Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Oblong is building a robust cryptocurrency treasury focused on decentralized artificial intelligence ("AI") and the acquisition of $TAO, the native cryptocurrency of Bittensor, a decentralized blockchain network for machine learning and AI. The Company also provides innovative video collaboration and network solutions, centered around our patented Mezzanine™ product line and managed services.

Mezzanine™Product Offerings

Our product is called Mezzanine™, a family of turn-key products that enable dynamic and immersive visual collaboration across multi-users, multi-screens, multi-devices, and multi-locations (see further description of Mezzanine™ in Part I, Item 1). Mezzanine™ allows multiple people to share, control, and arrange content simultaneously, from any location, enabling all participants to see the same content in its entirety at the same time in identical formats, resulting in dramatic enhancements to both in-room and virtual videoconference presentations. Applications include video telepresence, laptop and application sharing, whiteboard sharing, and slides. Spatial input allows content to be spread across screens, spanning different walls, scalable to an arbitrary number of displays, and interaction with our proprietary wand device. Mezzanine™ substantially enhances day-to-day virtual meetings with technology that accelerates decision making, improves communication, and increases productivity. Mezzanine™ scales up to support the most immersive and commanding innovation centers; across to link labs, conference spaces, and situation rooms; and down for the smallest work groups. Mezzanine's digital collaboration platform can be sold as delivered systems in various configurations for small teams to total immersion experiences. The family includes the 200 Series (two display screen), 300 Series (three screen), and 600 Series (six screen). We also sell maintenance and support contracts related to Mezzanine™.

Historically, customers have used Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces. Sales of our Mezzanine™ product have been adversely affected during the last several years by the commercial response to the COVID-19 pandemic and its aftermath. Like many technology companies in recent months, we will continue to monitor and manage our costs relative to demand with the goal of growing the Company's revenue in the future. We are not currently investing in research and development or sales and marketing for our Mezzanine™ product. To the extent we believe new investments in these areas are warranted as a result of changes in market demand, we believe additional capital will be required to fund those efforts and our ongoing operations.

Managed Services for Network

We provide our customers with network solutions that ensure reliable, high-quality, and secure traffic of video, data, and internet. Network services are offered to our customers on a subscription basis. Our network services business carries variable costs associated with purchasing and reselling this connectivity.

Managed Services for Video Collaboration

We provide a range of managed services for video collaboration, from automated to orchestrated, to simplify the user experience in an effort to drive adoption of video collaboration throughout our customers' enterprises. We deliver our services through a hybrid service platform or as a service layer on top of our customers' video infrastructure. We provide our customers with i) managed videoconferencing, where we set up and manage customer videoconferences, and ii) remote service management, where we provide 24/7 support and management of customer video environments.

Staking Rewards on Digital Assets

In exchange for staking digital assets on blockchain networks, the Company is entitled to a fractional share of the fixed digital asset award a third-party validator node receives for successfully validating or adding a block to the blockchain. This award is remitted in the native token of the validator node and is referred to as a staking reward. The Company's staking reward received from delegating to a third-party validator node is proportionate to the digital assets staked by the Company compared to the total digital assets staked by all delegators to that node at that time. Token rewards earned from staking are calculated and distributed directly to Oblong's digital wallets by the blockchain networks as part of their consensus mechanisms.

Strategy

During the last several years, the Company has faced declining revenues for both our Mezzanine product offering and our Managed Services. These setbacks prompted us to undertake a comprehensive review of our strategic direction with the aim of enhancing shareholder value through various means.

In conjunction with the Company's June 2025 private placement, the Company has started to migrate its product focus from Mezzanine™ and related services to the AI and digital assets market.

Oblong envisions a dynamic integration into the Bittensor ecosystem, embracing its decentralized AI network to build a thriving and sustainable future. By staking $TAO tokens within Bittensor's framework, the Company seeks to create a robust foundation that could fuel long-term growth and engagement, focusing on internal initiatives and collaborative partnerships to amplify its impact in the decentralized AI landscape. The Company is also exploring partnerships within the Bittensor ecosystem to potentially develop technology offerings, further aligning its operational and treasury strategies.

The Company aims to act as a central catalyst, uniting community engagement, user empowerment, and technical expertise within subnets. It seeks to foster collaboration through vibrant spaces for knowledge-sharing, equip users with intuitive tools to seamlessly explore the ecosystem, and contribute operational insights to enhance decentralized AI. By harmonizing these efforts, Oblong hopes to spark innovation, deepen connections across Bittensor's network, and become a tangible contributor in shaping the future of decentralized intelligence, creating an inclusive environment where creativity and participation thrive.

