TON Strategy Company (37V) Risk Analysis

As previously disclosed in our filings with the SEC, we did not comply with the shareholder approval requirement of Nasdaq rules in connection with our PIPE financing. We received a letter from the Listing Qualifications Department, or the Nasdaq Staff, of the Nasdaq Stock Market LLC, or Nasdaq, stating that we were not in compliance with certain requirements for continued listing on the Nasdaq Capital Market. We coordinated with the Nasdaq Staff and, though we received a Letter of Reprimand from the Nasdaq Staff, we maintained our Nasdaq listing. On March 27, 2026, we provided notice to the Nasdaq Staff regarding a possible violation of Nasdaq Listing Rule 5635(c). The notification to Nasdaq related to our recent determination that a number of equity awards granted pursuant to our 2019 Stock and Incentive Compensation Plan, as amended, or the Incentive Plan, were inadvertently issued in excess of the amount available under the Incentive Plan, or the Excess Awards, and such issuance of Excess Awards may have required shareholder approval. On March 30, 2026, we received a letter, or the Letter, from the Nasdaq Staff acknowledging our notice. The Letter has no immediate effect on our continued listing on Nasdaq, subject to our compliance with other continued listing requirements. Pursuant to the Nasdaq Listing Rules, we have 45 calendar days from March 30, 2026 to submit a plan to regain compliance. We intend to work closely and expeditiously with Nasdaq in an effort to resolve this matter. We intend to submit, within the requisite period, a plan to regain compliance under the Nasdaq Listing Rules. If the plan is accepted, Nasdaq may grant us an extension of 180 calendar days from the date of the Letter to evidence compliance. There can be no assurance that Nasdaq will accept our plan or that we will be able to regain compliance with the applicable listing requirements, which could result in us losing our listing on the Nasdaq Capital Market. In the event of a delisting from the Nasdaq Capital Market, our stock would likely be traded in the over-the-counter inter-dealer quotation system, more commonly known as the OTC. OTC transactions involve risks in addition to those associated with transactions in securities traded on the securities exchanges, such as the Nasdaq Capital Market, or Exchange-listed stocks. Many OTC stocks trade less frequently and in smaller volumes than Exchange-listed stocks. Accordingly, our stock would be less liquid than it would be otherwise. Also, the prices of OTC stocks are often more volatile than Exchange-listed stocks. Additionally, many institutional investors are prohibited from investing in OTC stocks, and it might be more challenging to raise capital when needed.

We may need additional capital in the future to continue our planned operations, including any potential acquisitions, hiring new personnel and continuing activities as an operating public company. To the extent we seek additional capital through a combination of public and private equity offerings and debt financings, our stockholders may experience substantial dilution. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders may be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt and receivables financings may be coupled with an equity component, such as warrants to purchase shares of our common stock, which could also result in dilution of our existing stockholders' ownership. The incurrence of indebtedness would result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt and other operating restrictions that could adversely impact our ability to conduct our business. A failure to obtain adequate funds may cause us to curtail certain operational activities, including sales and marketing, in order to reduce costs and sustain the business, and would have a material adverse effect on our business and financial condition. In addition, we have granted options to purchase shares of our common stock pursuant to our equity incentive plans and have registered 16,000,000 shares of common stock underlying options and shares granted pursuant to our equity incentive plans. Sales of shares issued upon exercise of options granted under our equity compensation plans may result in material dilution to our existing stockholders, which could cause our price of our common stock to fall.

The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including;- Potential delisting from Nasdaq; and - Volatility in the market price of Toncoin, which materially affects the value of our digital asset holdings and related staking activities;         - Changes in the liquidity of the Toncoin market, including trading volumes, market depth, exchange availability, and our ability to monetize Toncoin or convert staking rewards into fiat currency on commercially reasonable terms;         - Market perceptions of the TON blockchain ecosystem, Toncoin, and Telegram, including developments relating to adoption, network security, protocol upgrades, governance decisions, or regulatory scrutiny affecting any of the foregoing;         - Regulatory, legislative, or enforcement developments relating to digital assets, staking activities, or crypto-related businesses in the United States or other relevant jurisdictions;         - Variability in staking yields, validator performance, smart contract risk, or other operational factors that impact our ability to generate expected returns from our digital asset strategy;         - Cybersecurity incidents, including hacking, phishing, validator compromise, smart contract vulnerabilities, private key misappropriation, or other security breaches affecting digital asset custodians, staking providers, exchanges, the TON blockchain, or our own systems, which could result in loss of assets, operational disruption, reputational harm, or reduced investor confidence in our digital asset strategy;         - Broader macroeconomic and digital asset market conditions, including changes in interest rates, monetary policy, inflation expectations, geopolitical instability, capital flows into or out of digital asset markets, and shifts in investor risk appetite, all of which have historically contributed to significant volatility in cryptocurrency prices and related equity securities;- volatility in the trading markets generally and in our particular market segment;         - limited trading of our common stock;- actual or anticipated fluctuations in our results of operations;         - the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections;         - announcements regarding our business or the business of our customers or competitors;         - changes in accounting standards, policies, guidelines, interpretations, or principles;         - actual or anticipated developments in our business or our competitors' businesses or the competitive landscape generally;         - developments or disputes concerning our intellectual property or our offerings, or third-party proprietary rights;         - announced or completed acquisitions of businesses or technologies by us or our competitors;         - new laws or regulations or new interpretations of existing laws or regulations applicable to our business;         - any major change in our board of directors or management;         - sales of shares of our common stock by us or by our stockholders;         - lawsuits threatened or filed against us; and         - other events or factors, including those resulting from war, incidents of terrorism, pandemics or responses to these events. Statements of, or changes in, opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the markets in which we operate or expect to operate could have an adverse effect on the market price of our common stock. In addition, the stock market as a whole, as well as our particular market segment, has from time-to-time experienced extreme price and volume fluctuations, which may affect the market price for the securities of many companies, and which often have appeared unrelated to the operating performance of such companies. Any of these factors could negatively affect our stockholders' ability to sell their shares of common stock at the time and price they desire.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. We may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities; thus, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may adversely affect investors' desire to invest in our securities. If we are unable to raise the funds we require for all of our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products or services and continue our current operations. As a result, our business may suffer, and we may be forced to reduce or discontinue operations. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to reduce or discontinue operations.

