10-K: TON Strategy Reports $148.5M Loss Amid Crypto Shift

TON Strategy Company reported a significant net loss of $148.5 million for 2025, driven by unrealized losses on Toncoin holdings, despite a strategic pivot to a digital asset treasury model.

Summary

• The company changed its name from Verb Technology Company, Inc. to TON Strategy Company, effective September 2, 2025, and its Nasdaq trading symbol from VERB to TONX.
• A new TON Treasury Strategy was implemented in August 2025, focusing on acquiring and staking Toncoin (TON), the native digital asset of The Open Network (TON) blockchain.
• As of December 31, 2025, the company held 219,709,826 units of TON, with 55,189,788 units unrestricted and 164,520,038 units restricted.
• Staking operations commenced in August 2025, generating 2,185,286 units of TON and recognizing $4.0 million in staking rewards revenue for the year ended December 31, 2025.
• The company owns 4.2% of the total supply of Toncoin as of December 31, 2025.
• Total revenue for 2025 increased to $12.8 million, up 1,328% from $0.9 million in 2024, primarily due to the TON Treasury Strategy and growth in MARKET.live and Go Fund Yourself segments.
• The company reported a net loss of $148.5 million for the year ended December 31, 2025, a substantial increase from a $10.3 million net loss in 2024.
• Unrealized losses on crypto assets amounted to $373.9 million in 2025, significantly impacting the net loss.
• A Private Investment in Public Equity (PIPE) completed on August 7, 2025, generated gross proceeds of approximately $558.0 million, funded with cash, TON, and stablecoins.
• The company acquired LyveCom, an AI-driven video commerce platform, in April 2025 for $3.0 million cash, repayment of $1.125 million to investors, $0.1 million to a related party, and 184,812 restricted common shares valued at $1.0 million.
• The company faces Nasdaq compliance issues related to equity awards issued in excess of the Incentive Plan and potential unregistered securities, requiring a plan to regain compliance by May 14, 2026.
• Veronika Kapustina is transitioning out as CEO, Rory J. Cutaia was terminated and resigned from the Board, and Denise Butler was appointed interim President of the Global Digital Media Division.
• Negotiations are underway to terminate an advisory services agreement with Kingsway Capital Partners Limited, a related party.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with low sentiment due to the substantial net loss, significant unrealized losses on crypto assets, and ongoing Nasdaq compliance issues, which overshadow the revenue growth and strategic pivot to digital assets.

Positives

• Total revenue increased by 1,328% to $12.8 million in 2025 from $0.9 million in 2024, driven by the TON Treasury Strategy and growth in other business units.
• The MARKET.live and LyveCom segment revenue increased by 883% to $8.8 million in 2025 from $0.9 million in 2024.
• The company successfully completed a PIPE offering, raising approximately $558.0 million in gross proceeds, bolstering its capital for the TON Treasury Strategy.
• Staking activities on the TON blockchain generated 2,185,286 units of TON and $4.0 million in revenue for 2025.
• The acquisition of LyveCom is expected to enhance MARKET.live's multicast and AI capabilities, improving omnichannel livestream shopping experiences.
• MARKET.live expanded its partnership with TikTok through a formal TikTok Shop Partner (TSP) agreement, now representing its largest and fastest-growing business segment.
• The company's cash and cash equivalents increased significantly to $39.5 million as of December 31, 2025, from $7.6 million in 2024.

Negatives

• The company incurred a significant net loss of $148.5 million for the year ended December 31, 2025, compared to a $10.3 million net loss in 2024.
• A net loss on crypto assets of $114.2 million was recorded, primarily due to an unrealized loss of $373.9 million on digital assets.
• General and administrative expenses increased substantially to $40.9 million in 2025 from $11.2 million in 2024, partly due to advisory fees, legal fees, and employee compensation related to the TON Treasury Strategy.
• The company faces Nasdaq compliance issues regarding equity awards issued in excess of the Incentive Plan and potential unregistered securities, which could lead to delisting.
• Executive leadership changes include the transition of CEO Veronika Kapustina and the termination and resignation of Rory J. Cutaia from his executive role and the Board.
• The company has incurred recurring losses since its inception in 2012 and cannot assure future profitability.
• One customer accounted for 25.3% of total revenues in 2025, indicating a significant customer concentration risk.

