TEN Holdings, Inc.

Previous wording

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 $4,836 thousand and $405 thousand for the three months ended March 31, 2025 and fiscal year ended December 31, 2024, respectively, and cash used in operating activities of $6,785 thousand and $581 thousand for the three months ended March 31, 2025 and fiscal year ended December 31, 2024, respectively. As of December 31, 2024, we had an accumulated deficit of $1,922 thousand and a working capital deficit of $5,735 thousand.

Current wording

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 wording

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 Xyvid 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 quarter 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.

Current wording

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 wording

For thethree months ended March 31, 2025, there were two customers that independently accounted for more than 10% of our total revenue; accounting for approximately 54% and 18% of our total revenue, respectively. For the three months ended March 31, 2024, there were two customers that independently accounted for more than 10% of our total revenue; accounting for approximately 66% and 16% of our total revenue, respectively.

Current wording

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 wording

For thethree months ended March 31, 2025, there were three suppliers that independently accounted for more than 10% of our total purchases, accounting for approximately 22%, 11%, and 11% of our total purchases. For the three months ended March 31, 2024, there were three suppliers that independently accounted for more than 10% of our total purchases, accounting for approximately 23%, 17%, and 14% 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.

Current wording

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 wording

Our ability to attract and retain customers depends on our ability to provide our customers and their users with a highly reliable platform. We currently use data centers in the United States. Our platform may not be fully available to customers in the event of catastrophic failure at one of those data centers. We also do not control the operation of the data centers we use, and they are vulnerable to damage or interruption from human error, intentional bad acts, natural disasters, war, terrorist attacks, cyber-attacks and other cybersecurity incidents, power losses, hardware failures, systems failures, telecommunications failures and similar events, any of which could disrupt our services. In the event of significant physical damage to one of these data centers, it may take a significant period of time to achieve full resumption of our platform, and our disaster recovery planning may not account for all eventualities. As of the date of this quarterly report, we have experienced service disruptions, outages and other performance problems, due to the introduction of new functionality, human error, and capacity constraints, and we may in the future experience further service disruptions, outages and other performance problems due to a variety of other factors, including infrastructure changes, software errors, zero-day vulnerabilities, and denial-of-service attacks, ransomware attacks and other cybersecurity incidents by malicious actors. In some instances, we may not be able to rectify these performance issues within an acceptable time-frame.

Current wording

Our ability to attract and retain customers depends on our ability to provide our customers and their users with a highly reliable platform. We currently use data centers in the United States. Our platform may not be fully available to customers in the event of catastrophic failure at one of those data centers. We also do not control the operation of the data centers we use, and they are vulnerable to damage or interruption from human error, intentional bad acts, natural disasters, war, terrorist attacks, cyber-attacks and other cybersecurity incidents, power losses, hardware failures, systems failures, telecommunications failures and similar events, any of which could disrupt our services. In the event of significant physical damage to one of these data centers, it may take a significant period of time to achieve full resumption of our platform, and our disaster recovery planning may not account for all eventualities. We have previously experienced service disruptions, outages and other performance problems, due to the introduction of new functionality, human error, and capacity constraints, and we may in the future experience further service disruptions, outages and other performance problems due to a variety of other factors, including infrastructure changes, software errors, zero-day vulnerabilities, and denial-of-service attacks, ransomware attacks and other cybersecurity incidents by malicious actors. In some instances, we may not be able to rectify these performance issues within an acceptable time-frame. We have not experienced any such service disruptions, outages, or other performance issues during the period covered by this quarterly report.

Previous wording

For thethree months ended March 31, 2025 and 2024, we had total revenue of approximately $.739 million and $1.128 million, respectively, and net loss of approximately $4.840 million and $0.405 million, respectively. Our financial results in the past may not be indicative of future results, and we cannot assure you that we will achieve or maintain profitability on a consistent basis. Our revenue growth may slow, or our revenue may decline for a number of reasons, including reduced demand for our products and services, increased competition, industry trend, or our failure to capitalize on growth opportunities. Meanwhile, we expect our overall operating expenses to continue to increase in the foreseeable future, as we will incur additional expenses in connection with the expansion of our business operations and as a newly public company. These efforts and additional expenses may be more costly than we currently expect, and there is no assurance that we will be able to maintain sufficient operating revenue to offset our operating expenses. Any failure to increase revenue or to manage our costs as we continue to grow and invest in our business would prevent us from achieving or maintaining profitability or maintaining positive operating cash flow at all, or on a consistent basis, which would cause our business, financial condition, and results of operations to suffer.

Current wording

For the six months ended June 30, 2025 and 2024, we had total revenue of approximately $1,855,000 and $2,151,000, respectively, and net loss of approximately $7,620,000 and $826,000, respectively. Our financial results in the past may not be indicative of future results, and we cannot assure you that we will achieve or maintain profitability on a consistent basis. Our revenue growth may slow, or our revenue may decline for a number of reasons, including reduced demand for our products and services, increased competition, industry trend, or our failure to capitalize on growth opportunities. Meanwhile, we expect our overall operating expenses to continue to increase in the foreseeable future, as we will incur additional expenses in connection with the expansion of our business operations and as a newly public company. These efforts and additional expenses may be more costly than we currently expect, and there is no assurance that we will be able to maintain sufficient operating revenue to offset our operating expenses. Any failure to increase revenue or to manage our costs as we continue to grow and invest in our business would prevent us from achieving or maintaining profitability or maintaining positive operating cash flow at all, or on a consistent basis, which would cause our business, financial condition, and results of operations to suffer.

