TWAV 10-K & 10-Q changes, risk factors and insider trading

We own and may purchase additional digital assets, the prices of which have been, and will likely continue to be, highly volatile. We currently own digital assets and expect to purchase more in the future. Digital assets are generally highly volatile assets. In addition, digital assets do not pay interest or other returns, so the ability to generate a return on investment from the net proceeds of the June 2025 and future offerings will depend on whether their value appreciates following our purchases of digital assets with those proceeds. Future fluctuations in digital asset trading prices may result in our converting digital assets purchased into cash with a value substantially below the purchase price.

If any of the digital assets that we hold are classified as a security, we may be subject to extensive regulation, which could result in significant costs or force us to cease certain operations. Regulatory changes or interpretations that classify digital assets that we hold as a security under the Securities Act of 1933, as amended (the “Securities Act”), or the Investment Company Act of 1940, as amended (the “Investment Company Act”), could require us to register and comply with additional regulations. Compliance with these requirements could impose extraordinary, non-recurring expenses on our business. If the costs and regulatory burdens become too great, we may be forced to modify or cease certain operations, which could be detrimental to our investors.

The SEC has previously indicated that certain digital assets may be considered securities depending on their structure and use. Future developments could change the legal status of digital assets that we may hold, requiring us to comply with securities laws. If we fail to do so, we may be forced to discontinue some or all of our business activities, which could negatively impact investments in our securities.

If the SEC or other regulators determine that digital assets that we may hold qualify as securities, we may be required to register as an investment company under the Investment Company Act. This classification would subject us to additional periodic reporting, disclosure requirements, and regulatory compliance obligations, significantly increasing our operational costs.

Although we do not currently engage in investing, reinvesting, or trading in securities, and we do not hold ourselves out as an investment company, we could inadvertently be deemed an investment company under the Investment Company Act. If we are unable to rely on an exclusion, we would be required to register with the SEC, which could impose additional financial and regulatory burdens.

Furthermore, state regulators may conclude that the digital assets we hold are securities under state laws, requiring us to comply with state-specific securities regulations. States like California have stricter definitions of “investment contracts” than the SEC, increasing the risk of additional regulatory scrutiny.

Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns. If regulatory changes or interpretations require us to register as a money services business with FinCEN under the U.S. Bank Secrecy Act, or as a money transmitter under state laws, we may be subject to extensive regulatory requirements, resulting in significant compliance costs and operational burdens. In such a case, we may incur extraordinary expenses to meet these requirements or, alternatively, may determine that continued operations are not viable. If we decide to cease certain operations in response to new regulatory obligations, such actions could occur at an unfavorable time for investors.

Multiple states have implemented or proposed regulatory frameworks for digital asset businesses. Compliance with such state-specific regulations may increase costs or impact our business operations. Furthermore, if we or our service providers are unable to comply with evolving federal or state regulations, we may be forced to dissolve or liquidate certain operations, which could materially impact our investors.

The classification of digital assets we hold as commodities could subject us to additional CFTC regulation, resulting in significant compliance costs or the cessation of certain operations. If our activities require CFTC registration, we may be required to comply with extensive regulatory obligations, which could result in significant costs and operational disruptions. Additionally, current and future legislative or regulatory developments, including new CFTC interpretations, could further impact how digital assets are classified and traded.

If the digital assets we may hold are further regulated as commodities, we may be required to register as a commodity pool operator and to register the Company as a commodity pool with the CFTC through the National Futures Association. Compliance with these additional regulatory requirements could result in substantial, non-recurring expenses, adversely affecting an investment in our securities. If we determine not to comply with such regulations, we may be forced to cease certain operations, which could negatively impact our investors.

We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds and exchange-traded funds, or to obligations applicable to investment advisers. Mutual funds, ETFs, and their directors and management are subject to extensive regulation as “investment companies” and “investment advisers” under U.S. federal and state law; this regulation is intended to benefit and protect investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of our changes to our digital asset strategy, our use of leverage, our ability to engage in transactions with affiliated parties, and our operating and investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies and investment advisers.

