Executive Summary / Key Takeaways

• Transformative Juncture: TEN Holdings, Inc. (NASDAQ: XHLD) is undergoing a significant transformation, leveraging its proprietary Xyvid Pro Platform and expanding into physical events, while simultaneously managing substantial financial losses and the complexities of being a newly public company.
• Technological Differentiation: The Xyvid Pro Platform, with its interactive features and existing AI-driven multi-language capabilities, forms the core of XHLD's competitive strategy, with further AI enhancements planned for the second half of 2025 to deepen its moat.
• Challenging Financials: The first half of 2025 saw a 13.8% revenue decline, primarily in virtual events due to customer event timing, alongside a dramatic 199% surge in SG&A expenses, leading to a net loss of $7.62 million and raising going concern doubts.
• Strategic Capital Deployment: Recent IPO proceeds and ongoing financing efforts, including a new CFO with M&A and capital raising expertise, are critical to funding operations, repaying debt, and investing in platform enhancements and potential acquisitions.
• Competitive Specialization: XHLD aims to carve out a niche through specialized, high-quality hybrid and physical event production, differentiating itself from larger, more generalized competitors like Zoom (ZM) and Microsoft (MSFT), though it faces significant scale and resource disparities.

The Stage is Set: XHLD's Core Business and Competitive Arena

TEN Holdings, Inc. (XHLD) operates at the intersection of event planning, production, and broadcasting, serving a diverse client base across technology, healthcare, educational institutions, marketing, and non-profit sectors. The company's business model is bifurcated into virtual and hybrid events, powered by its proprietary Xyvid Pro Platform, and physical events, which primarily involve live streaming and video recording. This dual approach positions XHLD to cater to the evolving demands of a dynamic event industry.

The industry landscape is intensely competitive and rapidly changing, populated by both established giants and agile new entrants. XHLD finds itself vying for market share against formidable players such as Zoom Video Communications (ZM), Cisco Systems (CSCO), Microsoft (MSFT), and Twilio (TWLO). These competitors often boast greater brand recognition, longer operating histories, more varied product portfolios, larger marketing budgets, and significantly more financial and technical resources. XHLD's strategic imperative is to differentiate itself through specialized offerings and technological superiority.

Technological Edge and Innovation: The Xyvid Pro Platform

At the heart of XHLD's value proposition lies its Xyvid Pro Platform, an internet-based broadcast platform designed to deliver dynamic, interactive, and engaging virtual event experiences. This proprietary technology enables clients to connect with their target audiences globally, fostering interaction and engagement that is critical in today's digital-first world. The platform's core benefit is its ability to provide a tailored, high-quality event environment, which contrasts with the more generalized offerings of some larger competitors.

The Xyvid Pro Platform already incorporates artificial intelligence (AI) for essential features such as multi-language captioning and transcription, enhancing accessibility and reach. Looking ahead, XHLD plans to implement additional AI-driven enhancements in the second half of 2025. While specific quantitative performance metrics for these upcoming features are not disclosed, the strategic intent is clear: to further improve the quality and range of its service offerings. This investment in research and development is aimed at solidifying XHLD's competitive moat, potentially leading to higher customer satisfaction, improved retention rates, and the ability to command premium pricing for its sophisticated solutions. The company's mission to become a global leader in innovative virtual events underscores its commitment to leveraging technology for enhanced engagement and connectivity.

A History of Evolution and Strategic Shifts

XHLD's journey began with Ten Events, Inc., incorporated in 2011, focusing on virtual and hybrid events. A corporate restructuring in fiscal year 2023 formally integrated physical events into its revenue streams, diversifying its service portfolio. The current holding company, TEN Holdings, Inc., was established in February 2024, acquiring Ten Events from its principal stockholder, V-Cube, Inc., and subsequently completing its Initial Public Offering (IPO) in February 2025.

The IPO, which raised approximately $8.90 million in net proceeds, was a pivotal moment, providing much-needed capital for operations, debt repayment, marketing, and platform enhancements. This period also saw significant financial restructuring, including the settlement of $4.91 million in outstanding payables through the issuance of 6.44 million shares to Sunpeak Holdings Corporation, and a purchase agreement with Lincoln Park Capital Fund, LLC for up to $20 million in common stock. The recent appointment of Virgilio D. Torres as Chief Financial Officer, with his background in M&A and capital raising, signals a clear strategic direction towards strengthening the company's financial foundation and pursuing future growth initiatives, including potential acquisitions.

Financial Performance: A Period of Transformation and Investment

The first half of 2025 reflects a company in a state of significant transition, marked by both operational shifts and the financial burden of becoming a public entity. For the six months ended June 30, 2025, total revenue decreased by 13.8% to $1.85 million, down from $2.15 million in the prior year. This decline was primarily driven by a 19.5% reduction in virtual and hybrid event revenue, largely attributable to a major customer's bi-annual event occurring in 2024 but not in 2025. This highlights a vulnerability in customer concentration.

Conversely, the physical events segment demonstrated robust growth, increasing by 49.7% to $268,000, boosted by approximately $100,000 in revenue from a new customer. While physical events still represent a smaller portion of total revenue (14.4% in H1 2025), their growth offers a valuable diversification. Cost of revenue decreased by 15.1% to $361,000, primarily due to a strategic shift towards utilizing contractors and reducing equipment rentals for physical events, indicating some operational efficiency.