Risks

• Financial results and common stock price are highly sensitive to the volatile price of Toncoin, which could decrease substantially or entirely.
• Toncoin holdings are less liquid than cash and cash equivalents, potentially limiting the ability to serve as a source of liquidity during market instability.
• The new TON treasury strategy may not be successfully implemented, requiring specialized skills and infrastructure, and exposing the company to significant operational risks.
• Digital assets do not pay interest or dividends, and revenue generation relies on staking or decentralized finance activities, which involve additional risks like slashing penalties, smart contract vulnerabilities, and potential loss of assets.
• Interaction with various smart contracts deployed on TON exposes the company to technical vulnerabilities, coding errors, security flaws, and exploits.
• A significant decrease in the market value of Toncoin holdings could adversely affect the ability to satisfy financial obligations under future debt financings.
• Unrealized fair value gains on Toncoin holdings could subject the company to the corporate alternative minimum tax (CAMT), requiring substantial cash payments.
• The evolving and uncertain regulatory and legislative environment for digital assets, including potential classification of Toncoin as a security, could materially and adversely affect the ability to execute the TON Treasury Strategy.
• Enhanced regulatory oversight due to the TON treasury strategy could lead to increased compliance requirements and scrutiny, including under money services and commodity/securities laws.
• Toncoin trading venues may experience greater fraud, security failures, or regulatory/operational problems than traditional asset trading venues.
• Concentration of Toncoin holdings limits risk mitigation and any decision to liquidate a material portion could exert significant downward pressure on Toncoin's price.
• Cybersecurity incidents or unauthorized access to TON assets, or market-related exploits, could result in loss of assets and materially adversely affect financial condition.
• Risks related to the custody of Toncoin, including loss or destruction of private keys and counterparty insolvency (e.g., Blockchain.com or BitGo Trust Company Inc.).
• Blockchain technology may inadvertently expose the company to sanctioned or blocked persons, leading to fines or reputational harm.
• The growth and acceptance of Toncoin are subject to high uncertainty, including public familiarity, institutional demand, and competition from other digital assets.
• The availability of spot Exchange Traded Products (ETPs) for digital assets, including potential Toncoin ETPs, could adversely affect the market price of common stock.
• Disruption of the Internet may affect cryptocurrency networks, impacting Toncoin value and the company's investment.
• Dependence on third-party Internet providers for service delivery, with potential for outages or delays.
• AI technology integration presents operational, compliance, and reputational risks, including unexpected results, biases, and legal/regulatory challenges.
• Dependence on third parties for server maintenance, bandwidth, and operational support, with risks of errors or disruptions.
• Success is highly correlated to general economic conditions, with potential for decreased discretionary spending and adverse impact on financial results.
• Failure to adequately protect intellectual property rights could diminish product value and weaken competitive position.
• Natural disasters and other events beyond control could materially adversely affect operations.
• Future success depends on key executive officers and the ability to attract, retain, and motivate qualified personnel.
• Risk of delisting from the Nasdaq Capital Market if compliance with listing requirements is not maintained, leading to reduced liquidity and value.
• Future capital raises through equity or convertible debt could result in substantial dilution to existing stockholders.
• The market price of common stock is subject to substantial volatility due to numerous factors, including Toncoin price fluctuations and regulatory developments.
• A prolonged decline in common stock price could affect the ability to raise further working capital.
• No intention to pay cash dividends in the near future, requiring stockholders to rely on stock appreciation for returns.
• Some equity awards and shares issued under the Incentive Plan may not have been registered or had a valid exemption, potentially leading to rescission claims or damages.
• Ratification of certain corporate actions under Nevada law may still be challenged, potentially leading to liability.
• Anti-takeover effects of Nevada state law and company bylaws could hinder potential takeovers, limiting the price investors would pay for shares.
• Exclusive forum provision in bylaws could limit stockholders' ability to obtain a favorable judicial forum for disputes.
• Failure to maintain effective internal controls over financial reporting could lead to inaccurate or untimely financial reporting.

