TEN Holdings, Inc.

Current report

Item 1A. Risk Factors

Current report

As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on March 28, 2025, except that we have identified the additional risk factors set forth below.

Current report

We currently have a substantial number of shares of common stock subject to potential issuance associated with our Equity Line of Credit (“ELOC”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). The issuance or sale of shares under our ELOC would substantially increase the number of shares outstanding and result in dilution to our security holders. This might substantially decrease the market price of our common stock.

Current report

We have a substantial number of shares of our common stock that may be issued in the future. On June 23, 2025, we entered into a purchase agreement (the “Purchase Agreement”) with Lincoln Park, pursuant to which Lincoln Park committed to purchase from us, from time to time and subject to certain limitations and conditions, up to an aggregate of $20,000,000 of our common stock over the 24-month term of the Purchase Agreement. On that date, we issued Lincoln Park 882,145 shares of our common stock. During the three months ended September 30, 2025, we issued an additional 1,520,609 shares of our common stock to Lincoln Park under our ELOC. To the extent that shares of common stock are issued or sold under our ELOC, dilution to our security holders may occur. The issuance of these additional securities may have an adverse effect on the market price of our securities.

Current report

Failure to comply with The Nasdaq Capital Market continued listing requirements may result in our common stock being delisted from The Nasdaq Capital Market.

Current report

On June 30, 2025, we received a deficiency letter (the “Notice”) from the Listing Qualifications Department of Nasdaq indicating that, based upon the closing bid price of our common stock for 30 consecutive business days prior to the delivery of the Notice, we are not in compliance with the bid price requirement, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”). We were provided a compliance period of 180 calendar days from the date of the Notice, or until December 29, 2025, to regain compliance with the Bid Price Requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A).

Current report

We will continue to monitor the closing bid price of our common stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods and may, if appropriate, consider available options, including implementation of a reverse stock split of our common stock, to regain compliance with the Bid Price Requirement. As previously disclosed in the preliminary information statement filed on Schedule 14C filed on October 30, 2025, our stockholders have authorized our Board to implement a reverse stock split in the range of 1-for-10 to 1-for-20. If we seek to implement a reverse stock split in order to remain listed on Nasdaq, the announcement or implementation of such a reverse stock split could negatively affect the price of our common stock. If we do not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that our common stock will be subject to delisting. We would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that we will regain compliance with the Bid Price Requirement during the 180-day compliance period or maintain compliance with the other Nasdaq listing requirements. A delisting could substantially decrease trading in our common stock, adversely affect the market liquidity of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws, adversely affect our ability to obtain financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.

Current report

Use of Proceeds from Initial Public Offering of Common Stock

Current report

Sales of Unregistered Securities

Current report

During the three months ended September 30, 2025, we issued (i) 1,458,859 shares of common stock to Lincoln Park for a price of weighted average price of $0.29 per share, or an aggregate of $424,736, pursuant to the terms of our ELOC and (ii) 83,350 shares of common stock to Bancroft Capital, LLC (“Bancroft”) upon exercise of warrants granted to Bancroft in connection with the IPO for an exercise price of $7.20 per share, or an aggregate of $600,120. These shares were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act based upon certain factual representations received from Lincoln Park and Bancroft.

Current report

On October 27, 2025, the Company received a grand jury subpoena from the U.S. Attorney’s Office in connection with an investigation in the Southern District of New York. The subpoena calls for the production of documents relating to its initial public offering. On October 28, 2025, the Company learned that SEC is conducting a related investigation. The Company intends to fully cooperate with the investigations and comply with its obligations under the subpoena. It is not possible at this time to predict when the investigation will be resolved, the outcome of the investigation, or its potential impact on the Company.

Previous report

Risk Factors

Previous report

Risks Relating to our Business and Industry

Previous report

We have incurred significant operating and net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

Previous report

As reflected in our financial statements included elsewhere in this quarterly report, we have a history of losses since our inception, including net losses of $7,620,000 and $2,968,000 for the six months ended June 30, 2025 and fiscal year ended December 31, 2024, respectively, and cash used in operating activities of $7,577,000 and $2,485,000 for the six months ended June 30, 2025 and fiscal year ended December 31, 2024, respectively. As of December 31, 2024, we had an accumulated deficit of $1,922,000 and a working capital deficit of $5,735,000.

Previous report

Given the preceding conditions, our auditor has raised substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends upon our ability to generate positive operating cash flows. To support our working capital needs, we will rely on our revenue generating customer contracts and equity and/or debt financing. There is no assurance that we will be successful in generating positive operating cash flows and raising additional capital significant enough to result in operating profitability in the future.

