500,000 held in short-term certificates of deposit with MidFirst Bank. The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents.

  

 
Stock-Based Expense

  

 In June 2025, the Company granted warrants to an advisor related to digital assets. See Note 6 - Capital Stock for further information. The total stock-based cost of these warrants is $335,000, which will be expensed ratably over the twelve-month original life of the contract and vesting period of the warrants. During the three months ended March 31, 2026, $84,000 was recorded as stock-based advisory fees in general and administrative expense. During the year ended December 31, 2025, $168,000 was recorded as stock-based advisory fees in general and administrative expense, and as of March 31, 2026, $83,000 of expense remains to be recognized through June 2026.

  

 
Segments

  

 The Company currently operates in three 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 9 - Segment Reporting for further discussion.

  

 
 
 
 
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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, 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 to the Company’s significant accounting policies during the three months ended March 31, 2026.

  

 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.

 
 
  
 

 
 Note 2 - Liquidity

  

 As of March 31, 2026, the Company had $2,130,000 in cash and cash equivalents, $7,209,000 in digital assets, and working capital of $8,723,000. For the three months ended March 31, 2026, the Company recorded net income of $1,697,000, investing activities provided $522,000 in net cash, and the Company used net cash of $650,000 in operating activities.

  

 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.

 
  

 
  
 

 
 Note 3 - Digital Assets

  

 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 March 31, 2026, and December 31, 2025, approximately 72% and 66% of the Company's total assets (including cash) were held in TAO, respectively. The Company intends to continue allocating substantial portions of its excess cash to TAO without a formal cap on the percentage of assets invested in TAO.

  

 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 following table summarizes the Company's digital asset holdings as of  March 31, 2026 (in thousands except for tokens):

  

 
 As of March 31, 2026
  

 Asset
   Tokens
    Fair Market Value
    Unrealized Gain
  

 Staked TAO
   23,556.88  $7,209  $2,198 

 Un-staked TAO
   —   —   — 

   23,556.88  $7,209  $2,198 

 
  

 The Company recorded an unrealized gain of $2,198,000 for the three months ended March 31, 2026. As of March 31, 2026, the fair value of the Company's digital assets was $7,209,000.

  

 
 
 
 
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 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 March 31, 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 March 31, 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.

  

 During the three months ended March 31, 2026, the Company earned approximately 348.44 TAO Tokens through staking, representing approximately $86,000 in revenue. Staking yields are variable and depend on several factors, including validator performance, total network stake, and the dynamics of the specific subnets to which the Company's TAO is delegated. The following table summarizes the Company's staking rewards for the three months ended March 31, 2026, and 2025 (in thousands except for tokens):

  

  

 
    For the Three Months Ended March 31,
  

   2026
    2025
  

 Asset
   Token Rewards
    Revenue ($USD)
    Token Rewards
    Revenue ($USD)
  

 TAO
   348.44  $86   —  $— 

 
  

 The Company's cost of revenue for digital assets consists of custodian fees and advisor fees on its staked digital assets. For the three months ended March 31, 2026, the Company recorded cost of revenue of $6,000 related to digital asset staking, resulting in a gross profit of $80,000, or 93%. The following table summarizes the Company's cost of revenue for the three months ended March 31, 2026, and 2025 (in thousands):

  

 
    For the Three Months Ended March 31,
  

   2026
    2025
  

 Cost
   Fees TAO Tokens
    Fees $ USD
    Fees TAO Tokens
    Fees $ USD
  

 Cash Transaction Fees
   —  $2   —  $— 

 Advisory fees related to staking
   —   4   —   — 

   —  $6   —  $— 

 
  

 During the three months ended March 31, 2026, the Company did not purchase any TAO tokens and sold 1,457 tokens for cash proceeds of $522,000. The Company recognized a realized gain on this sale of $52,000, which is recorded in other income on the Condensed Consolidated Statement of Operations.

  

 The following table summarizes disposition activity for the three months ended March 31, 2026 (in thousands except for tokens):

  

 
    For the Three Months Ended March 31, 2026
  

 Asset
   Tokens Sold
    Proceeds $USD
    Cost $USD
    Realized Gain
  

 TAO
   1,457.00  $522   470  $52 

 
  

 
 
 
 
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 The following table summarizes the Company's digital asset activity for the year ended December 31, 2025, and the three months ended March 31, 2026. The fair value is presented as of  March 31, 2026 (in thousands except for tokens):

  

 
    TAO Tokens
    $USD
  

 Digital asset balance on December 31, 2024
   —  $— 

 TAO Token Purchases
   24,127.62   8,736 

 TAO Staking Rewards
   543.96   186 

 Non-Cash Fees
   (6.14)  (8)

 Unrealized Gains on Fair Value Remeasurement
   —   (3,519)

 Digital asset balance on December 31, 2025
   24,665.44   5,395 

 TAO Staking Rewards
   348.44   86 

 TAO Token Sales
   (1,457.00)  (470)

 Unrealized Gain on Fair Value Remeasurement
   —   2,198 

 Digital asset balance on March 31, 2026
   23,556.88  $7,209 

 
  

 
 
 
 
  
 

 

 

 
 
 
 
 Note 4 - Prepaid Expenses and Other Current Assets
 

 

 

  

 Prepaid expenses and other current assets consisted of the following (in thousands):

  

 
    March 31,
    December 31,
  

   2026
    2025
  

 Prepaid expenses
  $170  $204 

 Prepaid insurance
   290   121 

 Other current assets
   15   58 

 Prepaid software licenses
   25   41 

 Prepaid expenses and other current assets
  $500  $424 

 
  

 
 
 
 As of
 March 31, 2026, and
 December 31, 2025, the Company's Digital Assets segment had
 $83,000 and
 $168,000 in prepaid expenses, respectively. These prepaid expenses were related to unamortized stock-based advisor expenses.
 

 
  
 

 
 As of
 March 31, 2026, and
 December 31, 2025, the Company's Managed Services segment had
 $15,000 in prepaid expenses. These prepaid expenses primarily consisted of software licenses.
 

 
  
 

 
 As of
 March 31, 2026, and
 December 31, 2025, the Company's Collaboration Products segment had
 $6,000 and
 $7,000 in prepaid expenses, respectively. These prepaid expenses primarily consisted of software licenses.
 

 
  
 

 
 As of
 March 31, 2026, and
 December 31, 2025, the Company's unallocated prepaid expenses were 
 $396,000 and
 $234,000, respectively. These prepaid expenses were primarily attributable to insurance and software licenses. As of
 March 31, 2026, the amount also included expenses related to the filing of a registration statement, and as of
 March 31, 2025, the amount also included personnel expenses due to the timing of payroll.
 

 

 

 
 
  
 

 
 Note 5 - Accrued Expenses and Other Current Liabilities 

  

 Accrued expenses and other current liabilities consisted of the following (in thousands):

  

 
    March 31,
    December 31,
  

   2026
    2025
  

 Compensation costs
  $431  $324 

 Customer deposits
   —   95 

 Professional fees
   126   79 

 Taxes and regulatory fees
   214   367 

 Accrued rent
   170   170 

 Accrued dividends on Series F Preferred Stock
   26   22 

 Other accrued expenses and liabilities
   6   4 

 Accr