Future Outlook

The company intends to continue its TON Treasury Strategy, targeting the accumulation of over 5% of Toncoin's circulating supply to establish itself as a significant participant in securing the TON blockchain. It plans to steadily increase Toncoin held per share through reinvestment of cash flows, staking rewards, and disciplined capital markets activity. The company aims to support the development of a tokenized economy within Telegram's billion-user platform. However, the company acknowledges significant uncertainty regarding future profitability, the regulatory environment for digital assets, and its ability to successfully implement its new strategy at scale.

Management Comments

• Veronika Kapustina is transitioning out of her position as Chief Executive Officer, with a search for her successor underway.
• Rory J. Cutaia, CEO of the Global Digital Media Division, had his employment terminated and subsequently resigned from the Board.
• Denise Butler was appointed interim President of the Global Digital Media Division.
• The company believes the benefits of increased protection from anti-takeover provisions outweigh the disadvantages of discouraging proposals, as negotiation could improve terms.
• Management believes its treatment of digital asset transactions for U.S. federal income tax purposes is consistent with existing guidance, but acknowledges potential disagreement from the IRS or state agencies.
• Management believes Toncoin is not a security under U.S. federal securities laws, but acknowledges a regulatory body or federal court may determine otherwise in the future.
• Management believes the company is not an investment company under the Investment Company Act of 1940 and intends to conduct operations to avoid such classification.

Industry Context

StockSavvy.ai notes that TON Strategy Company's pivot to a digital asset treasury strategy, centered on Toncoin and The Open Network (TON) blockchain, positions it within the rapidly evolving Web3 and cryptocurrency sectors. This move leverages Telegram's vast user base, a significant differentiator in the social commerce and digital asset space. The company's other segments, MARKET.live (livestream shopping) and LyveCom (AI social commerce), align with broader trends in interactive e-commerce and AI integration. The digital asset industry, however, faces intense competition, significant price volatility, and an uncertain regulatory landscape, as highlighted by the company's substantial unrealized losses on Toncoin and ongoing regulatory scrutiny. The company's strategy to accumulate a significant portion of Toncoin's supply and participate in staking reflects a growing trend among crypto-native entities to actively support and derive yield from blockchain ecosystems.

Comparison to Industry Standards

• The company's strategy to accumulate over 5% of Toncoin's circulating supply aims to establish it as a significant participant in maintaining and securing the TON blockchain's network infrastructure, a similar approach to major institutional holders in other Proof-of-Stake networks like Ethereum (e.g., Lido Finance, Coinbase Staking) or Solana.
• The company's use of third-party custodians like BitGo Trust Company, Inc. and Blockchain.com (Cayman) Limited for Toncoin holdings and staking aligns with industry best practices for institutional digital asset management, comparable to how other publicly traded crypto companies (e.g., MicroStrategy for Bitcoin) manage their treasury assets.
• The integration of LyveCom's AI technology into MARKET.live for omnichannel livestream shopping positions the company against competitors like Amazon Live, TikTok Shop, and other social commerce platforms, aiming to enhance user engagement and data capture through zero-party customer information, a key differentiator in a privacy-conscious market.
• The Go Fund Yourself platform, focusing on Regulation CF and Regulation A offerings, operates in a niche crowdfunding market, competing with platforms like StartEngine or Republic, by offering broad-based exposure through a reality TV show format, which is a unique marketing approach compared to standard online portals.

Management Changes

Corporate Governance

Legal Proceedings

• The company is involved in a dispute with a former employee, Meyerson v. Ton Strategy Company, et al., regarding unpaid bonus compensation from 2015. A judgment of $584,000 (including interest) was entered against the company on August 29, 2024, which was affirmed on appeal on July 3, 2025. The company bonded the judgment, and $718,000 was collected by plaintiff's counsel in October 2025. The company is determining whether to file a further appeal.

