UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
(Amendment No. 4)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal year ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the transition period from ______________ to ______________
Commission
File No.
INC.
(Exact
name of the small business issuer as specified in its charter)
| DELAWARE |
||
|
(State of |
(I.R.S. Identification |
|
Spectrum Center Drive 300 |
||
| (Address of principal executive offices) |
(Zip Code) |
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
||
Securities
registered pursuant to Section 12(g) of the Act:
| Title of each class |
||||
| Common Stock, par value $0.0001 |
Indicate
by check mark if the registrant is a well- known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding twelve (12) months (or for such
shorter period that the registrant was required to submit and post such files).
☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definition
of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer |
☐ | Accelerated filer |
☐ | |
filer |
☐ | Smaller reporting company |
||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The
aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the closing price as
of June 30, 2025, of $0.048 per share, the last business day of the registrant’s most recently completed second quarter, was approximately
$
The number of shares of Common Stock,
$ par value of the registrant,
outstanding as of June 30, 2026, was .
Explanatory
Note
Inc. (the “Company”) is filing this Amendment No. 4 on Form 10-K/A (this “Amendment No. 4”) to its Annual
Report on Form 10-K for the fiscal year ended December 31, 2025, originally filed with the Securities and Exchange Commission (the
“SEC”) on April 17, 2026 (the “Original Form 10-K”), as amended by Amendment No. 1 on Form 10-K/A filed with
the SEC on April 22, 2026 (“Amendment No. 1”), as further amended by Amendment No. 2 on Form 10-K/A filed with the SEC
on June 8, 2026 (“Amendment No. 2”), and as further amended by Amendment No. 3 on Form 10-K/A filed with the SEC on June
23, 2026 (“Amendment No. 3” and, together with the Original Form 10-K, Amendment No. 1, Amendment No. 2 and Amendment No. 3, the
“Form 10-K”).
As previously disclosed in a Current Report on Form 8-K filed by the
Company on June 8, 2026, the Board of Directors of the Company, after consultation with management and the Company’s independent registered
public accounting firm, concluded that the Company’s previously issued consolidated financial statements as of and for the fiscal years
ended December 31, 2025 (as included in the Original Form 10-K and Amendment No. 1) and December 31, 2024 should no longer be relied upon
because of errors in those financial statements, which the Company restated in Amendment No. 2 in accordance with ASC Topic 250, “Accounting
Changes and Error Corrections.” This Amendment No. 4 does not restate those financial statements again and does not change any previously
reported total assets, total liabilities, stockholders’ equity (deficit), net income (loss), earnings per share, or any other amount presented
in the face consolidated financial statements for any period; it includes in Note 4 certain revisions to the December 31, 2025 restatement
schedule that were inadvertently omitted from Amendment No. 3 as filed, as described below.
Items
Amended in this Filing
This Amendment No. 4 is being filed in response
to a comment received from the staff of the SEC’s Division of Corporation Finance by letter dated June 30, 2026, to include in Note 4
(Restatement of Previously Issued Financial Statements) certain revisions to the December 31, 2025 restatement schedule that were prepared
in connection with Amendment No. 3 but were inadvertently omitted from Amendment No. 3 as filed. As revised, the December 31, 2025 restatement
schedule presents all affected financial statement line items — including the related party receivable, tax receivable, right-of-use
asset, additional paid-in capital, and accumulated other comprehensive income (loss) balances — together with a description of the
purpose of each adjustment, including the reclassification of $2,612,695 from tax receivable to related party receivable. These revisions
affect only the presentation of the Note 4 restatement schedule and do not change any amount presented in the face consolidated financial
statements.
Except as described above, this Amendment No. 4 does not modify or update any other disclosures in the Form 10-K,
as amended.
TABLE
OF CONTENTS
| PART I. | ||
| ITEM 1 |
BUSINESS | 4 |
| ITEM 1A. |
RISK FACTORS |
15 |
| ITEM 1B. |
UNRESOLVED STAFF COMMENTS |
15 |
| ITEM 1C. |
CYBERSECURITY | 15 |
| ITEM 2 |
OPERATING LEASES |
16 |
| ITEM 3 |
LEGAL PROCEEDINGS |
18 |
| ITEM 4 |
MINE SAFETY DISCLOSURES |
18 |
| PART II. |
||
| ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
19 |
| ITEM 6. |
SELECTED FINANCIAL DATA |
21 |
| ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
22 |
| ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
29 |
| ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
29 |
| ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
29 |
| ITEM 9A. |
CONTROLS AND PROCEDURES |
30 |
| ITEM 9B. |
OTHER INFORMATION |
32 |
| PART III. |
||
| ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
33 |
| ITEM 11. |
EXECUTIVE COMPENSATION |
36 |
| ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
40 |
| ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
43 |
| ITEM 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
44 |
| PART IV. |
||
| ITEM 15. |
FINANCIAL STATEMENT SCHEDULES |
46 |
| ITEM 16. |
EXHIBITS | 46 |
| SIGNATURES | 47 | |
FORWARD-LOOKING
STATEMENTS
This
Annual Report on Form 10-K (“Form 10-K”) contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements”
for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue, or other financial
items; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed
new products or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements
of assumptions underlying any of the foregoing. Although we believe the expectations reflected in our forward-looking statements are
reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future
financial condition, operations results, and forward-looking statements are subject to change, inherent risks, and uncertainties.
Forward-looking
statements may include the words “may,” “could,” “will,” “estimate,” “intend,”
“continue,” “believe,” “expect,” “desire,” “goal,” “should,”
“objective,” “seek,” “plan,” “strive” or “anticipate,” as well as variations
of such words or similar expressions, or the negatives of these words. These forward-looking statements present our estimates and assumptions
only as of the date of this Form 10-K. Except for our ongoing obligation to disclose material information as required by federal securities
laws, we do not intend and undertake no obligation to update any forward-looking statements. We caution readers not to place undue reliance
on any such forward-looking statements. Should one or more of these risks or uncertainties materialize or underlying assumptions prove
incorrect, actual outcomes will likely vary materially from those indicated.
PART
I
Overview
FDCTech,
Inc. (“FDCTech,” “Company,” “we,” “us,” or “our”) is a financial technology
company specializing in developing and delivering innovative software solutions and business services to the over-the-counter (OTC) brokerage
and financial services industries. The Company provides a range of proprietary and third-party technology solutions, including its flagship
Condor Trading Technology, which supports multi-asset trading, risk management, and pricing for forex, equities, commodities, and digital
assets. FDCTech is a U.S.-based, fully reporting public company and currently trades under the symbol OTC: FDCT.
Founded
in January 2016 as a back-office technology solution provider, FDCTech has transformed into a diversified global fintech platform through
strategic acquisitions. Our growth trajectory includes the acquisitions of AD Advisory Services Pty Ltd. (2021), Alchemy Markets Ltd.
(2022-2023), Alchemy Prime Limited (2023), and, most recently, Alchemy International Ltd. (2025), expanding our global footprint across
Australia, Malta, the United Kingdom, Cyprus, Seychelles, and Mauritius.
FDCTech,
Inc. is the parent holding company with the following wholly-owned and majority-owned subsidiaries:
| Subsidiary | Ownership | Jurisdiction | Primary Business |
Markets | Technology | |||||
| AD Advisory Services Pty Ltd. (ADS) | 51.00% | Australia | Wealth Management |
Australia | Third-party software |
|||||
| Alchemy Markets Ltd. (AML) |
100.00% | Malta | FX, CFDs, Stocks, Bonds |
Europe (excl the United Kingdom) |
Condor Third-party |
|||||
| Alchemy Prime Ltd. (APL) |
100.00% | United Kingdom |
FX, CFDs |
United Kingdom |
Condor Trading & Third-party |
|||||
| Alchemytech Ltd. (ATECH) |
100.00% | Cyprus | Technology Services |
Europe | Condor Trading |
|||||
| Alchemy International Ltd. (AIL) |
99.90% | Seychelles | FX, CFDs |
Asia | Condor Trading & Third-party |
|||||
| Xoala Asia (XOA) |
100.00% | Mauritius | Payment Intermediary Services |
Asia | Third-party | |||||
| Prime Intermarket Group Eurasia (PIG) |
100.00% | Mauritius | FX, CFDs |
Asia | Condor Trading & Third-party |
Our
Business Segments
We
operate through four complementary business segments:
Margin
Brokerage: Through Alchemy Markets Ltd. (Malta, MFSA-regulated), Alchemy Prime Limited (UK, FCA-regulated), and Alchemy International
Ltd. (Seychelles, FSA-regulated), we provide multi-asset trading services in forex, CFDs, equities, commodities, and digital assets to
retail and institutional clients globally.
Wealth
Management: Through AD Advisory Services Pty Ltd. (Australia, ASIC-regulated), we operate a wealth management business with 28 financial
advisors managing and advising over $530 million in funds under advice under the aegis of our license, where we provide licensing solutions
and financial planning services to these financial advisors.
Technology
and Software Development: Through FDCTech and Alchemytech Ltd. (Cyprus), we develop and license our proprietary Condor Trading Technology
suite, including the Condor Pro Multi-Asset Trading Platform and Condor Risk Management back-office system.
Payment
Intermediary Services: Through Xoala Asia (Mauritius, FSC-licensed), we are developing a payment gateway, merchant acquiring, and
cross-border payment capabilities to complement our brokerage and wealth management operations. This segment is in the early stages of
development.
For
a more detailed description of our business, subsidiaries, industry, and market opportunity, competition, and business strategy, see
“Business” beginning on page 4.
Industry
and Market Opportunity
We
operate at the intersection of several large and growing global markets: (i) foreign exchange (“FX”), contracts for difference
(“CFDs”) and multi-asset online trading; (ii) wealth management and financial advisory services; (iii) trading technology
and infrastructure; and (iv) digital payments and cross-border transaction services. Through our subsidiaries, we provide margin brokerage
services in Europe, the United Kingdom, Seychelles, and Mauritius; wealth management services in Australia; proprietary trading technology
and connectivity; and, through Xoala Asia, we are building a regulated payment intermediary platform in Mauritius.
Global
FX, CFD, and Online Trading Markets
The
FX market is one of the largest and most liquid financial markets in the world. According to the Bank for International Settlements (“BIS”)
2025 triennial survey, average daily turnover in global FX markets reached approximately $9.6 trillion in April 2025, an increase of
about 28% compared to April 2022(1). The BIS notes that its survey is the primary global source on the size and structure
of OTC FX markets. This growth reflects the continued globalization of trade and capital flows, the increased use of electronic trading
platforms, and rising participation from both institutional and retail traders.
Parallel
to growth in underlying FX and derivatives volumes, the online trading platform market has expanded as investors migrate from traditional
channels to mobile- and cloud-based brokerage solutions. Industry research from Grand View Research estimates that the global online
trading platform market was approximately $9.6 billion in 2023 and is expected to reach $15.6 billion by 2030, representing a compound
annual growth rate (“CAGR”) of approximately 7.3% from 2024 to 2030(2). Other industry analysts similarly forecast
mid-single- to high-single-digit CAGRs(3) for online trading platforms over the next decade, driven by broader retail participation,
declining trading fees, and increased product breadth, including derivatives and digital assets.
Within
this broader online trading segment, CFD brokers represent a sizeable niche. DataIntelo(4) estimates that the global CFD broker
market generated approximately $12.5 billion of revenue in 2023 and could reach $22.4 billion by 2032, implying a CAGR of approximately
6.7%. Industry publications note that publicly traded CFD and leveraged trading brokers such as IG Group, Plus500, CMC Markets, and XTB
have reported robust revenue trends supported by strong client trading activity and increased active accounts.
We
believe our margin brokerage businesses—Alchemy Markets Ltd. (“AML”) in Malta, Alchemy Prime Ltd. (“APL”)
in the United Kingdom, and Alchemy International Ltd. (“AIL”) in Seychelles—are positioned to participate in these
trends by offering leveraged FX, CFD and multi-asset trading solutions to retail and institutional clients across the European Union,
the United Kingdom, selected offshore jurisdictions and other international markets. As regulatory reforms such as MiFID II in Europe
and leverage caps in major markets have raised barriers to entry and increased compliance costs, we expect competitive differentiation
to continue to shift toward technology, execution quality, and regulatory credibility, rather than purely marketing-led client acquisition.
Wealth
Management and Financial Advisory Services
Our
Australian subsidiary, AD Advisory Services Pty Ltd. (“ADS”), operates in the wealth management and financial advisory market,
providing licensing solutions and financial planning services to a network of financial advisers and accountants, with more than $530
million in funds under advice as of December 31, 2024.
The
global asset and wealth management industry is significant and growing. A 2025 report by PwC projects that global assets under management
could increase from approximately $139 trillion in 2024 to about $200 trillion by 2030(5), with wealth management for affluent
individuals highlighted as a major growth area. Structural trends such as aging populations, the shift from defined-benefit to defined-contribution
retirement systems, and increasing household participation in capital markets are driving demand for professional financial advice and
administration.
Within
Australia, superannuation (retirement) assets and self-managed superannuation funds have created a large addressable base for licensed
advisers, tax professionals, and integrated financial planning practices. ADS competes in this environment as a mid-sized licensee and
adviser network and, we believe, benefits from the broader trend toward outsourcing compliance, technology, and practice management functions
by independent advisers seeking scale and regulatory support.
Trading
Technology and Multi-Asset Infrastructure
FDCT
began as a technology company and continues to invest in proprietary trading infrastructure, particularly our Condor Pro Multi-Asset
Trading Platform, Condor Risk Management back office, and related pricing and connectivity tools. We license these systems to third-party
brokers and financial institutions and also use them to power our own brokerage operations.
Industry
analysts estimate that the digital banking platform market was approximately $20.8 billion in 2021 and may grow to approximately $107.1
billion by 2030, at a projected CAGR of roughly 20.5%(6). The broader digital banking market — including platforms and
services — is expected to grow from about $35.3 billion in 2024 to $79.4 billion by 2030, a CAGR of approximately 14.5%(7).
In parallel, the global AI trading platform market is forecast to grow from approximately $11.2 billion in 2024 to $33.5 billion by 2030,
reflecting a CAGR of about 20% as firms deploy AI for execution, analytics, and risk management(8).
We
believe the same forces that are driving banks and large brokerages to refresh their digital platforms—cloud migration, open-API
architectures, real-time risk and regulatory reporting, and the need to support multiple asset classes and geographies—also create
demand for modular trading technology such as ours. Our platform is designed to support FX, CFDs, equities, commodities, and other products,
integrate with third-party customer relationship management (“CRM”) and banking systems, and meet regulatory requirements
in multiple jurisdictions.
Digital
Payments and Cross-Border Transactions
Through
Xoala Asia, we intend to build a payment intermediary services business that provides payment gateway, merchant acquiring, cross-border
remittance, and card processing capabilities. The Financial Services Commission of Mauritius has granted Xoala Asia a Payment Intermediary
Services license.
The
global cross-border payments market is sizeable and expanding. Grand View Research estimates that the cross-border payments market generated
approximately $212.6 billion in revenue in 2024 and could reach $320.7 billion by 2030, representing a projected CAGR of approximately
7.1% over the period(9). Juniper Research projects that global cross-border business-to-business (“B2B”) payment
transactions will increase from about 16.3 billion in 2025 to 18.3 billion in 2030, driven by globalization and new payment technologies,
including digital wallets and stablecoins(10).
At
the same time, the overall payments landscape is undergoing digital transformation. J.P. Morgan has estimated that global payments flows
could reach approximately $290 trillion by 2030, supported by e-commerce, real-time payment systems, and open banking initiatives(11).
Within this ecosystem, providers such as PayPal, Wise, Western Union, Visa, and Mastercard are identified as major players in cross-border
payments, leveraging global networks and multi-currency capabilities(12).
We
intend for Xoala Asia to complement our brokerage and wealth management businesses by facilitating faster and more efficient client funding,
withdrawals, and partner settlements, particularly in emerging markets where traditional banking access remains limited. There can be
no assurance that we will successfully commercialize these services or capture a meaningful share of the cross-border payments market.
Competition
We
operate in highly competitive markets across each of our business segments. Our ability to compete successfully depends on a number of
factors, including our technology, regulatory capabilities, pricing, customer service, and brand recognition.
Margin
Brokerage
Our
margin brokerage subsidiaries—Alchemy Markets Ltd. (Malta), Alchemy Prime Limited (UK), and Alchemy International Ltd. (Seychelles)—compete
in the global retail and institutional FX, CFD, and multi-asset trading markets. Competitors include:
●
large global retail brokers and market makers such as IG Group, CMC Markets, Plus500, OANDA, and Saxo Bank, which have established brands,
significant customer bases, and substantial financial resources;
●
regional and offshore CFD and FX brokers operating in European, Asian, and emerging markets, many of which compete aggressively on spreads,
leverage, and promotional incentives; and
●
institutional prime-of-prime brokers and liquidity providers that serve professional traders, hedge funds, and smaller brokerages.
Competition
in margin brokerage is driven by trading costs (spreads and commissions), execution quality and speed, range of tradable instruments,
platform functionality and reliability, regulatory reputation and fund safety, customer service, and marketing reach. Many of our competitors
have greater financial resources, broader product offerings, and more established brand recognition than we do.
Customers
choose among FX/CFDs providers based on technology features (multi-asset support, latency, reliability, and risk tools), integration
with CRM, compliance and banking systems, security and regulatory reporting capabilities, pricing and commercial terms, and quality of
implementation and ongoing support. Our Condor Pro Multi-Asset Trading Platform and related technologies are designed to be regulatory-compliant,
multi-jurisdictional, and modular, and we believe this approach allows us to address the needs of both our own brokerage operations and
external B2B clients. Nevertheless, we compete against larger and better-capitalized technology providers with broader client bases and
more extensive research and development resources.
Wealth
Management
Our
Australian subsidiary, AD Advisory Services Pty Ltd. (ADS), competes in the Australian wealth management and financial advisory market.
Competitors include:
●
large institutional wealth managers and dealer groups such as AMP, IOOF, and Insignia Financial, which operate extensive adviser networks
and have significant assets under advice;
●
mid-sized licensees and adviser networks, including self-licensed practices and boutique dealer groups that compete for advisers and
clients; and
●
emerging digital wealth platforms and robo-advisors that offer lower-cost, technology-driven financial planning solutions.
Competition
in wealth management is driven by the quality and breadth of financial planning services, fee structures, compliance and regulatory support
for advisers, technology platforms, investment product offerings, and brand trust. ADS competes as a mid-sized licensee and adviser network,
and we believe it benefits from the broader trend toward outsourced compliance and licensing solutions following regulatory reforms in
Australia.
Technology
and Software Development
Through
FDCTech and Alchemytech Ltd. (ATECH), we license our proprietary Condor Trading Technology suite to brokerages and financial institutions.
Competitors include:
●
established trading platform providers such as MetaQuotes (MetaTrader 4/5), Spotware (cTrader), and Devexperts (DXtrade), which dominate
the retail FX and CFD platform market globally;
●
enterprise trading technology vendors serving institutional clients, including Trading Technologies, FlexTrade, and Refinitiv, which
offer sophisticated multi-asset trading and risk management solutions; and
●
emerging fintech companies and white-label solution providers offering modular, cloud-based trading infrastructure and back-office systems.
Customers
choose among these providers based on technology features (multi-asset support, latency, reliability, and risk tools), integration with
CRM, compliance and banking systems, security and regulatory reporting capabilities, pricing and commercial terms, and quality of implementation
and ongoing support. Our Condor Pro Multi-Asset Trading Platform competes as a newer entrant, and we seek to differentiate through customization,
vertical integration with our brokerage operations, and flexible licensing arrangements.
Payments
and Payment Intermediary Services
Once
commercialized, Xoala Asia will operate in the competitive payments and cross-border remittance market. Competitors include:
| ● | global payment networks, digital wallets, and remittance providers such as PayPal, Wise, Western Union, MoneyGram, Visa, Mastercard, and others, which industry research identifies as major players in cross-border payments(13); |
|
| ● | regional payment processors, merchant acquirers, and gateway providers that serve e-commerce, retail, and small-business customers in key markets; and |
|
| ● | emerging fintech and blockchain-based payment solutions that aim to reduce friction and cost in cross-border transactions. |
Competition
in payments is driven by transaction pricing and foreign exchange spreads, speed and reliability of settlement, geographic coverage and
currency pairs supported, quality of technology and integration (including APIs and SDKs), user experience, fraud prevention and compliance
capabilities, and brand trust. As a new market entrant, we expect Xoala Asia to face significant competitive and regulatory challenges.
There can be no assurance that we will be able to acquire and retain merchants and partners on attractive terms or achieve profitable
scale in this segment.
| (13) | “Cross-Border Payments Market Size & Share Report, 2030”, Grand View Research, July 2025 |
Business
Strategy
Our
strategy is to build an integrated, technology-driven financial services platform that solves the structural barriers faced by (i) existing
FX/CFD and multi-asset brokerages and (ii) entrepreneurs who seek to launch new brokerage or proprietary trading businesses, while also
improving outcomes for end-traders.
Solving
Structural Problems for Existing Brokerages and New Entrants
We
believe the current market structure is unfavorable to both average traders and smaller or emerging brokerages. The “current system”
often features: (i) fragmented infrastructure from multiple vendors; (ii) slow and expensive client funding; (iii) opaque pricing and
execution; (iv) high fixed costs and regulatory complexity; and (v) concerns around the safety of client assets and regulatory oversight.
Entrepreneurs often never launch, and small brokerages rarely scale, due to the high cost of entry, technology barriers, liquidity and
counterparty risks, and uncertainty about regulatory and banking relationships.
Our
business strategy is to address these pain points by offering a full-stack solution that combines:
| ● | proprietary multi-asset trading technology; |
|
| ● | regulated brokerage and wealth management licenses in key jurisdictions; |
|
| ● | institutional liquidity and dealing capabilities; and |
|
| ● | emerging digital payment and funding rails. |
We
seek to provide both existing brokerages and new entrants with a “plug-and-play” way to access technology, licensing, and
liquidity that historically were available only to large institutions.
1.
Deliver a Plug-and-Play Brokerage Stack for Entrepreneurs and New Firms
A
core pillar of our strategy is to lower the cost, complexity, and time-to-market for entrepreneurs who want to start an FX/CFD brokerage,
prime-of-prime broker, or proprietary trading firm.
Through
FDCTech and our technology subsidiary, Alchemytech Ltd. (“ATECH”), we offer turnkey solutions such as Start-Your-Own Brokerage
(“SYOB”), Start-Your-Own Prime Brokerage (“SYOPB”), and FX/OTC liquidity solutions. These turnkey offerings are
built around our proprietary Condor suite, including:
Condor
Pro Multi-Asset Trading Platform, supporting FX, CFDs, equities, commodities, and digital assets across desktop, web, and mobile;
Condor
Risk Management Back Office, providing dealing desk tools, risk analytics, margin calls, alerts, and exposure monitoring; and
Condor
Back Office APIs to integrate third-party CRM and banking systems.
We
intend to position this stack as a “plug-and-play brokerage” for new entrants: entrepreneurs can leverage our technology,
connectivity, and, where appropriate, our group’s regulated entities, rather than assembling their own technology, liquidity, compliance,
and operational capabilities from scratch. Our goals for this segment include:
| ● | reducing the upfront capital expenditures and implementation risk for launching a brokerage or prop firm; |
|
| ● | shortening the timeline from concept to live trading; |
|
| ● | providing access to institutional-grade spreads and liquidity; |
|
| ● | embedding risk management and regulatory-compliant reporting into the platform from day one; and |
|
| ● | offering optional consulting, project management, and integration support for non-technology founders. |
There
can be no assurance that we will continue to attract new brokerage or prop firm clients at the pace we anticipate, or that these clients
will achieve or maintain profitability.
2.
Upgrade Existing Brokerages Through Technology, Liquidity, and Outsourcing
For
existing brokerages and financial institutions already operating in FX/CFD or multi-asset markets, our strategy is to serve as a technology
and liquidity partner that helps them modernize their infrastructure and scale efficiently.
In
our Technology & Software Development segment, we generate revenues by licensing trading platforms, back-office systems, pricing
engines, and integration technology to third-party brokers, prime brokers, prime-of-prime brokers, and banks. Through ATECH, we provide:
| ● | licensing of Condor trading and risk systems; |
|
| ● | custom software development for clients with unique requirements; and |
|
| ● | consulting services to design and implement end-to-end brokerage workflows. |
We
also intend to leverage our regulated brokerage entities—Alchemy Markets Ltd. (“AML”), Alchemy Prime Limited (“APL”),
and Alchemy International Ltd. (“AIL”)—to support existing brokerages with institutional liquidity, prime-of-prime
services, and white-label or “broker-under-our-umbrella” models, where permitted by local regulation.
For
existing brokers, our strategy focuses on:
| ● | replacing or complementing legacy trading and risk systems with modern, multi-asset platforms; |
|
| ● | consolidating multiple technology and liquidity vendors into a more integrated solution; |
|
| ● | offering back-office and risk tools that support regulatory reporting and client money controls; and |
|
| ● | allowing management teams to focus on distribution and customer relationships while we support underlying technology and infrastructure. |
3.
Leverage a Regulated Global Footprint to Provide Licensing and Regulatory “Umbrella” Options
We
are building a multi-jurisdictional regulatory footprint spanning wealth management (ADS in Australia), investment services and securities
dealing (AML in Malta, APL in the United Kingdom, AIL in Seychelles), and payment intermediary services (Xoala Asia in Mauritius).
Our
strategy is to use this footprint to help solve a core problem for both existing and aspiring brokerages: regulatory complexity and access
to reputable licenses. For appropriate counterparties and structures, we intend to:
| ● | offer “regulatory umbrella” arrangements where certain activities can be conducted under our licensed entities (subject to local law and regulator approval); |
|
| ● | use EU, UK, and other licenses to support cross-border offerings where permissible; and |
|
| ● | provide guidance, via our internal expertise and external advisors, on structuring businesses to meet local regulatory requirements. |
While
we do not present ourselves as a regulatory advisor or law firm, we believe our experience operating under ASIC, MFSA, FCA, FSA (Seychelles),
and FSC (Mauritius) regimes enables us to design platforms and workflows that embed regulatory expectations such as client categorization,
best execution, leverage limits, negative balance protection, and AML/CTF controls.
There
can be no assurance that regulators will approve new products, cross-border arrangements, or licensing structures we may pursue, or that
future regulatory changes will not increase our costs or restrict our business model.
4.
Integrate Payments and Faster Funding to Address Funding and Trust Gaps
A
recurring problem for both traders and brokerages is slow and expensive funding, including delays in deposits and withdrawals and difficulty
accessing banking relationships, particularly in high-risk or emerging markets.
Through
Xoala Asia, our Mauritian Payment Intermediary Services licensee, we intend to develop a payments and funding layer that can support:
| ● | faster onboarding and funding of client accounts through payment gateways and merchant acquisition; |
|
| ● | cross-border remittance capabilities to move funds between clients, brokers and liquidity providers; and |
|
| ● | improved reconciliation and reporting for brokerage and wealth management flows. |
Our
strategy is to make payments infrastructure a core part of the value proposition for both new and existing broker clients, addressing
funding frictions that can otherwise undermine trading activity and customer trust. Over time, we may integrate these payment capabilities
into the Condor Investing & Trading App and other front-end experiences, subject to regulatory constraints.
There
can be no assurance that we will successfully commercialize Xoala Asia’s payment services or obtain the necessary banking and card
network relationships to scale this business.
5.
Continue to Invest in Product Innovation for Traders and Advisors
While
our technology primarily targets B2B clients (brokers, financial institutions, advisors), our strategy also includes building front-end
products for traders and wealth management clients to support our B2B2C model.
Key
initiatives include:
Condor
Investing & Trading App – a simplified, mobile-first platform designed for investors with varied levels of experience to trade
stocks, ETFs, and other financial instruments. We expect this app to extend our technology directly to retail users and to be white-labelled
by partner brokers and advisers.
Enhanced
analytics, charting, and risk tools within Condor Pro, targeting professional day traders and active retail traders who demand institutional-grade
functionality but are served by smaller or mid-sized brokers.
Digital
tools for wealth advisers and accountants at ADS, including practice-management, reporting, and client-engagement features that can be
integrated with our trading platforms and, where appropriate, payment solutions.
By
improving the end-user experience for traders and wealth clients, we aim to make our platform more attractive to brokerages and advisers
seeking to differentiate themselves in the market.
6.
Pursue Disciplined Acquisitions to Expand Our Platform and Unlock Valuation Upside
Since
2021, we have executed an acquisition-driven growth strategy, adding ADS (wealth management), AML and APL (brokerage), and AIL (securities
dealer), and establishing ATECH and Xoala Asia.
Our
acquisition strategy is designed to:
| ● | expand our regulatory footprint (for example, electronic money institutions and additional securities dealer licenses); |
|
| ● | add complementary capabilities (such as market making, digital wallets, or prop trading communities) that can be integrated into our technology and payments stack; |
|
| ● | grow our revenue base and user count; and |
|
| ● | capture potential “valuation arbitrage” between private acquisition multiples and public trading multiples for comparable businesses. |
We
intend to remain disciplined in our M&A strategy, focusing on targets that (i) are accretive to earnings over time, (ii) offer strategic
synergies with our core platform, and (iii) can be integrated into our risk management and compliance framework. There can be no assurance
that we will complete any of our contemplated transactions on favorable terms or at all, or that any acquisitions we complete will achieve
the expected financial or strategic benefits.
7.
Build a Diversified, Global, Multi-Revenue-Stream Platform
Finally,
we aim to build a diversified global platform with multiple revenue streams—technology licensing, brokerage dealing and liquidity
fees, advisory and administration fees, and, over time, payments and digital asset-related revenues.
Between
2021 and 2024, we transformed from a niche technology licensing business into a broader fintech platform with revenues from technology,
wealth management, and brokerage trading, and we now serve more than 500,000 users worldwide. Our strategy is to continue to grow each
of our segments while maintaining balance so that we are not overly dependent on any single product or geography.
We
believe that, if executed successfully, this strategy will allow us to:
| ● | provide differentiated solutions to existing and aspiring brokerages; |
|
| ● | deepen relationships with entrepreneurs and institutional partners; |
|
| ● | improve outcomes for traders and wealth clients; and |
|
| ● | enhance long-term shareholder value. |
However,
our ability to execute on our business strategy is subject to numerous risks and uncertainties, including competitive pressures, regulatory
changes, integration risks related to acquisitions, our ability to raise capital, and broader macroeconomic conditions. See “Risk
Factors—Risks Related to Our Business and Industry” and “Risks Related to Our Growth Strategy.”
Governmental
Regulation
We
operate in multiple jurisdictions and are subject to extensive regulation of our brokerage, wealth management, and payments activities.
Our key regulated entities are AD Advisory Services Pty Ltd in Australia, Alchemy Markets Ltd in Malta, Alchemy Prime Limited in the
United Kingdom, Alchemy International Ltd in Seychelles, and Xoala Asia in Mauritius. Failure by any of these entities to comply with
applicable laws and regulations could result in fines, business restrictions, license conditions, or the suspension or loss of licenses.
Australia
– Wealth Management (AD Advisory Services Pty Ltd)
Our
wealth management business, AD Advisory Services Pty Ltd (“ADS”), is subject to enhanced regulatory scrutiny and is regulated
by multiple authorities in Australia. ADS holds an Australian Financial Services License (“AFSL”) issued under the Corporations
Act and is supervised by the Australian Securities and Investments Commission (“ASIC”). As an AFSL holder, ADS must provide
financial services efficiently, honestly, and fairly; maintain adequate governance, risk management, and compliance systems; monitor
its representatives; and meet disclosure and reporting obligations.
Where
ADS or its authorized representatives provide personal advice to retail clients, they are subject to Australia’s “best interests”
and related duties, as well as restrictions on conflicted remuneration. ADS must also maintain internal and external dispute resolution
arrangements and participate in the Australian Financial Complaints Authority scheme. In addition, ADS is subject to Australia’s
anti-money laundering and counter-terrorism financing regime and must maintain customer due diligence, transaction monitoring, and reporting
controls.
Malta
– Investment Services and CFDs (Alchemy Markets Ltd)
Alchemy
Markets Ltd (“AML”) is authorized and regulated by the Malta Financial Services Authority (“MFSA”) under the
Investment Services Act as an investment firm. Malta has implemented the European Union’s MiFID II/MiFIR framework, and AML is
subject to MFSA investment services rules and conduct of business requirements, including client classification, best execution, conflicts
of interest, safeguarding of client money and assets, capital adequacy, and systems and controls expectations.
AML
offers, among other products, contracts for difference (“CFDs”) and rolling spot FX. These products are subject to European
product intervention measures that impose leverage caps, margin close-out rules, negative balance protection, and restrictions on marketing
to retail clients. These rules limit the leverage that may be offered and require prominent risk warnings, affecting trading volumes,
revenues, and the cost of compliance.
United
Kingdom – Investment Services and CFDs (Alchemy Prime Limited)
Alchemy
Prime Limited (“APL”) is incorporated in the United Kingdom and is authorized and regulated by the Financial Conduct Authority
(“FCA”) under the Financial Services and Markets Act. APL is subject to the FCA Handbook, including organizational and systems
and controls requirements, and the Conduct of Business Sourcebook, which sets out detailed rules on client communications, best execution,
product governance, client money, conflicts of interest, and financial promotions.
The
FCA has adopted permanent product intervention rules for CFDs and similar products sold to retail clients, including leverage limits,
margin close-out at a percentage of required margin, negative balance protection, and restrictions on incentives. APL is also subject
to the FCA’s Consumer Duty, which requires firms to deliver good outcomes for retail customers and to demonstrate that products,
pricing, and customer support are consistent with that standard. Supervisory focus on CFD providers has increased in recent years.
Seychelles
– Securities Dealing (Alchemy International Ltd)
Alchemy
International Ltd (“AIL”) is regulated by the Financial Services Authority (“FSA”) in Seychelles as a securities
dealer under the Securities Act and related regulations. AIL’s license permits it to deal in securities (including derivatives)
as principal and agent, subject to license conditions and conduct of business rules.
AIL
must comply with minimum capital and financial reporting requirements, maintain appropriate governance and risk management systems, and
comply with conduct of business rules, including client asset protection and disclosure obligations. Regulatory reforms in Seychelles
have increased minimum capital requirements for securities dealers and introduced additional conduct requirements for leveraged and speculative
products. AIL is also subject to Seychelles’ anti-money laundering and counter-terrorist financing framework.
Mauritius
– Payment Intermediary Services (Xoala Asia)
Our
payments business, Xoala Asia (“Xoala”), is regulated by the Financial Services Commission of Mauritius (“FSC”)
under the Financial Services Act as a Payment Intermediary Services (“PIS”) provider. The PIS regime covers services such
as acquiring and executing payment transactions, acting as a payment gateway or merchant aggregator, and facilitating cross-border remittances,
generally for transactions conducted outside Mauritius.
As
a PIS licensee, Xoala must comply with FSC requirements regarding capital, liquidity, governance, outsourcing, and operational resilience.
It is also subject to Mauritius’ AML/CFT framework and FSC guidelines on customer due diligence, transaction monitoring, sanctions
screening, and suspicious transaction reporting. Xoala must implement robust technology, security, and fraud-prevention controls in its
payment systems.
Cross-Border
Activities, Group-Wide Compliance and U.S. Securities Law
Because
our brokerage and payments businesses serve clients across borders, we must also consider the rules of countries where clients are located,
including restrictions on cross-border marketing of leveraged products and local investor protection and product intervention measures.
All of our regulated entities are subject to anti-money laundering and counter-terrorist financing regimes that generally follow Financial
Action Task Force standards.
As
a U.S. public company, we are also subject to the U.S. federal securities laws, including the Securities Act of 1933 and the Securities
Exchange Act of 1934, and the rules and regulations of the Securities and Exchange Commission. These laws impose disclosure, reporting,
internal control, and other obligations on us at the parent-company level, separate from the regulatory regimes applicable to our operating
subsidiaries.
Recent
Developments
Recent
Corporate Actions
An
Information Statement was made available by the Board of Directors of FDCTech, Inc., a Delaware corporation (the “Company”),
to holders of record of the Company’s common stock at the close of business on September 4, 2025 (the “Record Date”).
The purpose of this Information Statement was to inform our stockholders of the following actions taken by written consent of the holders
of a majority of our voting stock, dated September 4, 2025:
On
September 4, 2025, our Board unanimously approved corporate actions to:
1.
To amend our certificate of incorporation, as amended (the “Certificate”), to increase the number of authorized shares of
common stock from 500,000,000 to 750,000,000 (the “Authorized Share Increase”), and the number of Preferred Stock from 10,000,000
shares to 15,000,000 shares (the “Authorized Share Increase”).
2.
To authorize our Board of Directors, in its discretion, to amend our articles of incorporation not later than June 30, 2026, to effect
a Reverse Stock Split of all outstanding shares of our common stock in a ratio of not less than 1 for 10 and not more than 1 for 100,
to be determined by the Board of Directors. The prospectus assumes a reverse split ratio of 1 for 100.
In
connection with the above corporate actions, on September 4, 2025, we obtained the written consent of a majority of the Company’s
voting power.
Amendment
to Series B Convertible Preferred Stock Conversion Terms
In
January 2026, we filed a Certificate of Amendment to the Certificate of Designation of our Series B Convertible Preferred Stock (the
“Series B Amendment”) with the Secretary of State of the State of Delaware. The original Certificate of Designation for the
Series B Convertible Preferred Stock, filed on December 4, 2023, designated 3,000,000 shares of our preferred stock, par value $0.0001
per share, as Series B Convertible Preferred Stock. The Series B Amendment did not change the number of authorized or issued shares of
Series B Convertible Preferred Stock or any of the other rights, preferences, or privileges of the Series B Convertible Preferred Stock,
except with respect to its conversion rights.
The
Series B Amendment deleted and replaced Section 4(a) (Conversion Right) in its entirety. As amended, each share of Series B Convertible
Preferred Stock is convertible, at the option of the holder and without payment of additional consideration, into shares of our Common
Stock at any time, at an initial conversion rate of 100 shares of Common Stock for each one share of Series B Convertible Preferred for
Stock, subject to adjustment as provided in the Certificate of Designation. In the event that we complete a public offering of $10,000,000
or more, which includes an uplisting of our Common Stock to The Nasdaq Stock Market or the New York Stock Exchange, the conversion rate
for the Series B Convertible Preferred Stock in connection with such qualifying public offering will be determined by our Board of Directors
within a range of between 100 and 10 shares of Common Stock for each one share of Series B Convertible Preferred Stock, subject to the
adjustment provisions in the Certificate of Designation. We anticipate the conversion ratio for the Series B Convertible Preferred Stock
to be 10 shares of Common Stock for 1 share of Series B Convertible Preferred Stock.
The
Series B Amendment was approved by our Board of Directors by unanimous written consent and by the written consent of the holders of at
least 51% of the stockholders required under Delaware General Corporation Law.
Acquisition
of Alchemy International Ltd. (“AIL”)
On
November 11, 2025, it announced it had finalized the acquisition of Alchemy International Ltd., a Seychelles-licensed securities dealer
regulated under license number SD136 by the Financial Services Authority (FSA). The change of control was approved on October 29, 2025,
by the FSA. Alchemy International becomes a key operational subsidiary within the Company’s expanding global architecture, enabling
the Company to serve a broader base of offshore brokerages, high-frequency traders, and institutional clients seeking regulated access
to foreign exchange and multi-asset markets.
Available
financial information: AIL reported audited IFRS revenue, net profit, and net assets of $3.74 million, $0.48 million, and $2.16 million
for the fiscal year ended December 31, 2024 (Revonti Limited, auditors).