Oblong's Results of Operations

Three Months Ended September 30, 2025 (the"2025 Third Quarter"), compared to the Three Months Ended September 30, 2024 (the "2024 Third Quarter")

Segment Reporting

The Company currently operates in two segments for purposes of segment reporting: (1) "Collaboration Products," which represents the Oblong Industries business surrounding our Mezzanine™ product offerings, and (2) "Managed Services," which represents the Oblong business surrounding managed services for network solutions and video collaboration. The Company has included its digital asset operations in its non-segmented corporate activities.

In 2024, we adopted Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. As part of our adoption of ASU 2023-07 and the Chief Operating Decision Maker's evaluation of segment performance for the 2025 Third Quarter and the 2024 Third Quarter, we updated certain segment information for 2025 and recast certain prior period segment information from 2024 to conform with our current period segment presentation.

The following table summarizes the key income statement components that we use to evaluate our financial performance on a consolidated and reportable segment basis for the 2025 Third Quarter and the 2024 Third Quarter (in thousands):

		Three Months Ended September 30, 2025
		2025				2024				% Change
Revenue
Managed Services		$	490			$	510				(4	)%
Collaboration Products			14				68				(79	)%
Corporate - Digital assets			97				-				100	%
Consolidated			601				578				4	%
Cost of revenues
Managed Services			345				295				17	%
Collaboration Products			4				204				(98	)%
Corporate - Digital assets			8				-				-	%
Consolidated			357				499				(28	)%
Gross Margin
Managed Services			145				215				(33	)%
Collaboration Products			10				(136	)			107	%
Corporate - Digital assets			89				-				100	%
Consolidated			244				79				(209	)%
Operating expenses
Managed Services (1)			-				-				-	%
Collaboration Products (2)			3				104				(97	)%
Corporate (3)			1,043				1,047				(0	)%
Consolidated			1,046				1,151				(9	)%
Other (expense) income, net (4)
Unrealized loss on digital assets			(1,517	)			-				100	%
Interest income, net			29				32				(9	)%
Consolidated			(1,488	)			32				(4750	)%
Net loss before taxes			(2,290	)			(1,040	)			120	%
Income tax expense			-				-				100	%
Net loss		$	(2,290	)		$	(1,040	)			120	%

	(1)	There were no operating expenses related to our Managed Service segment during the 2025 Third Quarter or the 2024 Third Quarter.
	(2)	Operating expenses related to our Collaboration Products Segment include research and development, sales and marketing, and other miscellaneous expenses.
	(3)	Corporate operating expenses include costs that are not specific to a particular segment but are general to the group. These include expenses for administrative, information technology, and accounting staff, general liability and other insurance, professional fees, and similar corporate expenses. The 2025 Third Quarter also includes cash and stock-based advisory fees related to digital assets.
	(4)	Unrealized losses from the fair-value remeasurement of digital assets and interest income on our cash and cash-equivalents are related to Corporate.

Revenue. Total revenue increased 4% in the 2025 Third Quarter compared to the 2024 Third Quarter. The following table summarizes the changes in components of our revenue (in thousands), and the significant changes in revenue are discussed in more detail below.

		Three Months Ended September 30,
		2025				% of Revenue				2024				% of Revenue
Revenue: Managed Services
Network services		$	477				79	%		$	502				87	%
Video collaboration			10				2	%			6				1	%
Professional and other services			3				0	%			2				0	%
Total Managed Services revenue		$	490				82	%		$	510				88	%
Revenue: Collaboration Products
Visual collaboration product offerings		$	14				2	%		$	68				12	%
Revenue: Digital Assets
Staking Rewards		$	97				16	%		$	-				0	%
Total revenue		$	601				100	%		$	578				100	%

Managed Services

•

The slight decrease in revenue for network services is mainly attributable to disconnects at certain customer locations.

•

For the 2025 Third Quarter, one customer made up 99% of Managed Services revenue. For the 2024 Third Quarter, this customer made up 98% of Managed Services revenue.

Collaboration Products

•

The decrease in revenue for Collaboration Products was mainly attributable to a decrease in sales of our Mezzanine™ products due to lower demand.

Digital Assets

•

Our digital asset staking rewards are based on the number of digital assets we have staked. For the three months ended September 30, 2025, we had an average staking rate of 99% for our digital asset balance staked.

