TaoWeave (TWAV) FY2025 10-K Risk Factors: 22 New, 22 Dropped

What the changes say

Digital-asset price volatility, liquidity, custody, lending, staking, and trading-venue failures now dominate the risk section.
Regulatory classification could trigger SEC, Investment Company Act, FinCEN, state money-transmitter, or CFTC obligations and force shutdowns.
Legacy collaboration-technology risks, including competition, product quality, engineering talent, customer support, and system outages, were removed.
Financing and dilution disclosures now address TAO-token liquidity, cryptocurrency-treasury funding, the 2025 Private Placement, and future conversions.

What changed since the prior 10-K

New

NewRisks Related to Digital Assets
We own and may purchase additional digital assets, the prices of which have been, and will likely continue to be, highly volatile
Digital assets, including future purchases funded by offerings, may lose substantial value because prices are highly volatile and generate no returns.
NewRisks Related to Digital Assets
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
If held digital assets are deemed securities, SEC or Investment Company Act requirements could impose major costs or force operations to stop.
NewRisks Related to Digital Assets
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
Changing interpretations could require FinCEN money-services or state money-transmitter registration, raising compliance costs or making operations unviable.
NewRisks Related to Digital Assets
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
Commodity classification could require CFTC and National Futures Association registration, substantial compliance spending, or cessation of certain operations.
NewRisks Related to Digital Assets
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
Unlike mutual funds, ETFs, and investment advisers, the Company lacks their investor-protection rules governing strategy changes, leverage, affiliates, and investments.
NewRisks Related to Digital Assets
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
Opaque, lightly regulated digital-asset venues may suffer fraud, withdrawals, security failures, or outages that reduce confidence and asset values.
NewRisks Related to Digital Assets
Our historical financial statements may not reflect the potential variability in earnings that we may experience in the future relating to our holdings of digital assets
TAO price declines and future digital-asset sales may make earnings far more volatile than historical financial statements indicate.
NewRisks Related to Digital Assets
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
Digital assets may be impossible to sell during instability and lack the FDIC or SIPC protections available to cash and securities.
NewRisks Related to Digital Assets
Digital asset lending arrangements may expose us to risks of borrower default, operational failures, and cybersecurity threats
Digital-asset lending could produce losses from borrower defaults, unsecured claims, platform failures, and cyberattacks involving loaned assets.
NewRisks Related to Digital Assets
We may incur losses from staking, delegating, and other related services
Staking through BitGo can result in irreversible losses from service-provider or smart-contract failures and blockchain slashing penalties.
NewRisks Related to Digital Assets
Intellectual property disputes related to digital asset technology could threaten our ability to operate
Intellectual-property claims involving blockchain technology, transactions, or source code could restrict network access or digital-asset transactions.
NewRisks Related to Digital Assets
The open-source structure of digital asset networks exposes us to risks related to software development, security vulnerabilities, and potential disruptions
Open-source network development may lack resources to fix vulnerabilities or improve software, undermining security, reliability, and digital-asset viability.
NewRisks Related to Digital Assets
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
NewRisks Related to Digital Assets
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
NewRisks Related to Digital Assets
The irreversibility of digital asset transactions exposes us to risks of theft, loss, and human error, which could negatively impact our business
NewRisks Related to Digital Assets
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
NewRisks Related to Digital Assets
We may be unable to attract and retain qualified and skilled employees or consultants
NewRisks Related to Cybersecurity and Regulations
Future issuances of equity or debt securities by us may adversely affect the market price of our Common Stock
NewRisks Related to Cybersecurity and Regulations
We may not be able to comply with all applicable listing requirements or standards of the Nasdaq Capital Market, and Nasdaq could delist our Common Stock
NewRisks Related to Cybersecurity and Regulations
We may be delisted from the Nasdaq if we fail to maintain a minimum market value of $5.0 million in listed securities
NewRisks Related to Cybersecurity and Regulations
Holders of our Series F Preferred Stock will have no rights with in our Common Stock until the Series F Preferred Stock is converted, but may be adversely affected by certain changes made with respect to our Common Stock
NewRisks Related to Cybersecurity and Regulations
Holders of our Series F Preferred Stock may have to pay taxes if we adjust the conversion ratio of the Series F Preferred Stock in certain circumstances, even though the holders would not receive any cash

