UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
For
the Quarterly Period Ended
OR
For the transition period from ______________ to ______________
Commission
File No.
(Exact name of the small business issuer as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(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 | ||
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 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.
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 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated 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.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The number of shares of Common Stock, $ par value, of the registrant outstanding on June 8, 2026, was .
TABLE OF CONTENTS
| 2 |
EXPLANATORY NOTE
The restatement corrects the following errors in the previously issued financial statements: (i) general and administrative expense was overstated by $3,587 as a result of an update to the parent company operating lease; the correction increases operating income, income before provision for income taxes, and net income by $3,587; (ii) within total other income (expense), net interest income of $132,448 was incorrectly reported as interest expense of $(132,492), a sign and footing error; the correction has no effect on total other income (expense) of $14,611; (iii) net income attributable to the noncontrolling interest of $6,241, principally the 49% noncontrolling interest in AD Advisory Services Pty Ltd., was not previously presented; as restated, net income attributable to FDCTech, Inc. is $6,867,266, a decrease of $2,654 from the amount originally reported; and (iv) certain balance sheet corrections and reclassifications, principally the elimination of an intercompany cash position of $4,429,781, the reclassification of the related intercompany residual of $4,865,084 to related party receivable, an increase to right of use (lease) assets of $98,124 with corresponding reductions to operating lease liabilities, and related adjustments to accumulated other comprehensive income (loss) and accumulated surplus (deficit). As restated, total assets increased by $611,895 to $72,807,161, total liabilities increased by $338,130 to $38,920,903, and total FDCTech, Inc. stockholders’ equity increased by $276,973 to $33,845,667 as of March 31, 2026. In addition, rebate income of $804,664 earned by Alchemy Markets Ltd. from Alchemy International Ltd. continues to be presented as external revenue, consistent with prior filings, with no effect on total revenue, operating income, net income, or the balance sheet.
In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Amendment No. 1 includes currently-dated certifications from the Company’s Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, filed as exhibits hereto. Except as expressly set forth in this Amendment No. 1, this Amendment does not, and does not purport to, amend, update, or restate any other information or disclosures contained in the Original Filing, or reflect any events occurring after the date of the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Company’s filings with the SEC subsequent to the Original Filing.
| 3 |
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Form 10-Q”) 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 that the expectations reflected in any of 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 and results of operations, as well as any forward-looking statements, are subject to change and 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-Q. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend to and undertake no obligation to update any forward-looking statement. 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 should underlying assumptions prove incorrect, actual outcomes will likely vary materially from those indicated.
| 4 |
PART I.
| Item 1. | Financial Statements. |
FDCTECH, INC.
Index to Consolidated Financial Statements
| F-1 |
FDCTECH, INC.
CONSOLIDATED BALANCE SHEETS
| March 31, 2026 | December 31, 2025 | |||||||
| (Unaudited; Restated) | (Audited; Restated) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash (client funds, segregated) | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||
| Prepaid – current | ||||||||
| Related party receivable | ||||||||
| Total Current assets | ||||||||
| Fixed assets, net | ||||||||
| Other Non-Current Assets | ||||||||
| Prepaid – non-current | ||||||||
| Capitalized software, net | ||||||||
| Investment through subsidiary | ||||||||
| Accrued income | ||||||||
| Acquired intangible assets | ||||||||
| Tax receivable | ||||||||
| Other trade and tax receivable | ||||||||
| Fair value of trading positions for the firm, 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 | ||||||||
| 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 8) | ||||||||
| Stockholders’ Equity (Deficit): | ||||||||
| Series A Preferred stock, par value $, shares authorized, and issued and outstanding, as of March 31, 2026 and December 31, 2025 | ||||||||
| Series B Preferred stock, par value $, shares authorized, and issued and outstanding, as of March 31, 2026 and December 31, 2025 | ||||||||
| Common stock, par value $, shares authorized; and shares issued and outstanding, as of March 31, 2026 and December 31, 2025 | ||||||||
Additional paid-in capital, Common Series A, Series B | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income (loss) | ||||||||
| Accumulated surplus (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.
