TAO Synergies Inc.

Previous wording

The unaudited financial statements for the three months ended March 31, 2026 and 2025 include a summary of our significant accounting policies and should be read in conjunction with the discussion below and our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in the financial statements. All such adjustments are of a normal recurring nature.

Current wording

The unaudited financial statements for the six months ended June 30, 2026 and 2025 include a summary of our significant accounting policies and should be read in conjunction with the discussion below and our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in the financial statements. All such adjustments are of a normal recurring nature.

Previous wording

As of May 12, 2026, TAO’s circulating supply was approximately 10.9 million tokens with a market capitalization of approximately $9.38 billion, according to publicly available sources. The lifecycle of TAO follows a supply schedule. Approximately one block is produced every ~12 seconds, with 1 TAO per block minted before the first halving (about 7,200 TAO/day), and 0.5 TAO per block minted after the first halving (about 3,600 TAO/day). The first halving occurred when total issuance reached 10.5 million TAO on December 15, 2025. TAO is not halved on a daily basis. Instead, the per-block emission rate decreases by 50% when predetermined issuance thresholds are reached. TAO has a hard cap of 21,000,000 tokens. Subtensor transaction fees are paid in TAO. Current public documentation indicates that transaction fees are deducted from total issuance rather than distributed as rewards. Accordingly, subnet miners and subnet validators generally do not receive TAO as transaction-fee awards for validating transactions, and instead earn rewards primarily through protocol emissions. In addition, per current documentation, certain staking-related transactions are described as subject to a percentage-based fee (for example, 0.05% of the TAO amount being staked or unstaked), in addition to any weight-based transaction fees (in this context “weight” is a measure of compute time).

Current wording

As of August 11, 2026, TAO’s circulating supply was approximately 11.22 million tokens with a market capitalization of approximately $2.2 billion, according to publicly available sources. The lifecycle of TAO follows a supply schedule. Approximately one block is produced every ~12 seconds, with 1 TAO per block minted before the first halving (about 7,200 TAO/day), and 0.5 TAO per block minted after the first halving (about 3,600 TAO/day). The first halving occurred when total issuance reached 10.5 million TAO on December 15, 2025. TAO is not halved on a daily basis. Instead, the per-block emission rate decreases by 50% when predetermined issuance thresholds are reached. TAO has a hard cap of 21,000,000 tokens. Subtensor transaction fees are paid in TAO. Current public documentation indicates that transaction fees are deducted from total issuance rather than distributed as rewards. Accordingly, subnet miners and subnet validators generally do not receive TAO as transaction-fee awards for validating transactions, and instead earn rewards primarily through protocol emissions. In addition, per current documentation, certain staking-related transactions are described as subject to a percentage-based fee (for example, 0.05% of the TAO amount being staked or unstaked), in addition to any weight-based transaction fees (in this context “weight” is a measure of compute time).

Previous wording

We have not established a specific target amount of TAO that we seek to hold. Instead, we monitor market conditions, liquidity needs, and financing opportunities in determining whether to make additional TAO purchases in the future. We view our TAO holdings as long-term holdings and expect to continue accumulating TAO over time. As of September 10, 2025, approximately 88% of our treasury holdings were invested in TAO. We do not hedge our TAO exposure and have no diversification strategy into other crypto assets. Accordingly, our treasury strategy currently reflects long-only exposure to TAO. However, we are exploring the potential implementation of hedging strategies to manage risks associated with digital asset price volatility; 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.

Current wording

We have not established a specific target amount of TAO that we seek to hold. Instead, we monitor market conditions, liquidity needs, and financing opportunities in determining whether to make additional TAO purchases in the future. We view our TAO holdings as long-term holdings and expect to continue accumulating TAO over time. As of June 30, 2026, approximately 87.7% of our treasury holdings were invested in TAO. We do not hedge our TAO exposure and have no diversification strategy into other crypto assets. Accordingly, our treasury strategy currently reflects long-only exposure to TAO. However, we are exploring the potential implementation of hedging strategies to manage risks associated with digital asset price volatility; 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.

Previous wording

Although a liquid market for TAO exists, we have not monetized (i.e., sold) any TAO to date. All TAO is staked as soon as trade settlement permits, and we currently stake TAO through two staking providers - tao5 and Yuma. We only engage in TAO staking. In the future, we may explore additional yield-enhancement strategies, including participation in Bittensor subnets. Any such activity would likely be undertaken with a third-party partner possessing substantial subnet expertise.

