The accompanying consolidated financial statements include the accounts of FDCTech, Inc. and its wholly-owned subsidiaries. We have eliminated all intercompany balances and transactions. The Company has prepared the consolidated financial statements consistent with the accounting policies adopted by the Company in its financial statements. The Company has measured and presented its consolidated financial statements in US Dollars, the currency of the primary economic environment in which it operates (also known as its functional currency).

The Company prepared consolidated financial statements according to accounting principles generally accepted in the United States of America (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions. This could impact the reported amounts of assets and liabilities, as well as the related disclosures, at the date of the consolidated financial statements, and the reported amounts of revenue and expenses for 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. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the coronavirus (“COVID-19”).

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.

Subsequent to the issuance of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025 (the “Original Q2 2025 Form 10-Q”), the Company identified errors in its previously issued unaudited condensed consolidated financial statements. The errors related principally to (i) the presentation of cash and restricted cash held on behalf of clients, (ii) the classification of a subscription receivable as a current asset rather than as a reduction of stockholders’ equity, (iii) the recognition and measurement of right-of-use (“ROU”) lease assets and related operating lease liabilities under ASC 842, (iv) the classification of certain costs within cost of sales and operating expenses, and (v) the classification of related-party advances and the effect of exchange rates within the statement of cash flows.

As a result, the Company has restated its unaudited condensed consolidated balance sheets as of June 30, 2025, and June 30, 2024, and its related unaudited condensed consolidated statements of operations and cash flows for the three and six months then ended. Accordingly, the previously issued financial statements contained in the Original Q2 2025 Form 10-Q should no longer be relied upon.

(a) Cash and restricted cash. The Original Q2 2025 Form 10-Q presented cash and cash equivalents on a combined basis, including amounts held in a segregated capacity on behalf of clients. The restated financial statements separately present Cash and cash equivalents and Restricted cash (client funds), with a corresponding Client/customer funds payable liability. This change in presentation had no effect on total current assets or net loss for any period presented.

(b) Subscription receivable. The Company had previously classified a subscription receivable of $8,200,000 as a current asset. Because the related shares had not yet been issued and consideration had not been received, the amount has been reclassified as a reduction of stockholders’ equity (contra-equity) of $8,000,000 as of June 30, 2025, and $8,200,000 as of June 30, 2024, in accordance with SEC staff guidance on subscription receivables.

(c) Right-of-use lease assets and operating lease liabilities. The Original Q2 2025 Form 10-Q did not give effect to the recalculation of ROU assets and related operating lease liabilities under ASC 842. The restated financial statements record an ROU asset and current and non-current operating lease liabilities. As of June 30, 2024, this resulted in an increase of $1,052,867 in the ROU asset and $879,052 in total operating lease liabilities, with the net effect recorded in accumulated deficit.

(d) Equity — common shares and additional paid-in capital. The restated financial statements reflect 500,000 shares of common stock issued in October 2021 that had not previously been recorded in the share register, increasing the par value of common stock by $50 and additional paid-in capital by $54,700 as of June 30, 2024.

(e) Noncontrolling interest and accumulated other comprehensive income. The restated financial statements correct the prior allocation of net income (loss) and other comprehensive income (loss) between the controlling interest of FDCTech, Inc. and the noncontrolling interest in ADS in accordance with ASC 810-10 and ASC 220-10-45-5. The corrected allocation reflects the noncontrolling interest’s 49% share of ADS’s net income (loss) and foreign currency translation, together with a re-measurement adjustment to the noncontrolling interest balance recorded directly to equity through general ledger account 3010. The accumulated other comprehensive income (loss) attributable to FDCTech, Inc. stockholders has been correspondingly restated to exclude the noncontrolling interest’s allocable portion.

As of June 30, 2025, the restatement decreased total assets, total liabilities, and stockholders’ equity from $47,520,040, as previously reported, to $31,659,210, as restated, a decrease of $15,860,830. The principal components were the gross-up reversal of client cash and the related Client funds payable (a decrease of $7,074,201 in that liability, with cash and restricted cash combined of $19,063,258 as restated versus $26,195,817 as reported), the $8,000,000 subscription receivable reclassification to contra-equity, and an $801,778 reduction in Related party receivable. Total stockholders’ equity attributable to FDCTech decreased from $16,201,884 to $8,226,039. Including noncontrolling interest of $41,608, total stockholders’ equity as restated was $8,267,647.