Dropped

DroppedRisks Related to Our Business
If we fail to achieve broad market acceptance on a timely basis, we will not be able to compete effectively, and we will likely experience continued declines in revenue and lower gross margins
DroppedRisks Related to Our Business
Product quality problems could lead to reduced revenue, gross margins, and higher net losses
DroppedRisks Related to Our Business
Our success depends on our ability to recruit and retain adequate engineering talent
DroppedRisks Related to Our Business
Our success is highly dependent on the evolution of our overall market and on general economic conditions
Failure to achieve market acceptance for products could reduce competition, revenue, and gross margins.
DroppedRisks Related to Our Business
Changes in industry structure and market conditions could lead to charges related to discontinuances of certain of our products or businesses, asset impairments, and workforce reductions or restructurings
Hardware and software defects could reduce customer satisfaction, sales, and margins.
DroppedRisks Related to Our Business
We may be unable to realize intended efficiencies and benefits from our ongoing cost-saving initiatives, which may adversely affect our results of operations, financial condition, or our business. To operate more efficiently and control costs, we have undertaken cost-saving initiatives, which have included a cessation of R&D activities, workforce reductions, and other cost-reduction initiatives
Difficulty recruiting and retaining engineering talent could weaken innovation and competitiveness.
DroppedRisks Related to Our Business
The markets in which we compete are intensely competitive, which could adversely affect our achievement of revenue growth
Weak collaboration-technology adoption or general economic conditions could limit growth.
DroppedRisks Related to Our Business
Industry consolidation may lead to increased competition and may harm our operating results
Industry changes could require product or business discontinuances, impairments, workforce reductions, or restructuring charges.
DroppedRisks Related to Our Business
Any system failures or interruptions may cause a loss of customers
Cost-saving initiatives, including R&D cessation and workforce reductions, might fail to deliver savings or disrupt operations.
DroppedRisks Related to Our Business
There is limited market awareness of our products and services
DroppedRisks Related to Our Business
Our ability to sell our solutions is dependent in part on ease of use and the quality of our technical support, and any failure to offer high-quality technical support would harm our business, operating results, and financial condition
DroppedRisks Related to Our Business
We rely on third-party software that may be difficult to replace or may not perform adequately
Intense competition and rapidly changing collaboration technologies could impede revenue growth.
DroppedRisks Related to Our Business
Disruption of or changes in our distribution model could harm our sales and margins
Industry consolidation could strengthen competitors or cause former alliance partners to reduce business with the Company.
DroppedRisks Related to Our Business
Inventory management relating to our sales to our two-tier distribution channel is complex
DroppedRisks Related to Our Business
Supply chain issues, including financial problems of contract manufacturers or component suppliers or a shortage of adequate component supply or manufacturing capacity that increases our costs or causes a delay in our ability to fulfill orders, could have an adverse impact on our business and operating results, and our failure to estimate customer demand properly may result in excess or obsolete component supply, which could adversely affect our gross margins
Managed-service or system interruptions could damage reputation, cause customer losses, and create financial harm.
DroppedRisks Related to Our Business
We have made and may continue to make acquisitions that could disrupt our operations and harm our operating results
Limited market awareness and reduced sales and marketing investment could constrain demand for collaboration products and services.
DroppedRisks Related to Cybersecurity and Regulations
Our network could fail, which could negatively impact our revenues
Poor ease of use or technical support could undermine solution sales and customer relationships.
DroppedRisks Related to Intellectual Property
Our failure to obtain or maintain the right to use certain intellectual property may negatively affect our business
Loss or poor performance of third-party software could raise costs or disrupt service delivery.
DroppedRisks Related to Intellectual Property
We may not be able to protect the rights to or enforce our intellectual property
DroppedRisks Related to Intellectual Property
A number of our solutions incorporate software provided under open-source licenses, which may restrict or impose certain obligations on how we use or distribute our solutions or subject us to various risks and challenges, which could result in increased development expenses, delays, or disruptions to the release or distribution of those solutions, inability to protect our intellectual property rights and increased competition
DroppedRisks Related to Intellectual Property
We might need to raise additional capital by issuing securities or debt, which may cause significant dilution to our stockholders and restrict our operations
DroppedRisks Related to Intellectual Property
We could fail to satisfy the standards to maintain our listing on a stock exchange