| F-2 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Restated)
| Three Months Ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| (Unaudited; Restated) | (Restated, Unaudited) | |||||||
| 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) | $ | $ | ( | ) | ||||
| Income (loss) before provision for income taxes | ||||||||
| Provision for income tax | $ | |||||||
| Net income (loss) | $ | |||||||
| Less: Net income (loss) attributable to noncontrolling interest | ||||||||
| Net income (loss) attributable to FDCTech, Inc. stockholders | $ | $ | ||||||
| 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 other comprehensive income (loss) | ( | ) | $ | |||||
| 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
| F-3 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited; Restated)
| Preferred stock | Common stock | Additional Paid-in | Accumulated other comprehensive | Subscription | Noncontrolling | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | income (loss) | Recevable | interest | Deficit | Deficit | |||||||||||||||||||||||||||||||
| Three months ended March 31, 2025 (Restated) | ||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Three months ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | |||||||||||||||||||||||||||||||||||||||
| Series B issuances at $ per share | - | |||||||||||||||||||||||||||||||||||||||
| 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, March 31, 2025 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Balance, December 31, 2025 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||
| Change in APIC due to common control | - | - | ||||||||||||||||||||||||||||||||||||||
| FX gain (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interest | - | - | ||||||||||||||||||||||||||||||||||||||
| Noncontrolling interest — fair value / FX re-measurement | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to FDCTech shareholders | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||
See accompanying notes to the financial statements
| F-4 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Restated)
| Three Months Ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| (Unaudited; Restated) | (Restated, Unaudited) | |||||||
| Operating Activities: | ||||||||
| Net income (loss) | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Common stock issued for services | ||||||||
| Series B Preferred 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 | ( | ) | ||||||
| Tax receivable by subsidiaries | ( | ) | ||||||
| Trade 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 | ( | ) | ( | ) | ||||
| Investment through subsidiary | ||||||||
| 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 | ( | ) | ( | ) | ||||
| Noncontrolling income (loss) | ( | ) | ( | ) | ||||
| Change in noncontrolling interest | ( | ) | ||||||
| Net cash provided by (used in) financing activities | $ | ( | ) | $ | ( | ) | ||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash and cash equivalents, and restricted cash at beginning of the period | ||||||||
| Cash and cash equivalents, and restricted cash at end of the period | $ | $ | ||||||
See accompanying notes to the financial statements
| F-5 |
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 three months ended March 31, 2026. 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 March 31, 2026:
| Subsidiary | Ownership | Jurisdiction | Primary Business | Markets Served | Technology | |||||
| AD Advisory Services Ltd. (ADS) | ||||||||||
| Alchemy Markets Ltd. (AML) | ||||||||||
| Alchemy Prime Ltd. (APL) | ||||||||||
| Alchemytech Ltd. (ATECH) | ||||||||||
| Alchemy International Ltd. (AIL) | ||||||||||
| Xoala Asia (XOA) | ||||||||||
| Prime Intermarket Group Eurasia (PIG) |
The
Company consolidates all subsidiaries in which it holds a controlling financial interest. AD Advisory Services Ltd. (ADS) is consolidated
as a majority-owned subsidiary (
| F-6 |
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 $
(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. As of March 31, 2026, this segment remains in the development stages 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 3.
Fiscal Year
The Company’s fiscal year ends on December 31. The consolidated financial statements presented herein are as of and for the three months ended March 31, 2026.
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.
| F-7 |
NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
Recent Acquisitions and Developments
Acquisition of Alchemy International Ltd.
On November 11, 2025, the Company 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.
Establishment of Xoala Asia
On November 6, 2025, Xoala Asia was granted a Payment Intermediary Services license by the Financial Services Commission of Mauritius (license no. GB25204956). Management is in the process of implementing the compliance, technology, and operating framework required by the FSC (including AML/CFT, safeguarding of client funds where applicable, operational resilience, data protection, and reporting). There has been no activity in Xoala Asia for the three months ending March 31, 2026.