The restatement reclassified $310,884 for the three months and $495,168 for the six months ended June 30, 2025, from Brokerage (trading) cost of sales to Technology and software cost of sales; total cost of sales was unchanged. Technology and software revenue decreased $15,612 for both the three- and six-month 2025 periods. Operating expenses decreased $13,953 (three months) and $17,545 (six months) for 2025, and $46,255 (three months) and $119,065 (six months) for the 2024 periods.

As a result, net loss for the three months ended June 30, 2025, changed from $(423,797), as reported, to $(425,456), as restated; and for the six months ended June 30, 2025, from $(319,249) to $(111,334), an improvement of $207,915 driven primarily by a $205,981 reduction in other expense. Net loss for the three months ended June 30, 2024, changed from $(1,045,275) to $(999,020), and for the six months ended June 30, 2024, from $(211,830) to $(92,765), in each case reflecting the lower operating expenses described above.

For the six months ended June 30, 2025, net cash used in operating activities changed from $(3,164,373), as reported, to $(2,894,238), as restated (a change of $270,135); net cash provided by (used in) financing activities changed from $2,633,441 to $(5,158,793) (a change of $7,792,234), driven principally by the classification of related-party advances ($5,207,274 of net repayments, as restated, versus $2,506,553 of net advances, as reported). The net decrease in cash for the period was $(6,313,699), as restated, versus an increase of $1,414,428, as reported, and ending cash was $19,063,258, as restated, versus $26,195,817, as reported, consistent with the balance sheet presentation described above.

The restatement also reclassified the effect of exchange rate changes on cash, which was previously presented within investing activities, to a separate line item. These changes affected classification within the statements of cash flows and did not change the Company’s reported total cash.

As of June 30, 2024, the restatement decreased total assets and total liabilities and stockholders’ equity from $47,256,601, as previously reported, to $40,109,468, as restated, a decrease of $7,147,133, comprising the $8,200,000 subscription receivable reclassification to contra-equity offset by the $1,052,867 ROU asset recognition. Total operating lease liabilities increased by $879,052 and accumulated deficit decreased (improved) by $119,065, from $(2,834,639) to $(2,715,574).

With respect to the comparative 2024 periods, the restatement reduced general and administrative expense by $46,255 for the three months and $119,065 for the six months ended June 30, 2024, with no change to revenue or total cost of sales. As a result, net loss for the three months ended June 30, 2024 decreased from $(1,045,275), as reported, to $(999,020), as restated, and net loss for the six months ended June 30, 2024 decreased from $(211,830) to $(92,765). The $119,065 reduction in the six-month net loss is the principal component of the $119,065 decrease in accumulated deficit as of June 30, 2024 described above.

For the six months ended June 30, 2024, the restatement did not change the Company’s net increase in cash of $490,396 but reclassified amounts among the operating, investing and financing categories. Net cash provided by operating activities changed from $438,368, as reported, to $412,201, as restated (a change of $26,167), reflecting the removal of $26,167 of software amortization from operating add-backs and its presentation within capitalized software, together with the effect of the ASC 842 right-of-use asset and operating lease liability recalculation described above. Net cash provided by investing activities changed from $700,358 to $971,465 (a change of $271,107), and net cash used in financing activities was $(648,330), as restated, unchanged from as reported, with $26,544 reclassified between noncontrolling interest line items within financing activities. The effect of exchange rate changes on cash of $(244,940), as restated, was presented as a separate line item rather than within investing activities.