Previous wording

As of the date of this quarterly report, our largest stockholder, V-Cube, Inc., directly and indirectly owns more than a majority of the voting power of our outstanding common stock and is able to determine all matters requiring approval by our stockholders. V-Cube, Inc. is a Japanese company listed on the Tokyo Stock Exchange and its chief executive officer, Naoaki Mashita, has served as our Director since February 2024 and is our minority stockholder. Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and is permitted to phase in its compliance with the independent committee requirements. We rely on the “controlled company” exemptions under the Nasdaq listing rules. Specifically, have not formed the nominating and corporate governance and compensation committees, and a majority of our board of directors does not consist of independent directors, as permitted by the “controlled company” exemptions under the Nasdaq listing rules. We have formed an audit committee that will consist of three independent directors and we are phasing in our compliance with the relevant audit committee composition requirements by having two independent directors as of the time of our listing, and will have three independent directors within one year of our listing. During the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Current wording

As of the date of this quarterly report, our largest stockholder, V-Cube, Inc., directly and indirectly owns more than a majority of the voting power of our outstanding common stock and is able to determine all matters requiring approval by our stockholders. V-Cube, Inc. is a Japanese company listed on the Tokyo Stock Exchange and its chief executive officer, Naoaki Mashita, has served as our Director since February 2024 and is our minority stockholder. Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and is permitted to phase in its compliance with the independent committee requirements. We rely on the “controlled company” exemptions under the Nasdaq listing rules. Specifically, we have not formed the nominating and corporate governance and compensation committees, and a majority of our board of directors does not consist of independent directors, as permitted by the “controlled company” exemptions under the Nasdaq listing rules. While we have an audit committee, it presently consists of only one non-independent director, due to the recent resignations of two independent directors. We have undertaken a search for independent directors to fill the vacancies on our audit committee and plan to have an audit committee comprised solely of independent directors within one year of the completion of our initial public offering, in accordance with Nasdaq Listing Rules.

Previous wording

The following “Use of Proceeds” information relates to the registration statement on Form S-1, as amended (File Number 333-282621), for our IPO, which was declared effective by the SEC on February 7, 2025. On February 18, 2025, we completed our IPO, in which we registered, issued and sold an aggregate of 1,667,000 shares of common stock, at a public offering price of $6.00 per share for $10,002,000. Bancroft Capital, LLC was the representative of the underwriters of our IPO.

Current wording

The following “Use of Proceeds” information relates to the registration statement on Form S-1, as amended (File Number 333-282621), for our initial public offering (the “IPO”), which registration statement was declared effective by the SEC on February 7, 2025. On February 18, 2025, we completed our IPO, in which we registered, issued and sold an aggregate of 1,667,000 shares of common stock, at a public offering price of $6.00 per share for $10,002,000. Bancroft Capital, LLC was the representative of the underwriters of our IPO.

Previous wording

We incurred approximately $1,102 in expenses in connection with our IPO, which included approximately $550 in underwriting discounts, approximately $100 in expenses paid to or for underwriters, approximately $440 in legal and financial service fees, and approximately $12 in other expenses. None of the transaction expenses included payments to directors or officers of our Company or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of the net proceeds we received from the IPO were paid, directly or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates.

Current wording

We incurred approximately $1,102,000 in expenses in connection with our IPO, which included approximately $550,000 in underwriting discounts, approximately $100,000 in expenses paid to or for underwriters, approximately $440,000 in legal and financial service fees, and approximately $12,000 in other expenses. None of the transaction expenses included payments to directors or officers of our Company or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of the net proceeds we received from the IPO were paid, directly or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates.

Previous wording

The net proceeds raised from the IPO were approximately $8,900, after deducting underwriting discounts and the offering expenses payable by us. As of the date of this quarterly report, we have used approximately $2,500, $2,000, $2,000, $1,800, and $300 from the net proceeds for (i) advisory services for future financing related to acquisitions, business development and growth initiatives, (ii) repayment of short-term loans, (iii) marketing efforts to boost brand awareness, (iv) working capital and general corporate purposes to support day-to-day operations, and (v) research and development for platform enhancement, respectively. We intend to use the remaining proceeds from our IPO largely in the manner disclosed in our registration statement on Form S-1, as amended (File Number 333-282621).

Current wording

The net proceeds raised from the IPO were approximately $8,900,000, after deducting underwriting discounts and the offering expenses payable by us. As of the date of this quarterly report, we have used approximately $2,500,000, $2,000,000, $2,000,000, $1,800,000, and $300,000 from the net proceeds for (i) advisory services for future financing related to acquisitions, business development and growth initiatives, (ii) repayment of short-term loans, (iii) marketing efforts to boost brand awareness, (iv) working capital and general corporate purposes to support day-to-day operations, and (v) research and development for platform enhancement, respectively. We intend to use the remaining proceeds from our IPO largely in the manner disclosed in our registration statement on Form S-1, as amended (File Number 333-282621).