Due to the unregulated nature and lack of transparency surrounding the operations of many digital asset trading venues, digital asset trading venues may experience greater fraud, security failures, or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in digital asset trading venues and adversely affect the value of digital assets. Digital asset trading venues are relatively new and, in many cases, unregulated. Furthermore, many digital asset trading venues do not provide the public with significant information about their ownership structures, management teams, corporate practices, and regulatory compliance. As a result, the marketplace may lose confidence in digital asset trading venues, including prominent exchanges that handle a significant volume of such trading and/or are subject to regulatory oversight, in the event one or more digital asset trading venues cease or pause for a prolonged period the trading of digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational problems.

Negative perception, a lack of stability in the broader digital asset markets and the closure, temporary shutdown or operational disruption of digital asset trading venues, lending institutions, institutional investors, institutional miners, custodians, or other major participants in the digital asset ecosystem, due to fraud, business failure, cybersecurity events, government-mandated regulation, bankruptcy, or for any other reason, may result in a decline in confidence in digital assets and the broader digital asset ecosystem and greater volatility in the price of digital assets. The price of our listed securities may be affected by the value of our future digital asset holdings, and the failure of a major participant in the ecosystem could have a material adverse effect on the market price of our listed securities.

Our historical financial statements may not reflect the potential variability in earnings that we may experience in the future relating to our holdings of digital assets. Our historical financial statements reflect unrealized losses in 2025 from the price decline in TAO but may not fully reflect the potential variability in earnings we may experience from holding or selling digital assets. The prices of digital assets have historically been highly volatile, subject to dramatic fluctuations. We will need to perform an analysis each quarter to identify whether events or changes in circumstances indicate that our digital assets are impaired. As a result, volatility in our earnings may be significantly greater than we have experienced in prior periods.

Digital asset holdings are less liquid than cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent. Historically, the digital asset market has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our digital assets at favorable prices or at all. As a result, digital asset holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, digital assets we hold with our custodians and transact with our trade execution partners do not enjoy the same protections as those available to cash or securities deposited with or transacted by institutions regulated by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital-raising transactions collateralized by our unencumbered digital assets, or to otherwise generate funds using our digital asset holdings, including during times of market instability or when the price of digital assets has declined significantly. If we are unable to sell our digital assets, enter into additional capital raising transactions, including capital raising transactions using bitcoin as collateral, or otherwise generate funds using our bitcoin holdings, or if we are forced to sell our digital assets at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.

Digital asset lending arrangements may expose us to risks of borrower default, operational failures, and cybersecurity threats. From time to time in the future, we may generate income through the lending of digital assets, which carries significant risks. The volatility of such digital assets increases the likelihood of borrower defaults due to market downturns, liquidity crises, fraud, or other financial distress. These lending transactions may be unsecured and therefore subordinated to the borrower's secured debt. If a borrower becomes insolvent, we may be unable to recover the loaned digital asset, leading to substantial financial losses.

Additionally, digital asset lending platforms are vulnerable to operational and cybersecurity risks. Technical failures, software bugs, or system outages could disrupt lending activities, delay transactions, or result in inaccurate record-keeping. Cybersecurity threats, including hacking, phishing, and other malicious attacks, pose further risks, potentially leading to the loss, theft, or misappropriation of our loaned bitcoin. A successful cyberattack or security breach could materially and adversely impact our financial position, reputation, and ability to conduct future lending activities.

We may incur losses from staking, delegating, and other related services. Crypto assets that utilize PoS consensus mechanisms enable holders to earn rewards by participating in decentralized governance, bookkeeping, and transaction confirmation activities on their underlying blockchain networks. We stake certain of our crypto assets on blockchain networks through BitGo. Most PoS networks require crypto assets to be transferred into smart contracts on the underlying blockchain networks, not under our or anyone’s control. If any third-party service providers, or smart contracts, fail to behave as expected, suffer cybersecurity attacks, experience security issues, or encounter other problems, our crypto assets may be irretrievably lost. In addition, most PoS blockchain networks dictate requirements for participation in the relevant decentralized governance activity, and may impose penalties, or “slashing,” if the relevant activities are not performed correctly, such as if the node operator acts maliciously on the network, “double-signs” any transactions, or experiences extended downtimes. Slashing penalties can apply due to prolonged inactivity on a blockchain network, inadvertent errors (such as computing or hardware issues), or more serious behavior, such as intentional malfeasance. If we are slashed by an underlying blockchain network, our crypto assets may be confiscated, withdrawn, or burnt by the network, resulting in permanent, irrecoverable losses that could materially impact our financial position. Any penalties or slashing events could damage our brand and reputation, cause financial losses, and adversely impact our business.