	As Previously			As				Difference
	Reported (A)			Restated (B)				(B) - (A)
CONSOLIDATED BALANCE SHEETS
As of June 30, 2024
Current assets:
Cash and cash equivalents	$	31,806,857		$	1,951,165		$		(29,855,692	)
Restricted cash (client funds, segregated)	$	-		$	29,855,692		$		29,855,692
Cash + Restricted (combined)	$	31,806,857		$	31,806,857		$		-
Subscription receivable	$	8,200,000		$	-		$		(8,200,000	)
Total Current assets	$	41,412,956		$	33,212,956		$		(8,200,000	)
Right of use (lease)	$	-		$	1,052,867		$		1,052,867
Total assets	$	47,256,601		$	40,109,468		$		(7,147,133	)
Liabilities
Current liabilities:
Operating lease liability, current	$	-		$	255,654		$		255,654
Total Current liabilities	$	32,558,552		$	32,814,206		$		255,654
Operating lease liability, non-current	$	-		$	623,398		$		623,398
Total liabilities	$	33,094,579		$	33,973,631		$		879,052
Stockholders’ Equity (Deficit):
Common stock	$	39,058		$	39,108		$		50
Additional paid-in capital (Common + Series B)	$	16,964,234		$	17,018,934		$		54,700
Subscription receivable (contra-equity)	$	-		$	(8,200,000	)	$		(8,200,000	)
Accumulated deficit	$	(2,834,639	)	$	(2,715,574	)	$		119,065
Total FDCTech stockholders’ equity (deficit)	$	14,149,627		$	6,123,442		$		(8,026,185	)
Total liabilities & stockholders’ equity (deficit)	$	47,256,601		$	40,109,468		$		(7,147,133	)

CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, 2024
General and administrative	$	2,522,394		$	2,476,139		(46,255	)
Total operating expenses	$	3,349,906		$	3,303,651		(46,255	)
Operating income (loss)	$	(1,118,534	)	$	(1,072,279	)	46,255
Net income (loss)	$	(1,045,275	)	$	(999,020	)	46,255


Six Months Ended June 30, 2024
General and administrative	$	4,821,528		$	4,702,463		(119,065	)
Total operating expenses	$	5,736,253		$	5,617,188		(119,065	)
Operating income (loss)	$	(1,162,780	)	$	(1,043,715	)	119,065
Net income (loss)	$	(211,830	)	$	(92,765	)	119,065


CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2024
Software amortization	$	26,167			-		(26,167	)
Accounts receivable allowance	$	22,382			-		(22,382	)
Gross accounts receivable	$	980,618		$	1,003,000		22,382
Operating lease	$	(39,683	)	$	839,369		879,052
Right of use of assets (lease)	$	39,683		$	(1,013,184	)	(1,052,867	)
Net cash provided by (used in) operating activities	$	438,368		$	412,201		(26,167	)
Capitalized software (investing)	$	136,477		$	162,644		26,167
Net cash from investing activities	$	700,358		$	971,465		271,107
Noncontrolling interest (financing)	$	(5,706	)	$	20,838		26,544
Net cash from financing activities	$	(648,330	)	$	(648,330	)	-
Effect of exchange rates	$	(244,940	)	$	(244,940	)	-

The table above presents the line items of the consolidated balance sheet as of June 30, 2025, consolidated statements of operations for the three and six months ended June 30, 2025, consolidated statement of cash flows for the six months ended June 30, 2025, as previously reported in the Original Filing and as restated herein. The principal restatement items relate to: (i) the reclassification of a subscription receivable from current assets to a contra-equity account; (ii) the recognition of 500,000 shares of common stock issued in October 2021 that were not previously recorded in the Company’s share register; (iii) the separate presentation of restricted cash representing client funds segregated under regulatory requirements, with the corresponding liability re-titled “Client funds payable”; (iv) correction of the noncontrolling interest walk in accordance with ASC 810-10; (v) correction of the allocation of accumulated other comprehensive income in accordance with ASC 220-10; and (vi) the reclassification of ATECH cost of sales from Technology & software to Brokerage. The restatement adjustments affect total revenue, total cost of sales, gross profit, operating expenses, operating income (loss), and the components of cash, cash equivalents, and restricted cash as of June 30, 2025. Management has identified material weaknesses in the Company’s internal control over financial reporting in connection with these errors and has begun implementing remediation measures, as described in Item 4 of Part I of this Amendment.