Reworded

86% rewrittenRisks Related to Our Managed Services and Collaboration Products Business
Our Company experienced revenue declines in recent fiscal years, and revenue may continue to decline in future periods
The revised risk combines Mezzanine and Managed Services declines, cites customer losses and weaker demand, and expects further declines.
Was: Our Company experienced declines in revenue in recent fiscal years and may continue to experience further revenue decline in future periods
80% rewrittenRisks Related to Our Managed Services and Collaboration Products Business
Our network depends on telecommunications carriers, and they may limit or deny us access to their network or fail to perform, which would have a material adverse effect on our business
The revised text retains carrier dependence but narrows the stated consequences from business, financial condition, and results to business impact.
Was: Our network depends upon telecommunications carriers who could limit or deny us access to their network or fail to perform, which would have a material adverse effect on our business
69% rewrittenRisks Related to Our Managed Services and Collaboration Products Business
Our business activities will require additional financing that might not be obtainable on acceptable terms, if at all. This could have a material adverse effect on our financial condition, liquidity, and ability to operate as a going concern in the future
The 2025 disclosure adds TAO fair value as potential 12-month funding, while identifying long-term capital needs to expand the cryptocurrency treasury.
63% rewrittenRisks Related to Cybersecurity and Regulations
The issuance of the securities in the 2023 Private Placement and the 2025 Private Placement significantly diluted the ownership interest of the existing holders of our Common Stock, and the market price of our Common Stock will likely decline significantly as a result of sales of such securities into the public market by the selling stockholders and subsequent investors or the perception that such sales may occur
The revised text adds the 2025 Private Placement, future conversion dilution, and sales that could occur at any time.
Was: The issuance of the securities in the March 2023 private placement significantly diluted the ownership interest of the existing holders of our common stock, and the market price of our common stock has declined significantly as a result of sales of such securities into the public market by the private placement investors and subsequent investors or the perception that such sales may occur
47% rewrittenRisks Related to Cybersecurity and Regulations
Vulnerabilities and critical security defects, prioritization decisions regarding remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services, or solutions could result in claims of liability against us, damage our reputation, or otherwise harm our business
The revised wording clarifies third-party software and cloud providers’ remediation pace and customers’ choices not to deploy or upgrade.
41% rewrittenRisks Related to Our Managed Services and Collaboration Products Business
We depend on our network providers and facilities infrastructure
The revised text adds that network-connectivity vendors may fail customer expectations, causing lost revenue.
Was: We depend upon our network providers and facilities infrastructure
36% rewrittenRisks Related to Our Managed Services and Collaboration Products Business
If our actual liability for sales and use taxes and federal regulatory fees is different from our accrued liability, it could have a material impact on our financial condition
The revised wording mainly clarifies that unpaid sales and use taxes may be assessed, with interest and penalties.
36% rewrittenRisks Related to Cybersecurity and Regulations
Our business, operating results, and financial condition could be materially harmed by regulatory uncertainty applicable to our products and services
The revised wording makes minor terminology changes, referring to cloud-service regulations and customers’ ability to use the Company’s products.
36% rewrittenRisks Related to Cybersecurity and Regulations
Our stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future, and as a result, investors in our common stock could incur substantial losses
32% rewrittenRisks Related to Cybersecurity and Regulations
Future operating results may vary from quarter to quarter, and we may fail to meet the expectations of securities analysts and investors at any given time
32% rewrittenRisks Related to Our Managed Services and Collaboration Products Business
We may experience material disconnections and/or reductions in the prices of our services and may not be able to replace the resulting revenue losses
Was: We may experience material disconnections and/or reductions in the prices of our services and may not be able to replace the loss of revenues
29% rewrittenGeneral Risks
We incur significant accounting and administrative costs as a publicly traded corporation that impact our financial condition
22% rewrittenRisks Related to Our Managed Services and Collaboration Products Business
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

All 45 risk factors

Headings as the filing states them, in filing order.

