10-Q: TEN Holdings Faces Nasdaq Delisting, SEC Probe Amid Soaring Losses

TEN Holdings, Inc. reported a significant increase in net losses and negative cash flow, raising substantial doubt about its ability to continue as a going concern, while also facing a Nasdaq delisting threat and federal investigations into its IPO.

Summary

• Net loss for the nine months ended September 30, 2025, dramatically increased to $9,607,000, up 433.4% from $1,801,000 in the prior year period.
• The company reported negative cash flow from operations of $9,035,000 for the nine months ended September 30, 2025, compared to $1,763,000 in the same period last year.
• An accumulated deficit of $11,529,000 as of September 30, 2025, compared to $1,922,000 as of December 31, 2024, indicates significant financial deterioration.
• Total revenue for the nine months ended September 30, 2025, decreased by 10.7% to $2,398,000, primarily due to a non-recurring event series with a major customer in the prior year.
• Selling, General and Administrative (SG&A) expenses surged by 152.8% to $9,504,000 for the nine months, driven by $3,500,000 in stock compensation and increased public company operating costs.
• The company received a Nasdaq deficiency letter on June 30, 2025, for non-compliance with the bid price requirement, with a deadline of December 29, 2025, to regain compliance.
• A grand jury subpoena from the U.S. Attorney's Office (SDNY) and a related SEC investigation concerning the company's initial public offering were disclosed as subsequent events.
• The company has an Equity Line of Credit (ELOC) with Lincoln Park Capital for up to $20 million, with $19.6 million remaining available as of September 30, 2025, and has issued shares under this agreement post-period end.
• Short-term loans from related parties totaled $4,572,000 as of September 30, 2025, maturing by December 31, 2025.

Sentiment

Score: 1

Explanation: The company's financial performance is severely negative, marked by a substantial increase in net losses and negative cash flow, leading to explicit 'going concern' doubt. This is compounded by significant regulatory issues including a Nasdaq delisting threat and federal investigations into its IPO. While some capital has been raised, the underlying operational issues and legal uncertainties present extreme risks.

Positives

• Cash and cash equivalents increased to $310,000 as of September 30, 2025, from $48,000 at December 31, 2024, primarily due to financing activities.
• Revenue from physical events increased by 51.3% for the nine months ended September 30, 2025, to $339,000, indicating growth in this segment.
• Total assets increased to $10,746,000 as of September 30, 2025, from $6,424,000 at December 31, 2024, largely due to advances from related parties and capitalized software.

Negatives

• Net loss for the nine months ended September 30, 2025, increased by 433.4% to $9,607,000.
• Operating loss for the nine months ended September 30, 2025, widened by 388.3% to $8,048,000.
• Net cash used in operating activities significantly increased to $9,035,000 for the nine months ended September 30, 2025, from $1,763,000 in the prior year.
• Revenue from virtual and hybrid events decreased by 16.4% for the nine months ended September 30, 2025, to $2,059,000.
• Selling, General and Administrative expenses increased by 152.8% to $9,504,000 for the nine months, driven by public company costs and stock compensation.
• Other expenses, net, increased by 5,096.2% to $1,351,000 for the nine months, primarily due to expenses related to a settlement agreement.
• Interest expenses increased by 52.9% to $208,000 for the nine months ended September 30, 2025.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to incurred losses from operations and negative cash flow.
• The issuance or sale of shares under the Equity Line of Credit (ELOC) with Lincoln Park Capital Fund, LLC would substantially increase the number of shares outstanding and result in dilution to security holders, potentially decreasing the market price of common stock.
• Failure to comply with The Nasdaq Capital Market's bid price requirement (Nasdaq Listing Rule 5550(a)(2)) by December 29, 2025, may result in delisting, which could adversely affect market liquidity, financing ability, and investor confidence.
• The announcement or implementation of a reverse stock split, a potential option to regain Nasdaq compliance, could negatively affect the price of common stock.
• The company is subject to a grand jury subpoena from the U.S. Attorney's Office and a related SEC investigation concerning its initial public offering, with an unpredictable outcome and potential material adverse effects on financial statements.
• The company is dependent on attracting and retaining revenue-generating customers and securing additional equity and/or debt financing, with no assurances of success.

Future Outlook

The company's ability to continue as a going concern is dependent upon attracting and retaining revenue-generating customers, acquiring new customer contracts, and securing additional financing. Management may consider obtaining additional financing through common stock issuance, other equity or debt financing, or other means. The company is evaluating the impact of recently issued accounting pronouncements on its consolidated financial statements.