On August 5, 2025, the Company identified an error in the preparation of its condensed consolidated financial statements for the three months ended March 31, 2025. Specifically, the Company erroneously included the results of operations of its subsidiary, APL, for a prior period rather than for the current quarter. As a result, revenue, cost of sales, and certain operating expenses were overstated, and other related line items in the condensed consolidated balance sheets, statements of operations, statements of stockholders’ equity, and statements of cash flows were misstated. Additionally, the Right-of-Use (ROU) asset under ASC 842 was not recalculated in the originally filed Form 10-Q for Q2 2025, in the originally filed 10-Q/A for Q1 2025, and in the originally filed Forms 10-Q for Q1, Q2, and Q3 2024. The ‘As Restated’ column reflects the updated ROU balances.

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 June 30, 2025, and December 31, 2024, the majority of the cash balance was held with non-FDIC financial institutions in Malta, the United Kingdom, Cyprus, and Australia.

The Company’s regulated brokerage subsidiaries — Alchemy Markets Limited (Malta, MFSA-licensed), Alchemy Prime Limited (UK, FCA-licensed), and AD Advisory Services Pty Ltd (Australia, ASIC-licensed) — hold cash on behalf of clients in segregated bank accounts in accordance with the client-money rules of their respective regulators. These segregated client funds are not available for general corporate use and are matched by a corresponding liability presented as “Client funds payable” on the consolidated balance sheet. In accordance with Accounting Standards Codification (“ASC”) 230-10-50-8, ASC 940 (“Financial Services—Brokers and Dealers”) and SEC Staff Accounting Bulletin Topic 11.M, these balances are classified as restricted cash and presented as a separate line item on the consolidated balance sheet under the caption “Restricted cash — client funds (segregated).” The Company adopted this presentation in connection with the restatement described in this Note and applied the change retrospectively to all periods presented.

The following table reconciles the components of cash, cash equivalents, and restricted cash reported on the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:

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 primarily represent the amount from four (4) technology customers. In some cases, customer receivables are due immediately upon demand; however, in most cases, the Company offers net 30 terms, where payment is due in full 30 days after the invoice 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.

At June 30, 2025, and December 31, 2024, the Management determined that the allowance for doubtful accounts was $22,382 and $22,382, respectively. Bad debt expense for the six months ended June 30, 2025, and the year ended December 31, 2024, was $0 and $0, respectively.

The Company recognizes sales, marketing, and advertising expenses when incurred.

The Company incurred $570,141 and $827,947 in sales, marketing, and advertising costs (“sales and marketing”) for the six months ended June 30, 2025, and 2024. The sales and marketing costs mainly included travel costs for tradeshows, customer meetings, online marketing on industry websites, press releases, and public relations activities. The decrease in sales and marketing expenses is mainly due to lower promotional marketing costs for the six months ended June 30, 2025.

The sales, marketing, and advertising expenses represented 5.00% and 6.62% of the sales for the six months ended June 30, 2025, and 2024.

On January 1, 2019, the Company adopted ASU 2014-09 Revenue from Contracts with Customers. The majority 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:

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 complete satisfaction of a performance obligation, warranties, customer options for additional goods or services, non-refundable upfront fees, licensing, customer acceptance, and other relevant categories.

The Company accounts for a contract when the Company and the customer (‘parties’) have approved the contract and are committed to performing their respective obligations. Each party can identify its rights, obligations, and payment terms; the contract has commercial substance. The Company will collect all of the considerations. 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 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 assumes 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 that are not capable 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 consideration outlined in an arrangement or contract with a customer.

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, suppose 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. In that case, 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, equal to the invoice amount.

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, 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:

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 readily available resources, 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 receive 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 performed at a specific point in time, revenue is recognized upon completion of the service. 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 we are 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.

Alchemy Markets Ltd (Alchemy Malta) and Alchemy Prime Ltd (Alchemy UK) are providers of trading services and solutions specializing in over-the-counter (“OTC”) and exchange-traded markets for European markets. Malta Financial Services Authority (MFSA) regulates Alchemy Malta in 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 Alchemy UK in authorized countries, including 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 an 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 possesses the knowledge, experience, and expertise to assess risks and make informed investment decisions.