Intellectual property disputes related to digital asset technology could threaten our ability to operate. The legal landscape for digital assets remains uncertain, and third parties may assert intellectual property claims related to blockchain technology, digital asset transactions, or source code. Any litigation, regardless of its merit, could create uncertainty about the long-term viability of digital asset networks and reduce investor confidence in our business. If a court upholds an intellectual property claim, we and other market participants could be restricted from accessing certain digital asset networks or conducting transactions, which could materially impact our business, results of operations, and financial condition.

The open-source structure of digital asset networks exposes us to risks related to software development, security vulnerabilities, and potential disruptions. Digital asset networks are open-source projects, and although there may be an influential group of leaders within the network community, there is generally no official developer or group of developers that formally controls the network. Without guaranteed financial incentives, there may be insufficient resources to address emerging issues, enhance security, or implement necessary network improvements in a timely manner. If the digital asset network’s software is not properly maintained or developed, it could become vulnerable to security threats, operational inefficiencies, and reduced trust, all of which could negatively impact the digital assets’ long-term viability and our business.

We maintain crime insurance for our digital assets but there is still a risk of total loss in the event of theft or destruction, and if coverage is denied. We maintain third party crime insurance for coverage on digital assets. However, there is no assurance such coverage will protect us from losses if insurers were to deny coverage. If an event occurs that results in the loss of our digital assets, whether due to cyberattacks, fraud, or other malicious activities, we may have no viable legal recourse or ability to recover them. Unlike funds held in insured banking institutions, our digital assets are not protected by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. If our digital assets are lost under circumstances that render another party liable, there is no guarantee that the party responsible will have the financial resources to compensate us. As a result, we and our stockholders could face significant financial losses.

If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital assets, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our digital assets, and our financial condition and results of operations could be materially adversely affected. The digital assets we may purchase may be held in accounts at institutional-grade digital asset custodians. Blockchain-based cryptocurrencies and the entities that provide services to the participants in the cryptocurrency ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. For example, in November 2022, hackers exploited weaknesses in the security architecture of the FTX Trading digital asset exchange and reportedly stole over $400 million in customer assets. A successful security breach or cyberattack could result in:

•a partial or total loss of digital assets that we may purchase in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who may hold our digital assets;

•harm to our reputation and brand;

•improper disclosure of data and violations of applicable data privacy and other laws; or

•significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual, and financial exposure.

Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader blockchain ecosystem or in the use of digital asset networks to conduct financial transactions, which could negatively impact us.

The irreversibility of digital asset transactions exposes us to risks of theft, loss, and human error, which could negatively impact our business. Digital asset transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction or, in theory, the control or consent of a majority of the processing power on that digital asset network. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of digital assets or a theft of digital assets, will generally not be reversible, and we may not be able to seek compensation for any such transfer or theft.

It is possible that, through computer or human error, theft, or criminal action, digital assets could be transferred in incorrect amounts or to unauthorized third parties. To the extent we are unable to seek a corrective transaction to identify the third party that has received our digital assets through error or theft, we will be unable to revert or otherwise recover the impacted digital assets, and any such loss could adversely affect our business, results of operations, and financial condition.

If we fail to implement our new digital asset-related strategy, or if it is ineffective, our financial performance could be materially and adversely affected. Our future financial performance and success depend in large part on the effectiveness of our new business strategy for the Bittensor ecosystem, our digital asset holdings, and on our ability to successfully implement it. Implementation of our strategy will require effective management of our operational, financial, and human resources and will place significant demands on those resources. There are risks involved in pursuing our strategy. In addition to the risks set forth elsewhere in this Report, the effectiveness of and the successful implementation of our business strategy could also be affected by a number of factors beyond our control, such as legal developments, government regulation, general economic conditions, increased operating costs or expenses, and changes in industry trends. We may decide to alter or discontinue certain aspects of our business strategy at any time. If we are unable to successfully implement our business strategy, our long-term growth and profitability may be adversely affected. Even if we successfully implement some or all of the initiatives in our business strategy, our operating results may not improve and could decline substantially.