Establishment
of Xoala Asia
On
November 6, 2025, Xoala Asia was granted a Payment Intermediary Services (“PIS”) license by the Financial Services Commission
of Mauritius (the “FSC”) (license no. GB25204956) pursuant to Section 14 of the Financial Services Act 2007 (Mauritius) and
the Financial Services Rules 2008. The PIS license authorizes Xoala Asia to operate as a payment intermediary in Mauritius and to build
out the following activities consistent with its business plan:
| ● | facilitate payment transactions between payers and recipients, including initiation, processing, and settlement; |
|
| ● | provide secure payment-gateway services for online and mobile card transactions; |
|
| ● | acquire merchants and enable acceptance and processing across retail, e-commerce, and other channels; |
|
| ● | facilitate cross-border payments and remittances for businesses and individuals; and |
|
| ● | process credit and debit card payments, managing the full transaction lifecycle from authorization through settlement. |
Management
is establishing the compliance, technology, and operational infrastructure required by the FSC. Key requirements include anti-money laundering
and counter-terrorist financing (AML/CFT) controls, safeguarding of client funds where applicable, operational resilience, data protection,
and regulatory reporting. The commencement of commercial operations depends on the successful onboarding of merchants and partners and
the Company’s continued compliance with FSC requirements.
Board
of Directors
Mitchell
M. Eaglstein and Imran Firoz have been Executive Directors of the Company since January 21, 2016.
On
September 30, 2022, the Company appointed Gope S. Kundnani as the Director of the Company.
At
present, the Company has four members of the Board of Directors. Mitchell M. Eaglstein is the acting Chairman of the Company. Mitchell
M. Eaglstein and Imran Firoz are the company’s executive directors and officers. Gope S. Kundnani is considered an executive director
by owning at least 10% of the Company’s stock. Jonathan Baumgart is an independent director under the NYSE and NASDAQ listing standards.
Ukraine-Russia
Conflict
The
geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia’s invasion of Ukraine. The war between the
two countries continues to evolve as military activity continues. The United States and certain European countries have imposed additional
sanctions on Russia and specific individuals. By the end of August 2022, the Company closed its technical support and development office
in Russia. We relocated our personnel to Turkey, which is currently considered a neutral zone. No individual associated with the Company
is banned or under the Special Designated Nationals (SDN) and Blocked Persons list. If the military activities worsen and expand in Europe,
we may relocate our office from Turkey to other neutral zones in Asia. If we cannot relocate our technical and development operations
to a safer zone, it may impact our software development capabilities and negatively impact the Company’s business plans.
As
of the date of this report, there has been no disruption in our operations.
U.S.-Iran
Military Conflict
On
February 28, 2026, the United States and Israel launched coordinated joint military strikes against Iran, targeting military, governmental,
and nuclear-related sites. Iran subsequently responded with missile and drone attacks targeting Israel, U.S. military bases in the region,
and Gulf state infrastructure, and has sought to restrict commercial shipping traffic through the Strait of Hormuz. As of the date of
this Annual Report on Form 10-K, the conflict has entered its fourth week. Statements by the U.S. administration have indicated that
a winding down of military operations is under consideration; however, the situation remains fluid and the ultimate scope, duration,
and resolution of the conflict are uncertain.
The
Company maintains a sales office in Tel Aviv, Israel. As of the date of this filing, the Tel Aviv office has not experienced any material
disruption to its operations as a direct result of the conflict, and the safety of the Company’s personnel located there has not
been compromised. The Company continues to actively monitor the situation and has contingency protocols in place for its personnel and
operations in the region.
The
conflict has contributed to significant volatility in global energy prices and financial markets. The Company’s operating subsidiaries
are located in the United Kingdom, Malta, Cyprus, Australia, Seychelles, and Mauritius, none of which are in the directly affected region.
However, the broader geopolitical instability and elevated market volatility arising from the conflict may affect client trading volumes,
foreign currency exchange rates, and the general business environment in which the Company operates. In particular, restrictions on shipping
through the Strait of Hormuz, if sustained, may further amplify energy price volatility and affect global market conditions relevant
to the Company’s brokerage businesses.
As
of the date of this Annual Report, the Company has not experienced any material disruption to its business operations as a direct result
of the conflict. Management is continuing to monitor the situation and its potential impact on the Company’s operations, liquidity,
and financial condition. This event is classified as a Type II non-recognized subsequent event in accordance with ASC 855-10, as it does
not relate to conditions that existed at the balance sheet date of December 31, 2025, and therefore does not result in an adjustment
to the amounts recognized in the consolidated financial statements.
Our
Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and is not required to provide the
information required under this Item.
| ITEM 1B. |
UNRESOLVED STAFF COMMENTS |
None.
Management and Strategy
The
Company has adopted a cybersecurity risk management framework designed to identify, assess,
and manage material risks arising from cybersecurity threats to its information systems,
client data, and financial technology infrastructure. Key elements of our framework include:
| ● | Threat identification and assessment. We conduct periodic assessments of our information systems to identify vulnerabilities, evaluate potential cybersecurity threats, and prioritize remediation efforts based on risk severity. These assessments incorporate threat intelligence from industry sources and regulatory guidance issued by the financial authorities that govern our subsidiaries, including the Malta Financial Services Authority (MFSA) and the UK Financial Conduct Authority (FCA). |
|
| ● | Technical safeguards. We employ a combination of industry-standard security technologies including network access controls, data encryption, multi-factor authentication, intrusion detection systems, and endpoint protection tools across our global operations. |
|
| ● | Incident response. We maintain written incident response procedures that establish protocols for detecting, containing, and remediating cybersecurity incidents, including escalation procedures to senior management and, where applicable, regulatory notification obligations. |
|
| ● | Employee training. We provide cybersecurity awareness training to employees and contractors with access to our information systems, with emphasis on phishing, social engineering, and data handling practices. |
|
| ● | Third-party risk management. We rely on certain service providers for technology infrastructure, cloud computing, and payment processing. We assess the cybersecurity practices of material vendors as part of our onboarding and ongoing monitoring processes; however, we cannot guarantee that third parties will maintain adequate safeguards at all times. |
|
| ● | Integration with enterprise risk management. Cybersecurity risk is considered as part of the Company’s overall enterprise risk management process. Material cybersecurity risks are reported to senior management and escalated to the Board of Directors as warranted. |
The
Company’s regulated subsidiaries are subject to cybersecurity and data protection requirements
under applicable financial services regulations, including requirements imposed by the MFSA,
FCA, and ASIC. Compliance with these frameworks is reviewed as part of each subsidiary’s
ongoing regulatory supervision.
At
December 31, 2025, we are not aware of any cybersecurity incidents that have materially affected, or are reasonably likely to materially
affect, our business, results of operations, or financial condition. We recognize, however, that the threat landscape is continuously
evolving, and there can be no assurance that our controls will prevent all future incidents. See “Item 1A — Risk Factors”
for a discussion of cybersecurity-related risks.
Board
Oversight. The
of Directors is responsible for overseeing the Company’s cybersecurity risk management.
Senior management provides the Board with periodic updates on the cybersecurity threat environment,
the status of the Company’s security posture, significant vulnerabilities or incidents,
regulatory developments, and the effectiveness of remediation efforts.
Board reviews and approves the Company’s overall risk management framework, within
which cybersecurity risk is addressed, and engages with management on cybersecurity matters
as circumstances warrant.
Management’s
Role. Primary
for cybersecurity risk management rests with the Company’s Chief Executive Officer, Mitchell M. Eaglstein, who also serves as the
Company’s principal technology and operations executive and Chief Financial Officer, Imran Firoz, who serves as the Company’s
principal finance and controller executive. Mr. Eaglstein and Mr. Firoz have over 20 years of experience each in financial technology
and SEC-reporting companies, with extensive involvement in information systems, regulatory compliance, and operational risk management.
Day-to-day cybersecurity activities are coordinated by our
technology team across our operating subsidiaries, with support from external IT security consultants where specialized expertise is
required. Management reports cybersecurity matters to the Board through regular updates and, for potentially material incidents, through
immediate escalation.
Current
Operating Leases
Irvine,
California, USA (Company’s Headquarters)
Effective
October 29, 2019, to the present, the Company leased office space at 200 Spectrum Center Drive, Suite 300, Irvine, CA 92618. As per the
Commitment Term of the lease (“Agreement”), this Agreement shall continue on a month-to-month basis (any term after the Commitment
Term, also known as “Renewal Term”). The Commitment Term and all subsequent Renewal Terms shall constitute the “Term.”
The Company may terminate this Agreement by delivering to the lessor Form (“Exit Form”) at least one (1) whole calendar month
before the month in which the Company intends to terminate this Agreement (“Termination Effective Month”). The Company is
entitled to use the office and conference space if needed. The new rent payment or membership fee for the Irvine Office is $95 per month,
compared to the previous rent payment or membership fee for the New York Office of $890 per month, which covers general and administrative
expenses. This agreement is classified as a service contract rather than a lease under ASC 842 – Leases, and payments are accounted for
as operating expenses rather than recognizing a Right-of-Use (ROU) asset or lease liability.
Brisbane,
Australia (ADS Office)
Effective
January 1, 2024, to the present, the Company has leased office space at Level 38, 71 Eagle Street, Brisbane City, QLD 4000, Australia.
This lease will continue on a month-to-month basis. ADS may terminate this Agreement by delivering to the lessor at least one (1) whole
calendar month before the month in which ADS intends to terminate the lease. ADS is entitled to use the office and conference space if
needed. The new rent payment or membership fee for the ADS Office is approximately $125 per month and is included as a general and administrative
expense. This agreement is classified as a service contract rather than a lease under ASC 842 – Leases, and payments are accounted for
as operating expenses rather than recognizing a Right-of-Use (ROU) asset or lease liability.
Limassol,
Cyprus Lease (Company’s Executive Rental)
From
February 2019 to July 2023, the Company leased office space in Limassol District, Cyprus, from an unrelated party for a year. The office’s
monthly rent payment is $1,750, which is included in the general and administrative expenses. From July 2023 to the present, the Company
has leased a larger office space in the Limassol District, Cyprus, from an unrelated party for a one-year term. The office’s monthly
rent payment is approximately $3,500, which is included in the general and administrative expenses. From July 2023 to the present, the
Company has leased office space for its Chief Executive Officer. The down payment for the lease was approximately $6,300. The lease is
for one year and is renewable two months prior to the term’s end in June 2025. This agreement is classified as a residential rental
contract rather than a commercial lease and does not create a Right-of-Use (ROU) asset under ASC 842.
Limassol,
Cyprus Lease, Europe (ATECH Office)
Effective
August 26, 2024, ATECH has entered into a Sublease Agreement for office premises located on the ground floor at 10A-10C Eleftheriou Venizelou
Street, Limassol, Cyprus. The sublease is between Aldeon Property Partners Ltd (the “Sublessor”) and Alchemytech Ltd (the
“Sublessee”), with FDCTech, Inc. acting as the Guarantor. The leased premises are designated strictly for office use, and
any other usage is explicitly prohibited under the terms of the agreement. The lease term is for twenty-four (24) months, commencing
on October 1, 2024, and expiring on September 30, 2026. The lease agreement includes an option to extend the tenancy for up to two additional
two-year terms. The rent is subject to a 5% increase for each renewal period. Under the agreement, the Sublessee is obligated to pay
a total rent of €192,000 over the lease term, payable in monthly installments of €8,000 (or approximately $8,600) plus VAT.
Under ASC 842 – Leases, this agreement qualifies as a lease, and the Company will recognize a Right-of-Use (ROU) asset and corresponding
lease liability on its financial statements.
St.
Julian, Malta (AML Office)
Effective
July 11, 2024, to the present, AML leased office space with Regus Malta at Portomaso Business Centre, Portomaso, St. Julian, PTM01, Malta.
As per the lease, this agreement shall continue on a month-to-month basis (any term after the term, also known as “Renewal Term”).
The term and all subsequent renewal terms shall constitute the “Term.” AML may terminate this agreement by delivering to
Regus Malta at least one (1) whole calendar month before the month in which AML intends to terminate this lease. AML is entitled to use
the office and conference space if needed. The rent payment or membership fee for the AML Office is €1,659 per month. This agreement
is classified as a service contract rather than a lease under ASC 842 – Leases, and payments are accounted for as operating expenses
rather than recognizing a Right-of-Use (ROU) asset or lease liability.
Tel
Aviv, Israel (AML Sales Office)
Effective
July 1, 2023, AML has entered into a service agreement with Mindspace Ltd. for the use of office space and related services at Menachem
Begin 11, Ramat Gan, Israel. The agreement provides access to designated office space, common areas, and various business services, including
internet connectivity, printing, and access to conference rooms. The agreement operates on a monthly, automatically renewing basis with
a total monthly fee of $4,500 (including VAT). Additionally, an advance deposit of $6,300 was paid as security for the Company’s
obligations under the agreement. Under the terms of the agreement, Mindspace retains full discretion over space allocation and may relocate
the Company to a different office within the premises, provided that it gives prior notice. AML does not have exclusive control over
a specific office unit, and Mindspace provides shared services across its facilities. The agreement does not create a lease under ASC
842 – Leases and is accounted for as a service contract. As a result, payments under this agreement are classified as operating
expenses rather than recognizing a Right-of-Use (ROU) asset or lease liability.
London,
United Kingdom (APL Office)
Effective
December 20, 2024, APL entered into a lease agreement for office space located on the fifth floor at 142 Central Street, Clerkenwell,
London, EC1V BAR. Agop Tanielian and Hourig Mercedes Tanielian hold the lease as landlords, and the Company, through its subsidiary Alchemy
Prime Limited, is the tenant. The lease has a fixed term of five years, commencing in 2024 and expiring in 2029, with an annual rent
of £112,500 (or $12,000 monthly), payable in quarterly installments. APL is also liable for service charges, insurance, rent, and
maintenance responsibilities as specified in the agreement. The lease includes an option to terminate (“Break Clause”) on
or after 2026, provided that a four-month written notice is given prior. Additionally, the agreement requires APL to restore the premises
upon termination, including the removal of any alterations or fixtures made during the lease term. Under ASC 842 – Leases, this agreement
qualifies as a lease, and the Company will recognize a Right-of-Use (ROU) asset and corresponding lease liability on its financial statements.
Rental
expenses are included in General and Administrative costs.
| ITEM 3. |
LEGAL PROCEEDINGS |
The
Company and its subsidiaries are involved in the following legal proceedings:
Asher
Alkoby, et al. v. FDCTech
This
action is pending in the London Circuit Commercial Court under Claim Number LM-2024-000330 as of December 9, 2024. The claimants are
Asher Alkoby and other former shareholders of Alchemy Markets Ltd. (“AML”), a Malta-incorporated broker that FDCTech purchased
in June 2023. Following completion of the acquisition, the Company discovered that in 2019, the target company had anti-money laundering
deficiencies and was fined by the Financial Intelligence Analysis Unit.
An
external audit also revealed that the previous shareholders had taken loans from the company that were never repaid, resulting in the
net capital of the company being lower than disclosed during negotiations. Based on these findings, FDCTech withheld the final payment
to the sellers.
The
claimants are seeking approximately $1.02 million in amounts they allege are owing under the Share Sale Agreement, which they are seeking
to rectify to make it legally enforceable. The Company has counterclaimed for a declaration that the Share Sale Agreement is ineffective
and unenforceable and seeks repayment of $915,000 paid to the sellers. On October 17, 2025, the Court granted the claimants permission
to amend their claim to include a third claimant. The Company has prepared an Amended Defense and Counterclaim through Counsel, which
was served May 9, 2025. A Costs and Case Management Conference took place on November 17, 2025, at which directions will be given to
the trial, which will take place in November 2026.
FDCTech,
Inc. v. Intelligenceline.com, Fintelegram.com, et al.
This
action is pending in the Superior Court of California, County of Orange. FDCTech alleges that the defendants, through their websites
Intelligenceline.com, Fintelegram.com, and Criticalintel.com, published false and defamatory statements accusing the Company of fraud,
illegal conduct, and regulatory violations. The Company claims these statements have caused significant reputational and financial harm,
including lost business opportunities. FDCTech further alleges that the defendants engaged in an extortion scheme by demanding payment
for the removal of defamatory content.
The
complaint asserts claims for defamation per se, defamation per quod, trade libel, and false light, seeking damages and injunctive relief.
The complaint was filed in 2025 but had not yet been served as of December 31, 2025. A hearing took place on December 15, 2025, at the
Company’s motion. Following the hearing, the court instructed FDCTech to conduct an investigation as to the beneficial owner of
Intelligenceline.com.
Alchemy
Markets Ltd. v. Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 104/2023)
This
appeal is pending before the Court of Appeal (Inferior Jurisdiction) in Malta. On September 23, 2023, the Financial Intelligence Analysis
Unit (FIAU) imposed an administrative penalty of €419,997 and a follow-up directive on Alchemy Markets Ltd. (formerly NSFX Limited),
a subsidiary of the Company, based on a compliance examination conducted between November 25, 2019, and December 5, 2019. The examination
occurred approximately four years prior to the decision and under a different ownership and control of the subsidiary.
The
Company filed this appeal on October 19, 2023, challenging the decision-making process that led to the imposition of the penalty as well
as the law on which it was based, asserting that the penalty is arbitrary and excessive, and claiming that certain aspects of the decision
are unfounded both by law and in fact. The Company seeks to overturn the administrative penalty and the follow-up directive imposed by
FIAU. The case is in the evidentiary production stage pertaining to the Company as appellant. On October 24, 2025, a hearing was held
for the Company to continue presenting evidence. The Court scheduled an additional hearing for the FIAU to cross-examine the Company’s
witnesses for February 2, 2026, to be heard before Madam Justice Rachel Montebello, following which the matter will be adjourned for
final legal submissions.
Alchemy
Markets Ltd. v. L-Avukat tal-Istat u Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 159/2024)
This
constitutional challenge is pending before the First Hall Civil Court (Constitutional Jurisdiction) in Malta and relates to the same
September 23, 2023, FIAU decision described above. The Company filed this application on April 2, 2024, challenging: (i) the composition
of the FIAU and its enabling law; (ii) the decision-making processes which allegedly breach the Company’s fundamental human right
to a fair hearing; and (iii) that given the penal nature of the penalty, in breach of the Constitution of Malta, the Company was not
adjudged by an independent court. The Company requests the Constitutional Court to set aside the FIAU decision in its entirety.
A
first procedural hearing took place on May 7, 2024, and the Company has brought its evidence in support of the claim. The First Hall
Civil Court (Constitutional Jurisdiction) has, in various instances, pronounced that administrative penalties being imposed by the FIAU
are more akin to a penal sanction and that, therefore, subject persons should be afforded the full rights afforded to an accused under
criminal law and has consistently quashed FIAU decisions on this basis. While these judgments are, in most part, subject to further appeal
before the Constitutional Court of Appeal and have, in two instances, been overturned by the Constitutional Court of Appeal, the Company
considers that the principles underpinning such previous judgments are applicable to the Company. The case remains pending as of January
21, 2026; the next hearing in the matter is set for January 28, 2026.
The
Company believes it has meritorious defenses and counterclaims in the above matters and intends to defend them vigorously. However, litigation
is inherently uncertain, and the Company cannot predict the outcome of these proceedings with certainty.
There
are no additional material pending legal or governmental proceedings other than ordinary routine litigation incidental to the business.
The Company or any of its subsidiaries is a party, or their property is the subject.
| ITEM 4. |
MINE SAFETY DISCLOSURES. |
Not
applicable.
PART
II
| ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market
Information
Effective
October 24, 2019, Financial Industry Regulatory Authority, Inc. (FINRA) pursuant to FINRA Rule 6432 and Rule 15c2-11 under the Securities
Exchange Act of 1934, determined that Glendale Securities, Inc. (“Glendale”) demonstrated compliance with FINRA Rule 6432,
and Glendale might initiate a priced quotation of the Company’s stock at $0.1500 Bid, $0.1600 Ask on OTC Link ATS for the Company
under the trading symbol – FDCT. OTC Bulletin Board and OTC Link quote our stock under FDCT. The OTC Bulletin Board differs from national
and regional stock exchanges in that it: (i) is not situated in a single location but operates through the communication of bids, offers,
and confirmations between broker-dealers and (ii) securities admitted to the quotation are offered by one or more broker-dealers rather
than the “specialist” common to stock exchanges.
Quarterly
Stock Performance:
Our
common stock is traded on the OTC Bulletin Board under the ticker symbol FDCT.
The
following table presents the high and low sale prices for our common stock for each quarter of the last fiscal year, as reported on the
OTC Bulletin Board:
| Fiscal | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||||||||||||||||
| High | Low | High | Low | High | Low | High | Low | |||||||||||||||||||||||||
| 2025 | $ | 0.160 | $ | 0.0011 | $ | 0.0623 | $ | 0.017 | $ | 0.115 | $ | 0.035 | $ | 0.080 | $ | 0.001 | ||||||||||||||||
| 2024 | $ | 0.035 | $ | 0.0106 | $ | 0.0274 | $ | 0.001 | $ | 0.014 | $ | 0.000 | $ | 0.010 | $ | 0.000 | ||||||||||||||||
Our
stock commenced trading in June 2020.
Holders
Colonial Stock Transfer, LLC, our transfer agent,
indicates that as of December 31, 2025, we had 199 record holders of our Common Stock.
As of June 30, 2026, we had 423,084,729 shares
of our Common Stock, 4,500,000 shares of Series A Preferred Stock, and 2,371,844 shares of Series B Preferred Stock, and issued and outstanding.
Holders of Series A Preferred Stock are entitled to fifty (50) non-cumulative votes per share on all matters presented to our stockholders
for action. Holders of Series A Preferred Stock have no right to convert into the Company’s common stock. The Series B Preferred
Stock is non-dilutive and is not subject to stock splits or any other adjustments to the Company’s common stock. Each share of
Series B Preferred Stock can be converted into 100 shares of the Company’s common stock at any time by the holder of such shares.
Series B Preferred Stock is entitled to one (1) vote per share on all matters presented to stockholders for action.
Dividends
The
Company did not declare any cash dividends for the December 31, 2025, fiscal year. The Company’s Board of Directors, composed of
Mitchell Eaglstein, Imran Firoz, Jonathan Baumgart, and Gope S. Kundnani, has determined that it does not anticipate declaring or distributing
cash dividends in the foreseeable future. The Board of Directors decides the declaration, payment, timing, and amount or number of future
dividends. The dividends will depend upon, among other things, the results of our operations, cash flows, financial condition, operating
and capital requirements, and other factors the Board of Directors considers relevant. There is no assurance that the Company will pay
any future dividends. If the Company decides to pay dividends, there is no assurance concerning dividends.
Securities
Authorized for Issuance under Equity Compensation Plans
An
Information Statement was made available by the Board of Directors of FDCTech, Inc., a Delaware corporation (the “Company”),
to holders of record of the Company’s common stock at the close of business on September 4, 2025 (the “Record Date”).
The purpose of this Information Statement was to inform our stockholders of the following actions taken by written consent of the holders
of a majority of our voting stock, dated September 4, 2025:
On
September 4, 2025, our Board unanimously approved corporate actions to:
1.
To amend our certificate of incorporation, as amended (the “Certificate”), to increase the number of authorized shares of
common stock from 500,000,000 to 750,000,000 (the “Authorized Share Increase”), and the number of Preferred Stock from 10,000,000
shares to 15,000,000 shares (the “Authorized Share Increase”).
2.
To authorize our Board of Directors, in its discretion, to amend our articles of incorporation not later than June 30, 2026, to effect
a Reverse Stock Split of all outstanding shares of our common stock in a ratio of not less than 1 for 10 and not more than 1 for 100,
to be determined by the Board of Directors. The prospectus assumes a reverse split ratio of 1 for 100.
In
connection with the above corporate actions, on September 4, 2025, we obtained the written consent of a majority of the Company’s
voting power.
Amendment
to Series B Convertible Preferred Stock Conversion Terms
In
January 2026, we filed a Certificate of Amendment to the Certificate of Designation of our Series B Convertible Preferred Stock (the
“Series B Amendment”) with the Secretary of State of the State of Delaware. The original Certificate of Designation for the
Series B Convertible Preferred Stock, filed on December 4, 2023, designated 3,000,000 shares of our preferred stock, par value $0.0001
per share, as Series B Convertible Preferred Stock. The Series B Amendment did not change the number of authorized or issued shares of
Series B Convertible Preferred Stock or any of the other rights, preferences, or privileges of the Series B Convertible Preferred Stock,
except with respect to its conversion rights.
The
Series B Amendment deleted and replaced Section 4(a) (Conversion Right) in its entirety. As amended, each share of Series B Convertible
Preferred Stock is convertible, at the option of the holder and without payment of additional consideration, into shares of our Common
Stock at any time, at an initial conversion rate of 100 shares of Common Stock for each one share of Series B Convertible Preferred for
Stock, subject to adjustment as provided in the Certificate of Designation. In the event that we complete a public offering of $10,000,000
or more, which includes an uplisting of our Common Stock to The Nasdaq Stock Market or the New York Stock Exchange, the conversion rate
for the Series B Convertible Preferred Stock in connection with such qualifying public offering will be determined by our Board of Directors
within a range of between 100 and 10 shares of Common Stock for each one share of Series B Convertible Preferred Stock, subject to the
adjustment provisions in the Certificate of Designation. We anticipate the conversion ratio for the Series B Convertible Preferred Stock
to be 10 shares of Common Stock for 1 share of Series B Convertible Preferred Stock.
The
Series B Amendment was approved by our Board of Directors by unanimous written consent and by the written consent of the holders of at
least 51% of the stockholders required under Delaware General Corporation Law.
On
March 12, 2024, the Company filed the Information Statement pursuant to Section 14C of the Securities Exchange Act of 1934 and informed
all holders of record on February 21, 2024 (the “Record Date”) of the common stock, $0.0001 par value per share (the “Common
Stock”), of the Company, in connection with the approval of the following actions taken by the Board of Directors of the Company
(the “Board”) and by written consent of the holders of a majority of the voting power of Company’s issued and outstanding
capital stock (the “Approving Stockholders”):
| 1. | To amend our certificate of incorporation, as amended (the “Certificate”), to increase the number of authorized shares of common stock from 500,000,000 to 1,000,000,000 (the “Authorized Share Increase”), |
|
| 2. | Authorize our Board of Directors to amend our articles of incorporation by June 30, 2024, to execute a Reverse Stock Split of all outstanding common stock shares in a ratio between 1 for 10 and 1 for 50, as determined by the Board. |
|
| 3. | To approve the Company’s 2023 Stock Incentive Plan (the “2023 Stock Incentive Plan”). |
On
February 21, 2024, our Board unanimously approved the Corporate Actions. In order to eliminate the costs and management time involved
in holding a special meeting and in order to effect the actions disclosed herein as quickly as possible in order to accomplish the purposes
of our Company, we chose to obtain the written consent of a majority of the Company’s voting power to approve the actions described
in this Information Statement in accordance with Sections 228 and 242 of the Delaware General Corporation Law (the “DGCL”)
and our bylaws. On February 21, 2024, the Approving Stockholders approved, by written consent, the Corporate Actions. The Approving Stockholders
(common stock only) own 280,102,413 shares, representing 72% of the total issued and outstanding voting power of the Company.
Since
the Board and a majority of shareholders have approved, all necessary corporate actions have been authorized. We expect that each of
the Corporate Actions will become effective on or about the 20th calendar day after the date on which this Information Statement and
the accompanying notice are mailed to our stockholders. Our Board can cancel one or both Corporate Actions for any reason before their
effective date.
At
December 31, 2025, the Company has a 2023 Stock Incentive Plan.
Recent
Sales of Unregistered Securities
All
of the Company’s recent sales of unregistered securities within the past three years were reported previously as required in Quarterly
Reports on Form 10-Q, 10-K, and reports on Form S1-A filed July 26, 2018.
| ITEM 6. |
SELECTED FINANCIAL DATA |
As
a smaller reporting company, we are not required to provide the information required by this item pursuant to Item 301(c) of Regulation
S-K.
| ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This
Annual Report Form 10-K contains forward-looking statements. Our actual results could differ materially from those set forth due to general
economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis
of our financial condition and results of operations should be read together with the audited financial statements and accompanying notes
and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable
Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.
Overview
FDCTech,
Inc. is a financial technology company that provides institutional liquidity, multi-asset trading solutions, wealth management services,
and proprietary trading technology to clients globally. We operate through four business segments: Margin Brokerage, Wealth Management,
Technology and Software Development, and Payment Intermediary Services. Our regulated subsidiaries hold licenses from the Malta Financial
Services Authority (MFSA), the UK Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), and
the Seychelles Financial Services Authority (FSA), among others.
Fiscal year 2025 represented a year
of substantial financial progress for the Company. Total revenues increased 29.8% to $34,959,399, driven by strong growth in
Technology & Software revenues and continued expansion of our Investment and Brokerage segment, including the contribution of
Alchemy International Ltd. (“AIL”), acquired in fiscal 2025. We achieved an operating income of $6,067,574 compared to
an operating loss of ($635,439) in fiscal 2024 (restated), reflecting improved operational leverage across all three
revenue-generating segments. Net income (loss) attributable to FDCTech shareholders was $5,797,589 in fiscal 2025, compared to a net
income of $247,544 in fiscal 2024 (restated). At December 31, 2025, the Company held total cash and cash equivalents of $17,669,749,
comprising $11,855,861 of unrestricted cash at financial institutions and $5,813,888 of segregated client funds. At December 31,
2024, the comparable balances were $25,376,957 in total, consisting of $13,850,168 of unrestricted cash and $11,526,789 of
segregated client funds. Of the year-end totals, $15,258,896 and $12,658,241 were held at various liquidity providers in 2025 and
2024, respectively. The working capital improved to $17,831,410 from $991,609 as of December 31, 2025, and 2024.
Restatement
of Fiscal Year 2024 Financial Statements
On
April 3, 2025, the Company’s Board of Directors dismissed Olayinka Oyebola & Co. (“Olayinka”) as its independent
registered public accounting firm, following Olayinka’s designation as a Prohibited Service Provider by OTC Markets Group. The
Company engaged LAO Professionals (PCAOB Firm ID: 7057) as its new independent auditor effective April 3, 2025.
As
part of the auditor transition, the fiscal year 2024 financial statements previously audited by Olayinka were reaudited by LAO Professionals.
The reaudit resulted in certain reclassifications and adjustments to the previously reported December 31, 2024, consolidated balance
sheet and related statements. All comparisons presented in this Item 7 between fiscal year 2025 and fiscal year 2024 are based on the
LAO-reaudited 2024 figures. Investors should not rely upon the financial statements as presented in the Company’s previously filed
Annual Report on Form 10-K for the year ended December 31, 2024 (filed March 3, 2025). See Note 4 — Restatement of Previously Issued
Financial Statements for further detail.
Results
of Operations
The
following table presents a summary of our consolidated results of operations for the fiscal years ended December 31, 2025, and December
31, 2024 (restated), together with the dollar and percentage change between periods.
|
Year Ended Dec 31, 2025 (Restated, Audited) |
Year Ended Dec 31, 2024 (Restated, Audited) |
Change ($) | Change (%) | |||||||||||||
| REVENUES | ||||||||||||||||
| Technology & software | $ | 5,099,187 | $ | 1,642,130 | $ | 3,457,057 | $ | 210.52 | % | |||||||
| Wealth management | 6,430,897 | 6,498,404 | (67,507 | ) | -1.04 | % | ||||||||||
| Brokerage | 23,429,315 | 18,803,184 | 4,626,131 | 24.60 | % | |||||||||||
| Total revenues | $ | 34,959,399 | $ | 26,943,718 | $ | 8,015,681 | $ | 29.75 | % | |||||||
| COST OF SALES | ||||||||||||||||
| Technology & software | $ | – | $ | 173,708 | $ | (173,708 | ) | $ | — | |||||||
| Wealth management | 5,755,675 | 5,925,652 | (169,977 | ) | -2.87 | % | ||||||||||
| Brokerage | 10,059,683 | 8,802,990 | 1,256,693 | 14.28 | % | |||||||||||
| Total cost of sales | 15,815,358 | 14,902,350 | 913,008 | 6.13 | % | |||||||||||
| Gross profit | 19,144,041 | 12,041,368 | 7,102,673 | 58.99 | % | |||||||||||
| Gross margin % | 54.76 | % | 44.70 | % | 10.10 | % | — | |||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and administrative | $ | 11,561,028 | $ | 11,023,841 | $ | 537,187 | $ | 4.87 | % | |||||||
| Sales and marketing | 1,336,685 | 1,466,616 | (129,931 | ) | -8.86 | % | ||||||||||
| Depreciation | 178,754 | 186,350 | (7,596 | ) | -4.08 | % | ||||||||||
| Total operating expenses | $ | 13,076,467 | $ | 12,676,807 | $ | 399,660 | $ | 3.15 | % | |||||||
| Operating income (loss) | $ | 6,067,574 | $ | (635,439 | ) | $ | 6,703,013 | $ | — | |||||||
| Operating margin % | 17.36 | % | -2.36 | % | — | — | ||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Other interest income (expense) | $ | (106,089 | ) | $ | (638,483 | ) | $ | 532,394 | $ | — | ||||||
| Other income (expense) | (132,507 | ) | 1,510,508 | (1,643,015 | ) | — | ||||||||||
| Total other income (expense) | $ | (238,596 | ) | $ | 872,025 | $ | (1,110,621 | ) | $ | — | ||||||
| Income (loss) before income taxes | $ | 5,828,978 | $ | 236,586 | $ | 5,592,392 | $ | — | ||||||||
| Provision for income taxes | – | – | – | — | ||||||||||||
| Net income (loss) | $ | 5,828,978 | $ | 236,586 | $ | 5,592,392 | $ | 2,363.79 | % | |||||||
| Net income (loss) attributable to FDCTech shareholders | $ | 5,797,589 | $ | 247,544 | $ | 5,550,045 | $ | 2,242.04 | % | |||||||
| EPS — basic and diluted | 0.01 | 0.00 | — | — | ||||||||||||
| Weighted avg shares outstanding | 423,084,729 | 390,377,880 | — | — | ||||||||||||
Revenues
Total revenues for the fiscal year
ended December 31, 2025, were $34,959,399, an increase of $8,015,681, or 29.8%, compared to $26,943,718 for the fiscal year ended
December 31, 2024 (restated). Revenue growth was driven primarily by the Investment and Brokerage and Technology & Software
segments and continued expansion of investment and brokerage trading volumes, partially offset by a slight decline in Wealth
Management revenues.
Technology
& Software
Technology
& software revenues for fiscal year 2025 were $5,099,187, an increase of $3,457,057, or 210.5%, compared to $1,642,130 in fiscal
year 2024. This segment encompasses licensing and subscription revenues from our proprietary Condor Trading Technology suite, including
the Condor Pro Multi-Asset Trading Platform and Condor Risk Management back-office system, as well as consulting and custom development
services delivered through Alchemytech Ltd. (ATECH) in Cyprus.
The increase reflects expanded adoption
of the Condor platform by third-party brokerages and new licensing contracts executed during fiscal year 2025. During fiscal years 2025
and 2024, the Company had approximately fourteen to seventeen active technology and software development customers. Cost of sales for
this segment was $nil in fiscal year 2025 (2024: $173,708), as development costs in 2025 were capitalized as software development costs.
Technology & Software revenues represented 14.6% of total revenues in fiscal year 2025 compared to 6.1% in fiscal year 2024.
Wealth
Management
Wealth
management revenues for fiscal year 2025 were $6,430,897, a decrease of $67,507, or 1.0%, compared to $6,498,404 in fiscal year 2024.
This segment is operated by AD Advisory Services Pty Ltd. (“ADS”), our 51%-owned Australian subsidiary regulated by ASIC,
which provides licensing solutions and financial planning services to a network of approximately 28 financial advisers with more than
$530 million in funds under advice.
The
slight revenue decline reflects normal variability in adviser activity levels and does not indicate a structural deterioration of the
segment. Cost of sales in this segment — principally payments to advisers, compliance costs, and platform fees — decreased
to $5,755,675 from $5,925,652, contributing to a segment gross margin improvement to 10.5% from 8.8% in fiscal year 2024. Wealth management
represented 18.4% of total revenues in fiscal year 2025 compared to 24.1% in fiscal year 2024, reflecting the relative growth of the
Investment and Brokerage and Technology segments.
Brokerage
Brokerage
revenues for fiscal year 2025 were $23,429,315, an increase of $4,626,131, or 24.6%, compared to $18,803,184 in fiscal year 2024. This
segment encompasses trading commissions, spreads, and related revenues from our regulated brokerage entities: Alchemy Markets Ltd. (Malta,
MFSA-regulated), Alchemy Prime Limited (United Kingdom, FCA-regulated), and Alchemy International Ltd. (Seychelles, FSA-regulated). The
latter was acquired in fiscal year 2025, contributing incremental brokerage revenues not present in the prior year.
Brokerage revenues represented 67.0%
of total revenues in fiscal year 2025 compared to 69.8% in fiscal year 2024. The segment gross margin decreased slightly to 42.9% from
46.8%, reflecting an increase in trading costs. Cost of sales in this segment principally consists of liquidity provider fees, introducing
broker commissions, and direct trading infrastructure costs.
Gross
Profit
Gross
profit for fiscal year 2025 was $19,144,041, an increase of $7,102,673, or 59.0%, from $12,041,368 in fiscal year 2024. Consolidated
gross margin expanded to 54.8% in fiscal year 2025 from 44.7% in fiscal year 2024, an improvement of approximately 1,010 basis
points. The margin expansion was driven by (i) elimination of technology cost of sales in fiscal year 2025 as development costs were
fully capitalized, (ii) improved scale in the Investment and Brokerage segment as revenues grew faster than variable costs, and
(iii) modest efficiency gains in the Wealth Management segment.
Operating
Expenses
Total operating expenses for fiscal year 2025 were $13,076,467, an increase
of $399,660, or 3.2%, compared to $12,676,807 in fiscal year 2024. Despite revenue growth of approximately 30%, total operating expenses
grew only 3.2%, demonstrating meaningful operating leverage. As a percentage of total revenues, operating expenses declined to 37.4% in
fiscal year 2025 from 47.0% in fiscal year 2024.
General and Administrative Expenses. General and administrative expenses (“G&A”) for fiscal year
2025 were $11,561,028, an increase of $537,187, or 4.9%, compared to $11,023,841 in fiscal year 2024 (restated). G&A as a percentage
of revenues declined to 33.1% from 40.9%, reflecting the benefit of operating leverage on a largely fixed cost base. G&A principally
includes employee compensation, professional fees (legal, accounting, and audit), regulatory compliance costs across our multiple licensed
subsidiaries, office rent and occupancy, and other corporate overhead. The modest absolute increase reflects incremental compliance and
operational costs associated with the addition of Alchemy International Ltd. and related regulatory obligations.
Sales
and Marketing Expenses. Sales and marketing expenses for fiscal year 2025 were $1,336,685, a decrease of $129,931, or 8.9%, compared
to $1,466,616 in fiscal year 2024. As a percentage of revenues, sales and marketing costs declined to 3.8% from 5.4%. These expenses
primarily consist of trade show participation, client entertainment, online marketing, public relations, and related activities across
our brokerage and technology businesses.
Depreciation. Depreciation expense
for fiscal year 2025 was $178,754, a decrease of $7,596, or 4.1%, compared to $186,350 in fiscal year 2024, primarily reflecting the
aging of the fixed asset base, partially offset by additions during the year.
Operating
Income (Loss)
Operating income for fiscal year 2025 was $6,067,574, compared to an operating
loss of ($635,439) in fiscal year 2024 (restated). The turnaround of $6,703,013 reflects the combination of significant revenue growth,
gross margin expansion, and strong operating leverage on the expense base. The operating margin improved to 17.4% in fiscal year 2025
from a negative of 3.1% in fiscal year 2024.
Other
Income (Expense)
Total other expense for fiscal year 2025 was $238,596, compared to other
income of $872,025 in fiscal year 2024. The change of ($1,110,621) is primarily attributable to two items:
Other interest income (expense). Net interest expense was $(106,089) in fiscal year 2025, compared to net
interest expense of $638,483 in fiscal year 2024. The improvement reflects significantly reduced reliance on interest-bearing debt and
improved cash management during fiscal year 2025.
