TON Strategy Co

Notes to Condensed Consolidated Financial Statements

For the Three and Six months Ended June 30, 2026 and 2025

1. DESCRIPTION OF BUSINESS

Our Business

References in this document to the “Company,” “we,” “us,” or “our” are intended to mean TON Strategy Company, individually, or as the context requires, collectively with its subsidiaries on a consolidated basis.

Name Change

Effective September 2, 2025, we changed our name from Verb Technology Company, Inc. to TON Strategy Company by filing a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of the State of Nevada. As a result of the name change, the Company changed its trading symbol on the Nasdaq Capital Market for the Company’s common stock from “VERB” to “TONX,” effective September 2, 2025.

TON Strategy Company

TON Strategy Company is a digital asset treasury and Web3 ecosystem company focused on supporting The Open Network, a public blockchain originally developed to integrate with Telegram, one of the world’s largest messaging platforms. The Open Network blockchain is designed to process transactions quickly and at scale, enabling a range of decentralized applications and digital services that can be accessed directly through Telegram’s global user base of more than one billion people.

Effective June 8, 2026, following a community governance vote, the native digital asset of The Open Network, previously known as “Toncoin” (ticker: TON), was rebranded as “Gram” (ticker: GRAM). The rebrand changed only the name and ticker of the digital asset and did not affect the underlying blockchain, the Company’s holdings of the digital asset, or its staking positions. Accordingly, the Company refers to its digital asset holdings as “Gram” or “GRAM” throughout this Quarterly Report on Form 10-Q, and references to “Toncoin” or “TON” in the Company’s previously issued filings refer to the same digital asset.

The Company’s core business is the management of its corporate treasury holdings of Gram. This includes staking Gram, which involves locking up tokens to help secure and validate the network in exchange for staking rewards. Through these activities, the Company seeks to support the TON ecosystem while managing its digital assets in line with applicable regulatory, accounting, and risk-management standards. The Company may also pursue other Web3 initiatives within the TON ecosystem to help promote the network’s long-term growth and adoption.

Beginning in August 2025, the Company implemented its TON Treasury Strategy, utilizing proceeds from its capital-raising activities to acquire Gram and participate in staking activities on the TON network (the “Network”). The Company formally commenced staking operations in August of 2025 and staking is now a primary source of yield generation and a core component of its digital asset treasury strategy.

As of June 30, 2026, the Company utilizes two third-party custodians—BitGo Trust Company, Inc. and Blockchain.com (Cayman) Limited—to manage and stake its Gram holdings. While the Company’s staking agreements are governed directly through these custodians, the custodians may engage third-party service providers to operate validator or staking infrastructure on their behalf. All Gram staked by the Company is deployed through single-nominator validator pools and is not commingled with assets of other clients or participants. When chosen as validators by the TON network, these validators earn staking rewards and transaction fees proportional to the amount of stake delegated to them.

As of June 30, 2026, the Company had 229,860,889 units of GRAM staked on the TON blockchain. During the three and six months ended June 30, 2026, the Company received staking rewards of 9,438,177 GRAM and 11,613,360 GRAM, respectively, and recognized staking revenue of $15,019 and $18,021, respectively.

Private Placement in Public Equity

On August 7, 2025, the Company completed a private investment in public equity (“PIPE”) with certain institutional investors (the “PIPE Subscribers”) pursuant to a subscription agreement. The PIPE included the sale of (i)57,024,121 shares of common stock, par value $0.0001 per share, at a price of $9.51 per share, and (ii) pre-funded warrants to purchase up to 1,677,996 shares of common stock at a price of $9.5099 per warrant (together, the “Acquired Securities”). Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $0.0001 per share, is immediately exercisable, and remains outstanding until exercised in full. The PIPE generated gross proceeds of approximately $558,000, funded with a combination of cash, GRAM, and USD-denominated stablecoins (USDC and USDT), before deducting placement agent fees and offering expenses. The Company incurred cash placement agent fees of $11,423 and offering expenses of $13,155. In addition, the equity fee consisted of 512,860 shares of common stock valued at $10,452, that were issued to the placement agent.

Approximately one-third of the PIPE Subscribers (the “Lock-Up Investors”) agreed to lock-up restrictions under which they may not sell or transfer their Acquired Securities for six months (for all securities held) and 12 months (for 50% of those securities), measured from the date of the subscription agreement, subject to customary exceptions. Lock-Up Investors that contributed non-transferable Gram (“Locked Gram”) are also subject to equivalent lock-up restrictions for the Acquired Securities received as consideration for the Locked Gram. The Locked Gram may, however, be staked by the Company to generate staking revenue.

Historical Operations

On October 18, 2021, the Company established verbMarketplace, LLC (“Market LLC”), a Nevada limited liability company. Market LLC is a wholly owned subsidiary of the Company established for the MARKET.live platform.

On November 15, 2024, the Company formed Go Fund Yourself Show LLC (“Go Fund Yourself”), a Nevada limited liability company, to operate the Go Fund Yourself business.

On January 15, 2025, the Company formed Good Girl LLC, a majority-owned Nevada limited liability company, and subsequently sold this subsidiary during the year ended December 31, 2025. There was no consideration paid or received in this sale transaction.