We recognize Brokerage (Trading) revenue 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 Brokerage (Trading) Revenues. The Brokerage (Trading) revenue is the Company’s largest source of revenue. Brokerage (Trading) revenue comprises revenue from the retail OTC business and the 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 Brokerage (Trading) revenue on the Consolidated Statements of Operations and Comprehensive (Loss)/Income. We record Brokerage (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 acts as an agent concerning clearing trades, but is the principal on fees paid to introducing brokers. The Company does not assume any market-making risk related to 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 earned and incurred, respectively.

Cash and cash equivalents include cash on hand, bank deposits, and other short-term, highly liquid investments with a maturity of three months or less. 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 June 30, 2025. However, as of December 31, 2024, the majority of the cash balance was held with non-FDIC financial institutions in Malta, the UK, and other countries. As of June 30, 2025, the Company had $2,316,508 of cash and cash equivalents and $16,746,750 of restricted cash — client funds (segregated), for total cash, cash equivalents, and restricted cash of $19,063,258. As of December 31, 2024, the comparable amounts were $13,850,168, $11,526,789, and $25,376,957, respectively.

For the six months ended June 30, 2025, and 2024, the Company generated $11,396,739 and $12,505,856 in revenues, representing a decrease of over 8.87% from the previous period. It is comprised of three main business segments: Investment and Brokerage, Wealth Management, and Technology and Software Development.

Accounts Receivable primarily represent the amount from four (4) technology customers. In some cases, customer receivables are due immediately upon demand; however, in most cases, the Company offers net 30 terms, where payment is due in full 30 days after the invoice 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 age of accounts receivable balances, and economic conditions that may affect a customer’s ability to pay, and the expected default frequency rates. Trade receivables are written off when they are considered uncollectible.

As of June 30, 2025, and December 31, 2024, management determined that the allowance for doubtful accounts was $22,382 and $22,382, respectively. Bad debt expense for the six months ended June 30, 2025, and the year ended December 31, 2024, was $0 and $0, respectively.

The Company acknowledges that future benefits from research and development (R and D) are uncertain; therefore, we cannot capitalize on R and D expenditures. The GAAP accounting standards require us to expense all research and development expenditures as incurred. For the Three Months ended June 30, 2025, and 2024, the Company incurred R and D costs of $0 and $0. The R and D costs in the previous period were based on an evaluation of the technological feasibility costs of the Condor Investing and Trading App.

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.

On December 23, 2023, the Company received legal correspondence and supporting documents addressed to APSI Holdings Limited (formerly Alchemy Prime Holdings Limited) and FDCTech, Inc. The nature of the legal claims or disputes has not been fully specified in the received correspondence. The Company is assessing the situation and will respond appropriately. While management cannot predict the outcome of these matters, any adverse resolution could potentially have a material impact on the Company’s business, financial condition, and results of operations. The Company intends to defend its interests vigorously and will provide further updates as material developments arise.

On December 9, 2024, Asher Alkoby and other former shareholders of Alchemy Markets Ltd. (“AML”), the Company’s Malta-incorporated broker-dealer subsidiary acquired in June 2023, filed a claim against the Company in the London Circuit Commercial Court (Claim No. LM-2024-000330). The claimants seek approximately $1.02 million in amounts they allege are owed under the Share Sale Agreement, together with rectification of the agreement to render it legally enforceable. Following completion of the acquisition, the Company identified anti-money laundering deficiencies at the subsidiary that had resulted in a 2019 administrative fine by the Malta Financial Intelligence Analysis Unit (“FIAU”), as well as undisclosed loans taken by the previous shareholders from the subsidiary that had not been repaid, resulting in net capital lower than disclosed during negotiations. Based on these findings, the Company withheld the final payment otherwise due to the sellers. The Company has filed a counterclaim seeking a declaration that the Share Sale Agreement is ineffective and unenforceable and repayment of $915,000 previously paid to the sellers. The Company served its Defense and Counterclaim on May 9, 2025. Subsequent to June 30, 2025, on October 17, 2025, the Court granted the claimants permission to amend their claim to include a third claimant. A Costs and Case Management Conference took place on November 17, 2025, at which directions were given for trial, which is scheduled for November 2026. The Company believes it has meritorious defenses and counterclaims and intends to defend the action vigorously. Due to the inherent uncertainty of litigation, the Company cannot predict the outcome of this matter with certainty.