Other income (expense). Other expense
was ($132,507) in fiscal year 2025, compared to other income of $1,510,508
in fiscal year 2024. Fiscal year 2024 included a significant one-time other income item that did not recur in fiscal year 2025. The fiscal
year 2025 amount reflects net foreign exchange transaction losses and other miscellaneous items arising from the Company’s multi-currency
operations.
Provision
for Income Taxes
The provision for income taxes was $nil for both
fiscal years 2025 and 2024. The Company’s U.S. parent entity has historically generated operating losses and maintains a full valuation
allowance against its domestic deferred tax assets. The Company’s foreign subsidiaries are subject to income taxes in their respective
jurisdictions; however, taxable income has been offset by available deductions or existing tax attributes. See Note 15 to the consolidated
financial statements for further discussion of income taxes.
Net income (loss) attributable to FDCTech
Shareholders
Net income (loss) attributable to FDCTech shareholders for fiscal year 2025
was $5,797,589, or $0.01 per basic and diluted share based on weighted average shares outstanding of 423,084,729, compared to net income
of $247,544, or $0.00 per share, in fiscal year 2024 (restated). The improvement reflects the factors described above: strong revenue
growth, gross margin expansion, operating leverage, and the absence of significant non-recurring expenses in fiscal year 2025.
The noncontrolling interest in fiscal year 2025 represents the 49% minority
interest held by third parties in AD Advisory Services Pty Ltd and 0.1% minority interest held by Gope Kundnani in Alchemy International
Limited. Net income (loss) attributable to noncontrolling interest was $31,389 in fiscal year 2025 (2024: net loss attributable to NCI
of $10,958). The noncontrolling interest in fiscal year 2024 represents the 49% minority interest held by third parties in AD Advisory
Services Pty Ltd.
Liquidity
and Capital Resources
Our primary sources of liquidity are cash generated from operations,
proceeds from financing activities, including related party advances and equity issuances, and cash held at our regulated brokerage subsidiaries.
At December 31, 2025, we held total cash and cash equivalents of $17,669,749, consisting of $11,855,861 of unrestricted cash and $5,813,888
of segregated client funds, of which $15,258,896 in aggregate was held at liquidity providers. We have a positive working capital of $17,831,410,
and total stockholders’ equity of $22,657,965 attributable to FDCTech, Inc. stockholders (plus $33,323 noncontrolling interest).
We believe our current liquidity position is sufficient to fund our operating and capital requirements for at least twelve months from
the date of this Annual Report.
While the Company achieved profitability in fiscal
year 2025, we note that operating cash flows were negative $41.0 million due to a substantial increase in related party receivables of
approximately $38,407,601, which represents intercompany funding arrangements expected to be settled during fiscal year 2026. Excluding
this item, adjusted operating cash generation reflects the improved profitability of the business. Management continues to monitor working
capital carefully, given the scale of related party balances.
Cash
Flows
The
following table summarizes our cash flows for the fiscal years ended December 31, 2025, and December 31, 2024 (restated):
|
Year Ended Dec 31, 2025 (Restated, Audited) |
Year Ended Dec 31, 2024 (Restated, Audited) |
|||||||
| Net cash provided (used) in operating activities | $ | (40,918,408 | ) | (13,632,376 | ) | |||
| Net cash provided (used) by investing activities | 11,670,570 | 742,741 | ||||||
| Net cash provided (used) by financing activities | 21,171,592 | 7,248,140 | ||||||
| Effect of exchange rate | 369,038 | (298,009 | ) | |||||
| Net increase (decrease) in cash | $ | (7,707,208 | ) | (5,939,504 | ) | |||
| Cash, cash equivalents, and restricted cash at beginning of the period | 25,376,957 | 31,316,461 | ||||||
| Cash, cash equivalents, and restricted cash at end of the period | $ | 17,669,749 | 25,376,957 | |||||
Operating
Activities
Net cash used in operating activities was ($40,918,408) in fiscal year
2025, versus net cash used of $13,632,376 in fiscal year 2024. Despite net income (including noncontrolling interest) of $5,828,978, operating
cash flow was driven negative by a $38,407,601 increase in related party receivables — advances to affiliated entities under the
Company’s intercompany funding structure — which is expected to be substantially settled in fiscal year 2026.
Other notable working capital movements in fiscal
year 2025 included a $3,195,117 decrease in other current liabilities, partially offset by a $1,793,304 recovery of accrued income. Depreciation
of $178,754 was the principal non-cash item. No cash was paid for interest or income taxes in either year.
The prior-year $13,632,376 operating cash outflow primarily reflected
a $18,693,481 decrease in client funds payables (liabilities).
Investing
Activities
Net cash provided by investing activities was $11,670,570 in fiscal
year 2025, compared to $742,741 in fiscal year 2024. Fiscal year 2025 activity primarily reflected $8,933,118 recognized on the consolidation
of Alchemy International Limited and $1,054,389 of paid-in-capital changes attributable to common-control transactions, together with
a $2,000,000 credit on the business acquisition seller’s note, partially offset by $316,937 of capitalized software development
costs.
Fiscal year 2024 activity was driven by $818,507 of paid-in-capital
changes attributable to common-control transactions, partially offset by $75,766 of capitalized software development costs.
Financing
Activities
Net cash provided by financing activities was $21,171,592 in fiscal
year 2025, compared to $7,248,140 in fiscal year 2024. The fiscal year 2025 amount primarily comprised related party advances of $21,204,630,
partially offset by a net change in noncontrolling interest of ($31,389) and repayments on the line of credit ($3,985), the PPP advance
($5,661), and the SBA loan ($8,506).
Fiscal year 2024 financing activity consisted
primarily of related party advances of $7,199,501, net borrowings on the line of credit of $54,595, and common stock issued for cash
of $20,000, partially offset by noncontrolling interest distributions of ($22,118), PPP repayments of ($14,991), and SBA loan repayments
of ($8,505).
Sources
of Liquidity
Cash and Cash Equivalents (including client
funds). At December 31, 2025, we held total cash and cash equivalents of $17,669,749, consisting of $11,855,861 of
unrestricted cash and $5,813,888 of segregated client funds, of which $15,258,896 in aggregate was held at liquidity
providers. The unrestricted cash balance is held in operating accounts of our subsidiaries across multiple jurisdictions. The segregated
client funds, maintained at our regulated brokerage entities, are subject to regulatory minimum requirements and are not freely available
for general corporate purposes.
Related Party Receivables and Advances. At
December 31, 2025, related party receivables totaled $40,090,051, representing amounts due from affiliated entities and related parties
under intercompany funding arrangements. These are expected to be settled in the ordinary course of business during fiscal year 2026.
Related party advances payable of $29,197,470 represent amounts received from related parties to support the Company’s operations,
and these are expected to be repaid or converted during fiscal year 2026. The net related party position (receivable less payable) was
approximately $10,892,581 as of December 31, 2025.
Client Funds. Our regulated brokerage
subsidiaries hold client funds of $5,813,888 as of December 31, 2025 (2024: $11,526,789). These amounts are maintained in segregated
client accounts pursuant to applicable regulatory requirements and are not available for general corporate purposes. Client funds are
recognized as both an asset (segregated cash) and a corresponding liability in our consolidated balance sheet.
Lines of Credit and Debt. At December
31, 2025, our total outstanding debt obligations were approximately $2,567,030, consisting primarily of a business acquisition loan of
$2,350,000, a line of credit balance of $111,352, and an SBA Economic Injury Disaster Loan of $105,678 (non-current). The SBA loan bears
interest at 3.75% per annum.
Regulatory
Capital Requirements
Our
regulated subsidiaries are subject to minimum capital requirements imposed by their respective regulatory authorities. Alchemy Markets
Ltd. (MFSA, Malta) and Alchemy Prime Limited (FCA, United Kingdom) are subject to European Union and UK capital adequacy requirements
applicable to investment firms. Alchemy International Ltd. is subject to capital requirements under the laws of Seychelles. AD Advisory
Services Pty Ltd. is subject to ASIC’s financial requirements for Australian financial services licensees. At December 31, 2025,
management believes that all regulated subsidiaries were in compliance with their respective minimum regulatory capital requirements.
Regulatory capital requirements may limit the ability of subsidiaries to distribute cash upstream to the parent company.
Working
Capital
At December 31, 2025, working capital was
$17,831,410, compared to working capital of $991,609 as of December 31, 2024 (restated). The improvement of approximately
$16,839,801 reflects primarily the growth in the related party receivable (classified as current), which increased by approximately
$38,407,601, comprising primarily AIL’s current account receivable from Alchemy Capital Markets Ltd. (ACM) and related
affiliates, which is partially offset by an increase in related party advances payable (net) of approximately $21,204,630,
primarily owed to Alchemy DMCC, a Kundnani-affiliated entity. Excluding related party receivables and advances, the
Company’s underlying working capital remains modestly positive.
Contractual
Obligations and Commitments
Our
principal contractual obligations as of December 31, 2025, consist of operating lease commitments, amounts outstanding under government-assistance
loan programs, and the business acquisition loan. We have no material off-balance sheet arrangements.
Operating
Leases. We lease office space for our corporate headquarters in Irvine, California,
and for our subsidiary offices in Malta, the United Kingdom, Australia, Cyprus, and Seychelles. At December 31, 2025, right-of-use assets
were $811,038, current operating lease liabilities were $165,692, and non-current operating lease liabilities were $364,655. The weighted-average
remaining lease term for operating leases was approximately 1.1 years, and the weighted-average discount rate was approximately 5.5%.
SBA
Loan. We have an outstanding Economic Injury Disaster Loan from the U.S. Small Business Administration with a non-current balance
of $105,678 as of December 31, 2025. The loan bears interest at 3.75% per annum with monthly principal and interest payments.
Business
Acquisition Loan. We have a business acquisition loan with a current balance of $2,350,000 as of December 31, 2025, an increase of
$2,000,000 from the prior year’s balance of $350,000, reflecting additional amounts drawn to fund the acquisition of Alchemy International
Ltd. during fiscal year 2025.
Future
Capital Requirements
Our
future capital requirements will depend on a number of factors, including the growth rate of our revenue, our technology development
investments, regulatory capital requirements at our subsidiaries, the timing and extent of any strategic acquisitions, and general economic
and market conditions. We believe our existing cash, anticipated cash generation from operations, and available financing sources will
be adequate to fund our operations and planned capital expenditures for at least the next twelve months. If additional capital is required,
we may seek equity or debt financing; however, there can be no assurance that financing will be available on acceptable terms or at all.
Any equity financing may result in dilution to existing stockholders.
We
are also pursuing a potential listing of our common stock on a national securities exchange in connection with a proposed public offering
of common stock (see Note 18 — Subsequent Events). Proceeds from such an offering, if completed, would significantly enhance our
liquidity position and capital resources.
Off-Balance
Sheet Arrangements
At December 31, 2025, we did not have any relationships with unconsolidated organizations, special purpose entities, or other arrangements
that would constitute off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K that have or are reasonably likely
to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital
expenditures, or capital resources.
Critical
Accounting Policies and Estimates
The
preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from
those estimates. We consider the following policies to be critical because they involve the most significant judgments and estimates
used in the preparation of our financial statements.
Revenue
Recognition. We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when,
or as, control of promised goods or services is transferred to a customer in an amount that reflects the consideration we expect to receive.
For technology and software licensing, revenue is generally recognized over the contract term on a straight-line basis. For brokerage
commissions and spreads, revenue is recognized on a trade-date basis. For wealth management services, revenue is generally recognized
as services are rendered. Management exercises judgment in determining the appropriate contract term, transaction price, and timing of
revenue recognition for arrangements with variable consideration or multiple performance obligations.
Capitalized
Software Development Costs. We capitalize internal and external costs incurred during the application development stage of internal-use
software in accordance with ASC 350-40, Intangibles — Goodwill and Other — Internal-Use Software. Preliminary project stage
and post-implementation costs are expensed as incurred. Management exercises judgment in determining the appropriate stage of development
at which capitalization begins and ceases. Capitalized costs are amortized on a straight-line basis over the estimated useful life of
the software, which we have generally estimated to be three to five years. Impairment of capitalized software is assessed whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable.
Foreign
Currency Translation. The functional currency of each of our foreign subsidiaries is the respective local currency. Assets and liabilities
of foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while revenues and expenses
are translated at average exchange rates for the reporting period. Resulting translation adjustments are recorded as a component of accumulated
other comprehensive income (loss) in stockholders’ equity and are not included in determining net income. Transaction gains and
losses arising from transactions denominated in currencies other than the functional currency are recognized in other income (expense)
in our consolidated statements of operations.
Fair
Value of Financial Instruments. The Company’s brokerage subsidiaries carry trading positions at fair value, based on quoted
market prices (Level 1) or observable inputs (Level 2 in the fair value hierarchy). At December 31, 2025, the net fair value of trading
positions held by the firm was $1,183,873 (asset). Management exercises judgment in classifying assets and liabilities within the fair
value hierarchy and in determining whether observable inputs are available for valuation purposes.
Goodwill
and Intangible Assets. Acquired intangible assets are recognized at fair value at the acquisition date and amortized over their estimated
useful lives. Management exercises judgment in identifying and measuring intangible assets at acquisition, estimating their useful lives,
and assessing them for impairment. At December 31, 2025, acquired intangible assets, net, were $1,326,062. There were no impairment charges
recognized in fiscal year 2025.
Income
Taxes. We account for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of differences between the financial reporting and tax bases of assets and liabilities. We assess
the likelihood that deferred tax assets will be realized and establish valuation allowances when, in management’s judgment, it
is more likely than not that some or all of a deferred tax asset will not be realized. Our U.S. operations carry a full valuation allowance.
The assessment of valuation allowances requires significant judgment regarding expected future taxable income, tax planning strategies,
and the reversal of temporary differences.
Recently
Issued Accounting Standards
The
Company evaluates accounting standards issued by the Financial Accounting Standards Board (FASB) and the SEC on an ongoing basis. There
were no recently issued accounting standards that had or are expected to have a material impact on the Company’s consolidated financial
statements for fiscal year 2025. As an emerging growth company, the Company has elected to use the extended transition period provided
by the JOBS Act for complying with new or revised financial accounting standards.
JOBS
Act and Emerging Growth Company Status
We
are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”). As an emerging growth company, we are permitted to, and do, rely on exemptions
from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies, including
exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting
pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation in our
periodic reports.
Under
the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until those standards apply to private
companies. We have elected to avail ourselves of this extended transition period. As a result, our financial statements may not be comparable
to those of companies that comply with such new or revised accounting standards on a non-delayed basis.
We
will remain an emerging growth company until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of
the completion of our initial public offering; (ii) the last day of the fiscal year in which we have total annual gross revenue of at
least $1.235 billion; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year
period; and (iv) the last day of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million
as of the prior June 30.
| ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS. |
Not
Applicable.
| ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
All
financial statements required by this Item are presented beginning on Page F-20 and are incorporated herein by this reference.
| ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
(a)
Dismissal of Independent Registered Public Accounting Firm
On
April 3, 2025, the Board of Directors of FDCTech, Inc. (the “Company”) approved the dismissal of Olayinka Oyebola & Co.
(“Olayinka”), Lagos, Nigeria (PCAOB Firm ID: 5968), as the Company’s independent registered public accounting firm,
effective April 3, 2025.
Olayinka
was dismissed due to its designation as a Prohibited Service Provider by OTC Markets Group. Olayinka served as the Company’s independent
registered public accounting firm from July 2, 2024, to April 3, 2025, and audited the Company’s consolidated financial statements
for the fiscal years ended December 31, 2024 and December 31, 2023, and reviewed the Company’s quarterly reports on Form 10-Q filed
during that period.
During
the fiscal years ended December 31, 2025 and December 31, 2024, and through the date of Olayinka’s dismissal on April 3, 2025:
(i)
there were no disagreements with Olayinka on any matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which, if not resolved to the satisfaction of Olayinka, would have caused Olayinka to make reference to
the matter in its reports on the Company’s consolidated financial statements for such periods; and
(ii)
there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
The
Company provided Olayinka with a copy of the foregoing disclosures and requested that Olayinka furnish the Company with a letter addressed
to the Securities and Exchange Commission (the “SEC”) stating whether or not Olayinka agreed with such disclosures. Olayinka
provided a letter dated April 3, 2025, stating its agreement with such statements. A copy of Olayinka’s letter is filed as Exhibit
16.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2025, which is incorporated herein by reference.
(b)
Engagement of a New Independent Registered Public Accounting Firm
On
April 3, 2025, the Board of Directors approved the engagement of LAO Professionals (PCAOB Firm ID: 7057) as the Company’s new independent
registered public accounting firm, effective April 3, 2025. LAO Professionals is a member of the Public Company Accounting Oversight
Board (PCAOB) in the United States and has been engaged to audit the Company’s consolidated financial statements for the fiscal
year ended December 31, 2025, and to reaudit the Company’s consolidated financial statements for the fiscal year ended December
31, 2024.
During
the fiscal years ended December 31, 2025 and December 31, 2024, and through April 3, 2025, the date of the Board’s decision to
engage LAO Professionals:
(i)
the Company did not consult with LAO Professionals regarding the application of accounting principles to any specific transaction, either
completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements or
any financial statements; and
(ii)
there were no matters that were the subject of a disagreement or a reportable event as described in Items 304(a)(2)(i) and 304(a)(2)(ii)
of Regulation S-K.
(c)
Reaudit of Fiscal Year 2024 Financial Statements
As
a result of the change in independent registered public accounting firm described above, the Company’s consolidated financial statements
for the fiscal year ended December 31, 2024, which were previously audited by Olayinka and included in the Company’s Annual Report
on Form 10-K filed with the SEC on March 3, 2025, were reaudited by LAO Professionals in connection with the preparation of this Annual
Report. The audit opinion of Olayinka on December 31, 2024, on the consolidated financial statements is no longer valid and should not
be relied upon. The reaudit by LAO Professionals resulted in certain reclassifications and adjustments to the previously reported December
31, 2024, consolidated financial statements. The restated December 31, 2024, financial statements, as audited by LAO Professionals, are
included in Item 8 of this Annual Report. Investors are directed to Note 4 — Restatement of Previously Issued Financial Statements
for a description of the nature and effect of the restatement adjustments.
(d)
Form 8-K Disclosure
The
Company disclosed the change in its certifying accountant on a Current Report on Form 8-K filed with the SEC on April 4, 2025, under
Item 4.01 (Changes in Registrant’s Certifying Accountant). The Form 8-K, including Exhibit 16.1 (letter from Olayinka Oyebola &
Co. dated April 3, 2025), is available on the SEC’s website at www.sec.gov and is incorporated herein by reference.
| ITEM 9A. |
CONTROLS AND PROCEDURES. |
Evaluation
of Disclosure Controls and Procedures
Under
the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer (together,
the “Certifying Officers”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), as of December 31, 2025. Based on that evaluation, our Certifying Officers concluded that our disclosure controls and procedures
were not effective as of December 31, 2025, due to the material weaknesses in internal control over financial reporting described below.
Disclosure
controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including
our Certifying Officers, as appropriate, to allow timely decisions regarding required disclosure.
Management’s
Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f)
under the Exchange Act. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control —
Integrated Framework (2013 Framework).
Our
internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of our consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted
accounting principles (“GAAP”). Our internal control over financial reporting includes those policies and procedures that:
| (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; |
|
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
|
| (3) | provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements. |
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated
financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Identified
Material Weaknesses
Based
on management’s assessment, we determined that our internal control over financial reporting was not effective as of December 31,
2025. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there
is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected
on a timely basis. Management identified the following material weaknesses as of December 31, 2025:
| ● | Segregation of Duties. The Company lacks sufficient accounting personnel to achieve adequate segregation of duties across key financial reporting processes, including journal entry preparation and review, account reconciliation, and financial statement close procedures. This limitation increases the risk that errors or irregularities could occur without timely detection. |
|
| ● | Written Policies and Procedures. The Company does not have sufficient written accounting policies and procedures covering all significant areas of financial reporting, including information technology controls, period-end close, revenue recognition, and financial statement disclosure processes. |
|
| ● | Accounting Personnel and U.S. GAAP Expertise. The Company has limited accounting and financial reporting staff with sufficient depth of knowledge in U.S. GAAP as applied to multi-jurisdictional, multi-currency consolidations. This increases reliance on external consultants and the risk of misapplication of accounting standards. |
|
| ● |
Related |
Restatement
of Fiscal Year 2024 Financial Statements
As
disclosed in Item 9 of this Annual Report, the Company dismissed Olayinka Oyebola & Co. as its independent registered public accounting
firm on April 3, 2025, following Olayinka’s designation as a Prohibited Service Provider by OTC Markets Group, and engaged LAO
Professionals (PCAOB Firm ID: 7057) as its new independent auditor. As part of the auditor transition, the Company’s consolidated
financial statements for the fiscal year ended December 31, 2024 were reaudited by LAO Professionals, resulting in certain reclassifications
and adjustments to the previously reported financial statements. The requirement to reaudit the prior year financial statements is indicative
of a material weakness in the Company’s internal control environment, as it reflects limitations in the Company’s ability
to ensure the continued validity and reliability of its previously issued financial statements. This circumstance has been considered
in management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2025.
Remediation
Efforts
Management
has been implementing and continues to implement steps to remediate the material weaknesses identified above. During fiscal year 2025,
the Company took the following actions:
| ● | Engaged LAO Professionals as the Company’s new independent registered public accounting firm, replacing the former auditor that had been designated a Prohibited Service Provider, and conducted a reaudit of the fiscal year 2024 financial statements to restore the reliability of the Company’s historical financial reporting. |
|
| ● | Increased reliance on qualified external accounting consultants to support the period-end close and financial reporting process, including technical U.S. GAAP research and multi-jurisdictional consolidation review. |
|
| ● | Continued to identify and formalize certain accounting policies and procedures, with a focus on revenue recognition, related party transaction controls, and foreign currency translation. |
|
| ● | Engaged outside legal and compliance counsel to support regulatory filings and disclosure review processes across the Company’s multiple licensed subsidiaries. |
Notwithstanding
the foregoing remediation efforts, as of December 31, 2025, the material weaknesses described above had not been fully remediated. The
Company is continuing to take the following additional steps to address outstanding weaknesses:
| ● | Expanding the Company’s internal accounting team by recruiting qualified accounting professionals with U.S. GAAP and SEC reporting experience, with the goal of improving segregation of duties and reducing reliance on external consultants for routine functions. |
|
| ● | Developing and implementing a comprehensive accounting policies and procedures manual covering all significant financial reporting areas, including IT general controls, account reconciliation, and management review controls. |
|
| ● | Implementing enhanced controls and documentation requirements for related party transactions, including periodic board-level review and approval of significant related party balances. |
|
| ● | Evaluating the addition of one or more independent directors with financial reporting expertise to strengthen the oversight function of the Board of Directors. |
The
Company cannot assure that the foregoing remediation measures will be sufficient to fully remediate all of the material weaknesses identified
above, or that additional material weaknesses will not be identified in the future. Until fully remediated, the material weaknesses described
herein create an increased risk that a material misstatement of our consolidated financial statements could occur without being prevented
or detected on a timely basis.
This
Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting. We are not required to include such an attestation pursuant to Section 404(b) of the Sarbanes-Oxley Act of
2002 because we are a non-accelerated filer and an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the
“JOBS Act”).
Changes
in Internal Control Over Financial Reporting
During
the fiscal year ended December 31, 2025, the following changes in our internal control over financial reporting occurred that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting:
| ● | Auditor Transition. As described in Item 9 of this Annual Report, the Company dismissed Olayinka Oyebola & Co. and engaged LAO Professionals as its new independent registered public accounting firm in April 2025. The engagement of a new PCAOB-registered auditor and the associated reaudit of the fiscal year 2024 financial statements represented a material change in the Company’s financial reporting oversight environment during fiscal year 2025. |
|
| ● | Remediation Initiatives. As described above under “Remediation Efforts,” the Company initiated and continued to implement remediation measures during fiscal year 2025, including expanded use of external accounting consultants, enhanced review procedures for the period-end close, and improvements to related party transaction documentation and approval processes. These steps represent ongoing changes intended to strengthen the Company’s internal control environment. |
Other
than as described above, there were no changes in our internal control over financial reporting during the fiscal year ended December
31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| ITEM 9B. |
OTHER INFORMATION. |
PART
III.
| ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE. |
| Name | Age | Position | ||
| Mitch Eaglstein |
42 | President/CEO/Director | ||
| Imran Firoz |
53 | CFO/Secretary/Director | ||
| Brian Platt |
46 | CTO | ||
| Jonathan Baumgart |
42 | Director | ||
| Gope S. Kundnani |
68 | Director |
Directors
serve until the next annual meeting; their successors are elected and qualified. Officers are appointed to serve for one year until the
board of directors meets, following the stockholders’ annual meeting, and the directors’ successors are elected and qualified.
Mitchell
Eaglstein, Co-Founder, President, CEO, and Director
Mr.
Eaglstein, our Co-Founder, President, Chief Executive Officer, and Director, combines over nine (9) years of experience in financial
technology and FX brokerage senior management. Previously, he had been involved in companies in the financial services and technology
industries, holding positions including Chief Executive Officer, President, and Chief Operating Officer.
From
January 2016 to present, Mr. Eaglstein has served as the Founder, Chief Executive Officer, President, and Director of FDCTech, Inc.,
a financial technology company specializing in developing and delivering innovative software solutions and business services to the over-the-counter
(OTC) brokerage and financial services industries. In this role, Mr. Eaglstein is responsible for leading the development and execution
of the Company’s long-term strategy, primarily focusing on enhancing shareholder value. He oversees the Company’s infrastructure,
manages capital expenditure deployment, and approves budgets. From May 2024 to present, Mr. Eaglstein has also served as the Chief Executive
Officer and Chief Operating Officer of Alchemy Markets Ltd. (AML), the Company’s Malta-based subsidiary regulated by the Malta
Financial Services Authority (MFSA), where he oversees European operations.
Mr.
Eaglstein has experience managing FX brokerage and FinTech software companies at an executive level. Mr. Eaglstein has participated in
several panel discussions as a distinguished industry expert at various forex-related conferences and tradeshows.
We
believe Mr. Eaglstein is qualified to serve on our board of directors as a result of his experience founding and leading our Company
since 2016, his extensive background managing FX brokerage and FinTech software companies at the executive level, his deep knowledge
of the forex and financial technology industries, and his demonstrated expertise as a distinguished industry speaker at various forex-related
conferences and tradeshows.
Imran
Firoz, Co-Founder, CFO, and Director
Mr.
Firoz, our Co-Founder, Chief Financial Officer, Secretary, and Director, combines over twenty-four (24) years of experience in financial
services, technology, and risk management senior management. Previously, he had been involved in multiple companies in the financial
services, technology, and consulting industries, holding positions including Chief Financial Officer, Co-Founder, Director, and management
consultant.
From
January 2016 to present, Mr. Firoz has served as the Co-Founder, Chief Financial Officer, Secretary, and Director of FDCTech, Inc., a
financial technology company specializing in developing and delivering innovative software solutions and business services to the over-the-counter
(OTC) brokerage and financial services industries. In this role, Mr. Firoz is responsible for strategic planning and corporate development,
mergers and acquisitions (M&A), financial restructuring, and risk management. He has guided due diligence efforts, implemented financial
controls, practiced compliance guidelines, and planned disaster recovery strategies. From January 2019 to present, Mr. Firoz has owned
Spark Capital Investments, LLC, a management consulting firm that assists small-sized private and public companies. From July 2024 to
present, Mr. Firoz has served as the Co-Founder and Director of Boumarang Inc., a hydrogen-powered autonomous aerial and marine drone
company. From September 2025 to present, Mr. Firoz has served as the interim Chief Financial Officer of Eva Live, Inc., an AI-driven
ad-tech company.
Mr.
Firoz holds a Bachelor of Engineering (Chemical) from Aligarh University, India (July 1993) and an MBA from the Richard Ivey School of
Business, University of Western Ontario, Canada (April 2001). Mr. Firoz has been a Certified Financial Risk Manager (FRM) from the Global
Association of Risk Professionals (GARP), New Jersey, since January 2003.
We
believe Mr. Firoz is qualified to serve on our board of directors as a result of his experience in strategic planning, corporate development,
mergers and acquisitions, financial restructuring, and risk management, combined with his credentials as a Certified Financial Risk Manager
(FRM) from the Global Association of Risk Professionals, his MBA from the Richard Ivey School of Business, and his extensive experience
providing management consulting services to public and private companies through his ownership of Spark Capital Investments, LLC.
Brian
Platt, Chief Technology Officer
Mr.
Platt, our Chief Technology Officer, combines over ten (10) years of experience in forex and financial technology senior management.
His expertise includes advanced technical knowledge of databases, programming, product development lifecycles, and a clear understanding
of business needs. Mr. Platt combines his business and technological know-how to ensure quality products, client satisfaction, and optimization
of human resources.
From
May 2016 to present, Mr. Platt has served as the Chief Technology Officer of FDCTech, Inc., a financial technology company specializing
in developing and delivering innovative software solutions and business services to the over-the-counter (OTC) brokerage and financial
services industries. In this role, Mr. Platt manages complex technology and business operations.
Mr.
Platt holds a degree in Information Systems from Yeshiva University. He completed computer science training at New York University and
Oracle DBA training at Fairleigh Dickinson University.
Jonathan
Baumgart, Director
Mr.
Baumgart, an Independent Director, combines over twenty (20) years of experience in forex and financial services. Mr. Baumgart is considered
independent under listing standards.
From
June 2021 to present, Mr. Baumgart has served as a non-executive Independent Director of FDCTech, Inc., a financial technology company
specializing in developing and delivering innovative software solutions and business services to the over-the-counter (OTC) brokerage
and financial services industries. From May 2014 to present, Mr. Baumgart has served as the Founder and Chief Executive Officer of Atomiq
Consulting, a consulting firm specializing in the retail forex industry and the trading of other high-growth financial assets.
Mr.
Baumgart holds an undergraduate degree in International Affairs and Economics from the Whittemore School of Business and Economics, University
of New Hampshire, Durham (2004).
We
believe Mr. Baumgart is qualified to serve on our board of directors as a result of his experience founding and serving as Chief Executive
Officer of Atomiq Consulting since 2014, his specialized expertise in the retail forex industry and trading of high-growth financial
assets, and his educational background in International Affairs and Economics from the University of New Hampshire.
Gope
S. Kundnani, Director
Mr.
Kundnani, a Director, combines over twenty-six (26) years of experience in entrepreneurial and financial services senior management,
building successful businesses in the United States, the Middle East, and the United Kingdom. Previously, he had been involved in multiple
companies in the financial brokerage, payments, and manufacturing industries, holding positions including Founder, Director, Partner,
and Chief Executive Officer.
From
September 2022 to present, Mr. Kundnani has served as a Director of FDCTech, Inc., a financial technology company specializing in developing
and delivering innovative software solutions and business services to the over-the-counter (OTC) brokerage and financial services industries.
From May 2018 to present, Mr. Kundnani has served as the Founder and Director of Alchemy Prime Markets (operating through Alchemy Prime
Limited), a financial brokerage services company regulated by the Financial Conduct Authority (FCA) in the United Kingdom. From December
2018 to present, Mr. Kundnani has served as the Founder and Director of Blackthorn Finance Limited, an authorized payments financial
services company regulated by the FCA. From February 1999 to present, Mr. Kundnani has served as a Partner and Chief Executive Officer
of Flexo Pack, a polyethylene product manufacturer with a global customer base.
Mr.
Kundnani holds an undergraduate business degree from Mulund College of Commerce, Mumbai, India.
We
believe Mr. Kundnani is qualified to serve on our board of directors as a result of his experience as a seasoned entrepreneur with several
decades of experience building successful businesses across the United States, the Middle East, and the United Kingdom, including founding
and serving as Director of Alchemy Prime Markets, an FCA-regulated financial brokerage services company, and Blackthorn Finance Limited,
an FCA-regulated authorized payments financial services company, as well as his role as Partner and CEO of Flexo Pack, a global polyethylene
products manufacturer.
Family
Relationships
There
are no family relationships among any of our directors, director nominees, or executive officers.
Term
of Office
All
directors serve until the next annual meeting; their successors are elected and qualified. Officers are appointed to serve for one year
until the board of directors’ meeting, followed by the stockholders’ annual meeting, and until the directors’ successors
have been elected and qualified.
Director
of Independence
Our
board of directors is currently composed of four (4) members, of which one (1) director is independent.
Audit
Committee and Conflicts of Interest
Since
we do not have an audit or compensation committee comprised of independent directors, the functions that such committees would have performed
are performed by our Board of Directors. The Board of Directors has not established an audit committee, does not have an audit committee
financial expert, nor has the Board of Directors established a nominating committee. The Company currently lacks a formal audit committee,
is aware this does not meet Nasdaq listing standards, and is actively taking steps to remedy this prior to or in connection with the
uplisting, including the addition of independent directors with financial expertise. To date, such directors have been performing the
functions of such committees. Thus, there is a potential conflict of interest in that our four (4) directors and officers have the authority
to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions.
There
are no family relationships among our directors or officers other than as described above. We are unaware of any other conflicts of interest
with our executive officers or directors.
Involvement
in Certain Legal Proceedings
No
director, person nominated to become a director, executive officer, promoter, or control person of our Company has, during the last ten
(10) years, (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor
offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities
subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement
in any business activity, or finding any violation to such law, nor (iii) any bankruptcy petition been filed by or against the business
of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two (2) years prior
thereto.
Stockholder
Communications with the Board of Directors
We
have not implemented a formal policy or procedure by which our stockholders can communicate directly with our board of directors. Nevertheless,
every effort will be made to ensure that the board hears the views of stockholders and directors and that the appropriate responses are
provided to stockholders promptly. Our board of directors will continue to monitor whether it would be relevant to adopt such a process
during the upcoming year.
| ITEM 11. |
EXECUTIVE COMPENSATION |
Summary
Compensation Table
The
following table summarizes all compensation recorded by us in the past two fiscal years for:
| ● | our principal executive officer or other individual acting in a similar capacity during the fiscal year ended December 31, 2025, and December 31, 2024. |
2025
and 2024 Summary Executive Compensation Table
| Name and Principal Position | Year |
Salary(3) ($) |
Bonus ($) |
Stock ($) |
Option
|
Non-Equity ($) |
Nonqualified ($) |
All ($) |
Total ($) |
|||||||||||||||||||||||||
| Mitch Eaglstein, CEO (1) |
2025 | 180,000 | -0- | -0- | -0- | -0- | -0- | -0- | 180,000 | |||||||||||||||||||||||||
| 2024 | 180,000 | -0- | 211,500 | -0- | -0- | -0- | -0- | 391,500 | ||||||||||||||||||||||||||
| Imran Firoz, CFO (2) | 2025 | 180,000 | -0- | -0- | -0- | -0- | -0- | -0- | 180,000 | |||||||||||||||||||||||||
| 2024 | 180,000 | -0- | 211,500 | -0- | -0- | -0- | -0- | 391,500 | ||||||||||||||||||||||||||
| Brian Platt, CTO (3) | 2025 | 82,500 | -0- | -0- | -0- | -0- | -0- | -0- | 82,500 | |||||||||||||||||||||||||
| 2024 | 60,000 | -0- | -0- | -0- | -0- | -0- | -0- | 60,000 | ||||||||||||||||||||||||||
(1)
Appointed CEO, President, and Director on January 21, 2016. The Company issued 30,000,000 Common Stock on January 21, 2016, and
2,600,000 preferred stock on March 24, 2017, at par value as the founder in consideration of services rendered to the Company.
(2)
Appointed Chief Financial Officer, Secretary, and Director on January 21, 2016. The Company issued 5,310,000 Common Stocks on January
21, 2016, and 400,000 preferred stocks on March 24, 2017, at par value for services rendered to the Company.
(3)
On March 15, 2016, the Company issued 500,000 restricted common shares to Platt for services valued at $25,000.
The
Company gave all salary compensation to key executives as independent contractors, where Eaglstein, Firoz, and Platt commit one hundred
percent (100%) of their time to the Company. The Company has not formalized performance bonuses and other incentive plans. Each executive
is paid every month at the beginning of the month. From September 2018 to September 30, 2020, the Company is paying monthly compensation
of $5,000 to its CEO and CFO, respectively, with increases each succeeding year, should the agreement be approved annually. Effective
October 1, 2020, the Company will pay $12,000 monthly to its CEO and CFO. Effective January 1, 2023, the Company will pay $15,000 monthly
to its CEO and CFO.
Messrs.
Eaglstein, Firoz, and Platt are independent contractors performing as the CEO, CFO, CTO, and COO, respectively. The Company intends to
convert all such officers to employee status during the second quarter of 2026. The Company has not issued any bonuses or stock option
awards to its officers. The Company intends to provide these incentives to meet specific sales criteria, which will be reviewed quarterly
and annually.
On
December 12, 2022, the Board of Directors issued 10,000,000 Common Stocks valued at $83,000 each to Eaglstein and Firoz for services
rendered concerning the acquisition of AML Ltd and the integration of AD Advisory Services Pty Ltd.
On
January 4, 2024, the Board of Directors issued 150,000 Series B Convertible Preferred Stock valued at $211,500 each to Eaglstein and
Firoz for services rendered concerning the acquisition and integration of AML, APL, and ATECH.
Employment
Agreements
The
Company is not currently a party to any employment agreement and has no compensation agreement with any officer or director. The Company
plans to enter into employment agreements with its officers before the uplist.
Outstanding
Equity Awards at Fiscal Year-Ended December 31, 2024
We
have not granted any stock options to our executive officers since our incorporation.
Insider
Trading Policy
The
Company has
an insider trading policy that governs the purchase, sale,
and other dispositions of our securities that applies to the Company and our officers and directors, as well as our employees who have
regular access to material, nonpublic information about the Company in the normal course of their duties. We believe that our insider
trading policy is reasonably designed to promote compliance with insider trading laws, rules, and regulations, and listing standards
applicable to us. A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.
Director
Compensation
The
Company issued Jonathan Baumgart, non-executive director, 100,000 common stocks valued at $21,000 in June 2021 upon his appointment to
the Board. The Company issued Baumgart 500,000 common stocks valued at $15,000 in December 2021.
The
Company issued Gope S. Kundnani, director, 5,000,000 common stocks valued at $60,000 in September 2022 upon his appointment to the Board.
The Company has not issued any other compensation to Kundnani as of December 31, 2023.
On
January 4, 2024, the Board of Directors issued 50,000 Series B Preferred Stock valued at $70,500 to Kundnani for services rendered concerning
the acquisition and integration of AML, APL, and ATECH.
Employee
Benefit and Stock Plans
2023
Stock Incentive Plan
In
November 2023, our board of directors and, in February 2024, our stockholders approved the FDCTech, Inc. 2023 Stock Incentive Plan (the
“2023 Plan”). The 2023 Plan is designed to increase stockholder value and advance the interests of the Company by providing
equity-based incentives to attract, retain, and motivate employees, consultants, and directors of the Company.
Administration
The
2023 Plan is administered by our board of directors or a compensation committee of the board of directors (the “Committee”).
The Committee consists of not less than two directors, each of whom must be a “non-employee director” within the meaning
of Rule 16b-3 of the Securities Exchange Act of 1934 and an “outside director” within the meaning of Section 162(m) of the
Internal Revenue Code. The Committee has complete authority to award incentives under the 2023 Plan, interpret the Plan, and make any
other determinations it believes necessary and advisable for the proper administration of the Plan. The Committee’s decisions relating
to the 2023 Plan are final and conclusive on the Company and all participants.
Eligibility
Officers
of the Company, employees of the Company or its subsidiaries, members of the board of directors, and consultants or other independent
contractors who provide services to the Company or its subsidiaries are eligible to receive incentives under the 2023 Plan when designated
by the Committee. Participants may be designated individually or by groups or categories as the Committee deems appropriate. Participation
by officers of the Company or its subsidiaries and any performance objectives relating to such officers must be approved by the Committee.