On April 11, 2025, the Company, Lyvecom and the Lyvecom Shareholders entered into a definitive Stock Purchase Agreement with respect to the Acquisition that incorporated the terms of the Binding Term Sheet (the “Purchase Agreement”). The Acquisition closed on April 11, 2025. The purchase price paid for the shares of capital stock of Lyvecom was $3,000 in cash, the repayment of $1,125 to certain investors in Lyvecom’s Simple Agreement for Future Equity (S.A.F.E.) instruments, the payment of $100 to a Lyvecom related party to satisfy an existing loan to Lyvecom, and the issuance of 184,812 restricted shares of the Company’s common stock (the “Restricted Shares”) having a value of $1,000 on the closing date based on a 30-day volume weighted average price of approximately $5.41 per share. The Restricted Shares are subject to a lock-up agreement and a leak-out agreement. The Purchase Agreement also provides for an earn-out payment to the Lyvecom Shareholders of up to an additional $3,000 in cash over a 24-month earn-out period based on Lyvecom’s achievement of various performance metrics.

On July 28, 2025, the Company formed VERB Subsidiary 1, Corp., VERB Subsidiary 2, Corp., and VERB Subsidiary 3, Corp., all Nevada corporations, to operate the digital asset business.

On August 21, 2025, the Company announced the commencement of its TON Treasury Strategy, designating Gram as its primary treasury reserve asset. The Company began purchasing Gram under this strategy and initiated staking activities during the third quarter of 2025 to earn rewards on its digital asset holdings. See Note 3 – Digital Asset Holdings and Note 10 – Stock Warrants.

As of June 30, 2026, the Company had cash and cash equivalents, restricted cash, and unrestricted GRAM holdings of $140,313.

Economic Disruption and Network Disruption

Our business, including both our traditional operations and our digital asset treasury activities involving Gram, is dependent on general economic conditions and the performance of Gram. Macroeconomic factors such as inflation, rising interest rates, foreign exchange volatility, or economic instability in jurisdictions where we or our partners operate may adversely affect demand for our products and services, as well as the value of our digital asset holdings. These conditions can also influence liquidity, capital availability, and investor sentiment across all of our business lines.

In addition, our digital asset operations are directly exposed to risks specific to the TON ecosystem. Network disruptions, validator downtime, software vulnerabilities, governance disputes, or changes in protocol parameters may impair access to our Gram holdings or reduce staking rewards. Adjustments to validator incentives, inflation rates, or reward distributions could materially alter the economics of staking. Likewise, declines in network activity, competition from other blockchains, or regulatory developments affecting Gram or related ecosystem participants could negatively impact Gram’s utility and price.

Given the evolving nature of both global markets and the Network, we cannot predict the timing or magnitude of any economic or network-specific disruption. Any such events could materially and adversely affect our business, financial condition, and results of operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 31, 2026 (the “2025 Annual Report”). The consolidated balance sheet as of December 31, 2025 included herein was derived from the audited consolidated financial statements as of that date.

As of June 30, 2026, the Company has met the criterion pursuant to ASC 205-20,Discontinued Operations, as a strategic shift from operating and managing a digital media business to operating and managing a crypto currency business has occurred due to the shutdown of the Company’s Global Media Division. The shutdown of this division eliminates 2 of the 3 segments of the Company. As a result, there is only 1 segment remaining after this strategic shift. The Company’s condensed consolidated results of operations and statements of cash flows have been reclassified to reflect the presentation of discontinued operations. See Note 6 for details related to discontinued operations.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with GAAP and include the accounts of Ton Strategy Company, Verb Direct, LLC, Verb Acquisition Co., LLC, verbMarketplace, LLC, LyveCom, Inc., Go Fund Yourself Show, LLC, VERB Subsidiary 3, Corp, VERB Subsidiary 2, Corp and VERB Subsidiary 1, Corp. All intercompany accounts have been eliminated in the consolidation.

As of March 31, 2025, the Company had consolidated the results of Go Fund Yourself Show, LLC and Good Girl LLC as the Company had a 51% voting interest and the power to direct and control the activities of each of these entities. During 2025, the Company sold Good Girl LLC. As of June 30, 2026, the Company has consolidated the results of Go Fund Yourself Show, LLC as the Company has a 51% voting interest and the power to direct and control the activities of this entity. The equity interests of others who own less than 50% in Go Fund Yourself Show, LLC are reflected in the consolidated balance sheets as non-controlling interests. The portion of net income or loss attributable to others who own less than 50% are reflected as net income or loss attributable to non-controlling interests in the consolidated statements of income. As of June 30, 2026 and December 31, 2025, the non-controlling interest’s deficit was $232 and $93, respectively.

All of the financial results of Go Fund Yourself Show, LLC are classified as discontinued operations in the Company’s condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, and in its condensed consolidated statements of income and statements of cash flows for the three and six months ended June 30, 2026 and 2025.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported periods. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, and other factors that management believes to be reasonable. In addition, the Company has considered the potential impact of the pandemic, as well as certain macroeconomic factors, including inflation, rising interest rates, and recessionary concerns, on its business and operations.

Significant estimates include assumptions made in analysis of assumptions made in purchase price allocations, impairment testing of long-term assets, realization of deferred tax assets, determining fair value of its investments in debt and equity securities and valuation of equity instruments issued for services. Some of those assumptions can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.