Alchemy Markets Ltd. v. Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 104/2023)

On October 19, 2023, AML filed an appeal in the Court of Appeal (Inferior Jurisdiction) in Malta challenging an administrative penalty of €419,997 and a follow-up directive imposed by the FIAU on September 23, 2023. The FIAU penalty was based on a compliance examination conducted between November 25, 2019, and December 5, 2019, before the Company acquired AML and under the different ownership and control of the subsidiary. The appeal challenges the decision-making process leading to the penalty and the law on which it was based, asserts that the penalty is arbitrary and excessive, and contends that certain aspects of the decision are unfounded in law and fact. The case is in the evidentiary production stage pertaining to the Company as appellant. Subsequent to June 30, 2025, a hearing was held on October 24, 2025, for the Company to continue presenting evidence. The Court has scheduled an additional hearing for February 2, 2026, for the FIAU to cross-examine the Company’s witnesses, following which the matter will be adjourned for final legal submissions. The Company believes it has meritorious grounds for the appeal and intends to pursue it vigorously.

Alchemy Markets Ltd. v. L-Avukat tal-Istat u Il-Korp għall-Analizi ta’ Informazzjoni Finanzjarja (Ref: 159/2024)

On April 2, 2024, AML filed a constitutional challenge before the First Hall Civil Court (Constitutional Jurisdiction) in Malta relating to the same September 23, 2023, FIAU decision described above. The application challenges (i) the composition of the FIAU and its enabling law; (ii) the FIAU’s decision-making processes as allegedly breaching the Company’s fundamental right to a fair hearing; and (iii) the imposition of an administrative penalty of a penal nature without adjudication by an independent court, in alleged breach of the Constitution of Malta. The Company seeks to have the FIAU decision set aside in its entirety. A first procedural hearing took place on May 7, 2024, and the Company has presented its evidence in support of the claim. The First Hall Civil Court (Constitutional Jurisdiction) has, in prior judgments involving other subject persons, characterized FIAU administrative penalties as more akin to penal sanctions and quashed FIAU decisions on that basis, although certain of those judgments have been overturned on appeal. The Company considers that the principles underpinning such prior judgments are applicable to its case.

Subsequent to June 30, 2025, the Company filed a complaint in the Superior Court of California, County of Orange, against the operators of the websites Intelligenceline.com, Fintelegram.com, and Criticalintel.com. The complaint alleges that the defendants published false and defamatory statements accusing the Company of fraud, illegal conduct, and regulatory violations, causing reputational and financial harm, including lost business opportunities, and 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, and seeks damages and injunctive relief. As of the date of this filing, the complaint had not yet been served. A hearing took place on December 15, 2025, on the Company’s motion, following which the court instructed the Company to investigate as to the beneficial owner of Intelligenceline.com. The Company is the plaintiff in this matter.

The Company records a liability for loss contingencies when management, in consultation with legal counsel, determines that a loss is probable and the amount can be reasonably estimated. As of June 30, 2025, no amounts have been accrued for the matters described above, as management has determined, in consultation with counsel, that a loss is not probable or, where reasonably possible, cannot be reasonably estimated. The Company is unable to estimate the reasonably possible loss or range of loss, if any, in excess of amounts accrued for the matters described above. The Company believes it has meritorious defenses and counterclaims in the matters in which it is a defendant and intends to defend them vigorously; however, litigation is inherently uncertain, and the Company cannot predict the outcomes with certainty.

Other than the matters described above, neither the Company nor any of its subsidiaries is a party to, nor is any of their property the subject of, any material pending legal proceedings other than ordinary routine litigation incidental to the business.