Participation is entirely at the discretion of the Committee and is not automatically continued after an initial period of participation.
Vesting
Each
stock option granted under the 2023 Plan becomes exercisable at such time or times during its term as determined by the Committee at
the time of grant. The Committee has discretion to accelerate the exercisability of any stock option. In the case of restricted stock
awards, the restrictions imposed by the Committee may include prohibitions against sale, transfer, pledge, or other encumbrance of the
shares, with such prohibitions lapsing at such time or times as the Committee determines, whether in annual or more frequent installments,
at the time of the death, disability, or retirement of the holder, or otherwise. Stock appreciation rights become exercisable upon such
conditions as the stock option, if any, to which they relate is exercisable.
Shares
of Stock Available for Issuance
The
Company has reserved a total of 50,000,000 shares of its authorized common stock for issuance under the 2023 Plan. Shares of common stock
that are issued under the 2023 Plan or are subject to outstanding incentives will be applied to reduce the maximum number of shares remaining
available for issuance. Shares subject to a participant’s exercise of either an option or a stock appreciation right (but not both,
in the case of a tandem SAR) shall be counted only once. To the extent that a stock option or SAR granted under the 2023 Plan expires
or is terminated or canceled unexercised as to any shares of common stock, such shares may again be issued under the 2023 Plan. Similarly,
shares of restricted stock that are forfeited or reacquired by the Company pursuant to rights reserved upon issuance may again be issued
under the 2023 Plan.
The
authorized number of shares under the 2023 Plan is non-dilutive and will not be affected by reverse or forward stock splits, dividends,
or other distributions of the Company’s common stock.
Types
of Awards
The
2023 Plan authorizes the Committee to grant the following types of equity-based incentive awards:
Incentive
Stock Options and Non-Qualified Stock Options. Stock options granted under the 2023 Plan entitle the grantee, upon exercise, to purchase
a specified number of shares of common stock from the Company at a specified exercise price per share. The exercise price cannot be less
than the fair market value of the common stock on the date of grant (or 110% of fair market value for incentive stock options granted
to any employee who owns more than 10% of the combined voting power of the Company). No option may be exercised more than 10 years after
the date of grant (or five years for 10% stockholders receiving incentive stock options). Options may not be repriced without stockholder
approval.
Stock
Appreciation Rights (SARs). A SAR is a right to receive, without payment to the Company, a number of shares of common stock, cash,
or any combination thereof, the amount of which is determined based on the appreciation in the value of the shares subject to the SAR.
SARs may be granted in tandem with non-qualified stock options or as free-standing awards. The term of a SAR cannot exceed ten years
and one day from the date of grant. SARs may not be repriced without stockholder approval.
Stock
Awards and Restricted Stock. A stock award consists of the transfer by the Company to a participant of shares of common stock, without
other payment, as additional compensation for services. Restricted stock consists of shares of common stock sold or transferred to a
participant at a price determined by the Committee, subject to restrictions on their sale or other transfer. The Committee determines
the restrictions applicable to restricted stock, including prohibitions against transfer and requirements to forfeit shares upon termination
of employment.
Performance
Shares. Performance shares consist of awards that are paid in shares of common stock, subject to the achievement of performance objectives
for the Company or one of its operating units by the end of a specified period. If the performance objectives are achieved, each participant
will be paid in shares of common stock or cash. If such objectives are not met, each grant of performance shares may provide for lesser
payments in accordance with formulas established in the award.
Change
in Control
Upon
a Change in Control, any stock option or restricted stock award granted to any participant under the 2023 Plan that would have become
vested upon continued employment shall immediately vest in full and become exercisable. A “Change in Control” is generally
defined under the 2023 Plan to include: (i) the acquisition by any person or group of beneficial ownership of 33% or more of either the
outstanding shares of common stock or the combined voting power of the Company’s outstanding voting securities; (ii) the incumbent
board ceasing to constitute at least a majority of the board; or (iii) approval by stockholders of a reorganization, merger, consolidation,
liquidation, or sale of substantially all assets of the Company, unless the stockholders of the Company immediately prior to such transaction
continue to hold more than 50% of the combined voting power of the surviving entity.
In
the event of an acquisition of the Company through the sale of substantially all of the Company’s assets or through a merger, exchange,
reorganization, or liquidation, the Committee is authorized to take any action it deems equitable, including: (a) providing that all
outstanding vested options be exchanged for stock, securities, or assets that would have been paid to participants if their options had
been exercised immediately prior to the transaction; (b) providing that participants holding outstanding vested common stock-based incentives
receive cash, securities, or other property equal to the excess of fair market value over the exercise price; (c) continuing the Plan
with respect to incentives not cancelled and providing participants the right to earn their respective incentives with respect to the
equity of the successor entity; or (d) declaring that all unvested or restricted incentives shall be void and terminated, or accelerating
vesting.
Repricing
Under
the 2023 Plan, other than in connection with a change in the Company’s capitalization, stock options and SARs may not be repriced
without stockholder approval. This prohibition applies to both direct repricing (lowering the exercise price of an option or SAR) and
indirect repricing (canceling an outstanding option or SAR and granting a replacement option or SAR with a lower exercise price, or exchanging
an underwater option or SAR for cash or other awards).
Transferability
Incentive
stock options may not be transferred or exercised by another person except by will or by the laws of descent and distribution and must
be exercisable during the individual’s lifetime only by the individual. Non-qualified stock options may, in the sole discretion
of the Committee, be transferrable to permitted transferees, including the participant’s spouse, children, grandchildren, or parents
(collectively, “Family Members”), to trusts for the benefit of Family Members, to partnerships or limited liability companies
in which Family Members are the only partners or shareholders, or to entities exempt from federal income taxation pursuant to Section
501(c)(3) of the Internal Revenue Code.
Amendment
and Termination
The
board of directors may amend or discontinue the 2023 Plan at any time; however, no such amendment or discontinuance shall adversely change
or impair, without the consent of the recipient, an incentive previously granted. Further, no such amendment shall, without approval
of the stockholders: (a) increase the maximum number of shares of common stock which may be issued under the Plan; (b) change or expand
the types of incentives that may be granted; (c) change the class of persons eligible to receive incentives; or (d) materially increase
the benefits accruing to participants. The 2023 Plan will remain in effect until all incentives granted have either been satisfied by
the issuance of shares or payment of cash or have been terminated, and all restrictions on shares issued under the Plan have lapsed.
No incentives may be granted after the tenth anniversary of the date stockholders approved the Plan.
Federal
Income Tax Consequences
The
following is a general summary of the current U.S. federal income tax treatment of awards authorized to be granted under the 2023 Plan:
Incentive
Stock Options. A participant will not recognize income on the grant or exercise of an incentive stock option. However, the difference
between the exercise price and the fair market value of the common stock on the date of exercise is an adjustment item for purposes of
the alternative minimum tax. Generally, gain or loss from the sale or exchange of shares acquired on the exercise of an incentive stock
option will be treated as capital gain or loss if certain holding period requirements are satisfied.
Non-Qualified
Stock Options and SARs. A participant generally is not required to recognize income on the grant of a non-qualified stock option
or SAR. Instead, ordinary income generally is required to be recognized on the date the option or SAR is exercised. The amount of ordinary
income is equal to the excess of the fair market value of the shares on the exercise date over the exercise price (in the case of options)
or the amount of cash and/or fair market value of shares received (in the case of SARs).
Company
Deduction. The Company generally is not allowed a deduction in connection with the grant or exercise of an incentive stock option
(unless a disqualifying disposition occurs). In the case of non-qualified stock options, SARs, restricted stock, and performance shares,
the Company will generally be allowed a deduction in an amount equal to the amount of ordinary income recognized by a participant, subject
to certain income tax reporting requirements and the limitations of Section 162(m) of the Internal Revenue Code.
Plan
Benefits
The
terms and number of stock options or other awards to be granted in the future under the 2023 Plan are to be determined in the discretion
of the Committee. Since no determinations regarding specific future awards or grants have yet been made, the benefits or amounts that
will be received by or allocated to the Company’s executive officers, other eligible employees, non-employee directors, or consultants
in the future cannot be determined at this time. As of the date of this prospectus, we have not issued any shares under the 2023 Plan.
Compensation
Policies and Practices as They Relate to Risk Management
We
believe that the design and objectives of our compensation policies and practices for our employees, including our executive officers,
do not encourage excessive or unnecessary risk-taking that is reasonably likely to have a material adverse effect on the Company. Our
compensation policies and practices are designed to attract, retain, and motivate qualified employees while aligning their interests
with those of our stockholders and the long-term success of our business.
The
following elements of our compensation programs are designed to reduce the likelihood of excessive risk-taking:
Balanced
Compensation Structure. Our compensation programs include a mix of fixed base salary and variable compensation components, including
short-term cash incentives and long-term equity awards. This balanced approach helps ensure that employees are not overly incentivized
to pursue short-term results at the expense of long-term value creation.
Long-Term
Equity Incentives. A significant portion of our executive compensation is delivered through equity awards that vest over multi-year
periods. This design aligns the interests of our executives with those of our stockholders and encourages a focus on long-term Company
performance rather than short-term results. The use of time-based vesting and performance-based awards further discourages excessive
risk-taking by requiring sustained performance over time.
Board
and Committee Oversight. Our board of directors and compensation committee maintain oversight of our executive compensation programs
and have the discretion to adjust awards as appropriate based on company performance, market conditions, and individual performance.
This oversight provides a check on potential risk-taking behavior.
Prohibition
on Hedging and Pledging. Our insider trading policy prohibits our directors and executive officers from engaging in hedging transactions
with respect to the Company’s securities, including short sales, puts, calls, or other derivative transactions. This policy ensures
that our executives maintain meaningful stock ownership that aligns their interests with those of our stockholders.
Anti-Repricing
Provisions. The 2023 Plan prohibits the repricing of stock options and SARs without stockholder approval. This provision prevents
the Committee from reducing exercise prices to reward executives when the Company’s stock price declines, which helps ensure that
executives remain focused on creating long-term stockholder value.
Regulatory
Capital Considerations. Given the nature of our business as a financial services company with regulated subsidiaries in multiple
jurisdictions, we are subject to regulatory capital requirements that impose constraints on our risk-taking activities. Our compensation
practices are designed to complement these regulatory requirements and to encourage prudent risk management throughout the organization.
Based
on the foregoing, we have concluded that our compensation policies and practices are not reasonably likely to have a material adverse
effect on the Company.
We
attempt to make our compensation programs discretionary, balanced, and focused on the long term. We believe the goals and objectives
of our compensation programs reflect a balanced mix of quantitative and qualitative performance measures to avoid excessive weight on
a single performance measure. Our approach to compensation practices and policies applicable to employees and consultants is consistent
with that followed for its executives. Based on these factors, we believe that our compensation policies and practices do not create
risks that are reasonably likely to have a material adverse effect on us.
| ITEM 12: |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The
following table lists, as of December 31, 2025, the number of shares of common, Series A Preferred Stock, and Series B Preferred Stock
of our Company that are beneficially owned by (i) each person or entity is known to our Company to be the beneficial owner of more than
5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all sole officer and director as a group.
Information relating to beneficial ownership of the common stock by our principal shareholders and management is based upon each person’s
information using “beneficial ownership” concepts under the Securities and Exchange Commission rules. Under these rules,
a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote
or direct the voting of the security, or investment power, which consists of the power to vote or direct the voting of the security.
The person is also deemed to be a beneficial owner of any security and has a right to acquire beneficial ownership within sixty (60)
days. Under the Securities and Exchange Commission rules, more than one person may be deemed a beneficial owner of the same securities,
and a person may be deemed a beneficial owner of securities as to which they may not have any beneficial financial interest. Except as
noted below, each person has sole voting and investment power.
Common
Stock
The percentages below are calculated
based on 423,084,729 shares of our common stock issued and outstanding for the fiscal year ended December 31, 2025.
| Name and Address(1) |
Title of Class |
Number of Shares Beneficially Owned |
Percent of Class |
|||||||||
| Mitch Eaglstein | Common | 20,818,105 | 4.92 | % | ||||||||
| Imran Firoz | Common | 24,310,000 | 5.75 | % | ||||||||
| Brian Platt | Common | 1,000,000 | * | % | ||||||||
| Jonathan Baumgart | Common | 645,000 | * | % | ||||||||
| Gope S. Kundnani (2) | Common | 180,000,000 | 42.54 | % | ||||||||
| Robert J. Winters (3) | Common | 30,500,000 | 7.10 | % | ||||||||
| FRH Group Corporation (4) | Common | 26,372,413 | 6.23 | % | ||||||||
| Officers and Directors as a group (4 persons) | Common | 226,773,105 | 53.60 | % | ||||||||
*
Less than 1%
In
the fiscal year ended December 31, 2016, the Company collectively issued 30,000,000 and 5,310,000 common shares at par value to Mitchell
Eaglstein and Imran Firoz, respectively, as the founders, in consideration of services rendered to the Company. Further, the Company
agreed to issue 2,600,000, 400,000, and 1,000,000 shares of Preferred Stock to Mitchell Eaglstein, Imran Firoz, and FRH Group, respectively,
as the founders, in consideration of services rendered to the Company.
(1)
The addresses for all officers and directors are 200 Spectrum Center Drive, Suite 300, Irvine, CA 92618.
(2)
Gope S. Kundnani owns 180,000,000 shares of the Company’s common stock personally and through APSI Holdings Limited (formerly
known as Alchemy Prime Holdings Ltd.), located at 74 Back Church Lane, Unit 8, London, E11LX, UK.
(3) Robert J. Winters owns
30,500,000 in the Company’s common stock personally and resides in Kuala Lumpur, Malaysia.
(4)
On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group
Corporation. The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908 in return for issuing 12,569,080
shares of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares
to FRH Group Corporation located at 530 Technology Drive, Suite 100, Irvine, CA, also owned by Mr. Hong. Mr. Hong resides in Dubai, UAE.
Series
A Preferred Stock
The
percentages below are calculated based on 4,500,000 shares of our Series A Preferred Stock issued and outstanding for the fiscal year
ended December 31, 2025.
| Name and Address(1) |
Title Class |
Number Shares Beneficially Owned |
Percent Class |
|||||||
| Mitchell M. Eaglstein | Series A Preferred | 500,000 | 11.11 | % | ||||||
| Gope S. Kundnani (5) | Series A Preferred | 4,000,000 | 88.89 | % | ||||||
| Officers and Directors as a group (2 persons) | Series A Preferred | 4,500,000 | 100.00 | % | ||||||
(4)
Series A Preferred stock is entitled to fifty (50) non-cumulative votes per share on all matters presented to stockholders for
action. On December 12, 2016, the Board agreed to issue 2,600,000, 400,000, and 1,000,000 shares of Preferred Stock to Mitchell Eaglstein,
Imran Firoz, and Felix R. Hong, respectively, as the founders in consideration of services rendered to the Company. As of December 31,
2022, the Company had 4,000,000 preferred shares issued and outstanding.
(5)
In January 2023, Eaglstein and Firoz transferred 1,100,000 and 400,000 shares to Gope S. Kundnani, the Director of the Company.
As of September 30, 2023, the Company had 4,000,000 preferred shares issued and outstanding, with Eaglstein, Kundnani, and Hong holding
1,500,000, 1,500,000, and 1,000,000 shares, respectively.
On
November 30, 2023, the Company issued 2,500,000 Series A Preferred Stock to Kundnani, valued at $2,500,000. The Company will receive
$2,500,000 in direct investment from AHL (previously known as Alchemy Prime Holdings Ltd.) Shareholder for Series A Preferred, valued
at $1.00 per share.
On
January 30, 2024, the Company’s board of directors adopted and approved the rescission and cancellation of (i) 1,000,000 shares
of Series A Preferred Stock of the Company issued to Mitchell M. Eaglstein and (ii) 1,000,000 shares of Series A Preferred Stock of the
Company issued to Felix R Hong.
Immediately
prior to the closing of this offering, all 4,500,000 outstanding shares of Series A Preferred Stock will be retired and cancelled pursuant
to the voluntary surrender and cancellation by the holders thereof.
Upon
the retirement of all outstanding shares of Series A Preferred Stock:
●
No shares of Series A Preferred Stock will remain outstanding;
●
No shareholder will hold super voting rights with respect to any class or series of our capital stock;
●
Each share of Common Stock will be entitled to one vote per share on all matters submitted to a vote of stockholders;
●
The Company will file an Amended and Restated Certificate of Incorporation / a Certificate of Retirement with the Secretary of State
of the State of Delaware to eliminate the Series A Preferred Stock from our authorized capital / reflect the retirement of the Series
A Preferred Stock; and
●
The voting power of each share of Common Stock as a percentage of total voting power will increase proportionally and no longer be diluted
by the super-voting rights of the Series A Preferred Stock.
The
holders of Series A Preferred Stock have agreed to surrender their shares for cancellation without receiving any cash consideration in
connection with the retirement. The retirement of Series A Preferred Stock will not result in the issuance of any additional shares of
Common Stock.
Series
B Preferred Stock
The
percentages below are calculated based on 2,371,844 shares of our Series B Preferred Stock issued and outstanding for the fiscal year
ended December 31, 2025.
| Name and Address(1) |
Title Class |
Number Shares Beneficially Owned |
Percent Class |
|||||||
| APSI Holdings Limited (1) |
Series B Preferred | 1,800,000 | 75.90 | % | ||||||
| Mitchell M. Eaglstein, CEO, Director | Series B Preferred | 150,000 | 6.32 | % | ||||||
| Imran Firoz, CFO, Director | Series B Preferred | 150,000 | 6.32 | % | ||||||
| FRH Group Corporation (2) | Series B Preferred | 50,000 | 2.11 | % | ||||||
| Gope S. Kundnani (1), Director |
Series B Preferred | 191,844 | 8.09 | % | ||||||
| William B. Barnett (3) | Series B Preferred | 10,000 | 0.42 | % | ||||||
| Susan E. Eaglstein (4) | Series B Preferred | 10,000 | 0.42 | % | ||||||
| Nicky G. Kundnani (5) | Series B Preferred | 10,000 | 0.42 | % | ||||||
| Officers and Directors as a group (3 persons) | Series B Preferred | 2,291,844 | 96.63 | % | ||||||
(6)
The Series B Preferred Stock is non-dilutive and is not subject to stock splits or any other adjustments to the Company’s
common stock. Each share of Series B Preferred Stock can be converted into 100 shares of the Company’s common stock at any time
by the holder of such shares. Series B Preferred Stock is entitled to one (1) vote per share on all matters presented to stockholders
for action. As a result, 2,371,844 Series B Preferred Stock represents a 0.38% voting percentage on a fully diluted vote per share basis.
On
November 30, 2023, the Company issued 1,800,000 Series B Preferred Stock to Kundnani, valued at $2,538,000 for the purchase of 49.90%
of AML and 100% of APL.
On
January 4, 2024, the Company issued 150,000 Series B preferred stock to Mitchell M. Eaglstein, CEO and Director, for services valued
at $1.41 per share.
On
January 4, 2024, the Company issued 150,000 Series B preferred stock to Imran Firoz, CFO and Director, for services valued at $1.41 per
share.
On
January 4, 2024, the Company issued 50,000 Series B preferred stock to FRH Group for services valued at $1.41 per share.
On
January 4, 2024, the Company issued 10,000 Series B preferred stock to William B. Barnett, Esq, for services valued at $1.41 per share.
On
January 4, 2024, the Company issued 10,000 Series B preferred stock to Susan E. Eaglstein for services valued at $1.41 per share.
On
January 4, 2024, the Company issued 50,000 Series B preferred stock to Gope S. Kundnani for services valued at $1.41 per share.
On
January 30, 2024, the Company issued 141,844 Series B preferred stock to Gope S. Kundnani for cash valued at $1.41 per share.
On February 07, 2025, the Company issued 10,000 Series
B preferred stock to Nicky G. Kundnani for services valued at $1.41 per share.
Unless otherwise indicated below, the
address for each beneficial owner is c/o 200 Spectrum Center Drive, Suite 300, Irvine, CA 92618.
(1)
Gope S. Kundnani controls APSI Holdings Limited. Gope S. Kundnani and APSI Holdings Limited’s address is at 74 Back Church Lane,
Unit 8, London, E11LX, UK.
(2)
FRH Group is located at 530 Technology Drive, Suite 100, Irvine, CA.
(3)
William B. Barnet resides at 60 Kavenish Dr, Rancho Mirage, CA, 92770.
(4)
Susan E. Eaglstein Resides at 2661 Riverport Dr North, Jacksonville, Florida, 32223.
(5)
Nicky G. Kundnani resides at 9RINS Hendrikkade 132 E, Amsterdam, 1011, Netherlands.
Voting
Rights
Following
the retirement of all outstanding shares of Series A Preferred Stock immediately prior to the closing of this offering, holders of our
Common Stock will be entitled to one vote per share on all matters submitted to a vote of stockholders. We will not have any outstanding
shares of capital stock with super voting rights following the closing of this offering.
| ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
The
following is a description of transactions since January 1, 2022 to which we were a party in which (i) the amount involved exceeded or
will exceed the lesser of $120,000 or one percent (1%) of our average total assets at year-end for the last two completed fiscal years
and (ii) any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family
of, or person sharing the household with, any of the foregoing persons, who had or will have a direct or indirect material interest,
other than equity and other compensation, termination, change in control and other similar arrangements, which are described under “Executive
and Director Compensation.”
Between
February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder (“FRH
Group”). The Company executed Convertible Promissory Notes due between April 24, 2019, and June 30, 2019. The Notes are convertible
into Common Stock initially at $0.10 per share but may be discounted under certain circumstances; in no event will the conversion price
be less than $0.05 per share. The Notes carry an interest rate of 6% per annum, which is due and payable at maturity.
Between
March 15 and 21, 2017, subject to the terms and conditions of the Stock Purchase Agreement, the Company issued 1,000,000 shares to Susan
Eaglstein and 400,000 shares to Brent Eaglstein at $0.05 per share, a cumulative cash amount of $70,000. Ms. Eaglstein and Mr. Eaglstein
are the mother and brother of Mitchell Eaglstein, the Company’s CEO and director.
On
February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation.
The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908 in return for issuing 12,569,080 shares
of unregistered Common Stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH
Group Corporation, also owned by Mr. Hong.
In
September 2022, the Company issued 30 million Common Stock for $300,000 to Alchemy Prime Limited (APL) and appointed Gope S. Kundnani
as the director of the Company. As the director’s compensation, the Company issued 5,000,000 Common Stock, valued at $60,000. Mr.
Kundnani is the director and owner of APL.
In
January 2023, the Company sold 115,000,000 common shares to its director, Kundnani, for $550,000.
In
January 2023, Eaglstein and Firoz transferred 1,100,000 and 400,000 shares to Kundnani, the Director of the Company. As of September
30, 2023, the Company had 4,000,000 preferred shares issued and outstanding, with Eaglstein, Kundnani, and Hong holding 1,500,000, 1,500,000,
and 1,000,000 shares, respectively.
On
September 30, 2023, the Company signed the definitive agreement with Alchemy Group, where the Company acquired 100% of Alchemy Markets
DMCC (Alchemy UAE), 100% of APL, and 49.90% of AML. The Company terminated the acquisition of Alchemy UAE in October 2023.
On
November 30, 2023, the Company purchased 499 shares of Alchemy Markets Holdings Ltd (Alchemy BVI) from APSI Holdings Limited (APSI),
previously known as Alchemy Prime Holdings Ltd (APHL), in exchange for 833,621 Series B Convertible Preferred Stock. The Company did
not exchange cash in the transaction. The Company has issued the Series B Convertible Preferred Stock to APSI. Kundnani, a related party,
is the sole shareholder of APSI, a related party. As a result, the Company now owns one hundred percent (100.00%) of AML, an operating
entity of Alchemy BVI.
On
November 30, 2023, the Company purchased one hundred percent (100.00%) of all the issued and outstanding shares of APL, an FCA-regulated
brokerage, from APSI in exchange for 966,379 Series B Convertible Preferred Stock. The Company did not exchange cash in the transaction.
The Company has issued the Series B Convertible Preferred Stock APSI. Kundnani, a related party, is the sole shareholder of APSI.
Kundnani,
a related party, purchased 2,500,000 Series A Preferred stock of FDCTech for $2.5 million. FDCTech has issued the Series A Preferred
stock to Kundnani.
Kundnani,
a related party, purchased 50,000,000 Common stock of FDCTech for $5.5 million. FDCTech has issued the Common stock to Kundnani.
In
December 2023, Susan Eaglstein, mother of Mitchel Eaglstein, the Company’s CEO, provided $20,000 as a related party advance for
working capital. The Company has not formalized the agreement. As part of the consideration, the Company issued Ms. Eaglstein 10,000
Series B Convertible Preferred Shares in January 2024.
On
January 4, 2024, the Company issued 150,000 Series B Convertible Preferred Stock to Imran Firoz, CFO and Director, for services valued
at $1.41 per share.
On
January 4, 2024, the Company issued 50,000 Series B Convertible Preferred Stock to Gope S. Kundnani for services valued at $1.41 per
share.
On
January 4, 2024, the Company issued 150,000 Series B Convertible Preferred Stock to Mitchell M. Eaglstein, CEO and Director, for services
valued at $1.41 per share.
On
January 4, 2024, the Company issued 50,000 Series B Convertible Preferred Stock to FRH Group for services valued at $1.41 per share.
On
January 4, 2024, the Company issued 10,000 Series B Convertible Preferred Stock to William B. Barnett, Esq., for services valued at $1.41
per share.
On
January 4, 2024, the Company issued 10,000 Series B Convertible Preferred Stock to Susan E. Eaglstein for services valued at $1.41 per
share.
On
January 30, 2024, the Company’s board of directors adopted and approved the rescission and cancellation of (i) 1,000,000 shares
of Series A Preferred Stock of the Company issued to Mitchell M. Eaglstein and (ii) 1,000,000 shares of Series A Preferred Stock of the
Company issued to Felix R Hong.
On
February 7, 2025, the Company issued 10,000 Series B Convertible Preferred Stock to Nicky G. Kundnani for services valued at $1.41 per
share.
Eaglstein
and Kundnani hold 4,000,000 and 500,000 shares of our Series A Preferred Stock, representing 100.00% of all issued and outstanding Series
A Preferred Stock. Immediately prior to the closing of this offering, all 4,500,000 shares of Series A Preferred Stock held by the holders
will be retired and canceled. Holders of Series A Preferred Stock will not receive any cash consideration in connection with retirement.
| ITEM 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Background
— History of Independent Registered Public Accounting Firms
Given
the number of auditor changes the Company has undergone in recent years, the following background is provided for context. Prior to April
2023, BF Borgers CPA PC served as the Company’s independent registered public accounting firm and audited the Company’s consolidated
financial statements for the fiscal years ended December 31, 2021, and December 31, 2022. In May 2024, the Public Company Accounting
Oversight Board (PCAOB) permanently revoked BF Borgers’ registration and barred its principals following findings of securities
fraud. No fees were paid to BF Borgers in fiscal years 2025 or 2024; the Company paid $64,800 to BF Borgers in fiscal year 2023 for services
related to the fiscal year ended December 31, 2022, and 2021.
On
April 18, 2023, the Board of Directors engaged Bolko & Company, Boca Raton, Florida (“Bolko”) as the Company’s
independent registered public accounting firm. On March 4, 2024, the Board terminated its relationship with Bolko. The Company retained
Bolko for less than one year and did not file any Annual Reports on Form 10-K with the SEC during that period. There were no disagreements
with Bolko on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure during
the period of engagement. The Company paid $15,000 to Bolko in fiscal year 2023.
On
March 4, 2024, the Board engaged Fortune CPA Inc., Orange, California (“FCPA”) as the Company’s independent registered
public accounting firm. On July 2, 2024, the Board terminated its relationship with FCPA. The Company retained FCPA for less than one
year and did not file any Annual Reports on Form 10-K with the SEC during that period. There were no disagreements with FCPA on any matter
of accounting principles or practices, financial statement disclosure, or auditing scope or procedure during the period of engagement.
The Company paid $75,000 to FCPA in fiscal year 2024.
On July
2, 2024, the Board engaged Olayinka Oyebola & Co. (“Olayinka”), Lagos, Nigeria (PCAOB Firm ID: 5968), as the Company’s
independent registered public accounting firm. Olayinka audited the Company’s consolidated financial statements for the fiscal
years ended December 31, 2024, and December 31, 2023, and reviewed the Company’s quarterly reports on Form 10-Q filed during the
period of engagement. On April 3, 2025, the Board dismissed Olayinka following its designation as a Prohibited Service Provider by OTC
Markets Group. There were no disagreements with Olayinka on any matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure during the period of engagement. See Item 9 of this Annual Report for further details regarding the change
in independent registered public accounting firm.
On
April 3, 2025, the Board engaged LAO Professionals (PCAOB Firm ID: 7057) as the Company’s independent registered public accounting
firm, effective April 3, 2025. LAO Professionals is currently serving as the Company’s independent registered public accounting
firm and has audited the Company’s consolidated financial statements for the fiscal year ended December 31, 2025, and reaudited
the Company’s consolidated financial statements for the fiscal year ended December 31, 2024. The reaudited fiscal year 2024 financial
statements are included in Item 8 of this Annual Report.
Audit
Fees
For
the fiscal year ended December 31, 2025, the Company paid $55,000 to LAO Professionals for audit and quarterly review services, which
include the fiscal year 2025 annual audit, the reaudit of the fiscal year 2024 consolidated financial statements, and the review of interim
quarterly financial statements. In addition, the Company paid $53,750 to Olayinka Oyebola & Co. in fiscal year 2025, representing
the outstanding balance of fees owed for audit and quarterly review services rendered by Olayinka prior to its dismissal on April 3,
2025, including the completion of the fiscal year 2024 annual audit. Accordingly, total audit fees paid in fiscal year 2025 were $108,750.
For
the fiscal year ended December 31, 2024, the Company paid $139,750 to Olayinka Oyebola & Co. for the audit of the Company’s
annual consolidated financial statements for the fiscal years ended December 31, 2025, and December 31, 2024, and for the review of quarterly
reports on Form 10-Q. The Company also paid $75,000 to Fortune CPA Inc. in fiscal year 2024 for services rendered during the period of
FCPA’s engagement from March 4, 2024, to July 2, 2024. Accordingly, total audit fees paid in fiscal year 2024 were $214,750.
Audit-Related
Fees
The
Company did not incur any audit-related fees from LAO Professionals, Olayinka Oyebola & Co., or Fortune CPA Inc. in fiscal years
2025 or 2024 for assurance and related services reasonably related to the performance of the audit or review of the Company’s financial
statements, other than those disclosed above under the caption “Audit Fees.”
Tax
Fees
The
Company did not incur any fees from LAO Professionals, Olayinka Oyebola & Co., or Fortune CPA Inc. in fiscal years 2025 or 2024 for
professional services related to tax compliance, tax advice, or tax planning.
All
Other Fees
The
Company did not incur any other fees from LAO Professionals, Olayinka Oyebola & Co., or Fortune CPA Inc. in fiscal years 2025 or
2024 for any products or professional services not described under the captions above.
Board
of Directors Pre-Approval of Audit and Permissible Non-Audit Services
Our
Board of Directors is responsible for the appointment, compensation, and oversight of our independent registered public accounting firm.
Our Board of Directors’ policy is to pre-approve all audit and permitted non-audit services provided by our independent registered
public accounting firm prior to the commencement of any such engagement. Pre-approval is generally provided for up to one year and covers
specific categories of services and associated fee thresholds.
For
fiscal year 2025, our Board of Directors pre-approved 100% of all services provided by LAO Professionals. All fees described above under
“Audit Fees” were pre-approved by the Board of Directors in accordance with this policy. Our independent registered public
accounting firm periodically reports to our Board of Directors regarding the extent of services provided pursuant to the pre-approval
policy. Our Board of Directors may also delegate pre-approval authority to one or more of its members, provided that any such pre-approval
decision is reported to the full Board at its next scheduled meeting.
PART
IV
| ITEM 15. |
FINANCIAL STATEMENT SCHEDULES. |
(a)
Financial Statements
| Pages | |
| Report of Independent Registered Public Accounting Firm (PCAOB: ID 7057) |
F-2 |
| Consolidated Balance Sheets as of December 31, 2025, and December 31, 2024 |
F-4 |
| Consolidated Statements of Operations for the fiscal year ended December 31, 2025 and December 31, 2024 |
F-5 |
| Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2025 and December 31, 2024 |
F-6 |
| Consolidated Statements of Cash Flows for the fiscal year ended December 31, 2025 and December 31, 2024 |
F-7 |
| Notes to the Consolidated Financial Statements |
F-8 |
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
| FDCTECH, INC. |
||
| Date: |
June 30, 2026 | /s/ Mitchell Eaglstein |
|
Mitchell (Principal |
||
| Date: |
June 30, 2026 |
/s/ Imran Firoz |
|
Imran (Principal |
||
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
| SIGNATURE | TITLE | DATE | ||
| /s/ Mitchell Eaglstein |
President, Chief Executive Officer (Principal Executive Officer) |
June 30, 2026 |
||
| Mitchell Eaglstein |
||||
| /s/ Imran Firoz |
Chief Financial Officer (Principal Financial and Accounting Officer) |
June 30, 2026 |
||
| Imran Firoz |
FDCTECH,
INC.
Index
to Consolidated Financial Statements
| Pages | |
| Report of Independent Registered Public Accounting Firm (PCAOB: ID |
F-2 |
| Consolidated Balance Sheets as of December 31, 2025 (Audited, Restated), and December 31, 2024 (Audited, Restated |
F-4 |
| Consolidated Statements of Operations for the fiscal year ended December 31, 2025 (Audited, Restated), and December 31, 2024 (Audited, Restated) |
F-5 |
| Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2025 (Audited, Restated) and December 31, 2024 (Audited, Restated) |
F-6 |
| Consolidated Statements of Cash Flows for the fiscal year ended December 31, 2025 (Audited, Restated), and December 31, 2024(Audited, Restated) |
F-7 |
| Notes to the Consolidated Financial Statements |
F-8 |
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of FDCTech Inc.
Opinion
on the Financial Statements
have audited the accompanying consolidated balance sheets of FDCTech Inc. (the ‘Company’) as of December 31, 2025, and 2024,
and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for
the period ended December 31, 2025, and 2024, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of
the Company as of December 31, 2025, and 2024, and the results of its operations and its cash flows for each of the periods ended December
31, 2025, and 2024, in conformity with accounting principles generally accepted in the United States of America.
Restatement of Previously Issued Financial
Statement
As discussed in Note 4 to the financial statements, the 2025 and 2024 financial
statements have been restated to correct some misstatements and reclassifications. The correction of the misstatements affected the Cash
and cash equivalents, subscription receivables, related party receivables, client funds, and equity line item in the balance sheet of
the previously issued financial statements filed on April 14, 2025.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audit. 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 audits to obtain
reasonable assurance about whether the 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 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 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 financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical
Audit Matters
Critical
audit matters are matters arising from the current period audit of the 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 financial statements and
(2) involve our especially challenging, subjective, or complex judgments. Communication of critical audit matters does not alter in any
way our opinion on the financial statements taken as a whole, and we are not, by communicating the critical audit matters, providing
separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Testing
of Revenue
As
discussed in Note 2 of the financial statements, 3 (three) of the company’s subsidiaries offer trading services and solutions,
specializing in OTC and exchange-traded markets in Europe; this accounted for 67% of the total revenue, and it was generated from Commission,
Swap, profit from trading, and net floating profit. The Company operates its brokerage business in two segments: retail and institutional
(“clients” or “customers”). Through its retail and institutional segment, the Company provides its customers
(individuals) around the world with access to a diverse range of global financial markets, including spot forex, precious metals, spread
bets, and contracts for difference (“CFDs”) on currencies, commodities, indices, individual equities, cryptocurrencies, bonds,
and interest rate products, as well as OTC options.
We
identified the sufficiency of audit evidence over the streams of revenue as a critical audit matter due to the fact that the evaluation
of the sufficiency of audit evidence required subjective auditor judgment because of the large volume of data and the information technology
(IT) applications utilized in the revenue recognition process in capturing the revenue data.
How
We Addressed the Matter in Our Audit
| ● | Evaluated the design and tested the operating effectiveness of certain internal controls related to the processing and recording of revenue, including general IT controls and IT application controls. |
| ● | Involved IT professionals with specialized skills and knowledge who assisted in the identification and testing of certain IT systems, including the design of audit procedures, used by the Company for the processing and recording of revenue. |
| ● | Recalculated the recorded revenue for a sample of transactions by comparing the amounts recognized for consistency with the Company’s accounting policies and underlying documentation, including contracts with customers and other relevant and reliable third-party data. |
| ● | Confirmed key contract terms with clients for a selection of contracts. |
| ● | We challenged the management about the data integrity and performed a walk-through of the trading platform. |
| ● | We evaluated the sufficiency of the audit evidence obtained by assessing the results of the procedures performed over revenue. |
Related party balances and transactions
As disclosed in Note 7 of the financial statements,
under Post-Acquisition Related Party Balances. AIL carried a related party advances of $37,579,900 due from Alchemy Capital Markets Ltd
and Related Party payable of $25,512,642 due to Alchemy DMCC, a related party affiliate, included within the Related Party line on the
consolidated balance sheet. This balance reflects trading activity and liquidity arrangements conducted by AIL in the ordinary course
of its operations as a securities dealer. The Company has entered into a number of transactions with these related parties in the form
of loans and advances.
The reasons we determined this as a critical
audit matter were related to (i) the amounts are material to the financial statement; (ii) Auditor judgment was involved in assessing
the sufficiency of the procedures performed to identify related parties and related party transactions of the Company.
How
the Critical Audit Matter Was Addressed in the Audit
We
performed the following procedures to evaluate the identification of the related party transactions by the Companies:
| ● | Conducted background checks and reviewed other public research sources for information related to transactions between the Company and its related parties. |
| ● | Obtained agreements between the Company and related parties and reviewed for proper accounting and disclosures |
| ● | Obtained confirmations from the related parties for the account balances. |
| ● | Reviewed transaction details as posted to the accounting software from the bank statement and the Company’s trading platform. |
Client
Funds and clients’ funds obligations
As
disclosed in Note 11, the Company is required to segregate client funds. Client money is held in segregated accounts and is not
available for general corporate use. The difference between client money assets and liabilities represents client funds held with trading
counterparties (liquidity providers) and amounts in transit.
We
identified the evaluation of the sufficiency of audit evidence over client funds as a critical audit matter due to the fact that it required
the auditor’s judgment to determine the outstanding balances, as the transactions were volatile and subject to exchange rate fluctuations.
How
the Critical Audit Matter Was Addressed in the Audit
| ● | We evaluated the design and tested the operating effectiveness of certain internal controls related to the client funds and client funds obligations process. |
| ● | We involved IT professionals with specialized skills and knowledge, who assisted in the identification and testing of general IT controls and process-level IT risks, and confirmed the data integrity of the documents provided. |
| ● | Reviewed the data from the trading platform to confirm that intercompany balances were eliminated |
| ● | We obtained confirmation from the clients. |
| ● | Reviewed transaction details as posted to the accounting software from the bank statement and trading activities |
/S/
LAO
PROFESSIONALS
(PCAOB
ID 7057)
(Chartered
Accountants)
Nigeria
We
have served as the Company’s auditor since 2025.
June 30, 2026
FDCTECH,
INC.