Segment Information

The Company operates as one reportable segment. The chief operating decision maker is the Chief Executive Officer, who reviews consolidated operating results to allocate resources and assess performance. Significant segment expenses regularly provided to the chief operating decision maker, other segment items, and the measure of segment profit or loss used are disclosed for each interim period presented.

Digital Assets

The Company’s digital assets are comprised of Gram. As of June 30, 2026, the Company held $369,525 of digital assets comprised of Gram which is in the scope of ASC 350-60,Accounting for and Disclosure of Crypto Assets at fair value. The Company reflects digital assets held at fair value on the consolidated balance sheets within the GRAM – unrestricted and GRAM – restricted line items. In determining the fair value of the digital assets in accordance with ASC 820, the Company utilizes Binance as the principal market. The activity from remeasurement of digital assets at fair value is reflected in the consolidated statements of income within other income, net. Realized gains and losses from the derecognition of digital assets are included in other income, net in the consolidated statements of income. The Company uses a first-in, first-out methodology to assign costs to digital assets for purposes of the digital assets held and realized gains and losses disclosures are included in Note 3 – Digital Asset Holdings. Sales and purchases of digital assets are reflected as cash flows from investing activities in the unaudited condensed consolidated statements of cash flows.

The Company’s digital wallets infrequently receive miscellaneous deposits of Gram, commonly referred to as “dust,” and represent unsolicited transactions. Owing to the underlying blockchain mechanics, it is both economically and technically impractical to remove these balances. The Company maintains control over the related Gram units and anticipates realizing potential future economic benefit from these deposits. The miscellaneous deposits are recorded in other income, net in the unaudited condensed consolidated statements of income.

Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) ASC 606,Revenue from Contracts with Customers (“ASC 606”).

The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes

A performance obligation is a promise in a contract to transfer a distinct product. Performance obligations promised in a contract are identified based on the goods that will be transferred that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. Performance obligations for each segment are described below within each segment’s discussion of revenue recognition.

Pursuant to ASC 606, revenue is recognized when performance obligations under the terms of the contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is recognized in an amount that reflects the contractual consideration that the Company receives in exchange for its services.

TON Strategy revenue is derived from staking rewards. The Company recognizes staking rewards as revenue in accordance with ASC 606. As the amount of rewards are not known by the Company until a validation activity is completed, the staking rewards are constrained under the Topic 606 guidance on variable consideration. Staking rewards are recognized as revenue at the end of each validation round, or block processing time, or when earned and measurable and to the extent that it is probable that a significant reversal would not occur. The amount of revenue recognized is measured at fair value and is presented net of validator or other protocol fees. The Company acts as an agent in staking transactions as it provides access to its Gram to third-party validator operators who perform the technical validation responsibilities on the blockchain.

Cost of revenue consists primarily of staking service fees charged by the Company’s third-party custodians and validation fees incurred in connection with the Company’s staking activities on the TON blockchain.

Investments

The Company’s investments in equity securities primarily consist of non-marketable equity securities in private companies without readily determinable fair values. These investments are recorded at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer, as permitted under ASC 321,Investments – Equity Securities.

The Company assesses its equity investments for impairment at each reporting period. If qualitative factors indicate that the investment is impaired, and the fair value is less than the carrying amount, an impairment loss is recognized in the Company’s consolidated financial statements. Observable price changes in orderly transactions for identical or similar securities of the same issuer are considered and may result in adjustments to the carrying amount of the investment. These changes, if any, are recorded in earnings in the period when identified.

Gains and losses resulting from remeasurements, impairments, or observable price changes are included in Other income (expense) in the accompanying consolidated statements of income. The Company reevaluates the basis of its investments as of each balance sheet date and updates its carrying values as necessary.

See Note 4 – Investments and Fair Value Measurements for further details of the Company’s investments.

Promissory Convertible Notes

The Company provides certain services in exchange for consideration in the form of convertible promissory notes. These notes are classified as long-term assets and presented on the balance sheet under the caption “Other non-current assets” when the contractual maturity exceeds one year from the balance sheet date.

The convertible notes receivable are non-derivative financial instruments that are generally convertible into equity of the issuing party upon specified terms, including a fixed maturity date and conversion provisions. The Company evaluates the fair value of the services rendered based on the transaction price agreed with the counterparty, which is typically supported by recent transactions or comparable service arrangements.

Revenue is recognized in accordance with ASC 606,Revenue from Contracts with Customers, upon satisfaction of the performance obligations in the underlying contract. The corresponding note receivable is initially recorded at its estimated fair value, which is generally based on the fair value of the services provided unless the fair value of the note is more readily determinable.

The Company evaluates the convertible notes receivable for impairment at each reporting period in accordance with ASC 326,Financial Instruments – Credit Losses (CECL). The allowance for credit losses, if any, reflects management’s estimate of expected credit losses over the life of the instrument, based on historical experience, credit quality, and other relevant factors. As of June 30, 2026 and December 31, 2025, the allowance for long term credit losses balance was $346 and $310, respectively. See Note 6 – Discontinued Operations.