The Company reviews long-lived assets for impairment in accordance with FASB ASC 360, Property, Plant, and Equipment. Under the standard, long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment charge is recognized when the asset’s carrying value exceeds the fair value. There were no impairment charges as of June 30, 2025, and December 31, 2024.

The provision for income taxes is determined using the asset and liability method. This method calculates deferred tax assets and liabilities based on the temporary differences between the consolidated financial statement and income tax bases of assets and liabilities using the enacted tax rates applicable each year.

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, exceeding 50%, that is likely to be realized upon ultimate settlement. The Company considers various factors when evaluating and estimating its tax positions and benefits, which necessitate periodic adjustments that may not accurately predict actual outcomes. The Company includes interest and penalties related to tax contingencies in the provision for income taxes in the consolidated statements of its operations. The Company’s management does not expect the total amount of unrecognized tax benefits to change significantly in the next twelve (12) months.

According to ASC 985-20, Software development costs, including expenses incurred to develop software sold, leased, or otherwise marketed, are capitalized after establishing technological feasibility, if significant. The Company amortizes the capitalized software development costs using the straight-line method over the estimated useful life of the application software. By the end of February 2016, the Company completed the technical feasibility of the Condor FX Back Office, Condor Pro Multi-Asset Trading Platform Version, and Condor Pricing Engine. The Company established the technical feasibility of the Digital Assets Web Trader Platform in February 2018. The Company completed the technical feasibility of the Condor Investing and Trading App in January 2021.

The Company is developing the Condor Investing and Trading App. The Company is currently capitalizing on the costs associated with the development. The R and D costs in the period ending September 30, 2022, were incurred in evaluating the technological feasibility of the Robo Advice Platform. The R and D costs in the period ending December 31, 2022, were incurred while evaluating the technological feasibility of the Condor Investing and Trading App. There were no R and D costs for the three months ending June 30, 2025, and 2024.

The Company capitalizes major costs incurred during the application development stage for internal-use software.

The cash conversion guidance in ASC 470-20, Debt with Conversion and Other Options, is considered when evaluating the accounting for convertible debt instruments, including certain convertible preferred stock classified as a liability, to determine whether the conversion feature should be recognized as a separate component of equity. The cash conversion guidance applies to all convertible debt instruments that, upon conversion, may be settled entirely or partially in cash or other assets where the conversion option is not bifurcated and separately accounted for pursuant to ASC 815.

If the conversion features of conventional convertible debt provide a conversion rate below market value, this feature is characterized as a beneficial conversion feature (“BCF”). The Company records BCF as a debt discount in accordance with ASC Topic 470-20, Debt with Conversion and Other Options. In such circumstances, the convertible debt is recorded net of the discount related to the Black-Scholes formula. The Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

The Company translates its foreign operations into US dollars in accordance with 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 currencies of ADS, AML, and APL — the Australian Dollar (AUD), the Euro (EUR), and the British Pound (GBP), respectively, into US$1.00 at the following exchange rates for the respective dates:

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 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 utilizes estimated future cash flows or earnings, adjusted by a discount rate that reflects the time value of money and the risk of not achieving the cash flows, 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 (the best) to Level 3 (the worst). The Company uses these three levels to select inputs for valuation techniques:

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 income by the weighted average number of common shares and dilutive common share equivalents outstanding. As of June 30, 2025, and 2024, the Company had weighted 423,084,729 and 389,659,315 basic and dilutive shares issued and outstanding.

During the period ended June 30, 2025, common stock equivalents were anti-dilutive due to the net loss and were accordingly excluded from the computation.

During the period ended June 30, 2024, common stock equivalents were anti-dilutive due to the net loss and were accordingly excluded from the computation.

We have reclassified certain amounts from the prior period to conform to the current year’s presentation. None of these classifications impacted reported operating or net loss for any presented period.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific requirements. ASU 2014-09 establishes a five-step revenue recognition process; an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from customers’ contracts. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one (1) year. The Company adopted ASC 606 using the modified retrospective method, applying it 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 in accordance with legacy GAAP. Refer to Note 2, Revenue from Major Contracts with Customers, for further discussion on the Company’s accounting policies for revenue sources within the scope of ASC 606.