CONSOLIDATED
BALANCE SHEETS
|
December (Restated) |
December (Restated) |
|||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents | $ |
|
$ |
|
||||
| Restricted cash — client funds (segregated) | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $ and $ respectively |
||||||||
| Prepaid expenses – current |
||||||||
| Related party receivable | ||||||||
| Total Current Assets |
|
|
||||||
| Fixed assets, net |
||||||||
| Other Non-Current Assets |
||||||||
| Capitalized software, net |
||||||||
| Investment through subsidiary |
||||||||
| Accrued income |
||||||||
| Acquired intangible assets |
||||||||
| Prepaid | ||||||||
| Tax receivable | ||||||||
| Fair value of trading positions for the firm, profit |
||||||||
| Right of use (lease) |
||||||||
| Total assets |
$ |
|
$ |
|
||||
| Liabilities and Stockholders’ Deficit |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | $ | ||||||
| Line of credit | ||||||||
| Accrued expenses, related party |
||||||||
| Business acquisition loan |
||||||||
| Cares act- paycheck protection program advance |
||||||||
| Related party advances |
|
|
||||||
| Client funds payable |
||||||||
| Operating lease liability, current |
||||||||
| Other current liabilities |
||||||||
| Total Current liabilities |
|
|
||||||
| Deferred tax liabilities |
||||||||
| SBA loan – non-current |
||||||||
| Operating lease liability, non-current |
||||||||
| Accrued interest – non-current |
||||||||
| Total liabilities |
||||||||
| Commitments and Contingencies (Note 10) |
||||||||
| Stockholders’ Deficit: |
||||||||
| Series A Preferred stock, par value $, shares authorized, and issued and outstanding, as of December 31, 2025 and December 31, 2024 |
||||||||
| Series B Preferred Stock, par value $, shares authorized, and issued and outstanding, as of December 31, 2025, and December 31, 2024 |
||||||||
| Common stock, par value $, shares authorized; and shares issued and outstanding, as of December 31, 2025, and December 31, 2024 |
|
|
||||||
| Additional paid-in capital, Common Series A, Series B |
|
|
||||||
| Subscription receivable | ( |
) | ( |
) | ||||
| Accumulated other comprehensive income |
|
( |
) | |||||
| Accumulated deficit |
|
( |
) | |||||
| Total FDCTech, Inc. stockholders’ equity (deficit) |
|
|
||||||
| Noncontrolling interest |
||||||||
| Total Stockholders’ Equity | ||||||||
| Total liabilities and stockholders’ equity (deficit) |
$ |
|
$ |
|
||||
See
accompanying notes to the financial statements.
FDCTECH,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
December (Restated) |
December (Restated) |
|||||||
| Revenues | ||||||||
| Technology & software |
||||||||
| Wealth management | ||||||||
| Investment and Brokerage |
||||||||
| Total revenue |
$ | $ | ||||||
| Cost of sales | ||||||||
| Technology & software | ||||||||
| Wealth management | ||||||||
| Investment and Brokerage |
||||||||
| Total cost of sales |
||||||||
| Gross Profit |
$ | |||||||
| Operating expenses: |
||||||||
| General and administrative |
|
|||||||
| Sales and marketing | ||||||||
| Depreciation | ||||||||
| Total operating expenses |
|
|||||||
| Operating income (loss) |
( |
) | ||||||
| Other income (expense): |
||||||||
| Other interest income (expense) | ( |
) | ( |
) | ||||
| Other income (expense) |
( |
) | ||||||
| Total other income (expense) |
( |
) | ||||||
| Provision for income taxes |
||||||||
| Net income (loss) |
$ |
|
$ |
|
||||
| Less: Net income (loss) attributable to noncontrolling interest |
( |
) | ||||||
| Net income (loss) attributable to FDCTech’s shareholders |
|
|
||||||
| Net income (loss) per common share, basic and diluted |
$ | $ | ||||||
| Weighted average number of common shares outstanding, basic and diluted |
||||||||
| Other comprehensive income (loss): |
||||||||
| Change in foreign currency translation |
$ |
|
$ |
( |
) | |||
| Total comprehensive income (loss) |
|
( |
) | |||||
| Comprehensive income (loss) attributable to noncontrolling interests |
||||||||
| Comprehensive income (loss) attributable to FDCTech stockholders |
$ |
|
$ |
( |
) | |||
See
accompanying notes to the financial statements.
FDCTECH,
INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Additional | other | Total | ||||||||||||||||||||||||||||||||||||||
| Preferred stock |
Common stock |
Paid-in | comprehensive | Subscription | Noncontrolling | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | income (loss) |
Receivable | interest | Deficit | Deficit | |||||||||||||||||||||||||||||||
| Fiscal year ended December 31, 2024 (Restated) | ||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 |
$ | |
$ | |
$ | |
$ | $ | $ | $ | ( |
) | $ | |
||||||||||||||||||||||||||
| Series A Preferred canceled |
( |
) | ( |
) | – | ( |
) | |||||||||||||||||||||||||||||||||
| Series B issuances at $ per share |
– | |||||||||||||||||||||||||||||||||||||||
|
Common stock issued for adjustment |
– | |||||||||||||||||||||||||||||||||||||||
| Stock subscription reclassification | – | – | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Common stock issued for cash valued at $ |
– | |||||||||||||||||||||||||||||||||||||||
| Increase in APIC due to shares issued at a discount |
– | – | ||||||||||||||||||||||||||||||||||||||
| Change in APIC due to common control |
– | – |
|
|
||||||||||||||||||||||||||||||||||||
| FX gain (loss) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Rounding error adjustments | – | – | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interest | – | – |
|
|
||||||||||||||||||||||||||||||||||||
| Foreign currency translation — noncontrolling interest | – | – | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to FDCTech shareholders | – | – | ||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 (Restated) |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||
| Fiscal year ended December 31, 2025 (Restated) | ||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 (Restated) | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||
| Common stock issued for services | – | |||||||||||||||||||||||||||||||||||||||
| Series B issuances at $ per share |
– | |||||||||||||||||||||||||||||||||||||||
| Acquisition of Alchemy International Limited (AIL) | – | – | ||||||||||||||||||||||||||||||||||||||
| Change in APIC due to common control | – | – | ||||||||||||||||||||||||||||||||||||||
| FX gain (loss) | – | – |
|
|
||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interest |
|
|
||||||||||||||||||||||||||||||||||||||
| Foreign currency translation — noncontrolling interest | – | – | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to FDCTech shareholders | – | – |
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 (Restated) | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||||||||
See
accompanying notes to the financial statements
FDCTECH,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
December (Restated) |
December (Restated) |
|||||||
| Net income (loss) | $ |
|
$ |
|
||||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation | ||||||||
|
Common |
||||||||
| Series B stock issued for services |
||||||||
| Accounts receivable allowance | ||||||||
| Fixed assets, net | ( |
) | ( |
) | ||||
| Acquired intangible assets | ( |
) | ( |
) | ||||
| Change in assets and liabilities: |
||||||||
| Gross accounts receivable | ( |
) | ||||||
| Prepaid | ( |
) | ||||||
| Related party receivable | ( |
) | ( |
) | ||||
| Accounts payable | ( |
) | ||||||
| Other current liabilities | ( |
) | ||||||
| Accrued interest | ( |
) | ||||||
| Client funds payable | ( |
) | ( |
) | ||||
| Fair value of trading position, net |
( |
) | ||||||
| Operating lease | ( |
) | ||||||
| Deferred taxes | ( |
) | ||||||
| Related party guarantee | ||||||||
| Tax receivable | ( |
) | ||||||
| Accrued income | ( |
) | ||||||
| Right of use of assets (lease) | ( |
) | ||||||
| Accrued expenses, related party |
( |
) | ||||||
| Net cash provided by (used in) operating activities |
$ | ( |
) | $ | ( |
) | ||
| Investing Activities: |
||||||||
| Capitalized software | ( |
) | ( |
) | ||||
| Business acquisition seller’s note |
||||||||
| Acquisition of Alchemy International Limited | |
|||||||
| Changes in paid-in capital, common control |
|
|||||||
| Net cash provided by (used in) investing activities |
$ | $ | ||||||
| Financing Activities: |
||||||||
| Borrowing from (payments to) line of credit |
( |
) | ||||||
| Net proceeds from CARES Act – paycheck protection program |
( |
) | ( |
) | ||||
| Net proceeds from SBA loan | ( |
) | ( |
) | ||||
| Related party advances |
|
|||||||
| Common stock issued for cash | ||||||||
| Common stock issued for financing cost |
|
|||||||
| Series A for cash and cancelation | ( |
) | ||||||
| Changes in NCI | ( |
) | ||||||
| Noncontrolling interest income |
( |
) | ||||||
| Net cash provided by (used in) financing activities |
$ |
|
$ | |||||
| Effect of exchange rates | ( |
) | ||||||
| Net increase (decrease) in cash |
( |
) | ( |
) | ||||
| Cash, cash equivalents, and restricted cash at beginning of the period |
||||||||
| Cash, cash equivalents, and restricted cash at end of the period |
$ | $ | ||||||
| Cash paid for income taxes |
$ | $ | ||||||
| Cash paid for interest |
$ | $ | ||||||
| Non – cash investing and financing activities: |
||||||||
| $ | – | – | ||||||
See
accompanying notes to the financial statements.
FDCTECH,
INC. – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS
Organization
and General
FDCTech,
Inc. (“FDCTech,” “the Company,” “we,” “us,” or “our”) is a financial technology
company incorporated in the State of Delaware, United States of America, and is publicly traded on the OTC markets under the ticker symbol
OTC: FDCT. The Company is a fully reporting public company subject to the reporting obligations of the Securities Exchange Act of 1934,
as amended.
The
Company was founded in January 2016 as a back-office technology solution provider to the over-the-counter (“OTC”) brokerage
and financial services industries. Through a series of strategic acquisitions, the Company has evolved into a diversified global financial
technology platform. These acquisitions include AD Advisory Services Pty Ltd. (2021), Alchemy Markets Ltd. (2022–2023), Alchemy
Prime Limited (2023), and Alchemy International Ltd. (2025), collectively expanding the Company’s operational footprint across
Australia, Malta, the United Kingdom, Cyprus, Seychelles, and Mauritius.
The
accompanying consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries
(collectively, the “Company”) for the year ended December 31, 2025. All intercompany balances and transactions have been
eliminated in consolidation.
Corporate
Structure and Subsidiaries
FDCTech,
Inc. serves as the parent holding company. The following table presents the Company’s consolidated subsidiaries as of December
31, 2025:
| Subsidiary | Ownership | Jurisdiction | Primary Business |
Markets Served |
Technology | |||||
| AD Advisory Services Pty Ltd. (ADS) | Management |
software |
||||||||
| Alchemy Markets Ltd. (AML) |
CFDs, Stocks, Bonds |
(excl. UK) |
Trading & Third-party |
|||||||
| Alchemy Prime Ltd. (APL) |
Kingdom |
CFDs |
Kingdom |
Trading & Third-party |
||||||
| Alchemytech Ltd. (ATECH) |
Services |
Trading |
||||||||
| Alchemy International Ltd. (AIL) |
CFDs |
Trading & Third-party |
||||||||
| Xoala Asia (XOA) |
Intermediary Services |
|||||||||
| Prime Intermarket Group Eurasia (PIG) |
CFDs |
Trading & Third-party |
The
Company consolidates all subsidiaries in which it holds a controlling financial interest. AD Advisory Services Pty Ltd. (ADS) is consolidated
as a majority-owned subsidiary (
ownership), with the remaining
recognized as a noncontrolling interest in the consolidated balance sheet and statements of operations. All other subsidiaries are wholly
owned (100%) and fully consolidated, except for AIL, where the Company owns 99.90%.
NOTE
1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
Nature
of Operations
The
Company operates through four complementary business segments, as follows:
(a)
Margin Brokerage
Through
Alchemy Markets Ltd. (Malta, regulated by the Malta Financial Services Authority (“MFSA”)), Alchemy Prime Limited (United
Kingdom, regulated by the Financial Conduct Authority (“FCA”)), and Alchemy International Ltd. (Seychelles, regulated by
the Financial Services Authority (“FSA”)), the Company provides multi-asset online trading services—including foreign
exchange (“FX”), contracts for difference (“CFDs”), equities, commodities, and digital assets—to retail
and institutional clients globally.
(b)
Wealth Management
Through
AD Advisory Services Pty Ltd. (Australia, regulated by the Australian Securities and Investments Commission (“ASIC”)), the
Company operates a wealth management business with 28 financial advisors collectively managing and advising on approximately $
million in funds under advice as of December 31, 2025. This
segment provides licensing solutions and financial planning services to independent financial advisors operating under the Company’s
Australian Financial Services license.
(c)
Technology and Software Development
Through
FDCTech, Inc. and Alchemytech Ltd. (Cyprus), the Company develops, licenses, and supports its proprietary Condor Trading Technology suite,
which includes the Condor Pro Multi-Asset Trading Platform and the Condor Risk Management back-office system. This technology supports
multi-asset trading, risk management, and pricing across FX, equities, commodities, and digital assets and is utilized both internally
across the Company’s brokerage subsidiaries and licensed to third-party brokerage firms.
(d)
Payment Intermediary Services
Through
Xoala Asia (Mauritius, licensed by the Financial Services Commission (“FSC”)), the Company is developing a payment gateway,
merchant acquiring, and cross-border payment capabilities to complement its brokerage and wealth management operations. At December 31,
2025, this segment remains in the early stages of development and has not yet generated material revenue.
Regulatory
Environment
The
Company’s brokerage and wealth management subsidiaries operate under licenses and regulatory oversight from multiple international
financial regulatory authorities, including the MFSA (Malta), FCA (United Kingdom), FSA (Seychelles), ASIC (Australia), and FSC (Mauritius).
The Company is required to maintain minimum regulatory capital levels and comply with ongoing reporting, conduct-of-business, and anti-money-laundering
obligations in each of its operating jurisdictions. Regulatory compliance and capital adequacy are monitored by management on an ongoing
basis.
Going
Concern Consideration
These
consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue its operations
for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. Management
has evaluated the Company’s ability to continue as a going concern in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Subtopic 205-40, Presentation of Financial Statements—Going Concern.
The Company’s assessment of going concern, including any identified conditions or events that may raise substantial doubt, and
management’s plans to mitigate such conditions, are further described in Note 2.
Fiscal
Year
The
Company’s fiscal year ends on December 31. The consolidated financial statements presented herein are for the year ended December
31, 2025.
Board
of Directors
At
present, the Company has four members of the Board of Directors. Mitchell M. Eaglstein is the acting Chairman of the Company. Mitchell
M. Eaglstein and Imran Firoz are the company’s executive directors and officers. Gope S. Kundnani is considered an executive director
by owning at least 10% of the Company’s stock. Jonathan Baumgart is an independent director under NYSE and NASDAQ listing standards.
Mitchell
M. Eaglstein and Imran Firoz have been Executive Directors of the Company since January 21, 2016.
On
June 15, 2021, the Company appointed Jonathan Baumgart as the Director of the Company.
On
September 30, 2022, the Company appointed Gope S. Kundnani as the Director of the Company.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Principles of Consolidation
The
accompanying consolidated financial statements include the accounts of FDCTech, Inc. and its wholly owned subsidiary. We have eliminated
all intercompany balances and transactions. The Company has prepared the consolidated financial statements consistent with the Company’s
accounting policies in its financial statements. The Company has measured and presented the Company’s consolidated financial statements
in US Dollars, which is the currency of the primary economic environment in which the Company operates (also known as its functional
currency).
Consolidated
Financial Statement Preparation and Use of Estimates
The
Company prepared the consolidated financial statements according to accounting principles generally accepted in the United States of
America (“GAAP”). The preparation of the consolidated financial statements in conformity with GAAP requires management to
make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures
at the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented.
Estimates include revenue recognition, the allowance for doubtful accounts, website and internal-use software development costs, recoverability
of intangible assets with finite lives, and other long-lived assets. Actual results could materially differ from these estimates.
Defined
Terms
In
these consolidated financial statements and the related notes, the terms “Restricted cash — client funds (segregated),”
“client funds,” and “client money” are used interchangeably to refer to amounts held by the Company’s regulated brokerage
subsidiaries on behalf of clients in segregated accounts pursuant to applicable regulatory requirements, presented on the consolidated
balance sheets as a separately captioned restricted cash line item with an equal and offsetting client funds payable liability.
Cash
and Cash Equivalents
Cash
and cash equivalents include cash on hand, bank deposits, and other short-term, highly liquid investments with three months or less of
original maturities. The Company maintains its cash balances at multiple financial institutions, both domestic and foreign. For US financial
institutions, the balances do not exceed Federal Deposit Insurance Corporation (FDIC) limits as of December 31, 2024. However, at December
31, 2025, the majority of the cash balance was held with non-FDIC financial institutions in Malta, the UK, and other countries. On December
31, 2025, and 2024, the Company had $
and $
cash and cash equivalents held at the financial institution.
Common-Control Transactions and Statement of
Cash Flows Classification
The Company accounts for business combinations between entities under common
control in accordance with ASC 805-50, recognizing the assets and liabilities of the acquired entity at their carrying amounts as of the
transaction date, with any difference between the consideration transferred and the carrying value of net assets received recognized as
an adjustment to additional paid-in capital. For purposes of the consolidated statements of cash flows, cash consideration paid in common-control
acquisitions of businesses is classified as an investing activity, consistent with ASC 230-10-45-13(c), which characterizes payments to
acquire equity instruments of, or interests in, other entities as investing activities. The Company applies this classification consistently
to all common-control business acquisitions across the periods presented.
Accounts
Receivable
In some
cases, the customer receivables are due immediately on demand; however, in most cases, the Company offers net 30 terms or n/30, where
the payment is due in full 30 days after the invoice’s date. The Company has based the allowance for doubtful accounts on its assessment
of the collectability of customer accounts. The Company regularly reviews the allowance by considering historical experience, credit
quality, the accounts receivable balances’ age, and economic conditions that may affect a customer’s ability to pay and expected
default frequency rates. Trade receivables are written off at the point when they are considered uncollectible.
Sales,
Marketing, and Advertising
The
Company recognizes sales, marketing, and advertising expenses when incurred.
The
Company incurred $
and $
in sales, marketing, and advertising costs (“sales and
marketing”) for the fiscal year ended December 31, 2025, and 2024, respectively. The sales and marketing costs are mainly due to
expenses related to investment and brokerage business. The sales, marketing, and advertising expenses represented
and
of the sales for the fiscal year ended December 31, 2025, and 2024, respectively.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue
Recognition
On
January 1, 2019, the Company adopted ASU 2014-09 Revenue from Contracts with Customers. Most of the Company’s revenues come from
two contracts – IT support and maintenance (‘IT Agreement’) and software development (‘Second Amendment’)
that fall within the scope of ASC 606.
The
Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
the Company expects to receive in exchange for those goods or services as per the contract with the customer. As a result, the Company
accounts for revenue contracts with customers by applying the requirements of Accounting Standards Codification Topic 606, Revenue from
Contracts with Customers (Topic 606), which includes the following steps:
| ● | Identify the contract or contracts and subsequent amendments with the customer. |
|
| ● | Identify all the performance obligations in the contract and subsequent amendments. |
|
| ● | Determine the transaction price for completing performance obligations. |
|
| ● | Allocate the transaction price to the performance obligations in the contract. |
|
| ● | Recognize the revenue when, or as, the Company satisfies a performance obligation. |
The
Company adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2019. The Company
presents results for reporting periods beginning after January 1, 2019, under ASC 606, while prior period amounts are reported following
legacy GAAP. In addition to the above guidelines, the Company also considers implementing guidance on warranties, customer options, licensing,
and other topics. The Company considers revenue collectability, methods for measuring progress toward the complete satisfaction of a
performance obligation, warranties, customer options for additional goods or services, nonrefundable upfront fees, licensing, customer
acceptance, and other relevant categories.
The
Company accounts for a contract when it and the customer (parties) have approved the agreement and are committed to fulfilling their
obligations. Each party can identify its rights, obligations, and payment terms; the contract has commercial substance. The Company will
probably collect all of the consideration. Revenue is recognized when performance obligations are satisfied by transferring control of
the promised service to a customer. The Company fixes the transaction price for goods and services at contract inception. The Company’s
standard payment terms are generally net 30 days and, in some cases, due upon receipt of the invoice.
The
Company considers the change in scope, price, or both as contract modifications. The parties describe contract modification as a change
order, a variation, or an amendment. A contract modification exists when the parties approve a modification that either creates new or
changes existing enforceable rights and obligations. The Company assumed a contract modification by oral agreement or implied by the
customer’s customary business practice when agreed in writing. If the parties to the contract have not approved a contract modification,
the Company continues to apply the existing contract’s guidance until the contract modification is approved. The Company recognizes
contract modification in various forms –partial termination, an extension of the contract term with a corresponding price increase,
adding new goods or services to the contract, with or without a corresponding price change, and reducing the contract price without a
change in goods/services promised.
At
contract inception, the Company assesses the solutions or services, or bundles of solutions and services, obligated in the contract with
a customer to identify each performance obligation within the contract and then evaluate whether the performance obligations are capable
of being distinct and distinct within the context of the agreement. Solutions and services incapable of being distinct and distinct within
the contract context are combined and treated as a single performance obligation in determining the allocation and recognition of revenue.
For multi-element transactions, the Company allocates the transaction price to each performance obligation on a relative stand-alone
selling price basis. The Company determines the stand-alone selling price for each item at the transaction’s inception, involving
these multiple elements.
Since
January 21, 2016 (Inception), the Company has derived its revenues mainly from consulting services, technology solutions, and
customized software development. The Company recognizes revenue when it has satisfied a performance obligation by transferring control
over a product or delivering a service to a customer. We measure revenue based on the considerations outlined in an arrangement or contract
with a customer.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The
Company’s typical performance obligations include the following:
| Performance Obligation |
Types of Deliverables |
When Performance Obligation is Typically Satisfied |
||
| Consulting Services |
Consulting related to Start-Your-Own-Brokerage (“SYOB”), Start-Your-Own-Prime Brokerage (“SYOPB”), FX/OTC liquidity solutions, and lead generations. |
The Company recognizes the consulting revenues when the customer receives services over the contract length. If the customer pays the Company in advance for these services, the Company records such payment as deferred revenue until the Company completes the services. |
||
| Technology Services |
Licensing of Condor Risk Management Back Office (“Condor Risk Management”), Condor FX Pro Trading Terminal, Condor Pricing Engine, Digital Assets Platform (“Digital Assets Web Trader Platform”), and other digital assets-related solutions. |
The Company recognizes ratably over the contractual period that the services are delivered, beginning on the date such service is made available to the customer. Licensing agreements are typically one year in length with an option to cancel by giving notice; customers have the right to terminate their agreements if the Company materially breaches its obligations under the agreement. Licensing agreements do not provide customers with the right to take possession of the software. The Company charges the customers a set-up fee for installing the platform, and implementation activities are insignificant and not subject to a separate fee. |
||
| Software Development |
Design and build development software projects for customers, where the Company develops the project to meet the design criteria and performance requirements as specified in the contract. |
The Company recognizes the software development revenues when the Customer obtains control of the deliverables as stated in the Statement-of-Work contract. |
The
Company assumes that the goods or services promised in the existing contract will be transferred to the customer to determine the transaction
price. The Company believes that the contract will not be canceled, renewed, or modified; therefore, the transaction price includes only
those amounts to which the Company has rights under the present contract. For example, if the Company enters a contract with a customer
with an original term of one year and expects the customer to renew it for a second year, the Company will determine the transaction
price based on the initial one-year period. When choosing the transaction price, the company first identifies the fixed consideration,
including non-refundable upfront payment amounts.
To
allocate the transaction price, the Company gives the amount that best represents the consideration that the entity expects to receive
for transferring each promised good or service to the customer. The Company allocates the transaction price to each performance obligation
identified in the contract on a relatively standalone selling price basis to meet the allocation objective. In determining the standalone
selling price, the Company uses the best evidence of the stand-alone selling price that the Company charges to similar customers in similar
circumstances. The Company sometimes uses the adjusted market assessment approach to determine the standalone selling price. It evaluates
the market in which it sells the goods or services and estimates the price that customers in that market would pay for those goods or
services when sold separately.
The
Company recognizes revenue when or as it transfers the promised goods or services into the contract. The Company considers the
“transfers” of the promised goods or services when the customer obtains control of the goods or services. The Company
believes a customer “obtains control” of an asset when it can directly use and substantially obtain all the remaining
benefits from an asset. The Company recognizes deferred revenue related to services it will deliver within one year as a current
liability. The Company presents deferred revenue related to services that the Company will provide more than one year into the
future as a non-current liability.
According
to the contract’s terms and conditions, the Company invoices the customer at the beginning of the month for the month’s services.
The invoice amount is due upon receipt. The Company recognizes the revenue at the end of each month as equal to the invoice amount.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Wealth
Management
AD
Advisory Services Pty (ADS), the Company’s wealth management revenue, primarily consists of advisory revenue, commission revenue
from insurance products, fees to prepare the statement of advice, rebalancing portfolio, and other financial planning activities. ADS
is authorized and regulated by the Australian Securities & Investments Commission (ASIC) to conduct licensing activities in Australia.
ASC
606 establishes a five-step model for revenue recognition aimed at enhancing comparability and transparency across entities, industries,
and capital markets. The Company only recognizes revenue that reflects the transfer of promised goods or services to customers in exchange
for the consideration to which the entity expects to be entitled.
For
ADS, a contract is an agreement between ADS and a client that creates enforceable rights and obligations, encompassing advisory services,
insurance product commissions, and other financial planning activities. Contracts may be written, oral, or implied by customary business
practices and are identified when both parties approve the agreement; each party can identify rights regarding the goods or services
to be transferred and establish payment terms, the contract has commercial substance, and collection of payment is probable.
A
performance obligation is a promise in a contract to transfer a distinct good or service to the Customer. For ADS, performance obligations
may include:
| ● | Providing ongoing financial advisory services, |
|
| ● | Preparing statements of advice, |
|
| ● | Executing portfolio rebalancing, |
|
| ● | Facilitating the purchase of insurance products, and |
|
| ● | Offering other specialized financial and estate planning services. |
We
evaluate these services to determine if they are distinct, considering whether the Customer can benefit from the service on its own or
with other resources readily available to the Customer and if the promise to transfer the service is separately identifiable from other
promises in the contract.
The
transaction price is the amount of consideration ADS expects to be entitled to in exchange for transferring the promised goods or services
to the Customer. These services include fixed fees, commissions from insurance products, and variable consideration for performance-based
fees. ADS estimates the amount of variable consideration to which it will be entitled in a manner that reflects the likelihood and magnitude
of a revenue reversal.
If
a contract includes more than one performance obligation, ADS allocates the transaction price to each performance obligation based on
its standalone selling price. When standalone selling prices are not directly observable, ADS estimates them using methods that may include
cost-plus margin, market assessment, or residual approach, considering the Customer’s perceived value of each service.
ADS
recognizes revenue when (or as) a performance obligation is satisfied, i.e., when the control of the promised good or service is transferred
to the Customer. For ongoing services, revenue is recognized over time, reflecting the continuous transfer of services. For services
that are performed at a specific point in time, revenue is recognized when the service is completed. The pattern of revenue recognition
is determined based on when the Customer obtains control of the promised good or service, which, for advisory services, is typically throughout
the contract, and for transaction-based services (like insurance commissions or fees for specific planning activities), is at the point
in time when the transaction is executed, or the service is rendered. If we receive payments before services, we defer and recognize
them as revenue when satisfied with our performance obligation. Advisory revenue includes fees charged to clients in advisory accounts
for which we are the licensed investment advisor. We bill advisory fees weekly.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Investment
and Brokerage
Alchemy
Markets Ltd (AML) and Alchemy Prime Ltd (APL) offer trading services and solutions, specializing in OTC and exchange-traded markets
in Europe. Malta Financial Services Authority (MFSA) regulates AML with authorized countries, including Austria, Belgium, Bulgaria,
Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Liechtenstein, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. The Financial
Conduct Authority (FCA) regulates APL within the authorized countries of England, Scotland, Wales, and Northern Ireland.
The
Company operates its brokerage business in two segments: retail and institutional (“clients” or “customers”).
Through its retail and institutional segment, the Company provides its customers (individuals) around the world with access to a diverse
range of global financial markets, including spot forex, precious metals, spread bets, and contracts for difference (“CFDs”)
on currencies, commodities, indices, individual equities, cryptocurrencies, bonds, and interest rate products, as well as OTC options.
The FCA defines a retail customer as a client who is not a professional or eligible counterparty. A professional client is an entity
that must be authorized or regulated to operate in the financial markets. According to the MFSA, a retail client is a client who is not
a professional client or an eligible counterparty. A professional client has the knowledge, experience, and expertise to assess the risks
and make investment decisions.
We
recognize Investment and Brokerage revenues through the principal model following the guidance outlined in ASC 606, Revenues from Contracts
with Customers. The Company primarily generates revenue through market-making and trading execution services for its clients, known as
Trading Revenues. The Trading revenue is the Company’s largest source of revenue. Trading revenue comprises trading revenue from
the retail OTC business and advisory business. OTC trading includes forex trading (“forex”), precious metals trading, CFDs,
and spread betting (in markets that do not prohibit such transactions), as well as other financial products.
We
realize gains or losses when we liquidate customer transactions. We revalue unrealized gains or losses on trading positions at prevailing
market rates at the date of the balance sheet. We include them in Receivables from brokers, Payables to customers, and Payables to brokers
on the Consolidated Balance Sheets. We record changes in net unrealized gains or losses in Trading Revenue on the Consolidated Statements
of Operations and Comprehensive (Loss)//Income. We record Trading Revenue on a trade date basis.
We
also generate business through an agency model by earning commissions and spreads for executing customer trades. We book these revenues
on a trade-date basis. The Company serves as an agent for clearing trades and as a principal for fees paid to introducing brokers. The
Company does not assume any market-making risk concerning customer trades in this business.
Net
interest revenue consists primarily of the revenue generated by the Company’s cash and customer cash held at banks, as well as
funds on deposit as collateral with the Company’s liquidity providers, less interest paid to the Company’s customers.
We
record interest revenue and interest expense when they are earned and incurred, respectively.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentrations
of Credit Risk
Cash
Cash
and cash equivalents include cash on hand, bank deposits, and other short-term, highly liquid investments with three months or less
of original maturities. The Company maintains its cash balances at multiple financial institutions, both domestic and foreign. For
US financial institutions, the balances do not exceed Federal Deposit Insurance Corporation (FDIC) limits as of December 31, 2024.
At December 31, 2024, most of the cash was held with non-FDIC financial institutions in Malta, the UK, and other countries. At
December 31, 2025, the Company held total cash and cash equivalents of $
institutions and $
total, consisting of $
$
held at various liquidity providers in 2025 and 2024, respectively.
Revenues
The
revenues are comprised of three main business segments: Investment and Brokerage, Wealth Management, and Technology and Software Development.
For the fiscal year ended December 31, 2025, and 2024, the Company generated $
and $
in revenues, an increase of over 29.8% from the previous year,
mainly due to an increase in margin brokerage and technology business.
Accounts
Receivable
At
December 31, 2025, and 2024, the accounts receivable were $
and $
At December 31, 2025, and 2024, the Management determined that the allowance for doubtful accounts was $
and $
respectively.
Significant
Acquisitions
The
Company completed the Acquisition of
of the issued and outstanding shares of Alchemy Prime Limited (“APL”) on November 30, 2023 (“Acquisition Date”)
from Alchemy Prime Holdings Ltd. (“Seller” or “APHL”), through an exchange for
Series B preferred convertible stocks valued at $
The
Company completed the Acquisition of the remaining
of the issued and outstanding shares of Alchemy Markets Holdings Ltd (Alchemy BVI) and its subsidiary Alchemy Markets Ltd (AML) on November
30, 2023 (“Acquisition Date”), from Alchemy Prime Holdings Ltd., through an exchange for
Series B preferred convertible stocks valued at $
The
Company estimated the total purchase price for the Acquisition(s) or Transaction(s) to be $
The Seller is a UK entity, with Mr. Gope S. Kundnani (“Kundnani”) as the (sole) natural person holding one hundred percent
(
shareholding in the APHL. Kundnani is also a controlling shareholder in the Company, a related party.
Further,
the Company, Kundnani, and the current management are responsible for making strategic and operational decisions for both APL and AML
(“Targets”).
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
As
there is no quoted market for Series B Preferred convertible stock, and the Acquisition of 100% of the equity of APL and
of AML are related party transactions, we valued the exchange of shares
of Series B Preferred convertible stock based on the audited net financial assets (book value) of the targets.
The
net financial assets of
APL were $
and
of AML was $
with a total purchase price of $
for
shares of Series B Preferred convertible stock or $
per share.
Table
1. Closing Acquisition Consideration Breakdown
Series
B Preferred convertible stock Issued for Purchase of APL and AML
|
Net (Book |
Purchase % |
Purchase Price ($) |
Type of Shares |
Price per Shares |
# of Shares |
|||||||||||||||||||||
| Local Currency |
USD ($) |
|||||||||||||||||||||||||
| Shares of | ||||||||||||||||||||||||||
| APL | £ | (1) | % | $ | Series B | $ | ||||||||||||||||||||
| AML | € | (2) | % | $ | Series B | $ | ||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||||
| (1) | Net Financial Assets based on June 30, 2022, audited financial statements |
| (2) | Net Financial Assets based on November 30, 2022, audited financial statements |
Under
ASC 805-50-15-6, based on the ownership of Kundnani and the management structure post-acquisition, we believe the following guidance
in the transactions between entities under common control subsections applies to combinations between entities or businesses under common
control:
| a) | The Seller (APHL or Kundnani) transfers its controlling interest in APL and AML to the Company controlled by the Seller, directly or indirectly through its ownership as an individual or through APHL. This transaction is a legal organization change, but not the reporting entity. The reporting entity remains the Company. |
The
SEC staff’s conclusions expressed during the deliberations in EITF 02-5 that common control exists between (or among) separate
entities in the following situations: An individual or enterprise holds more than 50% of the voting ownership interest of each entity.
A group of shareholders has over 50% voting ownership in each entity and a written agreement to vote the majority of shares together.
Kundnani meets these criteria.
We
have accounted for the Acquisition under the acquisition method of accounting per ASC 805, with the Company treated as the accounting
acquirer and Targets treated as the “acquired” Company for financial reporting purposes. We determine the Company an accounting
acquirer based on the following facts: (i) after the Acquisition(s), shareholders of the Company held the majority of the voting interest
of the combined Company; (ii) the Board of Directors of the Company possess majority control of the Board of Directors of the combined
Company; and (iii) members of the management of the Company are responsible for the management of the combined Company. As such, we have
treated the financial statements of the Company as the historical financial statements of the combined Company. The Company will present
consolidated or combined financial statements in place of the financial statements of individual entities.
We
have identified the Company as the legal acquirer, as it is the entity that issued securities. Comparatively, we have identified Targets
as the legal acquiree, the entity whose equity interests are acquired.
We
have recognized Target’s assets and liabilities as their carrying amounts in the combined financial statements of the controlling
party, the Company, immediately before the Acquisition. This approach does not necessitate a fair value adjustment or a recognition of
goodwill that would typically follow a standard business combination. Therefore, we have recorded assets and liabilities at book value.
The
transaction’s equity structure involves the issuance of Series B preferred convertible stock valued at $
which is reflected in the Company’s equity.
The
post-acquisition consolidation process eliminates any existing intercompany transactions or balances between the Company and Target(s).
Although the initial recognition does not adjust assets and liabilities to fair value, the Company evaluates intangible assets in Target’s
financial statements on December 31, 2023.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
AML
Purchase Price Allocation
AML’s
Balance Sheet as of November 30, 2023 (Acquisition Date):
| Description | Book Value, $ |
|||
| Assets: | ||||
| Cash and cash equivalents (1) |
||||
| Prepaid | ||||
| Financial Assets through profit and less (2) |
||||
| Related party guarantee (3) |
||||
| Accrued income | ||||
| Tax receivable (4) | ||||
| Capitalized software, net | ||||
| Fixed assets (5) |
||||
| Total assets: |
$ | |||
| Liabilities: | ||||
| Accounts Payable (6) | ||||
| Financial liability at fair value through profit and loss (7) |
||||
| Client funds(8) | ||||
| Deferred tax liabilities(9) |
||||
| Total liabilities |
$ | |||
| Net assets, (A) | ||||
| Accumulated other comprehensive income (loss), (B) |
||||
| Purchase Price, Series B Preferred Stock valued at $, (C) |
||||
| Increase in APIC (A) – (B) – (C) |
$ | |||
APL
Purchase Price Allocation
APL’s
Balance Sheet as of November 30, 2023 (Acquisition Date):
| Description | Book Value, $ |
|||
| Assets: | ||||
| Cash and cash equivalents, including cash at liquidity provider (1) |
||||
| Fixed assets (2) | ||||
| Prepaid | ||||
| Total assets: |
$ | |||
| Liabilities: | ||||
| Deferred Tax(9) | ||||
| Current liabilities – Creditors (10) |
||||
| Client funds (8) | ||||
| Related party advances | ||||
| Total liabilities |
$ | |||
| Net assets (A) | ( |
) | ||
| Accumulated other comprehensive income (loss), (B) |
( |
) | ||
| Purchase Price, Series B Preferred Stock valued at $, (C) |
||||
| Increase in APIC (A) – (B) – (C) |
$ | ( |
) | |
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
| (3) | |
| (4) | |
| (5) | |
| (6) | |
| (7) | |
| (8) | |
| (9) | |
| (10) |
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
AIL
Acquisition
The
Company completed the Acquisition of
of the issued and outstanding shares of Alchemy International Ltd (“AIL”) on October 29, 2025 (“Acquisition Date”),
from SYNC Capital Limited (“Seller”), a UK entity, through a cash payment of $
(the “Consideration”).
remaining 0.1% of AIL’s shares were retained by a minority interest, resulting in a Non-Controlling Interest (“NCI”)
of 0.1%.
The
Seller, SYNC Capital Limited, is wholly owned by Mr. Gope S. Kundnani (“Kundnani”). Prior to the Acquisition, Kundnani held
of AIL’s
issued shares, comprising
shares through SYNC Capital Limited and
shares held personally. Kundnani is also a controlling shareholder
of the Company, a related party. The Acquisition was subject to regulatory approval by the UK Financial Conduct Authority (“FCA”),
which was received on October 29, 2025, constituting the effective Acquisition Date for accounting purposes.
The
transaction was identified as a related-party transaction pursuant to Section 10.5 of the Share Purchase Agreement (“SPA”),
and was reviewed and approved by an Audit Committee composed solely of independent, disinterested directors, with Kundnani and his affiliates
recused, in compliance with SPA Section 10.6.
Under
ASC 805-50-15-6, and consistent with the accounting treatment applied to the prior acquisitions of APL and AML, the Company has determined
that the Acquisition of AIL constitutes a transaction between entities under common control. Both AIL (through SYNC Capital Limited)
and the Company were, immediately before and after the transaction, controlled by the same individual — Kundnani — who holds
more than
of the voting ownership interest of each entity, thereby satisfying the common control criteria established in EITF 02-5. ASC 805-20
(the acquisition method) does not apply.
Accordingly,
the Company has accounted for the Acquisition under ASC 805-50-30-5. All assets and liabilities of AIL have been recognized at their
historical carrying amounts as of the Acquisition Date (proxied at October 31, 2025, per the nearest available management accounts).
No fair value adjustments have been made, no purchase price allocation has been performed, and no goodwill or bargain purchase gain has
been recognized in the consolidated income statement.
The
difference between the Consideration paid ($
and the net book value of AIL attributable to the Company at the Acquisition Date represents a capital contribution by Kundnani to the
Company. This amount has been credited to Additional Paid-In Capital (“APIC”) in the Company’s consolidated equity.
The APIC credit is calculated as follows:
| 100% Net Book Value of AIL at October 31, 2025 | $ | |||
| Less: Consideration paid (per SPA) | ( |
) | ||
| Less: Non-Controlling Interest ( of Net Book Value) |
( |
) | ||
| APIC – Capital Contribution from Controlling Shareholder |
$ |
The
Company has recognized NCI at $
representing
of AIL’s net book value at the Acquisition Date. The post-acquisition consolidation process eliminates intercompany transactions
and balances between the Company and AIL. Only results from the Acquisition Date (October 29, 2025) through December 31, 2025, are included
in the Company’s consolidated income statement for the year ended December 31, 2025.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The
FSA SD136 regulatory license held by AIL has not been separately recognized as an intangible asset, as it was not previously recorded
on AIL’s books, and ASC 805-50 does not require or permit the recognition of assets not already carried by the transferring entity.