We may be unable to attract and retain qualified and skilled employees or consultants. We operate in a relatively new industry that is not widely understood and requires highly skilled and technical personnel. We must be able to attract, develop, motivate, and retain highly qualified and skilled employees or consultants. Due to the nascent nature of the digital assets ecosystem, the pool of qualified talent is extremely limited, particularly for executive talent with engineering, risk management, and financial regulatory expertise. We may face intense competition for qualified individuals from numerous software and other technology companies. To attract and retain key personnel or consultants, we could incur significant costs, including salaries and benefits, and equity incentives. Even so, these measures may not be enough to attract and retain the personnel we require to operate our business effectively. A failure to attract, retain, and motivate additional highly skilled employees or consultants required for the planned expansion of our business could adversely impact our operations and impair our ability to grow.

Risks Related to Our Managed Services and Collaboration Products Business

We are a digital asset treasury company dedicated exclusively to Bittensor, a decentralized blockchain network for artificial intelligence ("AI") development and machine learning. Bittensor allows individuals and organizations to contribute computational power to train, validate, and improve AI models while earning rewards through TAO, Bittensor’s native cryptocurrency. In 2025, the Company invested $8,736,000 to acquire 24,128 TAO tokens. As of December 31, 2025, the Company holds 24,665 TAO tokens. The Company’s TAO holdings are all fully staked in the Bittensor network, enabling the Company to generate revenue and yield through earning staking rewards in the form of TAO tokens.

The Company is also operating legacy businesses centered around our patented Mezzanine™ product line and our managed services for video collaboration and network solutions. In conjunction with the Company's June 2025 financing, the Company began migrating its product focus from Mezzanine™ and managed services to building a digital asset treasury company.

The Company currently operates in three segments: (1) "Digital Assets", which represents the business surrounding our treasury activity with Bittensor, (2) “Managed Services”, which represents the business surrounding managed services for video collaboration and network solutions, and (3) “Collaboration Products”, which represents the business surrounding our Mezzanine™ product offerings.

As a digital asset treasury company dedicated exclusively to Bittensor, a decentralized blockchain network for AI development and machine learning, the Company generates revenue and yield through earning staking rewards. Bittensor allows individuals and organizations to contribute computational power to train, validate, and improve AI models while earning rewards through TAO, Bittensor’s native cryptocurrency. We generally stake all our TAO token holdings, subject to various liquidity and operational considerations, and we review this allocation periodically. All staking services are provided through the TAO Custodians, enabling yield generation while maintaining the highest standards of security and regulatory compliance. Through their staking services, our TAO Custodians hold and stake our TAO through their selected validators.

Historically, customers have used Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces. Sales of our Mezzanine™ product have been adversely affected during the last several years by the commercial response to the COVID-19 pandemic and its aftermath. We have not invested in research and development or sales and marketing for our Mezzanine™ product in recent years. Given the declines in sales, we announced end-of-life for Mezzanine™ in December 2025, and we expect to end the sale of Mezzanine™ products and maintenance after the first quarter of 2026.

Year Ended December 31, 2025 (“2025”) versus Year Ended December 31, 2024 (“2024”)

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 Digital Assets segment recorded a gross profit percentage of 87% in 2025. Our cost of revenue for digital assets consists of custodian fees and advisor fees on our staked digital assets.

Our Managed Services segment recorded a gross profit percentage of 29% and 35% for 2025 and 2024, respectively. The year-over-year decrease was primarily due to the reallocation of personnel following our September 2024 headcount reduction.

Cash used in investing activities for 2025 was $8,736,000, consisting of new investments in digital assets. No cash was used in investing activities in 2024.

The Company had staked $5,395,000 of digital assets as of December 31, 2025. The Company’s ability to sell or transfer staked digital assets is subject to restrictions related to unbonding periods, which are based on network traffic on the respective blockchains. As of December 31, 2025, all staked digital assets could be unbonded immediately. The $186,000 in rewards generated from proprietary staking activities for the year ended December 31, 2025, was recorded as point-in-time revenue. The Company stakes its TAO directly from BitGo and Kraken custody, qualified custodians, enabling yield generation while maintaining the highest standards of security and regulatory compliance.

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.

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.

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").

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.

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):

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 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.

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:

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%.

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):

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.

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.

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):

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.

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.

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”).