The following table identifies the digital assets earned from staking activities:

		For the Three Months Ended September 30,
		2025								2024
Asset		Token Rewards				Revenue ($USD)				Token Rewards				Revenue ($USD)
$TAO			273.84			$	97,000				-			$	-

Cost of Revenue. Cost of revenue includes all internal and external costs related to the delivery of revenue. Cost of revenue also includes taxes, which have been billed to customers. Cost of revenue by segment is presented in the following table (in thousands):

		Three Months Ended September 30,
		2025				2024
Cost of Revenue
Managed Services		$	345			$	295
Collaboration Products			4				204
Digital Assets			8				-
Total cost of revenue		$	357			$	499

The decrease in our consolidated cost of revenue is mainly attributable to lower costs related to our Collaboration Products segment. Our consolidated gross profit as a percentage of revenue was 26% in the 2025 Third Quarter, compared to a consolidated gross profit as a percentage of revenue of 14% in the 2024 Third Quarter.

Our Managed Services segment recorded a 30% gross profit as a percentage of sales for the 2025 Third Quarter, compared to 42% in the 2024 Third Quarter. This decrease was primarily due to the reallocation of personnel expenses following our reduction in headcount in September 2024.

Our Collaboration Products segment recorded a gross profit as a percentage of sales of 71% for the 2025 Third Quarter, compared to a negative gross profit as a percentage of sales of 200% in the 2024 Third Quarter. This increase was mainly attributable to a decrease in personnel costs in the 2025 Third Quarter related to headcount reductions in September 2024 and a reduction in the expense related to our inventory obsolescence reserve of $29,000 in the 2025 Third Quarter compared to the 2024 Third Quarter.

Our digital assets recorded a gross profit as a percentage of revenue of 92% for the 2025 Third Quarter. Our cost of revenue for digital assets is made up of asset fees charged by the custodian and advisor fees on our staked digital assets.

Operating expenses are presented in the following table (in thousands):

		Three Months Ended September 30,
		2025				2024				$ Change				% Change
Operating expenses:
Research and development		$	3			$	38			$	(35	)			(92	)%
Sales and marketing			-				66				(66	)			(100	)%
General and administrative			1,043				1,047				(4	)			(0	)%
Total operating expenses		$	1,046			$	1,151			$	(105	)			(9	)%

Research and Development. Research and development expenses include internal and external costs related to developing features and enhancements to our existing product offerings. The decrease in research and development expenses for the 2025 Third Quarter compared to the 2024 Third Quarter is primarily attributable to a decrease in consulting and outsourced labor costs between these periods.

Sales and Marketing Expenses. The decrease in sales and marketing expenses for the 2025 Third Quarter compared to the 2024 Third Quarter is primarily attributable to reduced personnel expenses during the 2025 Third Quarter related to headcount reductions in September 2024.

General and Administrative Expenses. General and administrative expenses include direct corporate expenses and personnel costs in the various corporate support categories, including executive, finance and accounting, legal, human resources, and information technology. The decrease in general and administrative expenses for the 2025 Third Quarter compared to the 2024 Third Quarter is primarily attributable to reduced personnel expenses related to headcount reductions in September 2024, slightly offset by increased professional service fees, stock-based expense, and insurance expenses.

Other (Expense) Income, Net. Other (expense), net for the 2025 Third Quarter, is primarily comprised of unrealized losses on our digital assets, slightly offset by our interest income related to our cash accounts. Other income, net for the 2024 Third Quarter, is primarily comprised of interest income related to our cash accounts.

Loss from Operations. The decrease in the Company's loss from operations for the 2025 Third Quarter compared to the 2024 Third Quarter is mainly attributable to an increase in gross profit and a decrease in operating expenses.

Oblong's Results of Operations

Nine Months Ended September 30, 2025, compared to the Nine Months Ended September 30, 2024

Segment Reporting

In 2024, we adopted Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. As part of our adoption of ASU 2023-07 and the Chief Operating Decision Maker's evaluation of segment performance for the nine months ended September 30, 2025, and 2024, we updated certain segment information for 2025 and recast certain prior period segment information from 2024 to conform with our current period segment presentation.