Management Comments

• "Our mission is to deliver top-tier planning, production, and broadcasting services for virtual, hybrid and physical events."
• "Our goal is to become a global leader in innovative virtual events that enhance engagement and connectivity, making impactful and memorable experiences accessible to all."
• "We expect general and administrative expenses to fluctuate as a result of operating as a public company."
• "We do not intend, and undertake no obligation, to update any forward-looking statement, except as required by law."
• "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."
• "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."

Industry Context

The company operates in the event planning, production, and broadcasting services industry, offering virtual, hybrid, and physical events. While the physical events segment showed growth, the overall revenue decline for the nine-month period, particularly in virtual and hybrid events, suggests challenges in a competitive or evolving market. The increased demand for physical events could indicate a post-pandemic shift in client preferences or a strategic focus by the company. The significant increase in operating expenses due to public company requirements highlights the cost burden of being a publicly traded entity, which can be particularly challenging for smaller companies with declining revenue and substantial losses.

Corporate Governance

Legal Proceedings

• Received a grand jury subpoena from the U.S. Attorney's Office in the Southern District of New York on October 27, 2025, in connection with an investigation into its initial public offering.
• Learned on October 28, 2025, that the SEC is conducting a related investigation.
• The company intends to fully cooperate with both investigations, but the outcome and potential impact are currently unpredictable.

Related Party Transactions

• Advances to V-Cube, Inc. (majority shareholder) for IT outsourcing, market advisory, marketing, business development, and consultancy services totaling $4,726,000 ($2,102,000 current and $2,624,000 non-current) as of September 30, 2025. These advances are unsecured and bear no interest.
• Short-term loans from V-Cube, Inc. ($465,000), Wizlearn Technologies Pte. Ltd. ($1,665,000), Pave Education Pte. Ltd. ($2,322,000), and Naoaki Mashita (CEO of V-Cube, Inc.) ($120,000) totaling $4,572,000 as of September 30, 2025, all bearing 6.00% interest and maturing on December 31, 2025.
• Partial conversion of a convertible promissory note held by Naoaki Mashita into 689,130 shares of common stock on December 23, 2024.
• Rental expense paid to GHDLCK, LLC (a company controlled by an immediate family member of a V-Cube Inc. director) of $75,000 for the nine months ended September 30, 2025.

Stakeholder Impact

• Shareholders face significant dilution risk from the Equity Line of Credit and warrant exercises, as well as potential loss of value due to substantial net losses, going concern doubt, and the risk of Nasdaq delisting.
• Investors are exposed to high uncertainty due to ongoing federal investigations into the IPO, which could lead to material adverse effects.
• Employees benefit from stock-based compensation, but the company's financial instability and going concern doubt could impact job security and future equity value.
• Creditors, particularly related parties, are exposed to the risk of non-repayment of short-term loans, although these are from entities closely tied to the majority shareholder.
• Customers may experience uncertainty regarding the company's long-term viability, especially given the decline in virtual and hybrid event revenue, despite growth in physical events.

Next Steps

• Regain compliance with Nasdaq's bid price requirement by December 29, 2025, potentially through a reverse stock split.
• Cooperate fully with the U.S. Attorney's Office and SEC investigations regarding the IPO.
• Attract and retain revenue-generating customers and acquire new customer contracts.
• Secure additional equity and/or debt financing to address going concern issues.
• Evaluate and adopt new accounting pronouncements (ASU 2025-05, ASU 2024-03, ASU 2023-09, ASU 2023-06).

Key Dates

Recommendation

The company's financial health is in severe decline, evidenced by a 433.4% increase in net loss and a substantial increase in cash used in operations, leading to an explicit 'going concern' warning. This fundamental weakness is compounded by significant external pressures: a Nasdaq delisting threat due to bid price non-compliance and active federal investigations (grand jury subpoena and SEC probe) into its IPO. These factors create an exceptionally high level of risk and uncertainty, making the stock highly speculative with a strong likelihood of further price deterioration. While some capital has been raised, it appears insufficient to offset the rapid cash burn and address the severe operational and legal challenges. A seasoned investor would view these combined factors as a clear signal to exit the position.

Keywords

SEC filing, 10-Q, TEN Holdings, XHLD, Quarterly Report, Financial Results, Net Loss, Going Concern, Nasdaq Delisting, SEC Investigation, IPO, Equity Line of Credit, Lincoln Park Capital, Virtual Events, Hybrid Events, Physical Events, Stock Compensation, Related Party Transactions, Corporate Governance, Risk Factors, Share Dilution, Reverse Stock Split