If the embedded conversion feature within a note is determined to require bifurcation under ASC 815,Derivatives and Hedging, the derivative component is separately recognized at fair value with changes in fair value recognized in earnings. As of each reporting date, the Company assesses whether bifurcation is required and whether any embedded derivative instruments exist.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination. Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

In accordance with FASB ASC 350,Intangibles-Goodwill and Other, we review goodwill and indefinite lived intangible assets for impairment at least annually or whenever events or circumstances indicate a potential impairment. Our impairment testing is performed annually at December 31 (our fiscal year end). Impairment of goodwill and indefinite lived intangible assets is determined by comparing the fair value of our reporting units to the carrying value of the underlying net assets in the reporting units. If the fair value of a reporting unit is determined to be less than the carrying value of its net assets, goodwill is deemed impaired and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the difference between the fair value of the reporting unit and the fair value of its other assets and liabilities.

In connection with the Company’s decision to wind down and discontinue all business segments in the Global Digital Media Division, the Company recorded an impairment of $5,165 within loss from disposition of discontinued operations for the three months ended June 30, 2026. See Note 6 – Discontinued Operations.

Fair Value of Financial Instruments

The Company follows the guidance of FASB ASC 820 and ASC 825 for disclosure and measurement of the fair value of its financial instruments. FASB ASC 820 establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The three (3) levels of fair value hierarchy defined by ASC 820 are described below:

The Company uses Level 1 observable prices for digital assets. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalents, prepaid expenses, and accounts payable and accrued expenses approximate their fair value due to their short-term nature. The carrying amount of notes payable approximates the fair value due to the fact that the interest rates on these obligations are based on prevailing market interest rates. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities.

As discussed in Note 1 – Description of the Business, the Company holds certain Gram digital assets that are subject to restrictions on trading and transfer. Pursuant to the guidance of ASC 820, the restrictions are specific to the Company and would not be transferred with the assets in a theoretical sale. The Company does not consider these restrictions to be part of the unit of account, and the restrictions are not factored into the fair value measurement of the digital assets.

As discussed in Note 2 – Summary of Significant Accounting Policies and Supplemental Disclosures, the Company stakes its Gram digital assets. While assets are staked, they are held in a smart contract for the duration of the validation round. The Company maintains control over the staked Gram during this time. The Company can unstake its Gram at any time and the Gram will be returned to the Company within eighteen hours, the period to complete the validation round. Given the short-term nature of this lock up period, the Company does not consider the protocol restrictions to be part of the unit of account, and the restrictions are not factored into the fair value measurement of the digital assets.

Derivative Financial Instruments

The Company evaluates all its financial instruments to determine if such instruments contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of income each period. Bifurcated embedded derivatives are classified with the related host contract in the Company’s condensed consolidated balance sheet. Refer to Note 4 – Investments and Fair Value Measurements for further details.

Digital Assets Embedded Derivatives

Certain custodial fees and staking fees payable included in accounts payable may be denominated in digital assets. These payables are hybrid instruments consisting of payable host contracts containing embedded derivatives driven by changes in fair value of the underlying digital assets. The payable host contracts are recorded at fair value at the time the Company is charged based on the fair value of the underlying digital assets at that time. The embedded derivatives are carried at fair value, with changes in fair value recognized in other income, net on the consolidated statements of income. The payable host contracts and embedded derivatives are included in accounts payable on the consolidated balance sheets. Cash flows related to the embedded derivatives are recognized as adjustments to reconcile net loss used in operating activities in the condensed consolidated statements of cash flows.

Share-Based Compensation

The Company issues stock options and warrants, shares of common stock and restricted stock units as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation in accordance with FASB ASC 718,Compensation – Stock Compensation. Share-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The fair value of restricted stock units is determined based on the number of shares granted and the quoted price of our common stock and is recognized as expense over the service period. Forfeitures are accounted for as they occur. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for services.

Net Loss Per Share

Basic net loss per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential shares of common stock that were outstanding during the period. Dilutive potential shares of common stock consist of incremental shares of common stock issuable upon exercise or conversion.

For the year ended December 31, 2025, the Company considered the earnings per share (“EPS”) implications of the Warrant shares as contingently issuable and potential Common Shares. The Company considered ASC 260-10-45-13 and concluded that 1,677,996 of pre-funded warrants that were issued in connection with the PIPE financing should be considered as outstanding shares for the purpose of calculating basic EPS.

For the three and six months ended June 30, 2026 and 2025, no dilutive potential shares of common stock were included in the computation of diluted net loss per share because their impact was anti-dilutive except for vested restricted stock awards for the three months ended June 30, 2026 as their inclusion are considered to have a dilutive impact on EPS. The number of vested restricted stock units is considered outstanding as of the later of the beginning of the period or the grant date for diluted EPS computation purposes.

As of June 30, 2026, and 2025, the Company had total outstanding options of 25,507 and 31,251, respectively, outstanding warrants of 1,681,392 and 3,396, respectively, and outstanding restricted stock units of 47,824 and 365,661, respectively.

Concentration of Credit and Other Risks

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and accounts receivable. Cash is deposited with a limited number of financial institutions. The balances held at any one financial institution at times may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits of up to $250.

The Company’s concentration of credit risk includes its concentrations from key customers and vendors. The details of these significant customers and vendors are presented in the following table for the six months ended June 30, 2026 and 2025:

Supplemental Cash Flow Information

Recent Accounting Pronouncements

New Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03,Income Statement – Reporting Comprehensive Income (Subtopic 220-40): Expense Disaggregation Disclosures (“ASU 2024-03”). ASU 2024-03 requires additional information about specific expense categories in the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. The amendments should be applied either (1) prospectively to financial statements issued after the effective date or (2) retrospectively to all prior periods presented in the financial statements. The Company is in the process of evaluating the effect this standard will have on the consolidated financial statement disclosures.