Current wording

Although a liquid market for TAO exists, we have not monetized (i.e., sold) any TAO to date. The majority of our TAO is staked as soon as trade settlement permits, and we currently stake TAO through two staking providers - tao5 and Yuma. We only engage in TAO staking. In the future, we may explore additional yield-enhancement strategies, including participation in Bittensor subnets. Any such activity would likely be undertaken with a third-party partner possessing substantial subnet expertise.

Previous wording

During the three months ended March 31, 2026 and 2025, the Company recorded a loss of $6,000 and a gain of $112,000, respectively, related to the change in fair value of the Series B warrant liability, which is recorded in other income (expense) on the Condensed Consolidated Statements of Comprehensive Income. The fair value of the warrants of approximately $15,000 was estimated at March 31, 2026 utilizing the Black Scholes model using the following weighted average assumptions: dividend yield 0%; remaining term of 1.64 years; equity volatility of 135.0%; and a risk-free interest rate of 3.68%.

Current wording

During the three months ended June 30, 2026 and 2025, the Company recorded a gain of $6,000 and a loss of $554,000, respectively, and, during the six months ended June 30, 2026 and 2025, the Company recorded no gain or loss and a loss of $442,000, respectively related to the change in fair value of the Series B warrant liability, which is recorded in other income (expense) on the Condensed Consolidated Statements of Comprehensive Income. The fair value of the warrants of approximately $9,000 was estimated at June 30, 2026 utilizing the Black Scholes model using the following weighted average assumptions: dividend yield 0%; remaining term of 1.39 years; equity volatility of 137.0%; and a risk-free interest rate of 3.96%.

Previous wording

We generated operating revenues for the three months ended March 31, 2026 from staking TAO tokens of $388,774 but generated no operating revenues for the three months ended March 31, 2025.

Current wording

We generated operating revenues for the three months ended June 30, 2026 and 2025 from staking TAO tokens of $88,626 and $3,962, respectively. The increase is attributable to purchasing tokens and staking for the entire 2026 period versus limited purchases and staking in the 2025 period.

Previous wording

For the three months ended March 31, 2026, we incurred $28,600 in research and development expenses as compared to $60,816 for the three months ended March 31, 2025, a decrease of approximately 53.0%. These expenses were incurred primarily in connection with developing the potential AD therapeutic product Of these expenses, for the three months ended March 31, 2026, $10,352 was incurred principally relating to our storage of drug product, $2,512 for clinical consulting services, $5,289 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai License Agreement, $10,447 for development of alternative drug supply with Stanford University; comparatively, for the three months ended March 31, 2025, $19,839 was incurred principally relating to our storage of drug product, $19,177 for clinical consulting services, $7,425 of amortization of prepaid licensing fees relating to the Stanford License Agreement and the Mount Sinai License Agreement, and $14,375 for development of alternative drug supply with Stanford University.

Current wording

For the three months ended June 30, 2026, we incurred $31,855 in research and development expenses as compared to $148,555 for the three months ended June 30, 2025, a decrease of approximately 78.6%. These expenses were incurred primarily in connection with developing the potential AD therapeutic product. Of these expenses, for the three months ended June 30, 2026, $10,353 was incurred principally relating to our storage of drug product, $7,013 for clinical consulting services, $4,986 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai License Agreement, $9,503 for development of alternative drug supply with Stanford University; comparatively, for the three months ended June 30, 2025, $90,810 was incurred principally relating to our product development and storage of drug product, $37,906 for clinical consulting services, $7,479 of amortization of prepaid licensing fees relating to the Stanford License Agreement and the Mount Sinai License Agreement, and $12,360 for development of alternative drug supply with Stanford University.