Risks Related to Digital Assets

01We own and may purchase additional digital assets, the prices of which have been, and will likely continue to be, highly volatileNew
02If 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 operationsNew
03Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdownsNew
04The 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 operationsNew
05We 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 advisersNew
06Due 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 assetsNew
07Our historical financial statements may not reflect the potential variability in earnings that we may experience in the future relating to our holdings of digital assetsNew
08Digital 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 extentNew
09Digital asset lending arrangements may expose us to risks of borrower default, operational failures, and cybersecurity threatsNew
10We may incur losses from staking, delegating, and other related servicesNew
11Intellectual property disputes related to digital asset technology could threaten our ability to operateNew
12The open-source structure of digital asset networks exposes us to risks related to software development, security vulnerabilities, and potential disruptionsNew
13We 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 deniedNew
14If 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 affectedNew
15The irreversibility of digital asset transactions exposes us to risks of theft, loss, and human error, which could negatively impact our businessNew
16If we fail to implement our new digital asset-related strategy, or if it is ineffective, our financial performance could be materially and adversely affectedNew
17We may be unable to attract and retain qualified and skilled employees or consultantsNew

Risks Related to Our Managed Services and Collaboration Products Business

18Our Company experienced revenue declines in recent fiscal years, and revenue may continue to decline in future periods86% rewritten
19We have a history of substantial net operating losses and may incur future losses
20Our business activities will require additional financing that might not be obtainable on acceptable terms, if at all. This could have a material adverse effect on our financial condition, liquidity, and ability to operate as a going concern in the future69% rewritten
21If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the
22Any future disposition of assets and business could have material and adverse effects on business, financial conditions, and operations if not consummated in a timely manner
23We 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 business22% rewritten
24We depend on our network providers and facilities infrastructure41% rewritten
25Our network depends on telecommunications carriers, and they may limit or deny us access to their network or fail to perform, which would have a material adverse effect on our business80% rewritten
26We may experience material disconnections and/or reductions in the prices of our services and may not be able to replace the resulting revenue losses32% rewritten
27We are exposed to the credit and other counterparty risk of our customers in the ordinary course of our business
28Failure to retain and recruit key personnel would harm our ability to meet key objectives
29If our actual liability for sales and use taxes and federal regulatory fees is different from our accrued liability, it could have a material impact on our financial condition36% rewritten
30The terms of the Series F Preferred Stock could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions, and engage in other business activities that may be in our best interests

Risks Related to Cybersecurity and Regulations

31Vulnerabilities and critical security defects, prioritization decisions regarding remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services, or solutions could result in claims of liability against us, damage our reputation, or otherwise harm our business47% rewritten
32Our business, operating results, and financial condition could be materially harmed by regulatory uncertainty applicable to our products and services36% rewritten
33Our stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future, and as a result, investors in our common stock could incur substantial losses36% rewritten
34Penny stock regulations may impose certain restrictions on the marketability of our securities
35Future operating results may vary from quarter to quarter, and we may fail to meet the expectations of securities analysts and investors at any given time32% rewritten
36Sales of substantial amounts of common stock in the public market, or the perception that such sales may occur, could reduce the market price of our common stock and make it more difficult for us and our stockholders to sell our equity securities in the future
37The issuance of the securities in the 2023 Private Placement and the 2025 Private Placement significantly diluted the ownership interest of the existing holders of our Common Stock, and the market price of our Common Stock will likely decline significantly as a result of sales of such securities into the public market by the selling stockholders and subsequent investors or the perception that such sales may occur63% rewritten
38Future issuances of equity or debt securities by us may adversely affect the market price of our Common StockNew
39We may not be able to comply with all applicable listing requirements or standards of the Nasdaq Capital Market, and Nasdaq could delist our Common StockNew
40We may be delisted from the Nasdaq if we fail to maintain a minimum market value of $5.0 million in listed securitiesNew
41Holders of our Series F Preferred Stock will have no rights with in our Common Stock until the Series F Preferred Stock is converted, but may be adversely affected by certain changes made with respect to our Common StockNew
42Holders of our Series F Preferred Stock may have to pay taxes if we adjust the conversion ratio of the Series F Preferred Stock in certain circumstances, even though the holders would not receive any cashNew
43Our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment

General Risks

44We incur significant accounting and administrative costs as a publicly traded corporation that impact our financial condition29% rewritten
45Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold them fail

Other TaoWeave 10-Ks

FY2024 10-K risk factors
45 risks
One major customer generated 84.9% of 2024 consolidated revenue.
Filed Mar 18, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.