3. DIGITAL ASSET HOLDINGS

Digital Assets

The following table sets forth the units held, cost basis, and fair value of digital assets held, as shown on the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025:

Cost basis is equal to the cost of the digital assets inclusive of any transaction fees, if any, at the time of purchase or upon receipt. Fair value represents the quoted digital asset prices within the Company’s principal market at the time of measurement (midnight UTC). Of the units of GRAM presented above 69,456,693 units are unrestricted and 161,064,099 units are subject to restriction. Refer to Note 13 – Subsequent Events for further discussion on the fair value of the units of GRAM held.

The following tables represent a reconciliation of GRAM – Unrestricted digital assets held at June 30, 2026:

The receipts of GRAM from staking represent the rewards earned from staking activities. The sale of GRAM represents the Company’s sale of GRAM units during the period. The vesting of Locked GRAM represents restricted GRAM that vested during the period and was reclassified to unrestricted GRAM. During the three and six months ended June 30, 2026, the Company recognized cumulative realized gains of $75, andno realized losses from the sale of unrestricted GRAM and the use of unrestricted GRAM to pay gas fees and transaction costs.

The following tables represent a reconciliation of GRAM – Restricted digital assets held at June 30, 2026:

The vesting of Locked GRAM represents restricted GRAM that vested during the period and was reclassified to unrestricted GRAM. During the three and six months ended June 30, 2026, the Company recognizedno realized gains or losses from the use of restricted GRAM to pay gas fees and transaction costs.

Restricted Digital Assets

The following table sets forth the fair value of unrestricted and restricted GRAM digital assets held, as shown on the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025:

Through contributions from the PIPE the Company received 18,007,358 units of GRAM subject to Locked GRAM vesting restrictions. See Note 12 – Related Party Transactions. The Locked GRAM is a smart contract mechanism on the TON blockchain. The smart contract includes a start time, a total duration, and a cliff period. The GRAM vests monthly on a 30-day cycle.

During the year ended December 31, 2025 the Company made purchases of 177,790,167 units of GRAM from two different parties subject to legal restrictions enforced through purchase agreements. The total lock-up period is four years for each purchase and commenced on July 31, 2025 and August 4, 2025. The GRAM is subject to an initial 12-month lock-up with 25% unlocked after the first year and the remaining 75% vesting ratably each month for the remaining 36 months. On November 3 2025, restrictions on approximately 28,773,971 units of GRAM were lifted and those units are no longer subject to the lock-up period or vesting schedule.

Refer to Note 2 – Summary of Significant Accounting Policies and Supplemental Disclosures for discussion on fair value considerations of the restrictions.

Although the restricted units of GRAM are not eligible for trading or transfer, the restricted or Locked GRAM do not carry any restrictions regarding staking and all restricted GRAM can be staked by the Company to generate staking revenue. During the three and six months ended June 30, 2026,1,725,764 units and 3,455,950 units of restricted GRAM vested, respectively. The table below sets forth the units of GRAM that will vest during subsequent years:

4. INVESTMENTS AND FAIR VALUE MEASUREMENTS

The Company invests its surplus funds in excess of operational and capital requirements in an overnight sweep account that is comprised of cash equivalents, with the objectives of delivering competitive returns while maintaining a high degree of liquidity.

A summary of our short-term investments are as follows:

A summary of our long-term investments are as follows:

See Note 6 – Discontinued Operations.

Fair Value Measurements

The Company’s financial instruments include cash, prepaid expenses, accounts payable, and accrued liabilities. The fair value of cash, prepaid expenses, accounts payable and accrued liabilities approximate their carrying values due to their short-term nature, which are all considered Level 1.

The Company’s financial instruments measured at fair value on a recurring basis consisted of U.S. treasury securities and corporate bonds. U.S. treasury securities are classified within Level 1 of the fair value hierarchy as they are valued based on quoted market price in an active market. Corporate bonds are valued based on quoted prices in markets that are less active and are generally classified within Level 2 of the fair value hierarchy.

The Company’s financial instruments include investment in equity securities and contingent consideration which are valued based on unobservable inputs which reflect the reporting entity’s own assumptions or data that market participants would use in valuing an instrument are generally classified within Level 3 of the fair value hierarchy.

As disclosed in Note 2 – Summary of Significant Accounting Policies and Supplemental Disclosures, the Company purchased digital assets held at fair value in August of 2025. The fair value of the Company’s digital assets is disclosed in Note 3 – Digital Asset Holdings. The digital assets are measured at fair value on a recurring basis using observable prices (Level 1).

Valuation Techniques

Bifurcated Embedded Derivative Assets

Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date. The fair value of the embedded derivative was calculated using a with and without method at issuance and revalued at the end of the reporting period using a Monte Carlo simulation model that used various assumptions related to term of the underlying agreement, equity value of the issuer, expected volatility, risk-free interest rate, credit risk adjusted rate, and the probability, timing, size of the future qualified financing or non-qualified financing rounds. Because the embedded conversion features are initially and subsequently carried at fair values, the Company’s condensed consolidated statements of income will reflect the volatility in these estimate and assumption changes. The bifurcated embedded derivative net asset was $992 and $890 as of June 30, 2026 and December 31, 2025, respectively.