Previous report

If we are unable to generate and raise sufficient positive operating cash flows and additional capital to result in operating profitability in the future, there may remain substantial doubt about our ability to continue as a going concern, and investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms or at all, and we may have to discontinue operations and liquidate our assets and may be compelled to receive less than the value at which those assets are carried on our audited financial statements, which would cause our stockholders to lose a part or all of their investment.

Previous report

Our business depends on our ability to attract new customers and retain and provide services to existing customers. Any decline in customer acquisition or retention would harm our business.

Previous report

Our business depends upon our ability to attract new customers, and maintain and expand our relationships with our existing customers, including providing additional services to our existing customers. Our customers engage us to provide support for their events or other corporate activities. We cannot provide any assurance that customers will extend or renew their engagement with us after the events or corporate activities for which we have been engaged are completed. Extensions or renewals of customer engagement may decline or fluctuate because of several factors, such as dissatisfaction with our platform and support, a customer no longer having a need for our platform, or a belief that a competitor’s service offering is better, more secure, or less expensive than our platform. For example, during the COVID-19 pandemic, we saw a significant increase in usage of our platform and services. Following the pandemic, some of our customers reduced their use of our platform, and additional customers may do so in the future. Extensions or renewals of customer engagement are also impacted by reductions in customers’ information technology spending budgets or decisions by customers to consolidate their spending budgets on one of our competitor’s platforms, both of which are more likely to occur during periods of high inflation, recessionary or uncertain economic environments. Finally, any decrease in customer satisfaction with our platform or support would harm our brand, word-of-mouth referrals, and ability to grow. We need to continually add new customers to grow our business and to replace customers who choose not to continue to use our platform. If customers terminate or do not renew their business relationships with us, or renew their service contracts on less favorable terms or for fewer services, and we do not acquire replacement customers or otherwise grow our customer base, our business and results of operations may be materially and adversely affected.

Previous report

Any decline in demand for our services or platform could harm our business.

Previous report

We derive, and expect to continue to derive, a significant portion of our revenue and cash flows from producing virtual and hybrid events. Widespread adoption and use of live engagement technologies, webinars and event software in general, and our platform in particular, are critical to our future growth and success. If this market fails to grow or grows more slowly than we currently anticipate, demand for our platform could be negatively affected.

Previous report

Demand for our platform is affected by a number of factors, many of which are beyond our control. Some of these potential factors include:

Previous report

If we fail to successfully predict and address these factors, meet customer demands or achieve more widespread market adoption of our platform, our business would be harmed.

Previous report

The experience of our customers depends upon the interoperability of our platform across technologies that we do not control, and if we are not able to maintain and expand our relationships with third parties in order to integrate our platform with their products, our business may be harmed.

Previous report

Our platform, Xyvid Pro Platform, has broad interoperability and is able to integrate and deliver event content to various devices, including Windows, Mac, iOS, and Android. We depend on the accessibility of our platform across these devices that we do not control. Some of our competitors may have inherent advantages by being able to develop products and services internally that more closely integrate with their own software platforms or those of their business partners.

Previous report

We may not be able to modify our platform and services to maintain their continued compatibility with that of third parties’ products and services that are constantly evolving. In addition, some of our competitors may be able to disrupt the ability of our platform to operate with their products or services, or they could exert strong business influence on our ability to, and the terms on which we, operate and provide access to our platform and services. Should any of these third parties modify their products or services in a manner that degrades the functionality of our platform or services, or that gives preferential treatment to their own or competitive products or services, whether to enhance their competitive position or for any other reason, the interoperability of our platform and services with these third-party products and services could decrease and our business could be harmed.

Previous report

We may not be able to respond to rapid technological changes, extend our platform or develop new features.

Previous report

The markets in which we compete are characterized by rapid technological changes and the frequent introduction of new products and services. Our ability to attract new customers and retain and expand the usage of existing customers depends on our ability to enhance and improve our platform, and to introduce new features and services. Our customers may require features and capabilities that our current platform does not have. We are focused on improving the quality and range of our service offerings and are committed to investing in research and development. Our enhancements to our platform, features or capabilities may not be compelling to our existing or potential customers and may not gain market acceptance. If our research and development investments do not accurately anticipate customer demand, or if we fail to develop our platform in a manner that satisfies customer preferences in a timely and cost-effective manner, we may fail to retain our existing customers or increase demand for our platform.

Previous report

The introduction of competing services or the development of entirely new technologies to replace existing offerings could make our platform obsolete or adversely affect our business, results of operations and financial condition. We may experience difficulties with software development, design or marketing that could delay or prevent our development, introduction, or implementation of new services, features, or capabilities. New services, features or capabilities may not be released according to schedule. Any delays could result in adverse publicity, loss of revenue or market acceptance, or claims by customers brought against us, all of which could harm our business. If customers do not widely adopt our new services, features and capabilities, we may not be able to realize a return on our investment. If we are unable to develop, license or acquire new features and capabilities to our platform on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, our business would be harmed.

