TaoWeave, Inc.: Form 10-Q for the period ended Jun 30, 2026

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):

(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.

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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.

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):

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):

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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):

(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.

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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.

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):

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):

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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.

(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.

As a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide this information.

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.

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.