Financial instruments measured at fair value on a recurring basis as of June 30, 2026 are classified based on the valuation technique in the table below:

Financial instruments measured at fair value on a recurring basis as of December 31, 2025 are classified based on the valuation technique in the table below:

Assets and liabilities that are measured at fair value on a nonrecurring basis as of December 31, 2025 are classified based on the valuation technique in the table below:

5. OPERATING LEASES

The components of lease expense and supplemental cash flow information related to leases for the period are as follows:

6. DISCONTINUED OPERATIONS

The assets and liabilities of discontinued operations were as follows as of June 30, 2026 and December 31, 2025:

The following information presents the net revenues and major line items that comprise net loss of the Global Digital Media business for the three and six months ended June 30, 2026 and 2025:

Included as part of general and administrative expense in the two tables above is share-based compensation amounting to $0 and $1,216 for the three months ended June 30, 2026 and 2025, respectively, and $0 and $1,867 for the six months ended June 30, 2026 and 2025, respectively.

7. COMMON STOCK

There was no common stock activity for the six months ended June 30, 2026.

See Note 13 for Subsequent Events.

8. RESTRICTED STOCK UNITS

A summary of restricted stock unit activity for the six months ended June 30, 2026 is presented below.

The total stock compensation expense recognized relating to the vesting of restricted stock units for the three and six months ended June 30, 2026 and 2025 amounted to $5,455 and $1,412, and $6,577 and $2,253, respectively.

On April 28, 2026, the Company and several executive officers and directors entered into an RSU Forfeiture Agreement pursuant to which an aggregate of 1,020,823 RSU awards were forfeited. The remaining amount of unrecognized compensation related to these grants was recognized as share-based compensation expense during the three months ended June 30, 2026 due to the Company’s cancellation of these awards. See Note 13 – Subsequent Events.

9. STOCK OPTIONS

A summary of option activity for the six months ended June 30, 2026 is presented below.

At June 30, 2026, the intrinsic value of the outstanding options was $0.

The total stock compensation expense recognized relating to the vesting of stock options for the three and six months ended June 30, 2026 and 2025 amounted to $0 and $133, and $0 and $250, respectively.

The fair value of share option award is estimated using the Black-Scholes option pricing method based on the following weighted-average assumptions:

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future.

10. STOCK WARRANTS

The Company has the following warrants outstanding as of June 30, 2026, all of which are exercisable:

At June 30, 2026 the intrinsic value of the outstanding warrants was $4,279.

In connection with the PIPE offering that occurred in 2025, pre-funded warrants were granted to purchase up to an aggregate of 1,677,996 shares of Common Stock at a purchase price per warrant of $9.5099. Each of the pre-funded warrants is exercisable for one share of Common Stock at the exercise price of $0.0001 per pre-funded warrant share, immediately exercisable, and may be exercised at any time until all of the pre-funded warrants issued in the PIPE are exercised in full. There is no expiration date or contractual life associated with the pre-funded warrants and therefore, the weighted-average remaining contractual life cannot be calculated.

11. COMMITMENTS AND CONTINGENCIES

Litigation

Meyerson Matter

The Company is currently in a dispute with a former employee of its predecessor bBooth, Inc. who has interposed a breach of contract claim in which he alleges that in 2015 he was entitled to approximately $300 in unpaid bonus compensation. This former employee filed his complaint in the Superior Court of California for the County of Los Angeles on November 20, 2019, styled Meyerson v. Ton Strategy Company, et al. (Case No. 19STCV41816). The Company disputed the former employee’s claims and interposed several affirmative defenses, including that the claims are contradicted by documentary evidence, barred by the applicable statute of limitations, and barred by a written, executed release. On February 9, 2021, the former employee’s counsel filed a motion for summary judgment, or in the alternative, summary adjudication against the Company. On October 13, 2021, the California court issued an order (i) denying the former employee’s motion for summary judgment on his claims against the Company, but (ii) granting the former employee’s motion to dismiss the Company’s affirmative defenses, which ruling the Company contends was in error. Under the rules, the Company is precluded from appealing the dismissal of its affirmative defenses until after a trial. On August 29, 2023, after a bench trial at which the Company was precluded from introducing evidence of its affirmative defenses, the court found in favor of Plaintiff Meyerson; and judgment was entered in Meyerson’s favor in the amount of $584 which included interest. Meyerson’s counsel thereafter submitted an untimely request for attorney’s fees and costs which the Company has opposed. After due consideration, the Court awarded Meyerson’s counsel approximately $8 in counsel fees. After the trial, the Company filed a timely appeal from the judgment (Meyerson v. Ton Strategy Company (2023 2nd Appellate District) Case No.: B334777, seeking among other things, that the trial court’s finding be vacated and that the Company’s affirmative defenses be reinstated. In October 2024, the Company bonded the judgement preventing any enforcement or collection of the judgement while the appeal is pending. As of June 30, 2026, the bonded amount is recorded and included within restricted cash on the Company’s condensed consolidated balance sheet. On July 31, 2026 the Company entered into a confidential settlement with Meyerson and the matter is now resolved.