Establishment of Prime Intermarket Group Eurasia
Effective January 1, 2026, we commenced start-up work under Prime Intermarket Group Eurasia (FXPIG), a Mauritius-based private limited company under Section 24 of the Companies Act. The company was originally established in May 2025, with no operations.
Recent Corporate Actions
On
September 4, 2025, our Board of Directors unanimously approved, and we obtained the written consent of holders of a majority of our voting
power for, corporate actions to (i) amend our Certificate of Incorporation to increase the number of authorized shares of common stock
from to and the number of authorized shares of preferred stock from to ; and (ii) authorize
our Board of Directors, in its discretion, to amend our Certificate of Incorporation not later than June 30, 2026, to
Certificate of Designation of Series B Convertible Preferred Stock
On
March 24, 2026, the Company filed a Certificate of Designation of Series B Convertible Preferred Stock (the “Series B Certificate
of Designation”) with the Secretary of State of the State of Delaware. The Series B Certificate of Designation designates
shares of the Company’s authorized preferred stock (par value $ per share) as “Series B Convertible Preferred Stock”
and establishes the rights, preferences, privileges, and restrictions of such shares, including a
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. The Company maintains a sales office in Tel Aviv, Israel. As of the date of this report, 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’s operating subsidiaries are located in the United Kingdom, Malta, Cyprus, Australia, Seychelles, and Mauritius, none of which are in the directly affected region. The conflict has contributed to significant volatility in global energy prices and financial markets, which may affect client trading volumes, foreign currency exchange rates, and the general business environment in which the Company operates. As of the date of this report, the Company has not experienced any material disruption to its business operations as a direct result of the conflict.
Ukraine-Russia Conflict
The geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia’s invasion of Ukraine. By the end of August 2022, the Company closed its technical support and development office in Russia and relocated its personnel to Turkey, currently considered a neutral zone. No individual associated with the Company is on the Specially Designated Nationals (SDN) and Blocked Persons list. As of the date of this report, there has been no disruption to our operations.
Description of Company’s Securities to be Registered
Effective September 3, 2021, the Company’s description of its common stock, par value $ per share, to be registered hereunder is contained under the heading “Description of Securities” in the Company’s Registration Statement on Form S-1 (File No. 333-221726), as initially filed with the Securities and Exchange Commission on November 22, 2017, as subsequently amended (the “Registration Statement”). Since the Registration Statement filing, the Company has made all required filings pursuant to Section 15(d) and has continued to file all reports voluntarily.
As
of March 31, 2026, the Company had shares of Common Stock, shares of Series A Preferred Stock, and shares
of Series B Preferred Stock issued and outstanding. Holders of Series A Preferred Stock are entitled to fifty (50) non-cumulative votes
per share on all matters presented to stockholders for action and 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 shares of the Company’s common stock at any time by the holder
of such shares, subject to the conversion-rate adjustment described above in connection with a qualifying public offering.
| F-8 |
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.
