TON Strategy Co
For the period ended Dec 31, 2024. Filed Mar 25, 2025.
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FY2024 · Filed Mar 25, 2025
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Reports of Independent Registered Public Accounting Firms
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Verb Technology Company, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Capitalized Software Development Costs and its Useful Life
Critical Audit Matter Description
As of December 31, 2024, the Company’s capitalized software development costs, net of accumulated amortization, aggregated $3.0 million. As disclosed in Note 2 to the consolidated financial statements, due to changes in market conditions and technological trends affecting the software application’s expected future use, management reassessed the estimated remaining useful life of its primary capitalized software development asset. Effective January 1, 2024, the Company revised the asset’s remaining useful life and is now amortizing the asset on a straight-line basis over a period of four years, which represents a change from the previous amortization period.
We identified the assessment of the capitalized software development costs as a critical audit matter due to the following:
| a) | The capitalized software development costs are material to the consolidated financial statements; |
| b) | The change in estimated useful life required significant management judgment regarding the expected future use of the software, technology obsolescence factors, anticipated competitive landscape, and potential changes in customer requirements; |
| c) | Management’s determination of whether impairment indicators were present as of the consolidated balance sheet date involved significant subjective assessments of qualitative factors, including but not limited to, changes in the business strategy, technological developments, and projected future cash flows expected to be generated by the software; and |
| d) | Auditing these elements involved especially challenging auditor judgment in evaluating the reasonableness of management’s estimates and assumptions, as well as the application of heightened professional skepticism. |
How the Critical Audit Matter was Addressed in the Audit.
Our audit procedures related to the evaluation of the capitalized software development costs included the following, among others:
| a) | We obtained an understanding of controls over the Company’s accounting and disclosures for capitalized software development cost. |
| b) | We also obtained an understanding of the company’s history and development of the capitalized software through inquiries with management and review of relevant agreements and other source documentation. |
| c) | With respect to the Company’s valuation and useful life of capitalized software development costs: |
| i. | We evaluated the methodology used by management to identify and assess potential impairment indicators against the criteria outlined in ASC 360-10-35-21. |
| ii. | We assessed the qualifications and expertise of management in evaluating the impairment indicators and the prospects of the business utilizing the capitalized software. |
| iii. | We obtained and evaluated the reasonableness of management’s undiscounted cash flow forecast related to supporting its valuation assertion with respect to the capitalized software development cost. Specifically, we tested the mathematical accuracy of the forecast and evaluated the reasonableness of key assumptions in the cash flow forecast. |
| iv. | We evaluated the reasonableness of management’s assertion by reviewing evidence of the software’s continued use and functionality, activity, and related agreements with suppliers and partners of the Company. |
| d) | We assessed the sufficiency of disclosures with respect to capitalized software development costs. |
/s/Grassi & Co., CPAs, P.C.
We have served as the Company’s auditor since 2023.
Jericho, NY
March 24, 2025
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