Graham Derivative Action

On April 2, 2026, a shareholder derivative action, captioned Graham v. Stotz, et. al., No. A-26-943141-C, was filed in Clark County, Nevada, district court against current and former members of the Company’s board of directors as defendants and the Company as a nominal defendant. The plaintiff, suing derivatively on behalf of the Company, alleges that the Company’s directors breached their fiduciary duties, waste, and unjust enrichment by causing the Company to enter into an advisory services agreement with Kingsway Capital Partners Limited(“Kingsway”) and awarding excessive compensation to current and former directors, and that, as a result, the Company has suffered damages. The complaint seeks on behalf of the Company compensatory damages, disgorgement, restitution, and equitable and injunctive relief. On July 27, 2026, defendants filed motions to dismiss.

TOMS Capital Investment Management Lawsuit

On July 30, 2026, a complaint was filed in New York Supreme Court by certain investors for which TOMS Capital Investment Management LLP is an investment advisor, against the Company, Kingsway and the Company’s Executive Chairman, Manuel Stotz. The complaint alleges that defendants made misrepresentations and breached subscription agreements in connection with the Company’s August 2025 private investment in public equity (“PIPE”), including with respect to an advisory services agreement with Kingsway and the Company’s compliance with Nasdaq listing requirements. The complaint asserts claims for breach of contract and rescission against the Company and tortious interference of contract against Kingsway and Stotz. The complaint seeks a preliminary and permanent injunction enjoining the Company from using PIPE proceeds to make further payments under the advisory services agreement, along with compensatory damages, punitive damages, rescission of the subscription agreements, and attorneys’ fees and costs. On July 31, 2026, the plaintiffs filed a motion for an order to show cause. The Company is unable to estimate a possible loss or range of possible losses in connection with this proceeding.

The Company knows of no material proceedings in which any of its directors, officers, or affiliates, or any registered or beneficial stockholder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

The Company believes it has adequately reserved for all litigation within its financial statements.

Severance Agreement with Veronika Kapustina

On March 31, 2026, the Company entered into a separation agreement with Ms. Kapustina under which the Company paid in April 2026 to Ms. Kapustina a one-time severance payment equal to $850, a one-time payment for reimbursement of health care expenses and legal fees in connection with the negotiation of the severance agreement, in exchange for standard releases of liability.

Board of Directors

The Company has committed an aggregate of $488 in board fees to its three independent board members over the term of their appointment for services to be rendered. Board fees are accrued and paid monthly. The members will serve on the board until the annual meeting for the year in which their term expires or until their successors has been elected and qualified.

Total board fees expensed during the six months ended June 30, 2026 and 2025 was $269 and $295, respectively.

12. RELATED PARTY TRANSACTIONS

Advisory Services Agreement

On August 7, 2025, the Company entered into an advisory services agreement (the “Advisory Services Agreement”) with Kingsway, a firm controlled by Manuel Stotz, the Company’s Executive Chairman of the Board of Directors. Pursuant to the Advisory Services Agreement, Kingsway provides advisory and consulting services related to the expansion and diversification of the Company’s business its TON Treasury Strategy. In consideration for these services, the Company agreed to pay Kingsway, (i) a one-time set-up fee having a notional value of $3,000 and (ii) an annual advisory fee equal to 2.0% of the Company’s market capitalization payable in 12 monthly installments. Payments may be made in either Gram or cash, as mutually agreed between the parties. If paid in Gram, the amount due is determined based on the weighted-average Gram execution price as of the last day of each month. The Company will also reimburse Kingsway for reasonable out-of-pocket expenses incurred in connection with the services provided. The Advisory Services Agreement has an initial 20-year term and may be renewed for successive one-year periods upon mutual agreement, unless earlier terminated. The Company capitalized the one-time set-up fee as a prepaid asset and is amortizing over the contractual term of the agreement. For the three and six months ended June 30, 2026, the Company recognized $2,902 and $2,939, respectively, of amortization expense related to the one-time set-up fee and recognized advisory fee expense of $832 and $1,533, respectively, under the monthly installments of the annual advisory fee. Transactions with Kingsway are considered related party transactions due to the control relationship with the Company’s Executive Chairman. On August 10, 2026, the Company notified Kingsway that it had terminated the Advisory Services Agreement without a settlement, with both parties reserving all rights.

Blockchain.com Agreements

On July 31, 2025, the Company entered into a master custody agreement with Blockchain.com pursuant to which Blockchain.com has custody of digital assets held by the Company and executes digital asset transactions on behalf of the Company. Manuel Stotz, the Company’s newly appointed Executive Chairman of the Board of Directors and Chief Executive Officer of Kingsway serves as director on the Board of Directors of Blockchain.com PLC, Blockchain.com’s parent company (“Blockchain Parent”), and entities affiliated with Kingsway hold an approximate 9% ownership in Blockchain Parent. Nicholas Cary currently sits on the Board of Directors of TON Strategy Company and is co-founder and serves as Vice Chairman and an employee of Blockchain Parent and holds an approximate 3% ownership interest in Blockchain Parent.

On November 24, 2025, the Company entered Addendum No. 1 (the “Addendum”) to the master custody agreement with Blockchain.com. Under this Addendum, for all unlocked Gram (i.e., non-smart contract locked Gram), the master custody agreement was amended for the following: (i) the custody services fee was reduced from 50 basis points to 5 basis points per annum, (ii) the rewards fee for staking rewards was reduced from 25% to 10%, (iii) the term of the Addendum and the master custody agreement is twelve months. The Company can terminate both the Addendum and master custody agreement early and incur an early termination fee equal to the monthly average of all fees paid by the Company multiplied by the number of months remaining in the term.