Previous wording

We incurred $1,677,938 and $1,008,349 of general and administrative expenses for the three months ended March 31, 2026 and 2025, respectively, an increase of approximately For the three months ended March 31, 2026, $278,878 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus $237,242 for the three months ended March 31, 2025. The increase resulted primarily from increased compensation for the Company’s Chairman as he became Executive Chairman during the second quarter of 2025; $153,852 was incurred for legal expenses versus $78,447 for the 2025 comparable period. The higher legal fees for 2026 is based upon the Company changing its business strategy, restructuring and financing; $593,821 was incurred for outside operations consulting services during the three months ended March 31, 2026, versus $194,358 for the comparable period in 2025. The higher amount for the 2026 period reflects non-cash expenses associated with warrants issued to cryptocurrency experts totaling 398,306; $9,607 was incurred for travel expenses during the three months ended March 31, 2026, versus $15,959 for the comparable period in 2025 as Company officers and directors conducted due diligence for strategic investments in 2025; $162,039 was incurred for investor relations services during the three months ended March 31, 2026, versus $149,961 for the comparable period in 2025; $121,152 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services during the three months ended March 31, 2026, versus $89,746 for the comparable period in 2025. The increase for the 2026 period resulted from increased accounting and auditing fees relating to the Company’s cryptocurrency treasury strategy; $165,451 was incurred for insurance during the three months ended March 31, 2026, versus $130,204 for the comparable period in 2025. The increase is attributable to higher premiums relating the the Company’s cryptocurrency treasury strategy; $116,536 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other during the three months ended March 31, 2026, versus $108,723 for the comparable period in 2025; and $76,600 was recorded as non-cash stock options compensation expense during the three months ended March 31, 2026, versus $3,709 for the comparable period in 2024. The increase for the current period is attributable to granting of stock options awards during the third quarter of 2025.

Current wording

We incurred $1,626,007 and $2,191,395 of general and administrative expenses for the three months ended June 30, 2026 and 2025, respectively, a decrease of approximately 25.8%. The three months ended June 30, 2025 results included warrant issuance costs associated with the Series D Private Placement of approximately $700,000. For the three months ended June 30, 2026, $258,202 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus $212,548 for the three months ended June 30, 2025. The increase resulted primarily from increased compensation for the Company’s Chairman as he became Executive Chairman during the second quarter of 2025; $145,467 was incurred for legal expenses versus $322,510 for the 2025 comparable period. The higher legal fees for 2025 are based upon the Company changing its business strategy, restructuring and financing; $585,001 was incurred for outside operations consulting services during the three months ended June 30, 2026, versus $310,471 for the comparable period in 2025. The higher amount for the 2026 period reflects non-cash expenses associated with warrants issued to cryptocurrency experts totaling $398,306; $8,662 was incurred for travel expenses during the three months ended June 30, 2026, versus $10,370 for the comparable period in 2025 as Company officers and directors conducted due diligence for strategic investments in 2025; $76,094 was incurred for investor relations services during the three months ended June 30, 2026, versus $54,474 for the comparable period in 2025. The 2025 period included additional IR consulting services for the Company’s change to cryptocurrency treasury strategy; $17,389 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services during the three months ended June 30, 2026, versus $52,904 for the comparable period in 2025. The increase for the 2025 period resulted from increased accounting and auditing fees relating to the Company’s cryptocurrency treasury strategy; $165,451 was incurred for insurance during the three months ended June 30, 2026, versus $149,730 for the comparable period in 2025. The increase is attributable to higher premiums relating the Company’s cryptocurrency treasury strategy; $128,016 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other during the three months ended June 30, 2026, versus $109,156 for the comparable period in 2025; and $241,725 was recorded as non-cash stock options compensation expense during the three months ended June 30, 2026, versus $969,232 for the comparable period in 2025. The decrease for the current period is attributable to granting of stock options awards during the third quarter of 2025 partially offset by the issuance of stock options awards during the current quarter.

Previous wording

We recognized total other income of $5,572,156 for the three months ended March 31, 2026 as compared to other income of $1,454,334 for the three months ended March 31, 2025, which consisted, for 2026 of unrealized gains on digital assets, and for both 2025 and 2024, interest income on funds deposited in interest-bearing money market accounts and investments in short-term U.S. treasury bills, and changes in fair value of warrant and derivative liabilities. The decrease in interest income and unrealized gains on treasury bills totaling $146,855 is primarily attributable to the decrease in cash balances over the period and lower interest rates. The total increase in other income is primarily attributable to the unrealized gain on digital asset investments of approximately $6.8 million and the income attributable to the Yuma partnership investments of approximately $351,000 partially offset by the the decrease in interest income as noted above and the increase in fair value of warrant and derivative liabilities of $1,357,000 and $1,571,000, respectively.

Current wording

We recognized total other expense of $7,729,730 for the three months ended June 30, 2026 as compared to other expenses of $14,480,245 for the three months ended June 30, 2025, which consisted, for the periods 2026 and 2025, of unrealized gains on digital assets, and for both 2026 and 2025, interest income on funds deposited in interest-bearing money market accounts and investments in short-term U.S. treasury bills, and changes in fair value of warrant and derivative liabilities. The decrease in interest income and unrealized gains on treasury bills totaling $127,543 is primarily attributable to the decrease in cash balances over the period and lower interest rates. The total decrease in other expense is primarily attributable to the decrease in the fair values of warrant and derivative liabilities of approximately $15.6 million, partially offset by the unrealized loss on digital asset investments of approximately $8.4 million, losses attributable to the Yuma partnership investments of $318,870 and the decrease in interest income as noted above.