Restatement of Previously Issued Financial Statements
Subsequent to the issuance of its unaudited condensed consolidated financial statements for the three months ended March 31, 2026 (originally filed on Form 10-Q on May 15, 2026), management of the Company identified errors in those financial statements. As previously disclosed in a Current Report on Form 8-K filed under Item 4.02 on June 8, 2026, the Board of Directors, after consultation with management and LAO Professionals (“LAO”), the Company’s independent registered public accounting firm, concluded that the Company’s previously issued unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2026 should no longer be relied upon. The Company has restated the accompanying condensed consolidated financial statements in accordance with ASC Topic 250, “Accounting Changes and Error Corrections.” The restatement reflects the following adjustments:
(a) General and administrative expense — consolidated
general and administrative expense was reduced from $
(b) Sign and footing error within total other income
(expense) — the net interest and recharge line was reported as expense of $(
(c) Net income attributable to noncontrolling interest
(ASC 810-10) — net income attributable to the noncontrolling interest of $
(d) Balance sheet corrections and reclassifications
— the principal adjustments are: cash and cash equivalents $(
(e) Intercompany rebate revenue (presentation) —
rebate income of $
| F-9 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The following tables reconcile the amounts as originally filed (Form 10-Q, filed May 15, 2026) to the amounts as restated:
| Consolidated Balance Sheet — March 31, 2026 | ||||||||||||
| As Originally Filed | Adjustment | As Restated | ||||||||||
| Cash and cash equivalents (including restricted cash) | ( | ) | ||||||||||
| Accounts receivable, net | ||||||||||||
| Prepaid – current | ||||||||||||
| Related party receivable | ||||||||||||
| Prepaid – non-current | ||||||||||||
| Fixed assets, net | ||||||||||||
| Capitalized software, net | ||||||||||||
| Investment through subsidiary | ||||||||||||
| Accrued income | ||||||||||||
| Acquired intangible assets | ( | ) | ||||||||||
| Tax receivable | ||||||||||||
| Other trade and tax receivable | ||||||||||||
| Fair value of trading positions for the firm, profit | ||||||||||||
| Right of use (lease) | ||||||||||||
| Total assets | ||||||||||||
| Accounts payable | ||||||||||||
| Line of credit | ||||||||||||
| Accrued expenses, related party | ||||||||||||
| Business acquisition loan | ||||||||||||
| Related party advances | ||||||||||||
| Client funds payable | ||||||||||||
| Operating lease liability, current | ( | ) | ||||||||||
| Other current liabilities | ||||||||||||
| Deferred tax liabilities | ||||||||||||
| SBA loan – non-current | ||||||||||||
| Operating lease liability – non-current | ( | ) | ||||||||||
| Accrued interest – non-current | ( | ) | ||||||||||
| Total liabilities | ||||||||||||
| Series A Preferred stock | ||||||||||||
| Series B Preferred stock | ||||||||||||
| Common stock | ||||||||||||
| Additional paid-in capital, Common and Series A Preferred | ( | ) | ||||||||||
| Subscription receivable | ( | ) | ( | ) | ||||||||
| Additional paid-in capital, Series B Preferred stock | ||||||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||||||
| Accumulated surplus (deficit) | ||||||||||||
| Total FDCTech, Inc. stockholders’ equity (deficit) | ||||||||||||
| Noncontrolling interest | ( | ) | ||||||||||
| Total liabilities and stockholders’ equity (deficit) | ||||||||||||
| Consolidated Statement of Operations — Three Months Ended March 31, 2026 | ||||||||||||
| As Originally Filed | Adjustment | As Restated | ||||||||||
| Total revenue | ||||||||||||
| Total cost of sales | ||||||||||||
| Gross profit | ||||||||||||
| Total operating expenses | ( | ) | ||||||||||
| Operating income (loss) | ||||||||||||
| Total other income (expense) | ||||||||||||
| Income (loss) before provision for income taxes | ||||||||||||
| Provision for income taxes | ||||||||||||
| Net income (loss) | ||||||||||||
| Net income (loss) attributable to noncontrolling interest | ||||||||||||
| Net income (loss) attributable to FDCTech, Inc. | ( | ) | ||||||||||
In the reconciliation above, cash and cash equivalents
is presented inclusive of restricted cash; as restated, the $
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 March 31, 2026. However, as of December
31, 2025, the majority of the cash balance was held with non-FDIC financial institutions in Malta, the UK, and other countries. As of
March 31, 2026, and December 31, 2025, the Company had $
Restricted Cash — Client Funds Segregated
The Company’s regulated brokerage subsidiaries — Alchemy Markets Ltd. (Malta, MFSA-licensed), Alchemy Prime Limited (United Kingdom, FCA-licensed), and Alchemy International Ltd. (Seychelles, FSA-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 sheets. In accordance with ASC 230-10-50-8 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 sheets under the caption “Restricted cash (client funds, segregated).”