Pursuant to the master custody agreement, for the three and six months ended June 30, 2026, the Company incurred custody fees, staking service fees and staking rewards fees in an aggregate amount of $805 and $997, respectively.

PIPE In-kind Contributions

Certain subscribers to the PIPE including Kingsway, Blockchain.com, and Vy Capital Management Company Limited (“Vy Capital”), a greater than 5% owner of the Company, contributed cash as well as in-kind contributions. Kingsway contributed $118,141 across eight entities consisting of: (i) $35,000 of cash (ii) 8,952,656 unlocked or unrestricted Gram, and (iii) 16,047,344 Gram restricted through a smart contract. The restricted Gram were contributed in-kind through the transfer of publicly viewable smart contracts on the TON blockchain containing embedded vesting logic. The tokens are not transferable until automatically released pursuant to the programmed vesting conditions. The smart contract addresses transferred by Kingsway as part of its in-kind contribution are:

Merkle Tree Markets Ltd., a subsidiary of Blockchain.com contributed $19,977 consisting of: $10,000 of cash and (ii)3,000,000 Gram restricted through a smart contract. The smart contract address transferred by Merkle Tree Markets Ltd. as part of its in-kind contribution is:

EQCI758gcdiZxC6x1ya3a3qVykRxTAjKprKHDwKV7urpHUvN

Vy Capital contributed $58,257 across two entities consisting of: (i) $25,000 of cash and (ii)10,000,000 of unlocked or unrestricted Gram.

13. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through August 11, 2026, the date these financial statements are available to be issued. The Company believes there were no material events or transactions discovered during this evaluation that requires recognition or disclosure in the financial statements other than the items discussed below.

Repurchases of Common Stock

From July 1, 2026 to August 4, 2026, the Company repurchased 1,458,628 shares of common stock pursuant to an at-the-market issuance purchase agreement, which resulted in payments of $4,748 to the purchaser.

Liquidations of Gram

From July 1, 2026 to August 4, 2026, the Company sold 3,650,000 units of Gram for aggregate cash proceeds of $5,765.

RSU Grants for Officers and Directors

On July 21, 2026, the Company granted 212,500 restricted stock units to its directors. The restricted stock units vest on August 7, 2026. These restricted stock units were valued based on the closing price of the Company’s common stock on the date of issuance and had an aggregate grant date fair value of $748, which is being amortized as share-based compensation expense over the vesting term.

On July 21, 2026, the Company granted 1,302,500 restricted stock units to its Chief Financial Officer. Twenty-five percent of the restricted stock units vest on August 7, 2026, and one thirty-sixth of the remaining RSUs will vest on each subsequent monthly anniversary thereafter. These restricted stock units were valued based on the closing price of the Company’s common stock on the date of issuance and had an aggregate grant date fair value of $4,585 which is being amortized as share-based compensation expense over the vesting term.

On July 21, 2026, the Company granted 218,000 restricted stock units to its Chief Financial Officer. The restricted stock units vest on August 7, 2026. These restricted stock units were valued based on the closing price of the Company’s common stock on the date of issuance and had an aggregate grant date fair value of $767, which is being amortized as share-based compensation expense over the vesting term.

On July 21, 2026, the Company granted 1,137,500 restricted stock units to its Chief Executive Officer. Twenty-five percent of the restricted stock units vest on May 4, 2027, and one thirty-sixth of the remaining RSUs will vest on each subsequent monthly anniversary thereafter. These restricted stock units were valued based on the closing price of the Company’s common stock on the date of issuance and had an aggregate grant date fair value of $4,004 which is being amortized as share-based compensation expense over the vesting term.

On July 21, 2026, the Company granted 312,500 restricted stock units to an employee. Twenty-five percent of the restricted stock units vest on September 29, 2026, and one thirty-sixth of the remaining RSUs will vest on each subsequent monthly anniversary thereafter. These restricted stock units were valued based on the closing price of the Company’s common stock on the date of issuance and had an aggregate grant date fair value of $1,100 which is being amortized as share-based compensation expense over the vesting term.

Issuances of Common Stock

On August 7, 2026, the Company issued 543,625 and 212,500 shares of its common stock to its Chief Financial Officer and directors, respectively, associated with the vesting of Restricted Stock Units.

GRAM Fair Value

As of August 4, 2026, the 230,520,792 units of Gram held by the Company as of June 30, 2026 had a fair value of $325,956.

Termination of Kingsway Advisory Agreement

On August 10, 2026, the Company notified Kingsway that it had terminated the Advisory Services Agreement dated August 7, 2025. Under the agreement, the Company was required to pay Kingsway an annual advisory fee equal to 2.0% of the Company’s market capitalization, payable monthly in arrears. The Company ceased making payments under the Agreement in March 2026, with its last payment made on March 18, 2026. Following unsuccessful settlement negotiations, the Company terminated the agreement without a settlement, and both parties have reserved all rights. The Company cannot currently estimate the amount of any loss or gain resulting from the termination and does not expect the termination to affect its TON Treasury Strategy or day-to-day operations. Kingsway is controlled by Manuel Stotz, the Company’s Executive Chairman, and is a significant stockholder of the Company.