AIL
Purchase Price Allocation
AIL’s
Balance Sheet as of October 31, 2025 (proxied Acquisition Date):
| Description | Book Value, $ |
|||
| Assets: | ||||
| Plant and Machinery, net (1) | ||||
| Liquidity Provider Accounts, net (2) | ||||
| C/A – Alchemy Capital Markets Ltd (3) | ||||
| C/A – Alchemy Markets EU (4) | ||||
| Net Intercompany Receivables (5) | ||||
| Rebates Receivable | ||||
| Payment Gateways (6) | ||||
| Other Debtors, Prepayments, and Deposits | ||||
| Cash at Banks | ||||
| C/A – FXIFY | ||||
| Total assets: | $ | |||
| Liabilities: | ||||
| Trade Creditors | ||||
| Client Money Liabilities – Retail (7) | ||||
| Client Money Liabilities – TTCA (7) | ||||
| C/A – Shareholders | ||||
| C/A – Intercompany (payable) | ||||
| C/A – Alchemy DMCC (8) | ||||
| Other Payables, Rebates, Accruals, and Sundry |
||||
| Total liabilities |
$ | |||
| Net assets (A) | ||||
| Non-Controlling Interest, of Net Assets (B) |
||||
| Consideration paid, $ cash (C) |
||||
| APIC – Capital Contribution (A) – (B) – (C) |
$ | |||
| (1) | |
| (2) | |
| (3) | |
| (4) | |
| (5) | |
| (6) | |
| (7) | |
| (8) |
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Research
and Development (R and D) Cost
The
Company acknowledges that future benefits from research and development (R and D) are uncertain and cannot capitalize on the R and D
expenditure. The GAAP accounting standards require us to expend all research and development expenditures as incurred. For the fiscal
year ended December 31, 2025, and 2024, the Company incurred $
and $
R and D costs. In the consolidated income statements, we have included the R and D costs in the General and Administrative expenses.
Legal
Proceedings
The
Company discloses a loss contingency if there is at least a reasonable possibility that a material loss has been incurred. The Company
records its best estimate of loss related to pending legal proceedings when the loss is probable, and the amount can be reasonably estimated.
The Company can reasonably estimate a range of losses with no best estimate in the range; the Company records the minimum estimated liability.
As additional information becomes available, the Company assesses the potential liability related to pending legal proceedings, revises
its estimates, and updates its disclosures accordingly. The Company’s legal costs associated with defending itself are recorded
as expenses when incurred.
The
Company and its subsidiaries are involved in the following legal proceedings:
Asher
Alkoby, et al. v. FDCTech
This
action is pending in the London Circuit Commercial Court under Claim Number LM-2024-000330 as of December 9, 2024. The claimants are
Asher Alkoby and other former shareholders of Alchemy Markets Ltd. (“AML”), a Malta-incorporated broker that FDCTech purchased
in June 2023. Following completion of the acquisition, the Company discovered that in 2019, the target company had anti-money laundering
deficiencies and was fined by the Financial Intelligence Analysis Unit.
An
external audit also revealed that the previous shareholders had taken loans from the company that were never repaid, resulting in the
net capital of the company being lower than disclosed during negotiations. Based on these findings, FDCTech withheld the final payment
to the sellers.
The
claimants are seeking approximately $
million in amounts they allege are owing under the Share Sale
Agreement, which they are seeking to rectify to make it legally enforceable. The Company has counterclaimed for a declaration that the
Share Sale Agreement is ineffective and unenforceable and seeks repayment of $
paid to the sellers. On October 17, 2025, the Court granted
the claimants permission to amend their claim to include a third claimant. The Company has prepared an Amended Defense and Counterclaim
through Counsel, which was served May 9, 2025. A Costs and Case Management Conference took place on November 17, 2025, at which directions
will be given to the trial, which will take place in November 2026.
FDCTech,
Inc. v. Intelligenceline.com, Fintelegram.com, et al.
This
action is pending in the Superior Court of California, County of Orange. FDCTech alleges that the defendants, through their websites
Intelligenceline.com, Fintelegram.com, and Criticalintel.com, published false and defamatory statements accusing the Company of fraud,
illegal conduct, and regulatory violations. The Company claims these statements have caused significant reputational and financial harm,
including lost business opportunities. FDCTech further alleges that the defendants engaged in an extortion scheme by demanding payment
for the removal of defamatory content.
The
complaint asserts claims for defamation per se, defamation per quod, trade libel, and false light, seeking damages and injunctive relief.
The complaint was filed in 2025 but had not yet been served as of December 31, 2025. A hearing took place on December 15, 2025, at the
Company’s motion. Following the hearing, the court instructed FDCTech to conduct an investigation as to the beneficial owner of
Intelligenceline.com.
Alchemy
Markets Ltd. v. Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 104/2023)
This
appeal is pending before the Court of Appeal (Inferior Jurisdiction) in Malta. On September 23, 2023, the Financial Intelligence Analysis
Unit (FIAU) imposed an administrative penalty of €
and a follow-up directive on Alchemy Markets Ltd. (formerly
NSFX Limited), a subsidiary of the Company, based on a compliance examination conducted between November 25, 2019, and December 5, 2019.
The examination occurred approximately four years prior to the decision and under a different ownership and control of the subsidiary.
The
Company filed this appeal on October 19, 2023, challenging the decision-making process that led to the imposition of the penalty as well
as the law on which it was based, asserting that the penalty is arbitrary and excessive, and claiming that certain aspects of the decision
are unfounded both by law and in fact. The Company seeks to overturn the administrative penalty and the follow-up directive imposed by
FIAU. The case is in the evidentiary production stage pertaining to the Company as appellant. On October 24, 2025, a hearing was held
for the Company to continue presenting evidence. The Court scheduled an additional hearing for the FIAU to cross-examine the Company’s
witnesses for February 2, 2026, to be heard before Madam Justice Rachel Montebello, following which the matter will be adjourned for
final legal submissions.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Alchemy
Markets Ltd. v. L-Avukat tal-Istat u Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 159/2024)
This
constitutional challenge is pending before the First Hall Civil Court (Constitutional Jurisdiction) in Malta and relates to the same
September 23, 2023, FIAU decision described above. The Company filed this application on April 2, 2024, challenging: (i) the composition
of the FIAU and its enabling law; (ii) the decision-making processes which allegedly breach the Company’s fundamental human right
to a fair hearing; and (iii) that given the penal nature of the penalty, in breach of the Constitution of Malta, the Company was not
adjudged by an independent court. The Company requests the Constitutional Court to set aside the FIAU decision in its entirety.
A
first procedural hearing took place on May 7, 2024, and the Company has brought its evidence in support of the claim. The First Hall
Civil Court (Constitutional Jurisdiction) has, in various instances, pronounced that administrative penalties being imposed by the FIAU
are more akin to a penal sanction and that, therefore, subject persons should be afforded the full rights afforded to an accused under
criminal law and has consistently quashed FIAU decisions on this basis. While these judgments are, in most part, subject to further appeal
before the Constitutional Court of Appeal and have, in two instances, been overturned by the Constitutional Court of Appeal, the Company
considers that the principles underpinning such previous judgments are applicable to the Company. The case remains pending as of January
21, 2026; the next hearing in the matter is set for January 28, 2026.
The
Company believes it has meritorious defenses and counterclaims in the above matters and intends to defend them vigorously. However, litigation
is inherently uncertain, and the Company cannot predict the outcome of these proceedings with certainty.
Impairment
of Long-Lived Assets
The
Company reviews long-lived assets for impairment following FASB ASC 360, Property, Plant, and Equipment. We test long-lived assets for
recoverability whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment charge
is recognized when the asset’s carrying value exceeds the fair value. There are
impairment charges for the fiscal years ended December 31, 2025,
and 2024.
Provision
for Income Taxes
The
provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities
are based on the temporary differences between the consolidated financial statement and income tax bases of assets and liabilities using
the enacted tax rates applicable yearly.
The
Company utilizes a two-step approach to recognizing and measuring uncertain tax positions (“tax contingencies”). The first
step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than
not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is
to measure the tax benefit as the largest amount, more than 50%, is likely to be realized upon ultimate settlement. The Company considers
many factors when evaluating and estimating its tax positions and benefits, requiring periodic adjustments, which may not accurately
forecast actual outcomes. The Company includes interest and penalties for tax contingencies in providing income taxes in the operations’
consolidated statements. The Company’s management does not expect the total amount of unrecognized tax benefits to change significantly
in the next twelve (12) months.
Software
Development Costs
The
Company accounts for software development costs in accordance with ASC 985-20 and ASC 350-40. Costs incurred after the establishment
of technological feasibility, or during the application development stage for internal-use software, are capitalized and amortized on
a straight-line basis over the estimated useful life of three (
years. Costs incurred prior to establishing technological feasibility are expensed as incurred.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Convertible
Instruments
The
Company accounts for convertible instruments in accordance with ASC 470-20, Debt with Conversion and Other Options, as amended by ASU
2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s
Own Equity (Subtopic 815-40). Under ASU 2020-06, the cash conversion model and the beneficial conversion feature model have been eliminated
for convertible instruments. Accordingly, convertible instruments are accounted for as a single unit unless a conversion feature meets
the conditions for bifurcation as a derivative under ASC 815.
Convertible
preferred stock is evaluated at issuance to determine whether it should be classified as equity or as a liability in accordance with
ASC 480, Distinguishing Liabilities from Equity. Instruments that are mandatorily redeemable or that embody an unconditional obligation
to transfer assets are classified as liabilities; all others are classified as equity.
The
Company’s Series B preferred convertible stock is classified as equity. No convertible debt instruments were outstanding as of
December 31, 2025, and 2024. There were no amortization charges related to debt discounts or beneficial conversion features for the fiscal
years ended December 31, 2025, and 2024.
Foreign
Currency Translation and Re-measurement
The
Company translates its foreign operations to US dollars following ASC 830, “Foreign Currency Matters.” Gains or losses
resulting from translating the foreign currency financial statements are accumulated as a separate component of accumulated other comprehensive
income (“AOCI”) in the Company’s stockholders’ equity and noncontrolling interests. Transaction gains and losses
resulting from exchange rate changes on transactions denominated in currencies other than the functional currency of the applicable subsidiary
are included in the Consolidated Statements of Income, within “Other (income) expense, net”, in the year in which the change
occurs.
We
have translated the local currency of ADS, AML, and APL in the Australian Dollar (AUD), Euro Dollar (EUR), and British Pound (GBP),
respectively, into US$1.00 at the following exchange rates for the respective dates:
The
exchange rate at the reporting end date:
| December 31, 2025 |
December 31, 2024 |
|||||||
| USD: AUD | $ | |||||||
| USD: EUR | $ | |||||||
| USD: GBP | $ | |||||||
Average
exchange rate for the period:
| Q1 2025 |
Q2 2025 |
Q3 2025 |
Q4 2025 |
|||||||||||||
| USD: AUD | $ | |||||||||||||||
| USD: EUR | $ | |||||||||||||||
| USD: GBP | $ | |||||||||||||||
ADS’
functional currency is AUD, and the reporting currency is the US dollar. AML’s functional currency is the EUR, and its reporting
currency is the US dollar. APL’s functional currency is GBP, and its reporting currency is US dollars.
The
Company translates its records into USD as follows:
| ● | Assets and liabilities at the rate of exchange in effect at the balance sheet date |
|
| ● | Equities at the historical rate |
|
| ● | Revenue and expense items at the average rate of exchange prevailing during the period |
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair
Value
The
Company uses current market values to recognize certain assets and liabilities at a fair value. The fair value is the estimated price
at which the Company can sell the asset or settle a liability in an orderly transaction to a third party under current market conditions.
The Company uses the following methods and valuation techniques for deriving fair values:
Market
Approach – The market approach uses the prices associated with actual market transactions for similar or identical assets and liabilities
to derive a fair value.
Income
Approach – The income approach uses estimated future cash flows or earnings, adjusted by a discount rate representing the time
value of money and the risk of cash flows not being achieved, to derive a discounted present value.
Cost
Approach – The cost approach uses the estimated cost to replace an asset adjusted for the obsolescence of the existing asset.
The
Company ranks the fair value hierarchy of information sources from Level 1 (best) to Level 3 (worst). The Company uses these three levels
to select inputs to valuation techniques:
| Level I |
Level 2 |
Level 3 |
||
| Level 1 is a quoted price for an identical item in an active market on the measurement date. Level 1 is the most reliable evidence of fair value and is used whenever this information is available. |
Level 2 is directly or indirectly observable inputs other than quoted prices. An example of a Level 2 input is a valuation multiple for a business unit based on comparable companies’ sales, EBITDA, or net income. |
Level 3 is an unobservable input. It may include the company’s data, adjusted for other reasonably available information. Examples of a Level 3 input are an internally-generated financial forecast. |
The
Company follows ASC 260, Earnings Per Share, to account for earnings per share. Basic earnings per share (“EPS”) calculations
are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings
per share calculations are determined by dividing net loss by the weighted average number of common shares and dilutive common share
equivalents outstanding. At December 31, 2025, and 2024, the Company had
and
weighted average basic and dilutive shares issued and outstanding,
respectively.
During
the period ended December 31, 2025, and 2024, common stock equivalents were dilutive due to net income. Hence, they are not considered
in the computation.
Reclassifications
Certain
prior period amounts were reclassified to conform to the current year’s presentation. None of these classifications impacted reported
operating or net loss for any presented period.
Recent
Accounting Pronouncements
In December
2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhanced disclosures
about a reporting entity’s effective tax rate and its income taxes paid (refunded). ASU 2023-09 is effective for public business
entities for annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 effective January 1, 2025, on a prospective
basis. The adoption expanded the Company’s income tax disclosures as reflected in Note 13, Income Taxes, and did not affect
the Company’s consolidated financial position, results of operations, or cash flows.
In March
2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar
Awards, to guide how entities should determine the appropriate accounting treatment for the issuance of profits interest
units and similar types of awards. The ASU is effective for public business entities for interim and annual periods for fiscal years
beginning after December 15, 2024. The Company adopted ASU 2024-01 effective January 1, 2025. The adoption did not have a material impact
on the Company’s consolidated financial statements because the Company has not issued profits interest or similar awards.
In March
2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concept Statements,
which removes various references to the FASB’s Concepts Statements from the Codification. The amendments are effective for public
business entities for fiscal years beginning after December 15, 2024. The Company adopted ASU 2024-02 effective January 1, 2025, and
the adoption did not have a material impact on the Company’s consolidated financial statements.
In December
2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and
Disclosure of Crypto Assets, which is effective for all entities for fiscal years beginning after December 15, 2024, including interim
periods within those fiscal years. The Company adopted ASU 2023-08 effective January 1, 2025. The adoption did not have a material impact
on the Company’s consolidated financial statements because the Company does not hold crypto assets within the scope of the ASU.
In March
2025, the FASB issued ASU 2025-02, Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin
No. 122, which removed Codification references related to SAB 121 following its rescission by SAB 122. The amendments were effective
upon issuance on a fully retrospective basis to annual periods beginning after December 15, 2024. The Company adopted ASU 2025-02 during
2025, and the adoption did not have a material impact on the Company’s consolidated financial statements because the Company does
not safeguard crypto assets for platform users.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recently
Issued Accounting Pronouncements Not Yet Adopted
In November
2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic
220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose, in tabular format, disaggregated
information about specified categories of expenses, along with a qualitative reconciliation to the captions on the face of the financial
statements. In January 2025, the FASB issued ASU 2025-01, which clarified that ASU 2024-03 is effective for public business entities
for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early
adoption is permitted. The Company is evaluating the effect that ASU 2024-03, as clarified by ASU 2025-01, will have on its disclosures
and does not expect the ASU to affect its consolidated financial position, results of operations, or cash flows.
In November
2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible
Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should
be accounted for as an induced conversion. The ASU is effective for all entities for annual reporting periods beginning after December
15, 2025, and interim reporting periods within those annual reporting periods. The Company is evaluating the impact of ASU 2024-04 and
does not expect the adoption to have a material impact on its consolidated financial statements.
In May
2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer
in the Acquisition of a Variable Interest Entity, which is effective for fiscal years beginning after December 15, 2026, including interim
periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of ASU 2025-03 on its consolidated
financial statements.
In July
2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic
606): Clarifications to Share-Based Consideration Payable to a Customer, which is effective for fiscal years beginning after December
15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company does not currently have share-based
consideration payable to customers within the scope of the ASU and does not expect adoption to have a material impact on its consolidated
financial statements.
In September
2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements
to the Accounting for Internal-Use Software, which modernizes the recognition guidance for internal-use software costs by removing references
to project-stage concepts and providing updated capitalization guidance. The Company is evaluating the impact of ASU 2025-06 on its capitalization
policies for internally developed software and related disclosures.
In December
2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which improves the navigability of ASC 270
and clarifies when it applies. Early adoption is permitted, and the ASU permits retrospective or prospective transition. The Company is
evaluating the impact of ASU 2025-11 on its interim disclosures.
In December
2025, the FASB issued ASU 2025-12, Codification Improvements, which includes 33 targeted improvements to U.S. GAAP across multiple topics,
including clarifications to diluted earnings per share calculations when a loss from continuing operations exists. The Company is evaluating
the impact of ASU 2025-12 on its consolidated financial statements and disclosures.
Other accounting
pronouncements issued but not yet effective are not expected to have a material impact on the Company’s consolidated financial
position, results of operations, or cash flows.
NOTE
3. MANAGEMENT’S PLANS
The Company
has prepared its consolidated financial statements on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities in the ordinary course of business. The Company has historically reported accumulated deficits; however, as described
below, Management believes that the Company’s financial position and operating trajectory as of December 31, 2025, substantially
reduces, and may eliminate, the conditions that previously gave rise to substantial doubt about the Company’s ability to continue
as a going concern.
For the fiscal year ended December 31, 2025, the Company achieved significant
improvement across all key financial metrics. The Company generated total consolidated revenues of $
of approximately
as well as the post-acquisition contribution of Alchemy International Ltd. (AIL) from October 29, 2025, through December 31, 2025. The
consolidated net income attributable to the Company’s shareholders for the year ended December 31, 2025, was $
31, 2025, we held total cash and cash equivalents of $
client funds, of which $
accumulated deficit was fully eliminated, resulting in an accumulated surplus of $
In
prior periods, the Company reported recurring net losses from operations and an accumulated deficit that raised substantial doubt
about its ability to continue as a going concern. At December 31, 2024 (as restated), the Company reported an accumulated deficit of
$
we held total cash and cash equivalents of $
of unrestricted cash and $
at liquidity providers, and a working capital surplus of $
Net income attributable to FDCTech’s shareholders for the year ended December 31, 2024 (as restated) was $
NOTE
3. MANAGEMENT’S PLANS (continued)
On
October 29, 2025, the Company completed the acquisition of
of the issued and outstanding shares of Alchemy International Ltd. (“AIL”), a securities dealer licensed by the Financial
Services Authority of Seychelles (License SD136), from SYNC Capital Limited, a wholly owned entity of Mr. Gope S. Kundnani. The consideration
was $
cash. AIL was immediately earnings-accretive and contributed
net income of approximately $
attributable to the Company’s shareholders for the period
from the Acquisition Date through December 31, 2025. The AIL acquisition expands the Company’s global regulatory footprint and
significantly enhances its capacity to serve offshore brokerages, high-frequency traders, and institutional clients.
Management’s
Plans
In
response to the conditions described above and to support the Company’s continued growth, Management has implemented and continues
to pursue the following plans:
Achieved
and Sustained Profitability. The Company returned to profitability in fiscal year 2025, generating Net income (loss) attributable
to FDCTech’s shareholders of $
the year ended December 31, 2025, compared to a net income of $236,586 for the year ended December 31, 2024 (as restated). The Company also eliminated its accumulated deficit entirely, reporting an accumulated
surplus of $
31, 2025. Management’s focus on operating leverage, disciplined cost management, and integration of acquired entities has produced
measurable results. Management intends to sustain and grow profitability through the continued execution of its diversified financial
services platform.
Revenue
Diversification and Segment Growth. The Company operates across three segments — Investment and Brokerage, Wealth Management,
and Technology and Software Development. Total revenues for the year ended December 31, 2025, were $
an increase of approximately
from $
in the prior year (as restated). Technology and software revenues
grew to $
an increase of
from $
in the prior year. Management expects continued growth in the
Technology segment, driven by expanded licensing of the proprietary Condor Trading Platform and the commercialization of the Condor Investing
and Trading App.
Strategic
Acquisitions and Global Expansion. The Company’s growth strategy centers on acquiring and scaling small to mid-size legacy
financial services companies with complementary regulatory licenses and client bases. In addition to the AIL acquisition completed in
October 2025, the Company announced the acquisition of Alchemy Global to expand its market presence in the Middle East and Asia, and
is advancing its acquisition of Steven AB (trading as Xoala), a Swedish-registered investment firm. These acquisitions expand the Company’s
regulatory footprint and diversify its revenue base across multiple jurisdictions.
Regulatory
Expansion. The Company’s subsidiary Alchemy Markets Ltd. received authorization from the Malta Financial Services Authority
(MFSA) to offer equities and money market securities, significantly broadening its product offering to clients. The Company has also
expanded its physical presence with new offices in Cyprus, Malta, and the United Kingdom, reinforcing its commitment to regulated, multi-jurisdictional
operations.
Uplisting
to a Senior National Securities Exchange. In February 2025, the Company announced its intention to apply for uplisting to a senior
national securities exchange, such as the Nasdaq Capital Market or the New York Stock Exchange. The Company has engaged Lucosky Brookman
LLP as legal counsel and E.F. Hutton & Co. LLC as financial advisor to assist with capital markets strategy, financing opportunities,
and the uplisting process. Shareholders have approved an increase in authorized common stock from
million to
million shares and authorized the Board of Directors to implement
a reverse stock split within a ratio of not less than
and not more than
at any time prior to June 30, 2026, providing flexibility to
meet exchange listing standards. Management believes uplisting will enhance liquidity, expand the Company’s institutional investor
base, and provide greater access to capital markets. In September 2025, the Company engaged ThinkEquity LLC (“ThinkEquity”)
to act as the sole book-runner for the firm commitment underwriting of the proposed registered public offering (the “Offering”)
of common stock (the “Common Stock”) by FDCTech, Inc. (collectively, with its subsidiaries and affiliates, the “Company”).
The Offering will consist of the sale of approximately $
million worth of Common Stock of the Company (the shares of
Common Stock to be sold in the Offering are hereinafter referred to collectively as the “Shares”).
Capital
Markets and Balance Sheet Strength. At December 31, 2025, the Company had total cash and cash equivalents of $
consisting of $
of segregated client funds, and a working capital surplus of $
providing adequate liquidity to fund operations, service obligations, and pursue continued growth initiatives. The Company’s capital
structure reflects the Series A and Series B preferred convertible stock issued in connection with prior financing and acquisition transactions,
both classified as equity. Management does not anticipate a need for emergency financing to sustain operations in the near term.
S-1
Registration Statement. In connection with the planned uplisting, the Company intends to file an S-1 registration statement with
the Securities and Exchange Commission. The Company’s audited financial statements for AIL for the relevant periods, pro-forma
financial information under Article 11 of Regulation S-X, and related-party transaction disclosures required under Regulation S-K Item
404 will be included as required by applicable SEC rules.
Based
on the foregoing, including the Company’s elimination of its accumulated deficit, its return to profitability in fiscal year 2025,
its strong cash and working capital position as of December 31, 2025, the earnings-accretive contribution of AIL, and Management’s
active plans for continued operational and strategic growth, Management believes that the Company has sufficient resources to continue
as a going concern for at least twelve months from the date these financial statements are issued. The consolidated financial statements
do not include any adjustments that might result from the outcome of this assessment. Management will continue to monitor conditions
and update its plans as circumstances evolve.
NOTE
4. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Background for fiscal year ending December
31, 2025
The Company originally filed its Annual Report
on Form 10-K for the year ended December 31, 2025, on April 17, 2026 (the “Original Filing”). On April 22, 2026, the Company
filed Amendment No. 1 on Form 10-K/A (the “Amendment No. 1”). Amendment No. 1 had no impact on the Consolidated Balance Sheet, the previously reported net income (loss), total
assets, total liabilities, or stockholders’ equity (deficit).
Subsequent to the filing of Amendment No. 1, in response to comments received from the Staff of the Securities and
Exchange Commission, the Company filed Amendment No. 2 on Form 10-K/A (the “Restatement”) to (i) disaggregate the previously
reported ‘Cash’ line item on the Consolidated Balance Sheet into two separately captioned line items, ‘Cash and cash equivalents’ and
‘Restricted cash — client funds (segregated),’ with a corresponding ‘Client funds payable’ liability presented separately on the
face of the Consolidated Balance Sheet; (ii) reflect cash, cash equivalents, and restricted cash on a combined basis on the Consolidated
Statements of Cash Flows in accordance with ASC 230-10-50-8, with the reconciliation between the consolidated balance sheets and the consolidated
statements of cash flows set forth in Note 11; and (iii) add Note 11 Client Funds. Restricted cash — client funds (segregated) represent
amounts held on behalf of customers of the Company’s regulated brokerage subsidiaries, with an offsetting client funds payable liability.
In addition to those presentation and disclosure reclassifications — which by themselves do not change
any previously reported total — the Restatement records corrections principally relating to the recalculation of the parent company
operating lease under ASC 842, a related reclassification within other income (expense), and the foreign currency translation and noncontrolling
interest allocations. For the fiscal year ended December 31, 2025, these corrections increase total assets by $
increase consolidated net income by $
compared to $
year ended December 31, 2024, they conform the comparative amounts to the restated figures described under “Background for fiscal
year ending December 31, 2024” below. Previously reported total revenue, total cost of sales, gross profit, and basic and diluted
earnings per share are unchanged, and no subtotal of the Consolidated Statements of Cash Flows is changed by the presentation reclassifications.
The following tables present the effects of the
Adjustment (Amendment No. 1) and the Restatement (Amendment No. 2) on the affected line items of the Consolidated Balance Sheet and Consolidated
Statement of Cash Flows. The Consolidated Statement of Operations is presented to show the effect of the Restatement on total operating
expenses, other income (expense), and net income (loss); see Note 14, Comprehensive Income, for the comprehensive income presentation
added in Amendment No. 1 and further corrected in the Restatement.
A. CONSOLIDATED BALANCE SHEET
December
31, 2025
| Line Item | As Originally Reported |
Adjustment | Amendment No. 1 |
Adjustment | As Restated (Amend. No. 2) |
|||||||||||||||
| Cash and cash equivalents |
$ | ( |
) | |||||||||||||||||
| Restricted cash — client funds (segregated) |
||||||||||||||||||||
| Related party receivable | ||||||||||||||||||||
| Tax receivable | ( |
) | ||||||||||||||||||
| Right of use asset (ROU) |
||||||||||||||||||||
| Total assets |
$ | |||||||||||||||||||
| Operating lease liability, current |
( |
) | ||||||||||||||||||
| Operating lease liability, non-current |
||||||||||||||||||||
| Total liabilities |
$ | ( |
) | |||||||||||||||||
| Additional paid-in capital | ||||||||||||||||||||
| Accumulated other comprehensive income (loss) | ( |
) | ||||||||||||||||||
| Accumulated deficit |
||||||||||||||||||||
| Total FDCTech, Inc. stockholders’ equity (deficit) | ||||||||||||||||||||
| Total stockholders’ equity | ||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | |||||||||||||||||||
In connection with the preparation of Amendment
No. 4 to its Annual Report on Form 10-K/A for the year ended December 31, 2025, the Company identified certain classification and measurement
matters affecting the consolidated balance sheet as of December 31, 2025, previously presented in Amendment No. 2. The accompanying consolidated
balance sheet has been restated to correct these matters. The effect of each adjustment is described below and summarized in the reconciliation
that follows.
(a) Separate presentation of restricted cash.
The Company reclassified $
Restricted cash caption. As a result, Cash and cash equivalents decreased from $
to $
(b) Reclassification of related party balances.
The Company reclassified $
nature of the counterparty. This adjustment had no effect on total assets, total liabilities or total stockholders’ equity.
(c) Re-measurement of operating lease right-of-use
asset. The Company re-measured its operating lease right-of-use asset, increasing the asset by $
by $
(d) Classification of operating lease liability.
The Company reclassified its operating lease liability between current and non-current, decreasing Operating lease liability, current
by $
(e) Reclassification within stockholders’ equity. The Company reclassified
$
$
December
31, 2024
| Line Item | As Originally Reported | Adjustment | Amendment No. 1 | Adjustment | As Restated (Amend. No. 2) |
|||||||||||||||
| Cash and cash equivalents |
$ | ( |
) | |||||||||||||||||
| Restricted cash — client funds (segregated) |
||||||||||||||||||||
| Right of use asset (ROU) | $ | |||||||||||||||||||
| Total assets | $ | |||||||||||||||||||
| Operating lease liability, current |
( |
) | ||||||||||||||||||
| Operating lease liability, non-current |
||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | |||||||||||||||||||
In connection with the restatement of its consolidated
financial statements, the Company restated its previously issued consolidated balance sheet as of December 31, 2024, as originally reported
and as previously presented in Amendment No. 1. The accompanying consolidated balance sheet as of December 31, 2024, has been restated
to correct the classification and measurement matters described below, which are summarized in the reconciliation that follows.
(a) Separate presentation of restricted cash.
The Company reclassified $
presented Restricted cash caption. As a result, Cash and cash equivalents decreased from $
increased to $
equity.
(b) Re-measurement of operating lease right-of-use
asset. The Company re-measured its operating lease right-of-use asset, increasing the asset by $
a corresponding decrease in accumulated deficit of $
(c) Classification of operating lease liability.
The Company reclassified its operating lease liability between current and non-current, decreasing Operating lease liability, current
by $
with no effect on total liabilities.
NOTE 4. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (continued)
B. CONSOLIDATED STATEMENT OF OPERATIONS
The Adjustment (Amendment No. 1) did not
change any previously reported amount in the Consolidated Statement of Operations through net income (loss) attributable to FDCTech,
Inc.’s shareholders, or basic and diluted earnings per share. The Restatement (Amendment No. 2) corrects the calculation of
the parent company operating lease under ASC 842, reducing rental expense within general and administrative expense by $
and reclassifies amounts between other interest income (expense) ($(
and other income (expense) ($
share of $.
Year
Ended December 31, 2025
| Line Item |
As Originally Reported |
Adjustment | Amendment No. 1 |
Adjustment | As Restated (Amend. No. 2) |
|||||||||||||||
| Revenue | ||||||||||||||||||||
| Cost of sales |
||||||||||||||||||||
| Gross Profit |
||||||||||||||||||||
| Total operating expenses |
( |
) | ||||||||||||||||||
| Other interest income (expense) |
( |
) | ( |
) | ||||||||||||||||
| Other income (expense) |
( |
) | ( |
) | ( |
) | ||||||||||||||
| Net income (loss) |
||||||||||||||||||||
| Net income (loss) per common share |
||||||||||||||||||||
Year
Ended December 31, 2024
| Line Item |
As Originally Reported |
Adjustment | Amendment No. 1 |
Adjustment | As Restated (Amend. No. 2) |
|||||||||||||||
| Revenue | ||||||||||||||||||||
| Cost of sales |
||||||||||||||||||||
| Gross Profit |
||||||||||||||||||||
| Total operating expenses |
( |
) | ||||||||||||||||||
| Net income (loss) |
( |
) | ( |
) | ||||||||||||||||
| Net income (loss) per common share |
) | ) | ||||||||||||||||||
Refer to Note 14. Comprehensive Income for the comprehensive income
(loss) presentation was added in Amendment No. 1.
NOTE 4. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (continued)
C. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
Year
Ended December 31, 2025
| Line Item | As Originally Reported | Adjustment | Amendment No. 1 | Adjustment | As Restated (Amend. No. 2) |
|||||||||||||||
| Operating Activities: |
||||||||||||||||||||
| Net income (loss) |
5,814,612 | 14,366 | 5,828,978 | |||||||||||||||||
| Change in foreign currency translation |
( |
) | 386,265 | (17,227 | ) | 369,038 | ||||||||||||||
| Total comprehensive income (loss) |
6,200,877 | (2,861 | ) | 6,198,016 | ||||||||||||||||
| Comprehensive income (loss) attributable to NCI |
( |
) | 17,190 | 22,622 | 39,812 | |||||||||||||||
| Comprehensive income (loss) attributable to FDCTech stockholders |
6,183,687 | (25,483 | ) | 6,158,204 | ||||||||||||||||
Year Ended December 31, 2024
| Line Item | As Originally Reported | Adjustment | Amendment No. 1 | Adjustment | As Restated (Amend. No. 2) |
|||||||||||||||
| Operating Activities: |
||||||||||||||||||||
| Net income (loss) |
( |
) | (29,739 | ) | 266,325 | 236,586 | ||||||||||||||
| Change in foreign currency translation |
( |
) | (298,009 | ) | – | (298,009 | ) | |||||||||||||
| Total comprehensive income (loss) |
( |
) | (327,748 | ) | 266,325 | (61,423 | ) | |||||||||||||
| Comprehensive income (loss) attributable to NCI |
( |
) | 22,450 | (22,408 | ) | 43 | ||||||||||||||
| Comprehensive income (loss) attributable to FDCTech stockholders |
( |
) | (350,198 | ) | 288,733 | (61,466 | ) | |||||||||||||
Note:
Only line items affected by the Adjustment (Amendment No. 1) or otherwise relevant for traceability are shown. The Restatement (Amendment
No. 2) does not change any subtotal or line item of the Consolidated Statements of Cash Flows; rather, it (i) relabels ‘Cash at beginning/end
of the period’ to ‘Cash, cash equivalents, and restricted cash at beginning/end of the period’ to reflect the inclusion of client funds
— segregated as restricted cash under ASC 230-10-50-8, and (ii) adds the corresponding reconciliation between the Consolidated
Balance Sheets and the Consolidated Statements of Cash Flows in Note 11(d).
D. CONSOLIDATED STATEMENT OF CASH FLOWS
Amendment No. 1 added the presentation of comprehensive
income (loss) below net income (loss) on the Consolidated Statements of Operations — a presentation change only. Amounts shown
reflect the comprehensive income (loss) disclosure as added; refer to Note 14. Comprehensive Income.
Year
Ended December 31, 2025
| Line Item | As Originally Reported | Adjustment | Amendment No. 1 | Adjustment | As Restated (Amend. No. 2) |
|||||||||||||||
| Net income (loss) |
||||||||||||||||||||
| Common stock issued for services |
||||||||||||||||||||
| Series B Convertible Preferred stock for services |
||||||||||||||||||||
| Right of use of assets |
( |
) | ||||||||||||||||||
| Net cash provided by (used in) operating activities |
( |
) | ( |
) | ( |
) | ||||||||||||||
| Acquisition of AIL |
||||||||||||||||||||
| Changes in paid-in capital, common control |
||||||||||||||||||||
| Net cash used in investing activities |
||||||||||||||||||||
| Series B Convertible Preferred stock for services |
( |
) | ||||||||||||||||||
| Common stock issued at a discount |
( |
) | ||||||||||||||||||
| Common stock issued for cash |
( |
) | ||||||||||||||||||
| Capital contribution |
( |
) | ||||||||||||||||||
| Net cash provided by financing activities |
( |
) | ||||||||||||||||||
Year Ended December 31, 2024
| Line Item | As Originally Reported | Adjustment | Amendment No. 1 | Restatement Adjustment | As Restated (Amend. No. 2) |
|||||||||||||||
| Net income (loss) |
( |
) | ( |
) | ||||||||||||||||
| Less: Net income (loss) attributable to noncontrolling interest |
||||||||||||||||||||
| Operating lease |
||||||||||||||||||||
| Right of asset use |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Net cash provided by (used in) operating activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
F. STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE — CONFIRMATION
OF NO IMPACT
The Adjustment (Amendment No. 1) did not change total stockholders’ equity (deficit) or the components
of stockholders’ equity. The Restatement (Amendment No. 2) increased the accumulated surplus by $
FDCTech, Inc. stockholders’ equity to $
earnings per share.
NOTE 4. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (continued)
Background
for fiscal year ending December 31, 2024
On
April 3, 2025, the Company’s Board of Directors dismissed Olayinka Oyebola & Co. (“Olayinka”) as its independent
registered public accounting firm, following Olayinka’s designation as a Prohibited Service Provider by OTC Markets Group. The
Company engaged LAO Professionals (PCAOB Firm ID: 7057) as its successor independent auditor, effective on the same date.
As
part of the auditor transition, LAO Professionals conducted a reaudit of the Company’s consolidated financial statements for the
fiscal year ended December 31, 2024 (previously audited by Olayinka and filed with the SEC on March 3, 2025). The reaudit identified
two adjustments to the previously reported figures. Accordingly, the Company has restated its consolidated balance sheet as of December
31, 2024, and its consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year
then ended. Investors should not rely upon the financial statements as presented in the Annual Report on Form 10-K for the year ended
December 31, 2024, as originally filed.
The Company has restated its previously issued consolidated financial
statements for the year ended December 31, 2024 to correct certain errors. The effects of the restatement on the Consolidated Balance
Sheet, Consolidated Statement of Operations, and Consolidated Statement of Cash Flows are presented below.