The following table reconciles the components of cash, cash equivalents, and restricted cash reported on the consolidated balance sheets to the total amounts shown in the consolidated statements of cash flows:
| March 31, 2026 | December 31, 2025 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash (client funds, segregated) | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
| F-10 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company’s accounts receivable arise principally from brokerage commissions, rebates, and technology service fees earned from counterparties and customers in the ordinary course of business. Receivables are generally short-term in nature and are typically settled within thirty days of the invoice date.
The Company evaluates the collectability of its accounts receivable on an ongoing basis and maintains an allowance for doubtful accounts at a level management believes to be sufficient to absorb estimated losses inherent in the receivable portfolio as of the balance sheet date. The allowance is determined based on a review of specific accounts considered to be at risk, taking into consideration the age of the receivable, the financial condition and payment history of the counterparty, current economic conditions, and other relevant factors. Account balances are charged against the allowance after all reasonable means of collection have been exhausted and the potential for recovery is considered remote. Recoveries of receivables previously written off are recorded as a reduction to bad debt expense in the period the amounts are received.
As
of March 31, 2026 and December 31, 2025, accounts receivable were $
Sales, Marketing, and Advertising
The Company recognizes sales, marketing, and advertising expenses when incurred.
The
Company incurred $
Sales, marketing, and advertising expenses represented approximately
Revenue Recognition
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:
| ● | 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 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 of 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. |
| F-11 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
| F-12 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company’s standard 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”), Start-Your-Own-Crypto Exchange (“SYOC”), 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, Crypto Trading Platform (“Crypto Web Trader Platform”), and other cryptocurrency-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, 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.
| F-13 |
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, 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 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.
| F-14 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Investment and Margin Brokerage Business
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 Investment and Brokerage 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 Investment and Brokerage Revenues. The Investment and Brokerage revenue is the Company’s largest source of revenue. Investment and Brokerage 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 Investment and Brokerage revenue on the Consolidated Statements of Operations and Comprehensive (Loss)/Income. We record Investment and Brokerage 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.
| F-15 |
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 original maturities of three months or less at the date of acquisition. The Company maintains
its cash balances at multiple financial institutions, both domestic and foreign. For balances held at U.S. financial institutions, such
balances did not exceed Federal Deposit Insurance Corporation (“FDIC”) limits as of March 31, 2026. As of March 31, 2026,
and December 31, 2025, the majority of the Company’s cash was held with non-FDIC financial institutions located in Malta, the United
Kingdom, and other foreign jurisdictions. As of March 31, 2026, and December 31, 2025, the Company had $
Revenues
For the three months ended March 31, 2026, and 2025, the Company generated $
Research and Development (R and D) Cost
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 March 31, 2026, and 2025, the Company incurred R and D costs of $
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. FDCTech conducted the investigation and presented its findings during the management conference held on April 20, 2026. FDCTech is currently awaiting the court’s final judgment based on the outcome of the investigation.
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 €
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, and then for April 15, 2026, heard before Madam Justice Rachel Montebello, following which the matter will be adjourned for final legal submissions.
| F-16 |
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. On April 14, 2026, the Company submitted its final submissions before the Court. The Company is currently awaiting the Court’s final judgment following receipt and review of the FIAU’s final submissions.
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 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
Provision for Income Taxes
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.
| F-17 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Software Development Costs
In accordance with ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed, software development costs, including expenses incurred to develop software that is sold, leased, or otherwise marketed, are capitalized after the establishment of technological feasibility, to the extent such costs are significant. The Company amortizes capitalized software development costs using the straight-line method over the estimated useful life of the application software. Costs incurred prior to the establishment of technological feasibility are expensed as research and development costs in the period incurred.