The following table summarizes the key income statement components that we use to evaluate our financial performance on a consolidated and reportable segment basis for the nine months ended September 30, 2025, and 2024 (in thousands):

		Nine Months Ended September 30, 2025
		2025				2024				% Change
Revenue
Managed Services		$	1,495			$	1,540				(3	)%
Collaboration Products			221				275				(20	)%
Corporate - Digital assets			99				-				100	%
Consolidated			1,815				1,815				0	%
Cost of revenues
Managed Services			1,076				995				8	%
Collaboration Products			10				624				(98	)%
Corporate - Digital assets			9				-				-	%
Consolidated			1,095				1,619				(32	)%
Gross Margin
Managed Services			419				545				(23	)%
Collaboration Products			211				(349	)			160	%
Corporate - Digital assets			90				-				100	%
Consolidated			720				196				(267	)%
Operating expenses
Managed Services (1)			-				-				-	%
Collaboration Products (2)			-				330				(100	)%
Corporate (3)			2,897				3,140				(8	)%
Consolidated			2,897				3,470				(17	)%
Other (expense) income, net (4)
Managed Services			(1	)			-				(100	)%
Collaboration Products			-				14				100	%
Unrealized loss on digital assets			(1,486	)			-				100	%
Interest income, net			104				110				(5	)%
Consolidated			(1,383	)			124				(1215	)%
Net loss before taxes			(3,560	)			(3,150	)			13	%
Income tax expense			7				9				100	%
Net loss		$	(3,567	)		$	(3,159	)			13	%

	(1)	There were no operating expenses related to our Managed Service segment during the nine months ended September 30, 2025, or 2024.
	(2)	Operating expenses related to our Collaboration Products Segment include research and development, sales and marketing, and other miscellaneous expenses. Operating expense for the nine months ended September 30, 2025, also included a bad debt recovery of $18,000.
	(3)	Corporate operating expenses include costs that are not specific to a particular segment but are general to the group. These include expenses for administrative, information technology, and accounting staff, general liability and other insurance, professional fees, and similar corporate expenses. The nine months ended September 30, 2025, also includes cash and stock-based advisory fees related to digital assets.
	(4)	Other income (expense) for our segments includes interest expense and non-operating income. Unrealized losses from the fair-value remeasurement of digital assets and interest income on our cash and cash equivalents are related to Corporate.

Revenue. Total revenue remained steady in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The following table summarizes the changes in components of our revenue (in thousands), and the significant changes in revenue are discussed in more detail below.

		Nine Months Ended September 30,
		2025				% of Revenue				2024				% of Revenue
Revenue: Managed Services
Network services		$	1,457				80	%		$	1,489				82	%
Video collaboration			28				2	%			41				2	%
Professional and other services			10				1	%			10				1	%
Total Managed Services revenue		$	1,495				82	%		$	1,540				85	%
Revenue: Collaboration Products
Visual collaboration product offerings			221				12	%			275				15	%
Revenue: Digital Assets
Staking Rewards			99				5	%			-				0	%
Total revenue		$	1,815				100	%		$	1,815				100	%

Managed Services

•

The slight decrease in revenue for network services is mainly attributable to disconnects at certain customer locations.

•

The decrease in revenue for video collaboration services is mainly attributable to lower revenue from existing customers (either from reductions in price or level of services) and customer loss to competition.

•

For the nine months ended September 30, 2025, one customer made up 99% of Managed Services revenue. For the nine months ended September 30, 2024, this customer made up 98% of Managed Services revenue.

Collaboration Products

•

The decrease in revenue for Collaboration Products was mainly attributable to a decrease in sales of our MezzanineTM products due to lower demand.

Digital Assets:

•

Our digital asset staking rewards are based on the number of digital assets we have staked. For the nine months ended September 30, 2025, we had an average staking rate of 99% for our digital asset balance.

The following table identifies the digital assets earned from staking activities:

		For the Nine Months Ended September 30,
		2025								2024
Asset		Token Rewards				Revenue ($USD)				Token Rewards				Revenue ($USD)
$TAO			280.41			$	99,000				-			$	-

Cost of Revenue. Cost of revenue includes all internal and external costs related to the delivery of revenue. Cost of revenue also includes taxes, which have been billed to customers. Cost of revenue by segment is presented in the following table (in thousands):

		Nine Months Ended September 30,
		2025				2024
Cost of Revenue
Managed Services		$	1,076			$	995
Collaboration Products			10				624
Digital Assets			9				-
Total cost of revenue		$	1,095			$	1,619

The decrease in our consolidated cost of revenue is mainly attributable to lower costs related to our Collaboration Products segment. Our consolidated gross profit as a percentage of revenue was 40% in the nine months ended September 30, 2025, compared to a consolidated gross profit as a percentage of revenue of 11% in the nine months ended September 30, 2024.