A. Consolidated Balance Sheet — As of December 31, 2024
| As Originally Reported | Adjustment | As Restated | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | $ | ( |
) |
$ | |||||||
| Restricted cash — client funds (segregated) | $ | $ |
|
$ |
|
|||||||
| Accounts receivable, net | $ | $ | ||||||||||
| Subscription receivable | $ | $ | ( |
) | ||||||||
| Prepaid – current | $ | $ | ||||||||||
| Related party receivable | $ | $ | ( |
) | $ | |||||||
| Total current assets | $ | $ | ( |
) | $ | |||||||
| Fixed assets, net | $ | $ | ||||||||||
| Capitalized software, net | $ | $ | ||||||||||
| Investment through subsidiary | $ | $ | ||||||||||
| Accrued income | $ | $ | ||||||||||
| Acquired intangible assets | $ | $ | ||||||||||
| Tax receivable | $ | $ | ||||||||||
| Fair value of trading positions, profit | $ | $ | ||||||||||
| Right of use (lease) | $ | $ | ||||||||||
| Total assets | $ | $ | ( |
) | $ | |||||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | $ | ||||||||||
| Line of credit | $ | $ | ||||||||||
| Accrued expenses, related party | $ | $ | ||||||||||
| Business acquisition loan | $ | $ | ||||||||||
| CARES Act – PPP advance | $ | $ | ||||||||||
| Related party advances | $ | $ | $ | |||||||||
| Client funds payable | $ | $ | ( |
) | $ | |||||||
| Operating lease liability, current | $ | $ | ||||||||||
| Other current liabilities | $ | $ | ||||||||||
| Total current liabilities | $ | $ | ( |
) | $ | |||||||
| Deferred tax liabilities | $ | $ | ||||||||||
| SBA loan – non-current | $ | $ | ||||||||||
| Operating lease liability, non-current | $ | $ | ||||||||||
| Accrued interest – non-current | $ | $ | ||||||||||
| Total liabilities | $ | $ | ( |
) | $ | |||||||
| Stockholders’ Equity (Deficit): | ||||||||||||
| Preferred stock | $ | $ | ||||||||||
| Series B Preferred stock | $ | $ | ||||||||||
| Common stock | $ | $ | $ | |||||||||
| Additional paid-in capital | $ | $ | ( |
) | $ | |||||||
| Subscription receivable (contra-equity) | $ | ( |
) | $ | ( |
) | ||||||
| Additional paid-in capital, Series B Preferred | $ | $ | ||||||||||
| Accumulated other comprehensive income (loss) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Accumulated deficit | $ | ( |
) | $ |
|
$ | ( |
) | ||||
| Total FDCTech stockholders’ equity | $ | $ | ( |
) | $ | |||||||
| Noncontrolling interest | $ | $ | ||||||||||
| Total liabilities and stockholders’ equity | $ | $ | ( |
) | $ | |||||||
NOTE 4. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (continued)
B. Consolidated Statement of Operations — Year Ended December
31, 2024
| As Originally Reported | Adjustment | As Restated | ||||||||||
| Revenues: | ||||||||||||
| Technology & software | $ | $ | ||||||||||
| Wealth management | $ | $ | ||||||||||
| Brokerage | $ | $ | ||||||||||
| Total revenue | $ | $ | ||||||||||
| Cost of sales: | ||||||||||||
| Technology & software | $ | $ | ||||||||||
| Wealth management | $ | $ | ||||||||||
| Brokerage | $ | $ | ||||||||||
| Total cost of sales | $ | $ | ||||||||||
| Gross Profit | $ | $ | ||||||||||
| Operating expenses: | ||||||||||||
| General and administrative | $ | $ | ( |
) | $ | |||||||
| Sales and marketing | $ | $ | ||||||||||
| Depreciation | $ | $ | ||||||||||
| Total operating expenses | $ | $ | ( |
) | $ | |||||||
| Operating income (loss) | $ | ( |
) | $ |
|
$ | ( |
) | ||||
| Other income (expense): | ||||||||||||
| Other interest income (expense) | $ | ( |
) | $ | ( |
) | ||||||
| Other income (expense) | $ | $ | ||||||||||
| Total other income (expense) | $ | $ | ||||||||||
| Provision (benefit) for income taxes | ||||||||||||
| Net income (loss) | $ | $ |
|
$ | ||||||||
| Less: Net income (loss) attributable to NCI | $ | ( |
) | $ | ( |
) | ||||||
| Net income (loss) attributable to FDCTech shareholders | $ | $ |
|
$ | ||||||||
C. Consolidated Statement of Cash Flows — Year Ended December
31, 2024
| As Originally Reported | Adjustment | As Restated | ||||||||||
| Operating Activities: | ||||||||||||
| Net income (loss) | $ | $ |
|
$ | ||||||||
| Adjustments to reconcile net loss to net cash: | ||||||||||||
| Depreciation | $ | $ | ||||||||||
| Common stock issued for services | $ | $ | ||||||||||
| Series B Preferred issued for services | $ | $ | ||||||||||
| Accounts receivable allowance | $ | $ | ||||||||||
| Fixed assets, net | $ | ( |
) | $ | ( |
) | ||||||
| Acquired intangible assets | $ | ( |
) | $ | ( |
) | ||||||
| Changes in assets and liabilities: | ||||||||||||
| Gross accounts receivable | $ | $ | ||||||||||
| Prepaid | $ | $ | ||||||||||
| Related party receivable | $ | ( |
) | $ | $ | ( |
) | |||||
| Accounts payable | $ | $ | ||||||||||
| Other current liabilities | $ | $ | ||||||||||
| Accrued interest | $ | $ | ||||||||||
| Client funds payable (Customer funds) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Fair value of trading position, net | $ | $ | ||||||||||
| Operating lease | $ | $ | ||||||||||
| Deferred taxes | $ | ( |
) | $ | ( |
) | ||||||
| Related party guarantee | $ | $ | ||||||||||
| Tax receivable by subsidiaries | $ | $ | ||||||||||
| Accrued income | $ | ( |
) | $ | ( |
) | ||||||
| Right of use of assets (lease) | $ | ( |
) | ( |
) | $ | ( |
) | ||||
| Accrued expenses, related party | $ | ( |
) | $ | ( |
) | ||||||
| Net cash provided (used) in operating activities | $ | ( |
) | $ |
( |
) | $ | ( |
) | |||
| Investing Activities: | ||||||||||||
| Capitalized software | $ | ( |
) | $ | ( |
) | ||||||
| Effect of exchange rates | $ | ( |
) | $ | $ | |||||||
| Changes in paid-in capital, common control | $ | $ | $ | |||||||||
| Net cash provided (used) by investing activities | $ | $ | ||||||||||
| Financing Activities: | ||||||||||||
| Borrowing from (payments to) line of credit | $ | $ | ||||||||||
| Net proceeds from PPP (repayment) | $ | ( |
) | $ | ( |
) | ||||||
| Net proceeds from SBA loan (repayment) | $ | ( |
) | $ | ( |
) | ||||||
| Related party advances | $ | $ | $ | |||||||||
| Series A Preferred cancellation | $ | ( |
) | $ | ( |
) | ||||||
| Common stock issued for cash | $ | $ | ||||||||||
| Changes in paid-in capital, shares issued at discount | $ | $ | ||||||||||
| Changes in NCI | $ |
( |
) | ( |
) | |||||||
| Noncontrolling interest income | $ |
|
$ |
|
||||||||
| Net cash provided (used) by financing activities | $ | $ | $ |
|
||||||||
| Effect of exchange rates | $ | (278,498 | ) | (19,511 | ) | (298,009 | ) | |||||
| Net increase (decrease) in cash | $ | ( |
) | $ | $ | ( |
) |
|||||
| Cash, cash equivalents, and restricted cash at beginning of the period | $ | $ | ||||||||||
| Cash, cash equivalents, and restricted cash at end of the period | $ | $ | $ | |||||||||
NOTE 4. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (continued)
D. Effect of Each Restatement Adjustment
| Line item | A: G&A omitted | B: APL client funds | C: Third-party assets | D: RP advances reclass | E: Subscription receivable | F: Intercompany elimination | G: 500K shares 2021 | OCI re-translation* | Cash segregation* |
Total | ||||||||||||||||||||||||||||||
| Balance Sheet | ||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | (11,526,789 | ) | $ | ( |
) |
||||||||||||||||||||||||
| Restricted cash — client funds (segregated) |
|
|
|
|
|
|
|
$ | 11,526,789 |
|
||||||||||||||||||||||||||||||
| Related party receivable | $ | ( |
) | – | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Subscription receivable (asset) | $ | ( |
) | – | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Related party advances (liability) | $ | $ | ( |
) | – | $ | ||||||||||||||||||||||||||||||||||
| Customer funds (Client funds payable) | $ | ( |
) | $ | ( |
) | – | $ | ( |
) | ||||||||||||||||||||||||||||||
| Common stock | $ | – | $ | |||||||||||||||||||||||||||||||||||||
| Additional paid-in capital | $ | ( |
) | $ | $ | – | $ | ( |
) | |||||||||||||||||||||||||||||||
| Subscription receivable (contra-equity) | $ | ( |
) | – | $ | ( |
) | |||||||||||||||||||||||||||||||||
| AOCI (loss) | $ | ( |
) | – | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Accumulated deficit | $ | ( |
) | $ | ( |
) | – | $ | ( |
) | ||||||||||||||||||||||||||||||
| Income Statement | ||||||||||||||||||||||||||||||||||||||||
| General and administrative expense | $ | $ | – | $ | ||||||||||||||||||||||||||||||||||||
| Rental expenses adjustment per ASC 842 |
( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to shareholders | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||||||||||
Nature of Restatement Adjustments
Adjustment A — Correction of General and Administrative
Expense ($
The reaudit identified $
of G&A expenses omitted from the previously reported consolidated statement of operations for the year ended December 31, 2024. The
corresponding entry reduces cash by $
This correction increases G&A expense by $
reduces net income by $
and increases accumulated deficit by $
Adjustment in rental expenses per lease accounting under US GAAP (ASC 842)
with a reduction in lease expenses of $
Net income attributable to the Company’s shareholders increased from
$
Adjustment B — Reclassification of Client Funds
of Alchemy Prime Limited (APL) from Alchemy Markets Ltd. (AML) Cash ($
Client funds aggregating $
held within AML’s cash account (designated as the liquidity provider account) were recorded within AML’s general cash balance rather than
as a separately designated client funds account. ASC 940, “Financial Services–Brokers and Dealers,” the Company presents client funds as a separately
captioned asset on the consolidated balance sheet. This reclassification transfers the balance from AML’s unrestricted cash
to a client funds account. No effect on consolidated net income or total stockholders’ equity; reduces unrestricted cash and correspondingly
reduces the Client funds liability.
Adjustment C — Reclassification of External Third-Party
Assets from AML Cash on Hand ($
Assets totaling $
behalf of an external third-party counterparty were included within AML’s cash on hand balance (Account 1028). These assets belong to
an external party and do not constitute Company assets. The reclassification removes third-party assets from cash and presents them within
client funds, with corresponding recognition of amounts due to the external party. No effect on consolidated net income, net revenue,
or total stockholders’ equity.
Adjustment D — Reclassification of Cash Credit
at Various Related Parties from Cash on Hand to Related Party Advances ($
The classification of certain cash credits, net of $
for various related parties was corrected to related party advances. As a result, cash on hand increased by $
year ended December 31, 2024, with an offsetting increase to the related party advances liability.
Adjustment E — Reclassification of Subscription
Receivable from Current Asset to Contra-Equity ($)
The previously filed December 31, 2024, balance sheet included
a subscription receivable of $ classified as a current asset, representing amounts due from shareholders for equity instruments
previously issued but not yet paid. Under ASC 505-10-45-2, receivables arising from the issuance of equity instruments shall be presented
as a contra-equity item rather than as an asset. Accordingly, $
offset within stockholders’ equity, and $
of subscription receivable that had been credited to additional paid-in capital without a corresponding cash receipt, has been reversed
from additional paid-in capital. This reclassification has no effect on the consolidated statements of operations, comprehensive income,
or cash flows.
Adjustment F — Elimination of Intercompany Receivable
Against Intercompany Payable for AML ($
An intercompany receivable of $
Due from AML” had not been eliminated against the corresponding “Amount Due to AML” intercompany payable in consolidation.
Per ASC 810, all intercompany balances and transactions must be eliminated upon consolidation. This adjustment eliminates the gross presentation
of the intercompany receivable and payable. Net effect: reduces total consolidated assets and total consolidated liabilities by $
each. No impact on stockholders’ equity or net income.
NOTE 4. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (continued)
Adjustment G — Correction of Shares Issued
for Services in October 2021 ($
Corrects the under-issuance of shares that should
have been issued in October 2021 at $ per share. The entry records the omitted share consideration at the original transaction price.
Stock-based compensation expense increases by $, with an increase in common stock and APIC of $
a result, shares issued and outstanding increased from to .
Adjustment H — Correction of Foreign Currency Translation
Adjustment for Fiscal Year 2024 ($
In connection with LAO Professionals’ reissuance of the
Report of Independent Registered Public Accounting Firm, the Company further corrected the foreign currency translation adjustment by
$
Per ASC 830, foreign currency translation adjustments are recognized in OCI with an offset in AOCI within stockholders’ equity. No effect
on net income, total current assets, total current liabilities, working capital, or cash flows for fiscal 2024. The adjustment reduces
total comprehensive income for fiscal 2024 from $
to $(
OCI Translation — $(19,511) mechanical re-translation
effect
LAO Professionals re-performed the translation of the Company’s
foreign subsidiary financial statements from functional currency to U.S. dollar reporting currency per ASC 830. The re-translation produced
an AOCI loss of $(
$(
is further re-corrected by Adjustment H above.
E. Consolidated Statement of Comprehensive Income —
Year Ended December 31, 2024
(in U.S. dollars)
| Line item | As Originally Reported | Adjustment | As Restated | |||||||||
| Net income (loss) | $ | $ |
|
$ | ||||||||
| Other comprehensive income (loss): | ||||||||||||
| Foreign currency translation adjustment* | $ | $ | ( |
) | $ | ( |
) | |||||
| Total comprehensive income (loss) | $ | $ | ( |
) | $ | ( |
) | |||||
| Less: Comp income (loss) attributable to NCI | $ | ( |
) | $ | $ | |||||||
| Comprehensive income (loss) attributable to FDCTech shareholders | $ | $ | ( |
) | $ | ( |
) | |||||
NOTE
5. CAPITALIZED SOFTWARE COSTS
During
the fiscal years ended December 31, 2025, and 2024, the estimated remaining weighted-average useful life of the Company’s capitalized
software was three (
years. The Company recognizes amortization expenses for capitalized software on a straight-line basis.
At
December 31, 2025, and 2024, the unamortized balance of capitalized software for the Company, including software of subsidiaries, was
$
$
respectively.
The
Company has estimated aggregate amortization expense for each of the succeeding fiscal years based on the net unamortized balance of
$
of December 31, 2025, and an estimated software asset lifespan of three (3) years:
| Fiscal Year |
Estimated Amortization ($) |
|||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 and thereafter | ||||
| Total | $ | |||
NOTE
6. TAX RECEIVABLES
Other
trade and tax receivables consist of rebates receivable from liquidity providers, amounts due through payment gateway arrangements, and
value-added tax or equivalent recoverable amounts due from tax authorities. The components are as follows:
| December 31, 2025 (Restated) |
December 31, 2024 (Restated) |
|||||||
| Tax receivable (Alchemy Markets Ltd.) | $ | |||||||
| Total other trade and tax receivables | $ | $ | ||||||
Tax
Receivable
The
tax receivable of $
value-added tax (VAT) recoverable by Alchemy Markets Ltd. (AML) from the relevant tax authority in Malta. AML is registered for VAT in
Malta and periodically files returns, giving rise to refundable VAT positions. Management considers the full balance to be recoverable
and expects collection within twelve months of the balance sheet date.
All
components of other trade and tax receivables are classified as current assets. Management has assessed the recoverability of each component
and does not consider it necessary to record an allowance for credit loss as of December 31, 2025.
FRH
Group Convertible Notes (2016–2021)
Between
22, 2016, and April 24, 2017
$
from FRH Group, a founder and principal shareholder (“FRH
Group”). The Company executed Convertible Promissory Notes due between April 24, 2019, and June 30, 2019. The Notes were convertible
into Common Stock initially at $
per share, but in no event less than $
per share, and carried an interest rate of
per annum, due and payable at maturity.
On
February 22, 2021, the Company entered into an Assignment of Debt Agreement with FRH and FRH Group Corporation. The Company eliminated
all four FRH Group convertible notes, including accrued interest, of $
in return for issuing
unregistered shares of Common Stock of the Company to FRH.
Following the Agreement, FRH assigned the shares to FRH Group Corporation, also owned by Mr. Hong.
NOTE
7. RELATED PARTY TRANSACTIONS
FRH
Group Convertible Notes (2016–2021)
Between
February 22, 2016, and April 24, 2017, the Company borrowed $
from FRH Group, a founder and principal shareholder (“FRH
Group”). The Company executed Convertible Promissory Notes due between April 24, 2019, and June 30, 2019. The Notes were convertible
into Common Stock initially at $
per share, but in no event less than $
per share, and carried an interest rate of
per annum, due and payable at maturity.
On
February 22, 2021, the Company entered into an Assignment of Debt Agreement with FRH and FRH Group Corporation. The Company eliminated
all four FRH Group convertible notes, including accrued interest, of $
in return for issuing
unregistered shares of Common Stock of the Company to FRH.
Following the Agreement, FRH assigned the shares to FRH Group Corporation, also owned by Mr. Hong.
Stock
Issuances to Related Parties
Between
March 15 and 21, 2017, subject to the terms and conditions of a Stock Purchase Agreement, the Company issued
shares to Susan Eaglstein and
shares to Brent Eaglstein at $
per share, a cumulative cash amount of $
Ms. Eaglstein and Mr. Eaglstein are the mother and brother of Mitchell Eaglstein, the Company’s CEO and director.
In
September 2022, the Company issued shares
of Common Stock for $
Alchemy Prime Limited (APL) and appointed Gope S. Kundnani as a director of the Company. As the director’s compensation, the
Company issued shares
of Common Stock, valued at $.
Mr. Kundnani is the director and owner of APL.
In
January 2023, the Company sold
shares of Common Stock to Kundnani, a director, for $
In January 2023, Eaglstein and Firoz transferred
and
shares, respectively, to Kundnani.
Series
A Preferred Stock Transactions
On
November 30, 2023, Kundnani purchased
Series A Preferred Stock of FDCTech for $
and
shares of Common Stock of FDCTech for $
As of September 30, 2023, the Company had
preferred shares issued and outstanding, with Eaglstein, Kundnani,
and Hong holding ,
,
and
shares, respectively.
On
January 30, 2024, the Company’s board of directors adopted and approved the rescission and cancellation of (i)
shares of Series A Preferred Stock issued to Mitchell M. Eaglstein
and (ii)
shares of Series A Preferred Stock issued to Felix R. Hong.
Following these cancellations, Eaglstein and Kundnani hold
and
shares, respectively, of Series A Preferred Stock, representing
of all issued and outstanding Series A Preferred Stock.
Acquisitions
of AML and APL (November 2023)
On
November 30, 2023, the Company purchased
shares of Alchemy Markets Holdings Ltd (Alchemy BVI) from APSI
Holdings Limited (“APSI”), previously known as Alchemy Prime Holdings Ltd (APHL), in exchange for
Series B Convertible Preferred Stock. No cash was exchanged.
Kundnani, a related party, is the sole shareholder of APSI. As a result, the Company owns
of AML.
On
November 30, 2023, the Company purchased
of all the issued and outstanding shares of APL, an FCA-regulated brokerage, from APSI in exchange for
Series B Convertible Preferred Stock. No cash was exchanged.
Kundnani, a related party, is the sole shareholder of APSI.
NOTE
7. RELATED PARTY TRANSACTIONS (continued)
Series
B Convertible Preferred Stock Issuances
In
December 2023, Susan Eaglstein, mother of Mitchell Eaglstein, the Company’s CEO, provided $
as a related party advance for working capital. As part of
the consideration, the Company issued Ms. Eaglstein
Series B Convertible Preferred Shares in January 2024.
On
January 4, 2024, the Company issued Series B Convertible Preferred Stock for services valued at $
per share to the following related parties:
shares to Imran Firoz, CFO and Director;
shares to Gope S. Kundnani, Director;
shares to Mitchell M. Eaglstein, CEO and Director;
shares to FRH Group;
shares to William B. Barnett, Esq.; and
shares to Susan E. Eaglstein.
On
February 7, 2025, the Company issued
Series B Convertible Preferred Stock to Nicky G. Kundnani for
services valued at $
per share.
Acquisition
of Alchemy International Ltd. (October 2025)
On
October 29, 2025, the Company completed the acquisition of
of the issued and outstanding shares of Alchemy International Ltd. (“AIL”), a securities dealer licensed by the Financial
Services Authority of Seychelles (License SD136), from SYNC Capital Limited (“Seller”). The consideration was $
cash. SYNC Capital Limited is wholly owned by Gope S. Kundnani,
who is also a controlling shareholder of the Company. Accordingly, this acquisition constitutes a transaction between entities under
common control within the meaning of ASC 805-50, and has been accounted for at the historical carrying amounts of AIL’s assets
and liabilities. The difference between the consideration paid and the net book value of AIL attributable to the Company ($
has been credited to Additional Paid-In Capital as a capital contribution from the controlling shareholder. See Note 2 — Significant
Acquisitions.
This
transaction was identified as a related-party transaction pursuant to Section 10.5 of the Share Purchase Agreement (“SPA”)
and was reviewed and approved by an Audit Committee composed solely of independent, disinterested directors, with Kundnani and his affiliates
recused, in compliance with SPA Section 10.6.
Post-Acquisition
Related Party Balances — AIL and Alchemy DMCC
Following
the acquisition of AIL, significant intercompany and related party balances arose in the consolidated balance sheet as a result of AIL’s
pre-existing trading relationships with Alchemy Capital Markets Ltd. (ACM) and Alchemy DMCC, both related-party affiliates of Kundnani.
These balances are described below.
At December 31, 2025, AIL carried a current account receivable of $
due from Alchemy Capital Markets Ltd. and related affiliates,
included within the Related Party Receivable line on the consolidated balance sheet. This balance reflects trading activity and liquidity
arrangements conducted by AIL in the ordinary course of its operations as a securities dealer.
At December 31, 2025, AIL carried a current account payable of $
due to Alchemy DMCC, a related-party affiliate, included within
Related Party Advances on the consolidated balance sheet. Additionally, FDCTech at the parent level carried a payable of $
to Alchemy DMCC. The terms and repayment conditions of these
balances are subject to ongoing intercompany arrangements and are eliminated upon consolidation, where applicable.
Accrued
Compensation — Executive Officers
At December 31, 2025, the Company had accrued but unpaid payroll obligations of $
to Mitchell M. Eaglstein, CEO and Director, and $
to Imran Firoz, CFO and Director (through Thinkatalyst LLC.,
a company controlled by Mr. Firoz), included within Accrued Expenses, Related Party on the consolidated balance sheet. No related-party
interest expense was incurred for the fiscal years ended December 31, 2025, and 2024.
Planned
Retirement of Series A Preferred Stock
In
connection with the Company’s planned uplisting to a senior national securities exchange, immediately prior to the closing of the
contemplated offering, all
shares of Series A Preferred Stock held by Eaglstein (
shares) and Kundnani (
shares) will be retired and cancelled. Holders of Series A
Preferred Stock will not receive any cash consideration in connection with such retirement.
NOTE
7. RELATED PARTY TRANSACTIONS (continued)
Summary
of Related Party Balances
The
following table summarizes related party balances included in the consolidated balance sheets as of December 31, 2025, and December 31,
2024 (as restated):
| December 31, 2025 (Restated) |
December 31, 2024 (Restated) |
|||||||
| Related party receivable (asset): |
||||||||
| AIL – intercompany receivable (post-acquisition) |
$ | $ | ||||||
| FDC – Related party receivables and advances |
||||||||
| AML – due from related parties, net |
( |
) | ||||||
| FXPIG – due from |
||||||||
|
AIL |
||||||||
| Total related party receivable |
$ | $ | ||||||
| Related party advances (liability): |
||||||||
| AIL – due to Alchemy DMCC (post-acquisition) |
$ | $ |
|
|||||
| FDC – due to Alchemy DMCC |
||||||||
| FDC – related party advances, net |
||||||||
| ADS – related party loan |
||||||||
| AML – due to AML US |
||||||||
| ATECH – related party loan |
||||||||
| Total related party advances |
$ |
|
$ | |||||
| Accrued expenses, related party (liability): |
||||||||
| Accrued payroll – Mitchell M. Eaglstein |
$ | |||||||
| Accrued payroll – Imran Firoz |
|
|||||||
| ATECH – accrued expenses |
||||||||
| Other accrued, related party |
||||||||
| Total accrued expenses, related party |
$ | $ | ||||||
The Company transacts with affiliated entities
under common control and with other related parties. Related party balances as of December 31, 2025, and December 31, 2024 (restated)
are summarized in the table above and described below.
(a) Related party receivables totaled $
as of December 31, 2025, compared with $
intercompany receivable from Alchemy International Limited (AIL) arising in connection with its post-acquisition consolidation, $
of loan receivables and advances to FDC, a $
$(
of FDC loan receivables and advances.
(b) Related party advances (liabilities) totaled
$
due to Alchemy DMCC from AIL and $
due to AML US, $
comprised $
related party advances, and $
(c) Accrued expenses due to related parties totaled
$
to the Company’s officers, Mitchell M. Eaglstein ($
($
31, 2025.
NOTE
8. LINE OF CREDIT
Since
June 2016, the Company has maintained an unsecured revolving line of credit of $
from Bank of America to fund various purchases and travel expenses.
The line of credit has an average interest rate for purchases of
and a cash advance rate of
as of December 31, 2025.
Since
October 2024, the Company has maintained an additional unsecured revolving line of credit with no preset spending limit, meaning the
spending limit is flexible. The pay-over-time limit is $
The credit line has an average purchase interest rate of
as of December 31, 2025.
At December 31, 2025, the Company complies with the terms and conditions of both credit lines. At December 31, 2025, and 2024, the aggregate
outstanding balance was $
$
respectively.
NOTE
9. NOTES PAYABLE – RELATED PARTY
Business
Acquisition Loan — Seller’s Note
At
December 31, 2024, the Company carried a business acquisition loan of $
connection with a prior acquisition. During the fiscal year ended December 31, 2025, the Company recorded an additional $
in connection with the acquisition of Alchemy International Ltd. (“AIL”), representing the cash consideration paid to
SYNC Capital Limited pursuant to the Share Purchase Agreement dated October 29, 2025. At December 31, 2025, the total outstanding
balance of the business acquisition loan was $
The maturity of the $
obligation was extended to
30, 2026
Accrued
interest on the business acquisition loan was $
as of December 31, 2025, included within Accrued Interest —
Non-Current on the consolidated balance sheet. See Note 7 — Related Party Transactions and Note 2 — Significant Acquisitions
for further details regarding the AIL acquisition.
SBA
Loan
On
May 22, 2020, the Company received $
under the Small Business Administration (“SBA”)
Economic Injury Disaster Loan program. The loan bears interest at
per annum and requires monthly installment payments of $
including principal and interest, beginning twelve (12) months from the promissory note date. The loan matures thirty (30) years from
the promissory note date. At December 31, 2025, and 2024, the outstanding balance was $
and $
respectively, classified as non-current on the consolidated balance sheet.
CARES
Act — Paycheck Protection Program (PPP Note)
On
May 1, 2020, the Company received proceeds of $
under the Paycheck Protection Program pursuant to the Coronavirus
Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Note carried a fixed interest rate of
per annum. During the fiscal year ended December 31, 2025, the Company repaid the remaining outstanding balance in full. At December 31, 2025, the PPP Note outstanding balance was $
At December 31, 2024, the outstanding balance was $
AJB
Capital Promissory Note (Fully Retired)
On
January 27, 2022, the Company entered into a promissory note with AJB Capital Investments, LLC for $
at a coupon of
maturing
27, 2022
2023. On December 27, 2023, the Company redeemed the associated warrants issued as part of the original agreement for cash payments of
$
at execution) and $
on or before January 26, 2024), together with the issuance of
restricted shares of Common Stock on January 2, 2024. At December 31, 2025, and 2024, there was no outstanding balance under the AJB Capital arrangement.
Economic
Injury Disaster Loan (EIDL) Grant
On
May 14, 2020, the Company received $
as an Economic Injury Disaster Loan emergency grant under the
CARES Act. As this grant is forgivable and requires no repayment, the Company recorded it as other income. There was no outstanding repayment
obligation as of December 31, 2025, or 2024.
Summary
of Outstanding Loan Balances
The
following table summarizes outstanding loan and note balances as of December 31, 2025, and 2024:
| December 31, 2025 (Restated) |
December 31, 2024 (Restated) |
|||||||
| Outstanding loan and note payable balances: |
||||||||
| Business acquisition loans (Seller’s note) |
$ | $ | ||||||
| SBA loan (non-current) | ||||||||
| PPP loan | ||||||||
| AJB promissory note | ||||||||
NOTE
10. COMMITMENTS AND CONTINGENCIES
Office
Facility and Other Operating Leases
At
December 31, 2025, the Company and its subsidiaries operate offices across multiple jurisdictions. Leases that qualify under ASC 842
are recognized on the consolidated balance sheet as Right-of-Use (“ROU”) assets and corresponding lease liabilities. At December
31, 2025, the ROU asset was $
current operating lease liabilities were $
and non-current operating lease liabilities were $
The weighted-average remaining lease term for qualifying operating leases was approximately
years, and the weighted-average discount rate was approximately
Service contracts and month-to-month arrangements that do not qualify as leases under ASC 842 are expensed as incurred and included in
General and Administrative expenses.
Irvine,
California, USA (Company Headquarters)
Effective
October 29, 2019, to the present, the Company leases office space at 200 Spectrum Center Drive, Suite 300, Irvine, CA 92618, on a month-to-month
basis. The Company may terminate the agreement by delivering an exit form at least one calendar month prior to the intended termination
month. The monthly membership fee is $
This agreement is classified as a service contract rather than a lease under ASC 842, and payments are recognized as operating expenses.
Brisbane,
Australia (ADS Office)
Effective
January 1, 2024, to the present, ADS leases office space at Level 38/71 Eagle St, Brisbane City, QLD 4000, Australia, on a month-to-month
basis. The monthly membership fee is approximately $
This agreement is classified as a service contract rather than a lease under ASC 842, and payments are recognized as operating expenses.
Limassol,
Cyprus (Company’s Executive Rental)
From
July 2023 to the present, the Company has leased office and residential space in the Limassol District, Cyprus, from an unrelated party,
at a monthly rent of approximately $
included in General and Administrative expenses. This agreement is classified as a residential rental contract rather than a commercial
lease and does not create an ROU asset under ASC 842.
Limassol,
Cyprus (ATECH Office)
Effective
August 26, 2024, AlchemyTech Ltd. (“ATECH”) entered into a Sublease Agreement for office premises located at 10A-10C Eleftheriou
Venizelou Street, Limassol, Cyprus, with Aldeon Property Partners Ltd. as Sublessor, and FDCTech, Inc. acting as Guarantor.
lease term is twenty-four (24) months, commencing October 1, 2024, and expiring September 30, 2026
with an
to extend for up to two additional two-year terms at a 5% rent increase per renewal period
Monthly rent is €
(approximately $
plus VAT, for a total lease commitment of €
This agreement qualifies as a lease under ASC 842, and the Company has recognized an ROU asset and corresponding lease liability on its
consolidated balance sheet.
St.
Julian, Malta (AML Office)
Effective
July 11, 2024, to the present, AML leases office space with Regus Malta at Portomaso Business Centre, Portomaso, St. Julian, PTM01, Malta,
on a month-to-month basis. The monthly membership fee is €
This agreement is classified as a service contract rather than a lease under ASC 842, and payments are recognized as operating expenses.
NOTE
10. COMMITMENTS AND CONTINGENCIES (continued)
Tel
Aviv, Israel (AML Sales Office)
Effective
July 1, 2023, AML entered into a service agreement with Mindspace Ltd. for office space and related services at Menachem Begin 11, Ramat
Gan, Israel, on a monthly auto-renewing basis. The monthly fee is $
(including VAT), with a security deposit of $
AML does not have exclusive control over a specific unit. This agreement does not create a lease under ASC 842 and is accounted for as
a service contract.
London,
United Kingdom (APL Office)
Effective
December 20, 2024, Alchemy Prime Limited (“APL”) entered into a lease agreement for office space at the Fifth Floor, 142
Central Street, Clerkenwell, London, EC1V 8AR, with Agop Tanielian and Hourig Mercedes Tanielian as landlords. The lease has a fixed
term of
years
of £
$
month), payable in quarterly installments. The lease includes a Break Clause exercisable on or after 2026, subject to four
months’ prior written notice. APL is liable for service charges, insurance rent, and reinstatement obligations upon
termination. This agreement qualifies as a lease under ASC 842, and the Company has recognized an ROU asset and corresponding lease
liability on its consolidated balance sheet.
Terminated
Leases
Limassol,
Cyprus (Ecastica)
From
October 2023 to August 2024, the Company leased office space in the Limassol District, Cyprus, for the intended establishment of AlchemyTech
Ltd. The monthly rent was approximately $
and the down payment was approximately $
included in General and Administrative expenses. The lease was terminated in August 2024.
Chelyabinsk,
Russia
From
April 2019 to August 2022, the Company leased office space in Chelyabinsk, Russia, at $
per month for software development and technical support. The
Company closed its Russian offices in August 2022 and relocated the team to Turkey, and subsequently to Kazakhstan in April 2023. This
lease has been fully terminated.
Rental
expenses for all operating leases and service contracts are included in General and Administrative expenses.
Employment
Agreement
Company compensates its key executives as independent contractors. Eaglstein, Firoz, and Platt commit one hundred percent (100%) of their
time to the Company.
bonuses or other incentive plans. Each executive is paid at the beginning of each month. From September 2018 through September 30, 2020,
the Company paid monthly compensation of $
to its CEO and CFO, respectively. Effective October 1, 2020,
the Company increased the monthly compensation to $
Effective January 1, 2023, the Company pays $
monthly to its CEO and CFO.
The
Company is not currently a party to any formal employment agreement and has no compensation agreement with any officer or director. The
Company plans to enter into employment agreements with its officers in connection with the planned uplisting to a senior national securities
exchange.
Accrued
Interest
At
December 31, 2025, and December 31, 2024, the cumulative accrued interest on SBA and other loans, classified as non-current on the consolidated
balance sheet, was $
$
respectively.
Legal
Proceedings
The
Company discloses a loss contingency if there is at least a reasonable possibility that a material loss has been incurred. The Company
records its best estimate of a loss related to pending legal proceedings when the loss is probable, and the amount can be reasonably estimated.
When the Company can only reasonably estimate a range of losses with no best estimate, it records the minimum estimated liability. As
additional information becomes available, the Company reassesses the potential liability related to pending legal proceedings, revises
its estimates, and updates its disclosures accordingly. Legal costs associated with defending the Company are recorded as expenses when
incurred.
NOTE
10. COMMITMENTS AND CONTINGENCIES (continued)
The
Company and its subsidiaries are involved in the following legal proceedings:
Asher
Alkoby, et al. v. FDCTech
This
action is pending in the London Circuit Commercial Court under Claim Number LM-2024-000330 as of December 9, 2024. The claimants are
Asher Alkoby and other former shareholders of Alchemy Markets Ltd. (“AML”), a Malta-incorporated broker that FDCTech acquired
in June 2023. Following completion of the acquisition, the Company discovered that the target company had anti-money laundering deficiencies
in 2019, for which the Financial Intelligence Analysis Unit fined it. An external audit also revealed that prior shareholders had
taken loans from the company that were never repaid, resulting in net capital lower than disclosed during negotiations. Based on these
findings, FDCTech withheld the final payment to the sellers.
The
claimants are seeking approximately $ million,
which they allege is owing under the Share Sale Agreement, which they seek to rectify to make it legally enforceable. The Company
has counterclaimed for a declaration that the Share Sale Agreement is ineffective and unenforceable and seeks repayment of $ paid
to the sellers. On October 17, 2025, the Court granted the claimants permission to amend their claim to include a third claimant.
The Company has prepared an Amended Defense and Counterclaim through Counsel, served May 9, 2025. A Costs and Case Management
Conference took place on November 17, 2025, with directions given toward a trial scheduled during November 2026.
FDCTech,
Inc. v. Intelligenceline.com, Fintelegram.com, et al.
This
action is pending in the Superior Court of California, County of Orange. FDCTech alleges that the defendants, through their websites
Intelligenceline.com, Fintelegram.com, and Criticalintel.com, published false and defamatory statements accusing the Company of fraud,
illegal conduct, and regulatory violations, causing significant reputational and financial harm, including lost business opportunities.
FDCTech further alleges that the defendants engaged in an extortion scheme by demanding payment for the removal of defamatory content.
The complaint asserts claims for defamation per se, defamation per quod, trade libel, and false light, seeking damages and injunctive
relief. The complaint was filed in 2025 and had not yet been served as of December 31, 2025. A hearing took place on December 15, 2025,
at which the court instructed FDCTech to conduct further investigation as to the beneficial owner of Intelligenceline.com.
Alchemy
Markets Ltd. v. Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 104/2023)
This
appeal is pending before the Court of Appeal (Inferior Jurisdiction) in Malta. On September 23, 2023, the Financial Intelligence Analysis
Unit (“FIAU”) imposed an administrative penalty of €
and a follow-up directive on Alchemy Markets Ltd. (formerly
NSFX Limited), a subsidiary of the Company, based on a compliance examination conducted between November 25, 2019, and December 5, 2019
— approximately four years prior to the decision and under different ownership and control. The Company filed this appeal on October
19, 2023, challenging the decision-making process, the law on which the penalty was based, and asserting that the penalty is arbitrary
and excessive. The case is in the evidentiary production stage. On October 24, 2025, a hearing was held for the Company to present further
evidence. An additional hearing has been scheduled for February 2, 2026, for the FIAU to cross-examine the Company’s witnesses
before Madam Justice Rachel Montebello, following which the matter will be adjourned for final legal submissions.
Alchemy
Markets Ltd. v. L-Avukat tal-Istat u Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 159/2024)
This
constitutional challenge is pending before the First Hall Civil Court (Constitutional Jurisdiction) in Malta and relates to the same
September 23, 2023, FIAU decision described above. The Company filed this application on April 2, 2024, challenging: (i) the composition
of the FIAU and its enabling legislation; (ii) decision-making processes alleged to breach the Company’s fundamental right to a
fair hearing; and (iii) that the penal nature of the penalty was imposed in breach of the Constitution of Malta without adjudication
by an independent court. The Company requests the Constitutional Court to set aside the FIAU decision in its entirety. The first procedural
hearing took place on May 7, 2024. The First Hall Civil Court (Constitutional Jurisdiction) has, in various instances, pronounced that
administrative penalties imposed by the FIAU are more akin to penal sanctions and that subject persons should be afforded the full rights
of an accused under criminal law, consistently quashing FIAU decisions on this basis. The case remains pending as of January 21, 2026;
the next hearing is set for January 28, 2026.
The
Company believes it has meritorious defenses and counterclaims in all of the above matters and intends to defend them vigorously.
However, litigation is inherently uncertain, and the Company cannot predict the outcome of these proceedings with certainty. No
additional materials are pending legal or governmental proceedings other than ordinary routine litigation incidental to the
business.
Tax
Compliance Matters
From
inception to date, the Company’s officers have been compensated as independent contractors. As a result, as of December 31, 2025,
the Company believes payroll tax liabilities are not material. The Company’s federal taxes are compliant with the Internal Revenue
Service regulations.
NOTE
11. RESTRICTED CASH — CLIENT FUNDS (SEGREGATED)
(a)
Nature and Accounting Policy
Certain
of the Company’s regulated brokerage subsidiaries “hold” funds on behalf of clients in connection with foreign
exchange (“FX”), contracts for difference (“CFD”), and other financial trading activities. Restricted cash
— client funds (segregated) or Client funds represent trading deposits and margin balances placed by clients with the
applicable subsidiary and are required by regulation to be maintained in segregated accounts separate from the Company’s own
corporate funds.
In
accordance with applicable regulatory requirements and consistent with the guidance under ASC 940, “Financial Services–Brokers
and Dealers,”
the Company presents client funds as a separately captioned asset on the consolidated balance sheet, with an equal and offsetting client
funds payable recognized as a current liability. Client funds are not offset against the corresponding liability in the consolidated
balance sheet, as the conditions for right-of-setoff under ASC 210-20 are not met. The balances are carried at the amounts deposited
or received, which approximates fair value.
Client
funds are not available for the Company’s general corporate purposes and do not form part of the Company’s unrestricted cash
and cash equivalents. Recognition and derecognition of client funds balances occur upon receipt or disbursement of funds to or from the
segregated client accounts.
(b)
Regulated Entities Holding Client Funds
At December 31, 2025, client funds are held by the following regulated subsidiaries of the Company:
| ● | Alchemy Markets Ltd. (“AML”) – a company incorporated in Malta and authorized and regulated by the Malta Financial Services Authority (“MFSA”) as an investment services firm. AML is required to maintain client money in segregated accounts pursuant to the MFSA Client Money Rules and the European Union’s Markets in Financial Instruments Directive II (“MiFID II”). |
| ● | Alchemy Prime Limited (“APL”) – a company incorporated in the United Kingdom and authorized and regulated by the Financial Conduct Authority (“FCA”) as an investment firm. APL is subject to the FCA Client Assets Sourcebook (“CASS”) rules, which prescribe strict segregation, reconciliation, and disclosure requirements for client money. |
| ● | Alchemy International Limited (“AIL”) – a company incorporated in the Republic of Seychelles and licensed by the Financial Services Authority of Seychelles (“FSA Seychelles”) as a securities dealer. AIL is required to maintain client deposits in accounts designated for client funds in accordance with FSA Seychelles regulatory requirements. AIL was acquired by the Company on October 29, 2025, and is consolidated from that date. Client funds attributable to AIL are included in the December 31, 2025, balances set forth below. |
Client
funds held by each subsidiary are maintained in bank accounts designated exclusively for client money. Each entity performs daily internal
reconciliations to ensure that client money balances agree with the amounts standing to the credit of clients.