Despite a competitive gross profit margin of 81.67% (TTM), XHLD's operating and net margins are deeply negative. Selling, General and Administrative (SG&A) expenses surged by 199% to $7.32 million in the first half of 2025. This substantial increase was largely due to the costs associated with operating as a publicly traded company, including legal, auditor, and SEC fees, as well as $3.5 million in stock compensation expenses. This led to a significant increase in net loss, which ballooned to $7.62 million for the six months ended June 30, 2025, compared to $826,000 in the same period last year.

Liquidity and the Path Forward

XHLD's liquidity position remains a critical area of focus. Cash and cash equivalents improved to $739,000 as of June 30, 2025, up from $48,000 at the end of 2024, primarily due to the IPO proceeds.

However, the company reported net cash used in operating activities of $7.58 million for the first half of 2025, reflecting a significant cash burn driven by its net losses and an increase in advances to a related party. This negative operating cash flow, coupled with a history of losses and an accumulated deficit, has led the auditor to raise substantial doubt about XHLD's ability to continue as a going concern.

The company's ability to sustain operations for the next 12 months is contingent upon attracting and retaining revenue-generating customers, securing new contracts, and obtaining additional financing. XHLD has $4.31 million in contractual obligations, with $3.72 million due within one year, predominantly short-term debt. Discussions are underway to extend the maturity of approximately $3.22 million in short-term loans from related parties (V-Cube Inc. and Wizlearn Technologies Pte. Ltd.) to December 31, 2025, with an amendment expected in Q3 2025. The reliance on V-Cube, Inc. for financing, though currently based on verbal pledges, underscores the importance of this relationship.

Competitive Arena: Specialization vs. Scale

XHLD operates in a market dominated by large, well-capitalized players. When comparing XHLD's financial health to its publicly traded competitors, a clear picture emerges. XHLD's TTM gross profit margin of 81.67% is competitive, even surpassing Cisco's 64% and Twilio's 51%, and comparable to Zoom's 76% and Microsoft's 69%. This suggests efficiency in its core service delivery. However, XHLD's deeply negative operating and net profit margins (-252.52% and -304.30% TTM, respectively) stand in stark contrast to the robust profitability of Zoom (17% operating, 22% net), Cisco (23% operating, 18% net), and Microsoft (46% operating, 36% net). Even Twilio, with a -1% operating margin, demonstrates a more controlled expense structure. This disparity highlights the significant investment phase XHLD is in, particularly with public company costs and stock-based compensation.

XHLD's competitive advantages, or moats, primarily stem from its proprietary Xyvid Pro Platform and its focus on custom event services. The platform's interactive capabilities and planned AI enhancements aim to deliver a superior, tailored experience, fostering customer loyalty. This specialization allows XHLD to target niche markets, such as specific needs within healthcare or educational institutions, where a generic video conferencing solution might fall short. The company's ability to provide end-to-end production, including video editing and custom on-demand libraries, offers a more comprehensive solution than many competitors.

However, XHLD's smaller scale presents significant vulnerabilities. It lacks the extensive global network, brand recognition, and vast R&D budgets of a Microsoft or a Cisco. These larger players can leverage their ecosystems and integrate AI at a pace and scale XHLD cannot match, potentially offering more advanced features and broader accessibility. XHLD's customer concentration, with one customer accounting for over 10% of revenue, also poses a risk that diversified giants do not face to the same degree. The company's strategic response is to lean into its specialization, enhancing its platform with AI to deliver unique value, while actively seeking capital to fuel growth and potentially make strategic acquisitions that can expand its reach and capabilities.

Outlook and Strategic Imperatives

XHLD's outlook is defined by a delicate balance between ambitious growth plans and pressing financial realities. The company expects its cash and cash equivalents to be sufficient for the next 12 months, but this hinges critically on its ability to attract new revenue-generating customers and secure additional financing. The planned AI-driven enhancements to the Xyvid Pro Platform in the second half of 2025 are a key strategic initiative, aiming to bolster its technological differentiation and improve service offerings.

Management anticipates continued increases in overall operating expenses as the company expands its business operations and fully absorbs the costs associated with being a public entity. The new CFO's mandate to build a "financial foundation" and assist with "capital raising and future acquisition efforts" underscores the strategic importance of financial stability and inorganic growth. While XHLD believes it will continue to derive significant revenue from its largest customer, diversification remains a long-term goal. The company's ability to execute on its technological roadmap, manage its cost structure, and successfully navigate its financing needs will be paramount to achieving sustainable profitability and realizing its mission to become a global leader in innovative virtual events.

Conclusion

TEN Holdings, Inc. stands at a pivotal juncture, embarking on a high-stakes transformation from a specialized event production company to a technologically advanced public entity. Its proprietary Xyvid Pro Platform, with its interactive capabilities and planned AI enhancements, represents a core competitive asset, offering a differentiated experience in a crowded market. However, the company faces significant financial headwinds, including substantial losses, negative operating cash flow, and a going concern warning, exacerbated by the costs of public company operations and customer concentration.

XHLD's investment thesis hinges on its ability to leverage its technological edge and specialized service offerings to carve out a profitable niche against larger, more diversified competitors. The strategic focus on capital raising, potential acquisitions, and continuous platform innovation, as evidenced by the new CFO's appointment and AI development plans, are critical steps in this journey. For investors, XHLD represents a high-risk, high-reward opportunity, where the successful execution of its strategic initiatives and the effective management of its financial challenges will be paramount to achieving sustainable profitability and realizing its mission to become a global leader in innovative virtual events.