The Company established the technological feasibility
of the Condor FX Back Office, the Condor Pro Multi-Asset Trading Platform Version, and the Condor Pricing Engine by the end of February
2016. The Company established the technological feasibility of the Digital Assets Web Trader Platform in February 2018 and of the Condor
Investing and Trading App in January 2021. The Company estimates the useful life of each application software to be three (
The Company is continuing to develop the Condor Investing and Trading App and is currently capitalizing the costs associated with such development in accordance with the Company’s software development cost policy. Research and development costs incurred during the period ended September 30, 2022, were incurred in connection with evaluating the technological feasibility of the Robo Advice Platform, and research and development costs incurred during the period ended December 31, 2022, were incurred in connection with evaluating the technological feasibility of the Condor Investing and Trading App. There were no research and development costs incurred during the three months ended March 31, 2026, or 2025.
The Company also capitalizes major costs incurred during the application development stage for internal-use software in accordance with ASC 350-40, Internal-Use Software. Costs incurred during the preliminary project stage and post-implementation stage are expensed as incurred.
As of March 31, 2026, and December 31, 2025, capitalized
software, net of accumulated amortization, was $
Property and Equipment, Net; Depreciation
Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which range
from three to
As of March 31, 2026, and December 31, 2025, property and equipment, net of accumulated depreciation, were $
Convertible Debentures
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.
| F-18 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign Currency Translation and Re-measurement
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 currency of ADS and AML in the Australian Dollar (AUD), Euro Dollar (EUR), and British Pound (GBP), respectively,
into US$
The exchange rate at the reporting end date:
| March 31, 2026 | December 31, 2025 | |||||||
| USD: AUD | $ | |||||||
| USD: EUR | $ | |||||||
| USD: GBP | $ | |||||||
Average exchange rate for the period:
| Q1 2026 | Q1 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 |
| F-19 |
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 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:
| 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 the sales, EBITDA, or net income of comparable companies. | 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 computes earnings per share in accordance with ASC 260, Earnings Per Share. Basic earnings per share (“EPS”) is computed by dividing net income (loss) attributable to the Company’s common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) attributable to the Company’s common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Common stock equivalents are excluded from the computation of diluted earnings per share when their effect would be antidilutive.
For the three months ended March 31, 2026, and 2025,
the weighted average number of shares of common stock outstanding, used to compute both basic and diluted earnings per share, was
and , respectively. The Company reported net income attributable to the Company’s shareholders of $
The Company had no options, warrants, restricted stock units, convertible debt, or other potentially dilutive common stock equivalents outstanding during the three months ended March 31, 2026, or 2025. Accordingly, basic and diluted earnings per share are the same for each period presented.
Reclassifications
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.
| F-20 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Accounting Pronouncements
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.
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 satisfaction of liabilities and commitments in the ordinary course of business. As of March 31, 2026, and December 31, 2025,
the Company had an accumulated surplus of $
For
the three months ended March 31, 2026, and 2025, the Company generated net income of $
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. In performing this evaluation as of the date these consolidated financial statements are issued, management considered, among other factors, the Company’s significantly improved results of operations during the three months ended March 31, 2026, including the revenue growth, profitability, and strengthened liquidity position described above, together with management’s continued execution of its strategic plan to streamline and integrate the Company’s recently acquired subsidiaries into a unified operating platform. Based on this evaluation, management has concluded that no conditions or events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve (12) months from the date these consolidated financial statements are issued. Accordingly, these consolidated financial statements have been prepared on a going concern basis, and no adjustments have been made to the carrying values of assets or liabilities that might result if the Company were unable to continue as a going concern.