Previous report

We plan to incorporate AI technologies into some of our products and services, which may present operational and reputational risks.

Previous report

As of the date of this quarterly report, we utilize artificial intelligence, or AI, to empower the multi-language captioning and transcription features of our TEN Pro Platform, and we plan to implement additional features driven by artificial intelligence in the future. The initial AI-driven enhancements are expected to be available in the second half of 2025. As with many innovations, there are associated risks involved in utilizing AI technology. There can be no assurance that our use of AI will eventually produce the intended results. Even if it could produce the intended results, we cannot guarantee that such AI will not produce errors going forward. AI, particularly generative AI, has been known to produce false or “hallucinatory” inferences or outputs. AI can also present ethical issues and may subject us to new or heightened legal, regulatory, ethical, or other challenges. Inappropriate or controversial data practices by developers and end-users, or other factors adversely affecting public opinion concerning AI, could impair the acceptance of AI solutions, including those incorporated in our services. If the AI tools that we use are deficient, inaccurate, or controversial, we could incur operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business and financial results.

Previous report

In addition, regulation of AI is rapidly evolving worldwide, as legislators and regulators are increasingly focused on these powerful emerging technologies. The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, data privacy and security, customer protection, competition, and equal opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and regulations. For example, In the United States, President Biden issued the Executive Order on Safe, Secure and Trustworthy Artificial Intelligence in October 2023, with the goal of promoting the “safe, secure, and trustworthy development and use of artificial intelligence in the United States.” The Executive Order has established certain new standards for the training, testing and cybersecurity of sophisticated AI models. It has also instructed other federal agencies to promulgate additional regulations within certain timeframes from the date of the Executive Order. Federal artificial intelligence legislation has also been introduced in the U.S. Senate. Since these regulatory frameworks rapidly evolve, we may become subject to new laws and regulations, which may affect the legality, profitability, or sustainability of our business, and we may be unable to predict all the legal, operational, or technological risks that may arise relating to the use of AI. The failure to comply with the relevant regulatory frameworks may also negatively affect our reputation. Because AI technology itself is highly complex and rapidly developing, it is not possible to predict all the legal, operational, or technological risks that may arise relating to the use of AI. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm. As of the date of this quarterly report, the Company does not intend to utilize open-source AI.

Previous report

Interruptions in our services caused by undetected errors, failures, or bugs in our platform or services could harm our reputation and result in significant costs to us.

Previous report

Our platform and services may have errors or defects that customers identify after they begin using them that could result in unanticipated interruptions of service. Internet-based services frequently contain undetected errors and bugs when first introduced or when new versions or enhancements are released. The use of our services in complicated, large-scale network environments may increase our exposure to undetected errors, failures, or bugs in our services. We use monitoring software to detect errors or bugs in our platform and we subject new codes to stringent testing before their release. As of the date of this quarterly report, we have not experienced significant interruptions in our services as a result of such errors or defects, but we may experience future interruptions of service if we fail to detect and correct these errors and defects. As our business expands, the costs incurred in correcting defects, bugs or errors may be substantial and could harm our results of operations.

Previous report

In addition, we rely on hardware and software of third parties to offer our services. Any defects in, or unavailability of, our or third-party software or hardware that cause interruptions of our services could, among other things:

Previous report

Competition in our markets is intense, and if we do not compete effectively, our operating results could be harmed.

Previous report

The webcasting market is competitive and rapidly changing, and existing and new market entrants, particularly established companies with greater resources than we have, that provide technologies to improve communication and engagement technologies or platforms, such as artificial intelligence and machine learning, could also increase the level of competition in the market. We face competition from many large and small companies, which include, but are not limited to, Zoom, ON24, GlobalMeet, Cvent, Bizzabo, and Meeting Tomorrow.

Previous report

Our competitors vary in size and in the breadth and scope of the products and services they offer. Many of our actual and potential competitors benefit from competitive advantages over us, such as greater name recognition; longer operating histories; more varied products and services; larger marketing budgets; more established marketing relationships; more third-party integration; greater accessibility across devices or applications; greater access to larger user bases; and greater financial, technical, and other resources. Some of our competitors may make acquisitions or strategic investments or enter into strategic relationships to offer a broader range of products and services than we do, which may prevent us from using such third parties’ technology or offering such products or services. These combinations may make it more difficult for us to compete effectively. We expect these trends to continue as competitors attempt to strengthen or maintain their market positions. As we introduce new services, and with the introduction of new technologies and market entrants, we expect competition to intensify in the future.