Previous wording

Total operating expenses for the three months ended March 31, 2026 were $1,706,538 as compared to $1,069,165 for the three months ended March 31, 2025, an increase of approximately 59.6%. The increase in total operating expenses is due to the increases in general and administrative expenses partially offset by the decrease in research and development expenses.

Current wording

Total operating expenses for the six months ended June 30, 2026 were $3,364,400 as compared to $4,108,960 for the six months ended June 30, 2025, a decrease of approximately 27.2%. The decrease in total operating expenses is due to the decreases in research and development expenses and warrant issuance costs partially offset by the increase in general and administrative expenses.

Previous wording

Since inception, we have incurred negative cash flows from operations. As of March 31, 2026, we had working capital of $29,137,438 as compared to working capital of $23,564,919 as of December 31, 2025. The $5,572,516 increase in working capital was primarily attributable to digital assets of approximately $7.2 million, approximately $2.1 million from consultant warrant issuances and approximately $35,000 of interest income partially offset by approximately $1.5 million of operating expenses and Preferred Stock dividends of approximately $170,000.

Current wording

Since inception, we have incurred negative cash flows from operations. As of June 30, 2026, we had working capital of $19,585,415 as compared to working capital of $23,564,919 as of December 31, 2025. The $3,979,504 decrease in working capital was primarily attributable to operating expenses of approximately $2.9 million, decrease in digital assets of approximately $1.1 million and dividends on preferred stock of approximately $600,000, partially offset by approximately $600,000 from consultant warrant issuances and approximately $61,000 of interest income.

Previous wording

We expect that our current cash and cash equivalents and digital assets of approximately $28 million will be sufficient to support our projected operating requirements for at least the next 12 months from the date of this Quarterly Report on Form 10-Q, which may include the continuing development of Bryostatin-1, our initiation and possible development of a therapeutic for MS and other possible therapeutics.

Current wording

We expect that our current cash and cash equivalents and digital assets of approximately $18.8 million will be sufficient to support our projected operating requirements for at least the next 12 months from the date of this Quarterly Report on Form 10-Q, which may include the continuing development of Bryostatin-1, our initiation and possible development of a therapeutic for MS and other possible therapeutics.

Previous wording

Cash used in operating activities was $1,682,856 for the three months ended March 31, 2026, compared to $2,000,596 for the three months ended March 31, 2025. The $317,740 decrease primarily resulted from the increase in net income of approximately $3.9 million, the increase in derivative and warrant liabilities of approximately $2.9 million and changes in current assets and liabilities of approximately $1.0 million, partially offset by the increase in non-cash revenue of approximately $0.4 million, unrealized gain on digital assets of approximately $6.8 million, unrealized appreciation in Yuma partnership investment of approximately $0.3 million.

Current wording

Cash used in operating activities was $2,557,837 for the six months ended June 30, 2026, compared to $2,749,668 for the six months ended June 30, 2025. The $191,831 decrease primarily resulted from the decrease in net loss of approximately $12.1 million and the increased loss on digital assets, net of the change in unrealized revenues, of approximately $1.1 million and changes in current assets and liabilities of approximately $600,000, partially offset by the decrease in derivative liabilities of approximately $12.7 million, the decrease in warrant issuance costs of approximately $700,000 and the decrease in non-cash compensation of approximately $200,000.

Previous wording

Net cash used in financing activities was $169,006 for the three months ended March 31, 2026 compared to $822,362 for the three months ended March 31, 2025. For the three months ended March 31, 2026, the entire amount was used to pay dividends on Convertible Preferred Stock. For the three months ended March 31, 2025, $715,000 was used to redeem Convertible Preferred Stock and $107,362 was used to pay dividends on Convertible Preferred Stock.

Current wording

Net cash used in financing activities was $571,377 for the six months ended June 30, 2026 compared to $3,963,165 for the six months ended June 30, 2025. For the six months ended June 30, 2026, the entire amount was used to pay dividends on Convertible Preferred Stock. For the six months ended June 30, 2025 consisted of proceeds from the Company’s Series D Preferred Stock offering and proceeds from exercise of investor warrants partially offset by principal and dividend payments applied to our outstanding Series C Preferred Stock outstanding.