Our Managed Services segment recorded a 28% gross profit as a percentage of sales for the nine months ended September 30, 2025, compared to 35% in the nine months ended September 30, 2024. This decrease was primarily due to the reallocation of personnel expenses following our reduction in headcount in September 2024.

Our Collaboration Products segment recorded a gross profit as a percentage of sales of 95% for the nine months ended September 30, 2025, compared to a negative gross profit as a percentage of sales of 127% in the nine months ended September 30, 2024. This increase was mainly attributable to a decrease in personnel costs in the nine months ended September 30, 2025, related to headcount reductions in September 2024, and a reduction in the expense related to our inventory obsolescence reserve of $146,000 in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Our digital assets recorded a gross profit as a percentage of revenue of 91% for the nine months ended September 30, 2025. Our cost of revenue for digital assets is made up of asset fees charged by the custodian and advisor fees on our staked digital assets.

Operating expenses are presented in the following table (in thousands):

		Nine Months Ended September 30,
		2025				2024				$ Change				% Change
Operating expenses:
Research and development		$	8			$	153			$	(145	)			(95	)%
Sales and marketing			14				177				(163	)			(92	)%
General and administrative			2,875				3,140				(265	)			(8	)%
Total operating expenses		$	2,897			$	3,470			$	(573	)			(17	)%

Research and Development. Research and development expenses include internal and external costs related to developing features and enhancements to our existing product offerings. The decrease in research and development expenses for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, is primarily attributable to a decrease in consulting and outsourced labor costs between these periods.

Sales and Marketing Expenses. The decrease in sales and marketing expenses for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, is primarily attributable to reduced personnel expenses related to headcount reductions in September 2024.

General and Administrative Expenses. General and administrative expenses include direct corporate expenses and personnel costs in the various corporate support categories, including executive, finance and accounting, legal, human resources, and information technology. The decrease in general and administrative expenses for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, is primarily attributable to reduced personnel expenses related to headcount reductions in September 2024, slightly offset by increased stock-based expenses and professional fees.

Other (Expense) Income, Net. Other (expense), net for the nine months ended September 30, 2025, is primarily comprised of unrealized losses on digital assets, slightly offset by interest income on our cash accounts. Other income, net for the nine months ended September 30, 2024, is primarily comprised of interest income related to our cash accounts.

Loss from Operations. The decrease in the Company's loss from operations for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, is mainly attributable to an increase in gross profit and a decrease in operating expenses.

Off-Balance Sheet Arrangements

As of September 30, 2025, we had no off-balance sheet arrangements.

Inflation

Management does not believe inflation had a significant effect on the Condensed Consolidated Financial Statements for the periods presented.

Critical Accounting Policies

During the nine months ended September 30, 2025, we adopted critical accounting policies related to our digital assets. Please refer to Note 1 - Business Description and Significant Accounting Policies - Digital Assets for further information. Critical accounting policies and the significant estimates made in accordance with such policies are regularly discussed with our Audit Committee. Those policies are discussed under "Critical Accounting Policies" in "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as in our Condensed Consolidated Financial Statements and the footnotes thereto, each included in our 2024 Annual Report.

Liquidity and Capital Resources

As of September 30, 2025, we had $3,737,000 in cash and cash equivalents and working capital of $9,820,000. For the nine months ended September 30, 2025, we incurred a net loss of $3,567,000, and we used $2,271,000 of net cash in operating activities.

Financing activities provided $9,043,000 of net cash for the nine months ended September 30, 2025, consisting of net proceeds from the 2025 Private Placement and warrant exercises.

We believe our existing cash, cash equivalents, and the fair value of our $TAO tokens (if converted to cash) will be sufficient to fund our operations and meet our working capital requirements for at least the next twelve months from the filing of this Report. This assessment is based on current market conditions, regulatory environment, and the Company's operational plans, all of which are subject to change. In the long term, we believe additional capital will be required to fund operations and provide growth capital, including increasing the size of our cryptocurrency treasury. To access capital to fund operations or provide growth capital, we will need to raise capital from the exercise of outstanding common and/or preferred warrants, and/or in one or more debt and/or equity offerings. There can be no assurance that we will be successful in raising the necessary capital or that any such offering will be on terms acceptable to the Company. If we are unable to raise additional capital that may be needed on terms acceptable to us, it could have a material adverse effect on the Company.