Previous report

Demand for our platform is price sensitive. Many factors, including our pricing and marketing strategies, customer acquisition, and technology costs, as well as the pricing and marketing strategies of our competitors, can significantly affect our pricing strategies. Certain competitors offer, or may in the future offer, lower-priced or free products or services that compete with our platform or certain aspects of our platform, and they may offer a broader range of products and services than we do. Even if such competing products do not include all of the features and functionality that we provide, we could face pricing pressure to the extent that customers find such alternative products to be sufficient to meet their needs. Similarly, certain competitors or potential competitors may use marketing strategies that enable them to acquire customers at a lower cost than we can. Moreover, our major customers may demand substantial price concessions. As a result, we may be required to provide our major customers with pricing below our targets in the future. As a result, we could lose market share to our competitors or be forced to engage in price-cutting initiatives or other discounts to attract and retain customers, each of which could harm our business, results of operations and financial condition.

Previous report

Our ability to increase our customer base and achieve broader market acceptance of our services will depend to a significant extent on our ability to expand our marketing and sales operations. We plan to continue expanding our sales and marketing capabilities, including through additional investment in digital marketing and sales team expansion. If we are unable to expand our sales and marketing operations, our future revenue growth and business could be adversely impacted.

Previous report

Identifying and recruiting qualified sales representatives and training them is time consuming and resource intensive, and they may not be fully trained and productive for a significant amount of time. We also plan to dedicate resources to sales and marketing programs, including internet and other online advertising. All of these efforts will require us to invest significant financial and other resources, as the cost to acquire customers through these efforts is high. Our business will be harmed if our efforts do not generate a correspondingly significant increase in revenue.

Previous report

Our largest customer generates a significant portion of our revenue, and interruption in operations of such significant customer may have an adverse effect on our business, financial condition, and results of operations.

Previous report

For the six months ended June 30, 2025, there was one customer that independently accounted for more than 10% of our total revenue. For the six months ended June 30, 2024, there was one customer that independently accounted for more than 10% of our total revenue.

Previous report

We believe that, in the foreseeable future, we may continue to derive a significant portion of our revenue from such significant customer. If such customer fails to make payments, or experiences a downturn in business, our revenue and results of operations may be materially and adversely affected. We may lose our significant customer due to a variety of factors, including our capacity to deliver reliable services, service efficiency, as well as our competitiveness in pricing strategies. We cannot guarantee that we will continue to maintain the business relationship with our significant customer at the same level, or at all. If our significant customer terminates its relationship with us, we cannot assure you that we will be able to secure an alternative arrangement with a comparable customer in a timely manner, or at all. Losing our significant customer could adversely affect our revenue and profitability. In the short term, losing our significant customer may lead to a substantial loss of revenue and potentially disrupt cash flow. In the long term, it could impact market perception and our ability to attract new customers.

Previous report

We may be dependent on a limited number of suppliers and any disruption to the relationships with the major suppliers may have material adverse effects on our business.

Previous report

For the six months ended June 30, 2025, there was one supplier that independently accounted for more than 10% of our total purchases, accounting for approximately 14%, of our total purchases. For the six months ended June 30, 2024, there was one supplier that independently accounted for more than 10% of our total purchases, accounting for approximately 20%, of our total purchases. Such third-party suppliers are subject to their own unique operational and financial risks, which are beyond our control. If such significant suppliers breach or terminate their contracts with us, or experience significant disruptions to their operations, we will be required to find and enter into arrangements with one or more replacement suppliers. Finding alternative suppliers could involve significant delays and other costs and these suppliers may not be available to us on reasonable terms, or at all. As a result, this could harm our business and financial results and result in lost or deferred revenue.

Previous report

We depend on our controlling stockholder, V-Cube, Inc., for financing and other resources.

Previous report

V-Cube, Inc. owns the majority of our equity interest as of the date of this quarterly report. We do not expect any material changes to our relationship with V-Cube, Inc. in the foreseeable future. We have relied on and expect to continue to rely on V-Cube, Inc. for financing and other resources. V-Cube, Inc. has made verbal pledges to provide financial support and other resources to our Company. However, such pledges have not been formalized by any contractual arrangements and there is no assurance that such financial support will be available as and when needed or in sufficient amounts. If there are any changes to our relationship with V-Cube, Inc., and/or if V-Cube, Inc. suspends or terminates its provision of financing and other resources to us, for a variety of reasons beyond our control, such as any changes to the Japan-United States relations, any business interruptions or financial distress of V-Cube, Inc., or any legal changes that affect international money transfers, it could have material adverse effects on our business and financial results.

Previous report

Our results of operations are subject to seasonal fluctuations.

Previous report

We experience seasonality in our business. We usually generate more revenue in the last month of each calendar quarter. We may experience capacity and resource shortages in our platform and services during the period of such seasonal surge in our business. As a result of seasonality, our financial condition and results of operations may continue to fluctuate, and the trading price of our common stock may fluctuate from time to time.

Previous report

Our business and results of operations may be harmed by the misconduct of authorized employees that have access to important assets of our Company such as bank accounts and confidential information.