As
of March 31, 2026, the Company had a cash and restricted cash balance of $
Management remains focused on strengthening the Company’s financial position by expanding its global customer base, increasing revenue from its diversified portfolio of technology solutions, realizing operating synergies from the continued integration of its acquired subsidiaries, and working toward sustainable positive cash flow from operations. To support long-term growth, the Company also intends to invest in long-lived assets that are expected to generate economic benefits beyond fiscal year 2026. In addition, the Company is pursuing a potential listing of its common stock on a national securities exchange in connection with a proposed public offering. If completed, the proceeds of such offering would meaningfully enhance the Company’s liquidity position and capital resources; however, the completion, timing, and terms of any such offering are subject to market conditions and other factors, and there can be no assurance that the offering will be consummated.
| F-21 |
NOTE 4. CAPITALIZED SOFTWARE COSTS
The
Company’s capitalized software consists of internally developed software and software development costs capitalized in accordance
with ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed, and ASC 350-40, Internal-Use Software. The estimated useful life
of the Company’s capitalized software is three (
As of March 31, 2026, and December 31, 2025, the unamortized
balance of capitalized software, including capitalized software of the Company’s subsidiaries, was $
A substantial portion of the $
The Company has estimated aggregate amortization expense for each of the succeeding fiscal years based on the estimated
three (
NOTE 5. RELATED PARTY TRANSACTIONS
The Company has, from time to time, entered into transactions with related parties, including its founders, directors, principal shareholders, and entities controlled by them. The following describes related party balances and transactions as of and for the periods presented.
Nature of Relationships
The Company’s principal related parties are:
(i)
Mr. Gope S. Kundnani, a Director of the Company and the beneficial owner of
shares of common stock (
(ii) Mitchell M. Eaglstein and Imran Firoz, Co-Founders, Executive Officers, and Directors of the Company; and
(iii) certain non-consolidated affiliated entities controlled directly or indirectly by Mr. Kundnani, including Alchemy DMCC (United Arab Emirates), Alchemy Capital Markets (“ACM”) (United Kingdom), FXIFY Markets Ltd. (Labuan, Malaysia), and other Kundnani-affiliated sister entities, all of which are sister entities to the Company and not part of the consolidated group.
Related Party Receivables
Related
party receivables totaled $
As
of March 31, 2026, the principal components of the related party receivable balance were: (i) approximately $
As of December 31, 2025, the related party receivable balance was comprised primarily of approximately $
Related Party Advances Payable
Related
party advances payable totaled $
During
the three months ended March 31, 2026, the Company settled a net $
Accrued Expenses to Related Parties
Accrued
expenses to related parties totaled $
Other Q1 2026 Related Party Transactions
Other
than the settlements and accruals described above, the principal related party transactions during the three months ended March 31,
2026 consisted of (i) the continued accrual of executive compensation to Messrs. Eaglstein and Firoz at $
Cross-Reference to Form 10-K/A
For additional historical background on related party transactions, including transactions prior to fiscal year 2025, refer to Item 13 (Certain Relationships and Related Transactions) of the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025 (filed April 22, 2026).
| F-22 |
NOTE 6. LINE OF CREDIT
In
June 2016, the Company obtained an unsecured revolving line of credit of $
As
of March 31, 2026, the Company was in compliance with the terms and conditions of each of its lines of credit. As of March 31, 2026,
and December 31, 2025, the aggregate outstanding balances under the lines of credit were $
NOTE 7. NOTES PAYABLE
CARES Act – Paycheck Protection Program (PPP Note)
On
May 1, 2020, the Company received proceeds of $
SBA Loan
On
May 22, 2020, the Company received proceeds of $
Business Acquisition Loan
As
of March 31, 2026, and December 31, 2025, the Company had outstanding seller financing obligations incurred in connection with prior
business acquisitions in the aggregate amount of $
The $
(i) $
(ii) $
The $
As of March 31, 2026, the Company has accrued the
$
The $
| F-23 |
NOTE 8. COMMITMENTS AND CONTINGENCIES
The Company is subject to various commitments and contingencies arising in the ordinary course of business. The following discussion summarizes the Company’s significant commitments and contingencies as of March 31, 2026.