Some of the shares and equity awards granted pursuant to our Incentive Plan may not have been registered or had a valid exemption from registration or qualification under the Securities Act of 1933 and/or the securities laws of certain states. Because of the lack of registration and, potentially, the lack of a valid exemption from registration, the equity awards we granted and the shares issued upon exercise or vesting of these equity awards may have been issued in violation of U.S. federal and/or certain state securities laws and we may be subject to claims for rescission or damages, which could result in an adverse effect on our results of operations and financial condition. In addition, regulators may choose to pursue actions or impose penalties and fines against us with respect to any potential violations of securities laws. Under Securities Act Section 12(a)(1), certain purchasers of unregistered securities have a right to recover, upon the tender of such security the consideration paid for such security with interest, less the amount of any income received, or damages if the security holder no longer holds the security. We currently do not believe that any holder has a claim to rescission for the equity awards since we are not aware of any recipient of a potentially unregistered award having suffered damages as a result of such equity award, or shares issued pursuant to such equity award, not being registered. Under the Securities Act of 1933, private claims for rescission of a non-fraudulent transaction of unregistered securities are typically subject to a one-year statute of limitation, calculated from the date of the transaction.  While private claims for a non-fraudulent transaction of unregistered securities may be extended under certain exceptions and circumstances, such private claims may not be extended beyond three years from the date of the transaction.  State law limitations periods vary by state. Although we currently do not believe that any holder has a claim for damages or an economic incentive for rescission of the equity awards, or shares issued upon exercise of these equity awards, our belief could be incorrect, it might later become economically advantageous for a holder to seek rescission, or a holder might otherwise seek rescission for other reasons. If such equity awards, or shares issued or issuable pursuant to such equity awards, are subject to rescission, we could be required to rescind these shares and make payments for rescission, damages, and interest to the holders of these equity awards, or shares issued pursuant to such equity awards, in an amount not yet determinable by us. In addition, we could incur further costs as a result of regulatory inquiries, lawsuits, or additional actions we may be required to take to resolve this matter.

On March 28, 2026, our Board ratified certain actions, or the Ratification, pursuant to Nevada law, which allows a Nevada corporation to ratify a defective corporate act retroactive to the date the corporate act was originally taken. The Ratification was undertaken in order to ratify, and correct certain potential defects in authorization with respect to (i) the approval of amendments to our Incentive Plan to increase the share reserve under the Incentive Plan and as may be required in order to align the Incentive Plan and related Equity Awards (as defined below) with applicable laws, rules and regulations, the Plan Modifications, and (ii) certain issuances of our shares and grants of equity under the Incentive Plan (including options, restricted stock awards and restricted stock units), or the Equity Awards. The Ratifications do not correct that some of the equity awards we granted, and the shares issued upon exercise or vesting of these equity awards, may not have been registered and may not have been exempted from registration requirements and issued in violation of U.S. federal and/or certain state securities laws. Although we believe we have undertaken the Ratifications in accordance with Nevada law, there can be no assurance that (i) claims that the Plan Modifications and/or the Equity Awards are void or voidable due to defects in authorization, or (ii) claims that the Ratifications were ineffective, or only of limited effect, under Nevada Law, or (iii) other claims related thereto, will not be asserted, and, if asserted, that any such claims will not be successful. If any aspect of the Ratifications are determined to be ineffective or of limited effect, then the Plan Modifications and/or the Equity Awards, as applicable, may be determined to be invalid and, as applicable, we could have liability to holders of the common stock and the grantees under the Equity Awards, including being subject to monetary damages and rescission rights.

Nevada has a business combination law that prohibits certain business combinations between Nevada corporations and "interested stockholders" for three years after an "interested stockholder" first becomes an "interested stockholder," unless the corporation's board of directors approves the combination in advance. For purposes of Nevada law, an "interested stockholder" is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then-outstanding shares of the corporation. The definition of the term "business combination" is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquirer to use the corporation's assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders. The potential effect of Nevada's business combination law is to discourage parties interested in taking control of us from doing so if these parties cannot obtain the approval of our board of directors. Both of these provisions could limit the price investors would be willing to pay in the future for shares of our common stock.