NOTE
11. RESTRICTED CASH — CLIENT FUNDS (SEGREGATED) (continued)
(c)
Classification of Client Funds
The
Company classifies client funds into two categories in accordance with applicable regulatory frameworks:
| (i) | Retail Client Funds – funds held on behalf of retail clients as defined under MiFID II and equivalent UK regulatory standards. Retail client funds are subject to the highest level of segregation and investor protection requirements. |
| (ii) | Professional / Title Transfer Collateral Arrangement (“TTCA”) Client Funds – funds held on behalf of professional clients, including those subject to TTCA arrangements pursuant to which legal title to the funds has been transferred to the subsidiary. TTCA funds are subject to regulatory requirements applicable to professional client classifications. |
(d) Reconciliation of total cash, cash equivalents,
and restricted cash:
|
December 31, 2025 (Restated) |
December 31, 2024 (Restated) |
|||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash — client funds (segregated) | $ | $ | ||||||
| Total cash and cash equivalents (including segregated client funds) | $ | $ | ||||||
Amounts included in client funds — segregated represent monies held by the Company’s regulated brokerage subsidiaries
on behalf of clients in segregated accounts pursuant to applicable regulatory requirements and are restricted as to use. These amounts
are presented as a separately captioned restricted asset on the consolidated balance sheets and, in accordance with ASC 230-10-50-8, are
included within cash, cash equivalents, and restricted cash for purposes of the consolidated statements of cash flows. The table above
reconciles cash and client funds — segregated reported within the consolidated balance sheets to the total cash, cash equivalents,
and restricted cash reported on the consolidated statements of cash flows for each period presented. Changes in the corresponding client
funds payable liability are reflected within net cash provided by (used in) operating activities.
(e)
Consolidated Restricted cash — client funds (segregated) Balances
The
following table sets forth the Restricted cash — client funds (segregated) and the corresponding client funds payable as presented in the consolidated balance
sheets as of December 31, 2025, and December 31, 2024:
| December 31, 2025 |
December 31, 2024 |
|||||||
| Restricted cash — client funds (segregated) | $ | $ | ||||||
| Client funds payable – liability | ( |
) | ( |
) | ||||
| Net impact on stockholders’ equity | $ | $ | ||||||
As
the Restricted cash — client funds (segregated) and the client funds payable are equal in all periods presented, the gross presentation has no net effect on total
stockholders’ equity. The decrease in client funds from $
as of December 31, 2024 to $
as of December 31, 2025, representing a decrease of $
(
is primarily attributable to: attributing it to net client withdrawals and reduced margin deposits, partially offset by AIL’s client
funds added on acquisition.
(f)
Relationship to Restatement of FY2024 Financial Statements
As
described in Note 4 (Restatement of Previously Issued Financial Statements), the Company identified in fiscal year 2025 that certain
client fund balances had been incorrectly included within the Company’s general unrestricted cash balances in the previously issued
financial statements for the year ended December 31, 2024. Specifically:
| (i) | Client funds aggregating $ belonging to Alchemy Prime Limited (APL) and held within the cash account of Alchemy Markets Ltd. (AML) (designated as the liquidity provider account) were identified as having been recorded within AML’s general cash balance rather than as a separately designated client funds account. This reclassification transfers the balance from AML’s unrestricted cash to a client funds account, reflecting the substance of the arrangement whereby AML holds these funds as custodian on behalf of APL’s clients. The adjustment does not affect consolidated net income or total stockholders’ equity; however, it reduces unrestricted cash and correspondingly increases the Restricted cash — client funds (segregated) balance within the consolidated balance sheet. |
| (ii) | Assets totaling $ (EUR at the applicable period-end exchange rate, held by AML on behalf of an external third-party counterparty, were identified as having been included within AML’s cash on hand balance (Account 1028). These assets represent funds belonging to an external party and do not constitute assets of the Company. Such amounts are required to be reclassified from cash on hand to a client funds or third-party custodial asset account, with a corresponding liability recognized, to properly reflect the Company’s role as custodian of those funds. This adjustment removes third-party assets from the Company’s cash balance and presents them within a client funds or custodial asset classification, with a corresponding recognition of amounts due to the external party. The reclassification does not affect consolidated net income, net revenue, or total stockholders’ equity. |
Both
reclassifications were effected as part of the restatement of December 31, 2024, consolidated financial statements. Neither adjustment
affected the Company’s consolidated net income, total stockholders’ equity, or revenues for any period presented. Readers
are directed to Note 4 for a complete quantitative reconciliation of the restated amounts.
NOTE
11. RESTRICTED CASH — CLIENT FUNDS (SEGREGATED) (continued)
(g)
Restrictions and Use of Client Funds
Client
funds held by the Company’s regulated subsidiaries are subject to the following restrictions:
| (i) | Client funds may not be used to meet the Company’s own operational expenses, capital requirements, or any other general corporate purpose. |
| (ii) | Each regulated subsidiary is required to maintain, at all times, sufficient liquid assets in segregated client accounts equal to or exceeding the aggregate client funds liability. |
| (iii) | In the event of insolvency of a regulated subsidiary, client funds held in properly segregated accounts are generally protected from the claims of the subsidiary’s general creditors under applicable regulatory and insolvency regimes. |
Accordingly,
client funds are excluded from the Company’s liquidity analysis and are not considered available for general corporate purposes.
At December 31, 2025, we held total cash and cash equivalents of $
consisting of $
in aggregate was held at liquidity providers.
NOTE
12. STOCKHOLDERS’ EQUITY (DEFICIT)
Authorized
Shares
On
February 12, 2021, the Company filed a Certificate of Amendment with the Secretary of State of Delaware to increase the authorized shares
to
consisting of shares
of Common Stock (par value $)
and shares
of Preferred Stock (par value $).
On
February 17, 2022, the Company filed an Information Statement pursuant to Section 14C of the Securities Exchange Act of 1934 to increase
the authorized Common Stock from
to
shares and to approve the Company’s 2022 Equity Plan.
The Approving Stockholders (common stock only) owned
shares, representing
of the total issued and outstanding voting power of the Company.
On
March 12, 2024, the Company filed an Information Statement to increase the authorized Common Stock from
to
shares, to authorize a reverse stock split in a ratio of
less than 1-for-10 and not more than 1-for-50
any time prior to June 30, 2024, and to approve the Company’s 2023 Stock Incentive Plan. The Approving Stockholders (common stock
only) owned
shares, representing
of the total issued and outstanding voting power of the Company. The Board retains authority to abandon either Corporate Action prior
to its effective date.
On
September 4, 2025, the Board and the holders of a majority of the Company’s voting stock approved the following corporate actions
by written consent pursuant to Sections 228 and 242 of the Delaware General Corporation Law: (i) an increase in the authorized Common
Stock from to
shares;
and (ii) an increase in the authorized Preferred (Series A and Series B) Stock from
to
shares; and (iii) authorization for the Board to implement
a reverse stock split of all outstanding Common Stock in a ratio of
less than 1-for-10 and not more than 1-for-100
any time prior to June 30, 2026, at its discretion. The Approving Stockholders (common stock and Series A Preferred) owned
shares, representing
of the total issued and outstanding voting power. Each Corporate Action became effective on or about the 20th calendar day after the
Information Statement was mailed to stockholders.
At December 31, 2025, and 2024, the Company’s authorized capital stock consists of
shares of Preferred Stock (par value $)
and
shares of Common Stock (par value $).
At December 31, 2025, and 2024, the Company had
and
shares of Common Stock issued and outstanding, respectively.
Of the shares
outstanding as of December 31, 2025,
shares are restricted, and
shares are unrestricted.
At December 31, 2025, and 2024, the Company had
and
shares of Series A Preferred Stock issued and outstanding,
respectively.
At December 31, 2025, and 2024, the Company had
and
shares of Series B Convertible Preferred Stock issued and outstanding,
respectively.
NOTE
12. STOCKHOLDERS’ DEFICIT (continued)
Series
A Preferred Stock
The
percentages below are calculated based on 4,500,000 shares of our Series A Preferred Stock issued and outstanding for the fiscal year
ended December 31, 2024.
| Name and Address(1) |
Title Class |
Number Beneficially |
Percent Class |
|||||||
| Mitch Eaglstein |
A Preferred |
% | ||||||||
| Gope S. Kundnani (5) |
A Preferred |
% | ||||||||
| Officers and Directors as a group (2 persons) |
A Preferred |
% | ||||||||
On
November 30, 2023, the Company issued
Series A Preferred Stock to Kundnani, valued at $
The Company will receive $
in direct investment from Alchemy Prime Holdings Shareholder
for Series A Preferred, valued at $
per share.
On
January 30, 2024, the Company’s board of directors adopted and approved the rescission and cancellation of (i)
shares of Series A Preferred Stock of the Company issued to
Mitchell M. Eaglstein and (ii)
shares of Series A Preferred Stock of the Company issued to
Felix R Hong.
NOTE
12. STOCKHOLDERS’ DEFICIT (continued)
Series
B Preferred Stock
The
percentages below are calculated based on
shares of our Series B Preferred Stock issued and outstanding
for the fiscal year ended December 31, 2025.
| Name and Address(1) |
Title Class |
Number Beneficially |
Percent Class |
|||||||
| Alchemy Prime Holdings Ltd. | B Preferred |
% | ||||||||
| Gope S. Kundnani | B Preferred |
% | ||||||||
| Mitchell M. Eaglstein | B Preferred |
% | ||||||||
| Imran Firoz | B Preferred |
% | ||||||||
| FRH Group | B Preferred |
% | ||||||||
| William B. Barnett | B Preferred |
% | ||||||||
| Susan E. Eaglstein | B Preferred |
% | ||||||||
| Nicky G. Kundnani | B Preferred |
% | ||||||||
| Officers and Directors as a group (3 persons) | B Preferred |
% | ||||||||
On
November 30, 2023, the Company issued
Series B Preferred Stock to Kundnani, valued at $
for the purchase of
of AML and
of APL.
On
January 4, 2024, the Company issued
Series B preferred stock to Mitchell M. Eaglstein, CEO and
Director, for services valued at $
per share.
On
January 4, 2024, the Company issued
Series B preferred stock to Imran Firoz, CFO and Director,
for services valued at $
per share.
On
January 4, 2024, the Company issued
Series B preferred stock to FRH Group for services valued at
$
per share.
On
January 4, 2024, the Company issued
Series B preferred stock to William B. Barnett, Esq., for services
valued at $
per share.
On
January 4, 2024, the Company issued
Series B preferred stock to Susan E. Eaglstein for services
valued at $
per share.
On
January 4, 2024, the Company issued
Series B preferred stock to Gope S. Kundnani for services valued
at $
per share.
On
January 30, 2024, the Company issued
Series B preferred stock to Gope S. Kundnani for cash valued
at $
per share.
On February 07, 2025, the Company issued Series
B preferred stock to Nicky G. Kundnani for services valued at $ per
share.
NOTE
12. STOCKHOLDERS’ DEFICIT (continued)
Common
Stock
The
following summarizes significant Common Stock issuances since the Company’s inception through December 31, 2025:
On
January 21, 2016, the Company collectively issued
and
common shares at par value to Mitchell Eaglstein and Imran
Firoz, respectively, as founders, in consideration of services rendered.
On
December 12, 2016, the Company issued
common shares to the remaining two founding members.
On
March 15, 2017, the Company issued
restricted common shares for platform development valued at
$
and
restricted common shares for professional services to three
individuals valued at $
On
March 17, 2017, the Company issued
shares to Susan Eaglstein for cash of $
On March 21, 2017, the Company issued
shares to Bret Eaglstein for cash of $
Ms. Eaglstein and Mr. Eaglstein are the mother and brother of Mitchell Eaglstein, the CEO and director.
From
July 1, 2017, to October 3, 2017, the Company issued
units under its Offering Memorandum for cash of $,
where each unit consisted of one share of Common Stock and one Class A warrant.
On
October 31, 2017, the Company issued
restricted common shares to management consultants valued at
$
On
January 15, 2019, the Company issued
restricted common shares for professional services to eight
consultants valued at $
From
January 29, 2019, to February 15, 2019, the Company issued
registered shares for cash of $
On February 26, 2019, the Company filed Post-Effective Amendment No. 1 to its Form S-1, removing from registration all shares that were
offered but not sold.
On
June 3, 2020, the Company issued
shares to Benchmark Investments, Inc. at $
per share, valued at $
for financial advisory services. On August 25, 2020, the engagement was terminated, and the Broker-Dealer returned the
shares.
On
October 1, 2020, the Company issued
restricted common shares to a digital marketing consultant
valued at $
On
January 31, 2021, the Company issued
restricted common shares to two consultants for professional
services valued at $
On
February 22, 2021, the Company eliminated all four FRH Group convertible notes totaling $
by issuing
unregistered common shares. FRH assigned the shares to FRH
Group Corporation.
On
May 19, 2021, the Company issued
restricted common shares to a consultant for professional services
valued at $
On
June 2, 2021, the Company issued
restricted common shares under the Genesis Agreement valued
at $
As the Genesis Agreement did not materialize, the consultant returned the shares to the treasury.
On
June 15, 2021, the Company issued
restricted common shares to a board member for services valued
at $
On July 6, 2021, the Company issued a further
restricted common shares to a board member for services valued
at $
On
July 20, 2021, the Company issued
restricted common shares to a consultant for professional services
valued at $
On
October 4, 2021, the Company filed a prospectus related to the resale of shares to White Lion and AD Securities America, LLC. The Company
issued
shares to AD Securities America, LLC for $
and
registered shares to White Lion as consideration shares valued
at $
On
October 5, 2021, the Company issued
restricted common shares to a consultant for professional services
valued at $
In
November 2021, the Company issued
registered shares to White Lion for cash of $
On
December 22, 2021, the Company issued
restricted common shares to ADFP to acquire a
controlling interest in AD Advisory Service Pty Ltd.
In
December 2021, the Company issued
restricted common shares to two board members, a consultant,
and two officers for services and software development valued at $
On
January 4, 2022, the Company issued
restricted common shares to a consultant for professional services
valued at $
From January 4 to February 10, 2022, the Company issued
registered shares to White Lion for cash of $
On
January 27, 2022, the Company issued
common shares valued at $
upon execution of the AJB Capital promissory note, together
with
three-year cash warrants priced at $
as the incentive fee.
On
July 31, 2022, the Company issued
restricted common shares to a consultant for professional services
valued at $
On
September 30, 2022, the Company issued
restricted common shares for cash valued at $
and
restricted common shares to Gope S. Kundnani for services valued
at $
NOTE
12. STOCKHOLDERS’ DEFICIT (continued)
On
December 12, 2022, the Company issued
restricted common shares to two officers for services valued
at $
On December 15, 2022, the Company issued
restricted common shares to two officers for services valued
at $
On
January 25, 2023, the Company issued
restricted common shares to AJB as compensation for consideration
shares related to the AJB Note, valued at $
and
restricted common shares for cash valued at $
On
March 28, 2023, the Company issued
restricted common shares for cash valued at $
On
November 30, 2023, the Company issued
restricted common shares to Kundnani for cash valued at $
On
December 27, 2023, the Company issued
restricted common shares to AJB Capital in exchange for the
redemption of warrants, valued at $
On
May 9, 2024, the Company issued
shares for cash of $
On
January 1, 2025, the Company issued
restricted common shares to employees of its subsidiaries for
services rendered, valued at $
The shares were issued to Robert W. Winters (
shares), Shimon Kogan (
shares), and Patrick G. Cann (
shares).
Additional
Paid-In Capital — AIL Common Control Acquisition
In
connection with the acquisition of Alchemy International Ltd. on October 29, 2025, the Company recorded an increase to Additional Paid-In
Capital of $
representing the excess of AIL’s net book value at acquisition over the $
cash consideration paid, net of non-controlling interest recognized.
This amount represents a capital contribution from the controlling shareholder, Gope S. Kundnani, and is accounted for under ASC 805-50.
See Note 2 — Significant Acquisitions and Note 7 — Related Party Transactions for further details.
Subscription
Receivable
At December 31, 2025, and 2024, the Company has a subscription receivable of $
recorded as a contra-equity item within stockholders’ equity, representing shares issued for which the consideration has not yet
been received.
NOTE
13. WARRANTS
On
January 27, 2022, in connection with the AJB Capital promissory note, the Company issued
three-year cash warrants (“AJB Warrants”)
priced at $
per share, together with
shares of Common Stock valued at $
as the incentive fee upon execution of the agreement.
The
AJB Warrants were fully redeemed on December 27, 2023, pursuant to a warrant redemption agreement on the following terms: (i) cash payment
of $
paid at execution; (ii) a second cash payment of $
paid on or before January 26, 2024; and (iii) the issuance
of
restricted shares of Common Stock on January 2, 2024, valued
at $
All obligations under the warrant redemption agreement were satisfied in full by January 2024.
At December 31, 2025, and 2024, there were
warrants issued or outstanding. The Company has no equity compensation
plans under which warrants or options are currently authorized for issuance.
NOTE
14. COMPREHENSIVE INCOME
The Company’s other comprehensive income (loss) (“OCI”) consists
of foreign currency translation adjustments arising from those subsidiaries that do not use the U.S. dollar as their functional currency
— AD Advisory Services Pty Ltd. (ADS, Australian dollar), Alchemy Markets Ltd. (AML, euro), Alchemy Prime Limited (APL, pound sterling),
Alchemytech Ltd. (ATECH, euro), and, from the fourth quarter of 2025, Alchemy International Ltd. (AIL). These adjustments are recorded,
net of tax, in accumulated other comprehensive income (loss) (“AOCI”) within stockholders’ equity and noncontrolling interests,
and are reclassified to the statement of operations only upon the disposal or liquidation of the related subsidiary. Because the undistributed
earnings of the Company’s foreign subsidiaries are considered indefinitely reinvested, no deferred tax effect has been recorded on the
OCI components presented (ASC 740-30-25-17).
Changes
in AOCI by component. AOCI, all of which relates to cumulative foreign currency translation, was a balance of $
2023. During the fiscal year ended December 31, 2024 (restated), the Company recognized total other comprehensive loss of $(
comprising translation adjustments attributable to ADS, AML, APL, and ATECH, reducing the AOCI balance to $(
During the fiscal year ended December 31, 2025 (restated), the Company recognized total other comprehensive income of $
translation adjustments attributable to ADS, AML, APL, and ATECH, increasing
the AOCI balance to $
Comprehensive
income attributable to noncontrolling interest. Noncontrolling interest (“NCI”) represents the 49% minority interest in ADS
and, from October 29, 2025, a 0.1% interest in AIL. NCI was $
at the beginning of fiscal 2024. During
fiscal 2024, the Company attributed net income (loss) of $
and foreign currency translation of $(
to NCI, resulting in NCI of $
at December 31, 2024. During fiscal 2025, the Company attributed net income (loss) of $
to NCI, resulting in an NCI balance of $
at December 31, 2025.
The
following table shows the changes in AOCI by component for the fiscal years ended December 31, 2025, and 2024:
| Accumulated Comprehensive Income: |
Cumulative Currency |
|||
| Balance as of December 31, 2023 |
$ | |||
| Other comprehensive income (loss), attributed to ADS |
||||
| Other comprehensive income (loss), attributed to AML |
( |
) | ||
| Other comprehensive income (loss), attributed to APL |
||||
| Other comprehensive income (loss), attributed to ATECH |
||||
| Total other comprehensive income (loss), as restated, December 31, 2024 (Restated) |
( |
) | ||
| Balance as of December 31, 2024 (Restated) |
$ | ( |
) | |
| Other comprehensive income (loss), attributed to ADS |
$ | |||
| Other comprehensive income (loss), attributed to AML |
$ | |||
| Other comprehensive income (loss), attributed to APL |
$ | ( |
) | |
| Other comprehensive income (loss), attributed to ATECH |
$ | |||
| Total other comprehensive income (loss), December 31, 2025 (Restated) |
$ | |||
| Balance as of December 31, 2025 (Restated) |
$ | |||
No amounts were reclassified out of AOCI to net income during the fiscal
years ended December 31, 2025, or December 31, 2024. The AOCI balances rolled forward above tie to accumulated other comprehensive income
(loss) presented on the consolidated balance sheet of $(
NOTE
15. NON CONTROLLING INTEREST
Basis of presentation. Noncontrolling interest (“NCI”) represents
the equity in consolidated subsidiaries that is not attributable, directly or indirectly, to the Company. The Company consolidates entities
in which it holds a controlling financial interest and reports the portion of net income (loss), other comprehensive income (loss), and
net assets attributable to the minority owners as noncontrolling interest in accordance with ASC 810, Consolidation. NCI is presented
within total stockholders’ equity (deficit) on the consolidated balance sheets, separately from the equity attributable to the stockholders
of FDCTech, Inc., and net income (loss) and comprehensive income (loss) attributable to NCI are presented separately on the face of the
consolidated statements of operations and of comprehensive income (loss). Transactions with noncontrolling interest holders that do not
result in a loss of control are accounted for as equity transactions, with no gain or loss recognized in net income; any difference between
consideration and the carrying amount of the NCI acquired or relinquished is recognized directly in additional paid-in capital.
Subsidiaries with noncontrolling interests. The Company’s noncontrolling
interests consist of the 49% minority interest in AD Advisory Services Pty Ltd. (“ADS”), held since the Company obtained control
of ADS, and a 0.1% interest in Alchemy International Ltd. (“AIL”) arising from the Company’s consolidation of AIL effective
October 29, 2025. The Company holds a controlling financial interest in each of these subsidiaries and consolidates their results, attributing
the proportionate share of their earnings, other comprehensive income (loss), and net assets to the noncontrolling interest holders. No
noncontrolling interest is recognized for wholly owned subsidiaries.
Changes
in noncontrolling interest
Changes
in noncontrolling interest. The carrying amount of noncontrolling interest was $
the beginning of fiscal 2024. During the fiscal year ended December 31, 2024 (restated), the Company attributed net income (loss) of
$
foreign currency translation attributable to NCI of $(
reducing the balance to $
December 31, 2024. During the fiscal year ended December 31, 2025 (restated), the Company attributed net income (loss) of $
foreign currency translation attributable to NCI of $(
resulting in a noncontrolling interest balance of $
at December 31, 2025. Foreign currency translation attributable to NCI represents the noncontrolling holders’ proportionate
share of the cumulative translation adjustment arising on consolidation of the Company’s foreign subsidiaries. The
noncontrolling interest balances rolled forward above tie to the noncontrolling interest reported within stockholders’ equity
(deficit) on the consolidated balance sheets.
The
following table presents the changes in noncontrolling interest for the fiscal years ended December 31, 2025, and December 31, 2024:
| 2025 | 2024 | |||||||
| Balance, beginning of period | $ | |||||||
| Net income (loss) attributable to NCI | $ | |||||||
| Foreign currency translation — NCI | $ | ( |
) | ( |
) | |||
| Balance, end of period | $ | |||||||
NOTE
16. INCOME TAXES
The income tax disclosures below reflect the tax
position of FDCTech, Inc. as a standalone U.S. domestic C-corporation (the “U.S. Parent”).
The Company’s foreign operating subsidiaries – Alchemy Markets Ltd. (Malta), Alchemy Prime Limited (United Kingdom), AD Advisory
Services Pty Ltd. (Australia), Alchemy International Ltd. (Seychelles), and Alchemytech Ltd. (Cyprus) – are separate legal entities
subject to income taxation in their respective jurisdictions. The U.S. Parent does not include foreign subsidiary earnings in its U.S.
federal or state income tax returns. The deferred tax liabilities recognized on the consolidated balance sheet in respect of the foreign
subsidiaries are discussed separately below.
The
Company calculates its income tax provision using the asset and liability method prescribed under ASC 740, Income Taxes. Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases, as well as for net operating loss (“NOL”)
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets
and liabilities is recognized in income in the period that includes the enactment date.
United
States Federal and State Income Taxes – FDCTech, Inc.
The
U.S. Parent is subject to the U.S. federal corporate income tax at a flat rate of
under the Tax Cuts and Jobs Act of 2017, as well as applicable
state income taxes in California. For the fiscal years ended December 31, 2025, and December 31, 2024, the U.S. Parent generated a pre-tax
loss from operations on a standalone basis. In each year, the provision for income taxes attributable to the U.S. Parent was $,
as described below.
Book-to-Tax Reconciliation – FDCTech, Inc.
(U.S. Parent Standalone)
The following table
reconciles the U.S. Parent’s pre-tax book loss to taxable income (loss) for the fiscal years ended December 31, 2025, and December
31, 2024:
| Income Tax | Deferred Tax Assets/Liability | |||||||||||||||
| December 31, 2025 (Restated) |
December 31, 2024 (Restated) |
|||||||||||||||
| Book value | Tax value | Book value | Tax value | |||||||||||||
| Income (Loss) per Books | ( |
) |
( |
) |
( |
) | ( |
) | ||||||||
| M-1 Differences: | ||||||||||||||||
| Stock/options issued for services | ||||||||||||||||
| Allowance for doubtful accounts | ||||||||||||||||
| Tax income (loss) | ( |
) |
( |
) |
||||||||||||
| Prior Year NOL (exclude the effect of state tax) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Cumulative NOL | ( |
) |
( |
) |
( |
) | ( |
) | ||||||||
| December 31, 2025 (Restated) |
December 31, 2024 (Restated) |
|||||||
| Net operating loss carry forwards. | ||||||||
| Stock/options issued for services | ||||||||
| Allowance for doubtful accounts | ||||||||
| Valuation allowance | ( |
) |
( |
) | ||||
| Total | ||||||||
| Tax at statutory rate ( |
( |
) |
( |
) | ||||
| State tax benefit, net of federal tax effect | ||||||||
| Change in valuation allowance | ||||||||
| Total | ||||||||
Note
16. Income Taxes (continued)
For
the fiscal year ended December 31, 2025, the non-cash stock-based compensation add-back of $
consists of: (i) $
representing the fair value of
shares of restricted common stock issued to employees of the
Company’s subsidiaries for services rendered; and (ii) $
representing
shares of Series B Convertible Preferred Stock issued to Nick
G. Kundnani for services, recognized at $
per share. For the fiscal year ended December 31, 2024, the
add-back of $
represents
shares of Series B Convertible Preferred Stock issued to officers,
directors, and consultants for services rendered ($
and
shares of common stock issued for services ($
The allowance for doubtful accounts of $
recognized as a general and administrative expense in fiscal year 2024 in connection with the restatement, is not deductible for U.S.
federal income tax purposes until the related receivable is actually written off as uncollectible.
For
the fiscal year ended December 31, 2024,
pre-NOL taxable income of $383,187 was fully offset by prior-period NOL carryforwards, resulting in net taxable income of $nil and a
current tax provision of $nil. For the fiscal year ended December 31, 2025, the U.S. Parent generated a net taxable loss of $829,312,
resulting in no current income tax expense.
Net
Operating Loss Carryforwards
At December 31, 2025, the U.S. Parent had generated a current-year taxable loss of $
which is added to the accumulated NOL carryforward. Federal NOL carryforwards generated after December 31, 2017, carry forward indefinitely
but are subject to a utilization limitation of 80% of taxable income in any given year. Federal NOL carryforwards generated prior to
January 1, 2018, expire 20 years after the year in which they arose and are not subject to the 80% limitation. The accumulated U.S. federal
NOL carryforward of FDCTech, Inc. as of December 31, 2025, inclusive of the $
generated in fiscal year 2025, is approximately $
The Company has filed its U.S. federal tax return for the fiscal year ended December 31, 2025.
In
evaluating the realizability of deferred tax assets, management considered all available positive and negative evidence, including the
U.S. Parent’s history of cumulative operating losses, the expected reversal of existing temporary differences, tax planning strategies,
and projected future taxable income. Based on the weight of available evidence, and in particular the U.S. Parent’s sustained history
of pre-tax losses at the standalone entity level, management has determined that it is more likely than not that the U.S. Parent’s
gross deferred tax assets will not be realized. Accordingly, a full valuation allowance has been established against the U.S. Parent’s
net deferred tax assets as of December 31, 2025, and 2024.
The
change in valuation allowance for fiscal year 2025 reflects the addition of the deferred tax asset arising from the $
current-year taxable loss (generating a deferred tax asset
of $
partially offset by the release of the $
deferred tax asset associated with the $
of prior-period NOL carryforward utilized during fiscal year
2024 (reflected in the FY2024 comparative column). The allowance for doubtful accounts of $
recognized in fiscal year 2024 results in a temporary difference
of $
21%) that is expected to reverse upon charge-off of the related receivable.
Foreign Subsidiary
Taxes and Deferred Tax Liabilities
The
Company’s foreign operating subsidiaries are subject to income taxes in their respective jurisdictions. Alchemy Markets Ltd. is
subject to corporate income tax in Malta under the Income Tax Act at a standard rate of 35%, with a refund mechanism that generally results
in an effective tax rate of approximately 5% for trading income distributed to non-Maltese shareholders. Alchemy Prime Limited is subject
to UK Corporation Tax at the applicable statutory rate. AD Advisory Services Pty Ltd. is subject to Australian income tax at the applicable
corporate rate. Alchemy International Ltd. is subject to income tax in Seychelles under applicable local legislation. Alchemytech Ltd.
is subject to income tax in Cyprus.
The
Company does not consolidate foreign subsidiary earnings for U.S. tax purposes. Management considers the undistributed earnings of its
foreign subsidiaries to be indefinitely reinvested outside the United States, and accordingly, no deferred U.S. federal income tax liability
has been recognized with respect to such earnings.
The
consolidated balance sheet includes a deferred tax liability of $
as of December 31, 2025 (December 31, 2024: $
relating to temporary differences arising at the Company’s foreign subsidiaries, primarily Alchemy Markets Ltd. in Malta. The deferred
tax expense recognized in the consolidated statements of operations arising from changes in this liability was $
for the fiscal year ended December 31, 2025 (fiscal year 2024:
deferred tax benefit of $
These amounts are measured using the enacted tax rates applicable in the relevant foreign jurisdictions.
Uncertain
Tax Positions
The
Company has analyzed its tax positions in all jurisdictions in accordance with ASC 740-10-25 and has identified no uncertain tax positions
requiring recognition or disclosure as of December 31, 2025, or December 31, 2024. The Company does not anticipate a material change
in the amount of unrecognized tax benefits within the next twelve months. Should uncertain tax positions be identified in the future,
any related interest and penalties would be recognized as components of income tax expense.
Open
Tax Years
The
Company’s U.S. federal and California state income tax returns are subject to examination for tax years beginning in 2021. The
U.S. federal income tax returns for fiscal years 2023 and 2022 have been filed and accepted. The California franchise tax returns
for fiscal years 2023 and 2022 have also been filed and accepted. At December 31, 2025, the Company has no ongoing tax examinations
in any jurisdiction.
NOTE
17. OFF-BALANCE SHEET ARRANGEMENTS
We
have no off-balance sheet arrangements affecting our liquidity, capital resources, market risk support, credit risk support, or other
benefits.
NOTE
18. SUBSEQUENT EVENTS
The Company evaluated subsequent events through June 30, 2026, the date on which these consolidated financial statements,
as revised by this Amendment No. 4, were available to be issued. The following events occurring after December 31, 2025, are disclosed
in accordance with ASC 855, Subsequent Events.
Amendment
to Series B Convertible Preferred Stock Conversion Terms
In
January 2026, the Company filed a Certificate of Amendment to the Certificate of Designation of its Series B Convertible Preferred Stock
(the “Series B Amendment”) with the Secretary of State of the State of Delaware. The Series B Amendment did not change the
number of authorized or issued shares of Series B Convertible Preferred Stock, nor any other rights, preferences, or privileges thereof,
except with respect to its conversion rights.
amended, each share of Series B Convertible Preferred Stock remains convertible, at the option of the holder and without payment of additional
consideration, into 100 shares of Common Stock at any time (the “Base Conversion Rate”). However, in the event the Company
completes a qualifying public offering of $10,000,000 or more that includes an uplisting of its Common Stock to The Nasdaq Stock Market
or the New York Stock Exchange, the conversion rate applicable to shares converted in connection with such qualifying public offering
will be determined by the Board of Directors within a range of 10 to 100 shares of Common Stock for each one share of Series B Convertible
Preferred Stock. The Company anticipates that the conversion ratio applied in connection with a qualifying offering would be 10 shares
of Common Stock for each one share of Series B Convertible Preferred Stock. The Series B Amendment was approved by the Board of Directors
by unanimous written consent and by the written consent of the holders of at least 51% of the Series B voting power, as required under
Delaware General Corporation Law.
Planned
Uplisting to a National Securities Exchange
In
connection with its previously announced plan to uplist its Common Stock to a national securities exchange, the Company has engaged Lucosky
Brookman LLP as legal counsel and E.F. Hutton & Co. LLC as financial advisor to assist with capital markets strategy, financing opportunities,
and the uplisting process. The Company intends to file a registration statement on Form S-1 with the Securities and Exchange Commission.
As of the date these financial statements were available to be issued, the registration statement had not yet been filed. This event
is a Type I recognized subsequent event to the extent it relates to the Series B conversion terms described above, and is otherwise disclosed
for informational purposes.
Updates
to Legal Proceedings
Alchemy
Markets Ltd. v. Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 104/2023). On February 2, 2026, a hearing was
held before Madam Justice Rachel Montebello in the Court of Appeal (Inferior Jurisdiction), Malta, at which the FIAU cross-examined the
Company’s witnesses. Following the cross-examination, the matter has been adjourned for final legal submissions. No judgment has
been issued as of the date these financial statements were available to be issued.
Alchemy
Markets Ltd. v. L-Avukat tal-Istat u Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 159/2024). A hearing in
the constitutional challenge pending before the First Hall Civil Court (Constitutional Jurisdiction) in Malta was held on January 28,
2026. The case remains pending as of the date these financial statements were available to be issued.
With
respect to all other legal proceedings described in Note 10 — Commitments and Contingencies, there have been no material developments
between December 31, 2025, and the date these financial statements were available to be issued.
U.S.–Israel–Iran
Military Conflict
On
February 28, 2026, the United States and Israel launched coordinated joint military strikes against Iran, targeting military, governmental,
and nuclear-related sites. Iran subsequently responded with missile and drone attacks against targets in the region and sought to restrict
commercial shipping traffic through the Strait of Hormuz. As of the date these financial statements were available to be issued, the
conflict remained ongoing, and its ultimate scope, duration, and resolution were uncertain.
The
Company maintains a sales office in Tel Aviv, Israel. As of the date of this filing, that office has not experienced any material disruption
to its operations as a direct result of the conflict, and the safety of Company personnel located there has not been compromised. The
Company’s operating subsidiaries are located in the United Kingdom, Malta, Cyprus, Australia, Seychelles, and Mauritius, none of
which are in the directly affected region. However, the broader geopolitical instability and elevated market volatility arising from
the conflict may affect client trading volumes, foreign currency exchange rates, and the general business environment in which the Company
operates.
This
event is classified as a Type II non-recognized subsequent event under ASC 855-10, as it does not relate to conditions that existed at
December 31, 2025, and therefore does not result in any adjustment to the amounts recognized in the consolidated financial statements.
Series B Convertible Preferred Stock
On March 24, 2026, the Company filed a
ratification of Certificate of Designation with the Secretary of State of the State
of Delaware, designating
shares of its authorized preferred stock, par value $
per share, as “Series B Convertible Preferred Stock.”
share of Series B Preferred Stock carries one vote per share, voting together with the Common Stock as a single class
at the option of the holder into 100 shares of Common Stock, subject to adjustment and to a Board-determined conversion ratio
(ranging from 100:1 to 10:1) in the event the Company completes a qualifying public offering of $10,000,000 or more with an
uplisting to NASDAQ or NYSE.
stated dividend or liquidation preference. As of the date of issuance of these consolidated financial statements,
shares of Series B Preferred Stock have been issued and are outstanding.
AIL
Sellers Note
The maturity of the $
seller note loan obligation for the acquisition of AIL was extended to
30, 2026
Alchemy Markets (Cayman) Ltd.
On May 19, 2026, the Cayman Islands Monetary Authority
granted conditional approval for the transfer to FDCTech, Inc. of 100% of Alchemy Markets (Cayman) Ltd, a non-operating CIMA-licensed
company, which had not yet been completed as of the date these financial statements were available to be issued.
Alchemy Markets Ltd. (AML, Malta)
On June 1, 2026, the Malta Financial Services Authority confirmed its no-objection to changing the name of the Company’s
wholly-owned Maltese subsidiary, Alchemy Markets Ltd, to “Crestmark Trading Ltd,” effective upon issuance of the altered certificate
by the Malta Business Registry. Neither matter is expected to have a material effect on the Company’s consolidated financial statements.
Both are Type II non-recognized subsequent events under ASC 855-10.
Restatement and Non-Reliance on Previously
Issued Financial Statements
On June 3, 2026, the Board of Directors of the Company, after consultation with management and LAO, concluded —
having determined the nature and magnitude of the errors — that the Company’s previously issued unaudited condensed consolidated
financial statements as of and for the three months ended March 31, 2025 (as included in the Quarterly Report on Form 10-Q filed May 13,
2025 and Amendment No. 1 thereto), as of and for the three and six months ended June 30, 2025, as of and for the three and nine months
ended September 30, 2025, and as of and for the three months ended March 31, 2026, as well as the audited consolidated financial statements
as of and for the fiscal years ended December 31, 2024 and December 31, 2025 (as included in the Annual Report on Form 10-K filed April
17, 2026 and Amendment No. 1 thereto), should no longer be relied upon. The Company filed a Current Report on Form 8-K under Item 4.02
on June 8, 2026, providing notification of non-reliance and notifying the previously dismissed independent registered public accounting
firm of such non-reliance pursuant to Item 4.02(c). The Company effected the foregoing restatements by filing, on June 8, 2026, Amendment
No. 2 to its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, Amendment No. 2 to its Annual Report on Form 10-K
for the fiscal year ended December 31, 2025, and Amendments to its Quarterly Reports on Form 10-Q for the periods listed above, in each
case to restate the affected financial statements in accordance with ASC 250-10.
Subsequent to the foregoing, on June 18, 2026, the Company received a comment letter from the staff of the Securities
and Exchange Commission relating to the restatement. After consultation with management and LAO, the Board of Directors concluded that
the Company’s previously issued unaudited condensed consolidated financial statements as of and for the three months ended March
31, 2024, the three and six months ended June 30, 2024, and the three and nine months ended September 30, 2024 should no longer be relied
upon, because the errors that gave rise to the restatement of the Company’s fiscal year 2024 financial statements also affected
those interim periods. On June 23, 2026, the Company filed a Current Report on Form 8-K under Item 4.02 with respect to such 2024 interim
periods. The restated financial information for those interim periods is presented as comparative prior-period information in the Company’s
amended Quarterly Reports on Form 10-Q for the corresponding interim periods of fiscal year 2025. Subsequently, on June 30, 2026, the Company received a further comment letter from the staff with respect to the
December 31, 2025 restatement schedule in Note 4 and, in response, filed Amendment No. 4 to its Annual Report on Form 10-K for the fiscal
year ended December 31, 2025, to include in Note 4 certain revisions to that schedule that had been inadvertently omitted from Amendment
No. 3 as filed, which did not change any previously reported amount in the face consolidated financial statements.
The Company has evaluated subsequent events through June 30, 2026, the date of filing of this Amendment No. 4, and
determined that no other events would require adjustment to or disclosure in the consolidated financial statements.
EXHIBIT
INDEX
| Exhibit | Item | |
| 3.1 | Articles of Incorporation | |
| 3.2 | Bylaws | |
| 3.3 | Certificate of Designation of Series B Convertible Preferred Stock | |
| 10.1* | Alchemy International Limited Share Purchase Agreement as filed with the SEC on November 10, 2025 | |
| 16.1 | Change of Auditor as filed with the SEC on April 4, 2025 | |
| 19.1 | FDCTech, Inc. Insider Trading Policy | |
| 21.1 | List of Subsidiaries | |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 |
|
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 |
|
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
| 101.INS* | Inline XBRL Instance Document |
|
| 101.SCH* | Inline XBRL Taxonomy Extension Schema |
|
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase |
|
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase |
|
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase |
|
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase |
|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
| * | Filed herewith. |