Related Party Transactions

• Advisory Services Agreement with Kingsway Capital Partners Limited (controlled by Manuel Stotz, Executive Chairman) for advisory and consulting services related to business expansion and the TON Treasury Strategy. The agreement includes a one-time set-up fee of $3.0 million and an annual advisory fee of 2.0% of market capitalization, payable in TON or cash. For 2025, $61,000 was recognized for amortization of the setup fee and $2.9 million for advisory fees.
• Master custody agreement with Blockchain.com (Manuel Stotz is a director of its parent company, Nicholas Cary is Vice Chairman and employee of its parent company, and Kingsway affiliates hold ~9% ownership in its parent company). For 2025, the company incurred $1.0 million in custody, staking service, and staking rewards fees. An addendum on November 24, 2025, reduced custody fees from 50 to 5 basis points and staking rewards fees from 25% to 10% for unlocked Toncoin.
• PIPE in-kind contributions from Kingsway ($118.1 million, including cash, unrestricted Toncoin, and smart contract-restricted Toncoin), Merkle Tree Markets Ltd. (a Blockchain.com subsidiary, $19.9 million, including cash and restricted Toncoin), and Vy Capital Management Company Limited (a greater than 5% owner, $58.3 million, including cash and unrestricted Toncoin).

Stakeholder Impact

• **Shareholders:** Face significant dilution risk from future equity offerings, potential loss of value due to Toncoin price volatility and unrealized losses, and uncertainty regarding Nasdaq listing status. No cash dividends are expected in the near future.
• **Employees:** Impacted by management changes, including CEO transition and termination of a key executive. Share-based compensation is a significant component, but some awards may have been issued improperly, creating uncertainty.
• **Customers:** MARKET.live and LyveCom customers benefit from enhanced AI and social commerce capabilities. Go Fund Yourself clients utilize the platform for exposure, but the company's financial health could impact service continuity.
• **Creditors:** Potential impact if the company's financial condition deteriorates further, affecting its ability to service any future indebtedness, especially given the volatility of Toncoin as a treasury asset.
• **Regulatory Authorities:** The company is under scrutiny from Nasdaq for compliance issues and faces ongoing uncertainty regarding the regulatory treatment of digital assets by the SEC and other bodies, which could lead to further enforcement actions or changes in operational requirements.

Next Steps

• Submit a plan to Nasdaq within 45 calendar days from March 30, 2026, to regain compliance with Nasdaq Listing Rule 5635(c).
• Conduct a search for a successor Chief Executive Officer following Veronika Kapustina's transition.
• Enter into settlement negotiations with Kingsway Capital Partners Limited to terminate the advisory services agreement.
• Continue to implement the TON Treasury Strategy, including accumulating Toncoin and participating in staking activities.
• Offer certain directors and officers to forfeit equity awards granted after the PIPE financing to reduce the number of potentially excess or unregistered awards.

Key Dates

Recommendation

The company reported a massive net loss of $148.5 million for 2025, primarily driven by a $373.9 million unrealized loss on its Toncoin holdings, highlighting extreme volatility and risk in its core treasury strategy. Coupled with ongoing Nasdaq compliance issues that could lead to delisting, significant management turnover, and a history of recurring losses since inception, the investment thesis is severely compromised. While revenue growth in other segments is positive, it is dwarfed by the digital asset losses and operational uncertainties. The high concentration risk in Toncoin and the evolving, uncertain regulatory landscape for digital assets further amplify the downside. A seasoned investor would likely recommend selling to mitigate exposure to these substantial risks and uncertainties.

Keywords

Toncoin, TON blockchain, Digital Assets, Cryptocurrency, Staking, Web3, Livestream Shopping, AI Commerce, Crowdfunding, SEC Filing, Nasdaq, Financial Report, Market.live, LyveCom, Go Fund Yourself