Office Facility and Other 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 $
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 $
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 $
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.
| F-24 |
NOTE 8. COMMITMENTS AND CONTINGENCIES (continued)
St. Julian, Malta (AML Office)
Effective
July 11, 2024, to the present, AML leased office space with Regus Malta at Portomaso Business Center, 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 €
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 $
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
The total rental payment for the period ending March 31, 2026, was $
Employment Agreement
The
Company compensates its Chief Executive Officer and its Chief Financial Officer at $
Accrued Interest
At
March 31, 2026, and December 31, 2025, the cumulative accrued interest for the SBA loan and other non-current loans was $
| F-25 |
NOTE 8. COMMITMENTS AND CONTINGENCIES (continued)
Pending Litigation
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, filed December 9, 2024. The claimants are Asher Alkoby and other former shareholders of Alchemy Markets Ltd. (“AML”), a Malta-incorporated broker that the Company 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 net capital 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 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. The trial is currently scheduled to 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, and 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, on the Company’s motion. FDCTech conducted the investigation and presented its findings during the management conference held on April 20, 2026. FDCTech is currently awaiting the court’s final judgment based on the outcome of the investigation.
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 €
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 and in alleged 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 case remains pending; the next hearing in the matter is scheduled for January 28, 2026.
Management is unaware of any other actions, suits, investigations, or proceedings (public or private) pending or threatened against or affecting the Company, its subsidiaries, or any of their respective assets, other than those described above and other than ordinary routine litigation incidental to the business.
Tax Compliance Matters
From its inception to the present, the Company’s officers have been paid as independent contractors. As of March 31, 2026, the Company believes its payroll tax liabilities are not yet estimated. The Company’s federal taxes are acceptable to the Internal Revenue Service.
| F-26 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT)
Authorized Shares
On
February 12, 2021, the Company filed a Certificate of Amendment with the Secretary of State of Delaware to change the authorized shares.
As amended at that time, the Company had the authority to issue
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
Recent Corporate Actions – September 2025
On
September 4, 2025, the Board of Directors unanimously approved, and the Company obtained the written consent of holders of a majority
of the Company’s voting power for, corporate actions to (i) amend the Certificate of Incorporation to increase the authorized shares
of common stock from to and the authorized shares of preferred stock from to and (ii) authorize
the Board of Directors, in its discretion, to amend the Certificate of Incorporation not later than June 30, 2026 to
Certificate of Designation of Series B Convertible Preferred Stock
On March 24, 2026, the Company filed a Certificate of Designation of Series B Convertible Preferred Stock (the “Series B Certificate of Designation”) with the Secretary of State of the State of Delaware. The Series B Certificate of Designation designates shares of the Company’s authorized preferred stock (par value $ per share) as “Series B Convertible Preferred Stock” and establishes the rights, preferences, privileges, and restrictions of such shares.
Holders of Series B Convertible Preferred Stock have no dividend rights except as may be declared by the Board of Directors in its sole and absolute discretion, out of funds legally available for that purpose. Each share is entitled to one (1) vote per share on all matters presented to stockholders, and holders generally vote together with holders of Common Stock as a single class. The vote or consent of holders of a majority of the outstanding Series B Convertible Preferred Stock is required for: (i) matters that by law require the approval of the outstanding shares of the Series B Convertible Preferred Stock as a separate class; (ii) any amendment to the rights, preferences, privileges, or powers of the Series B Convertible Preferred Stock that would have a material adverse effect on the Series B Convertible Preferred Stock; (iii) any increase in the aggregate authorized number of shares of Series B Convertible Preferred Stock; (iv) any action that reclassifies any outstanding shares into shares having priority as to dividends or assets senior to the Series B Convertible Preferred Stock; or (v) any amendment to the Company’s Certificate of Incorporation that materially and adversely affects the rights of the Series B Convertible Preferred Stock.
Each
share of Series B Convertible Preferred Stock is convertible at the option of the holder, without payment of additional consideration,
into shares of Common Stock at any time, at an initial conversion rate of one hundred () shares of Common Stock for each one share
of Series B Convertible Preferred Stock, subject to adjustment as provided in the Series B Certificate of Designation. If the Company
completes a public offering of $
Shares of Series B Convertible Preferred Stock that are converted into Common Stock or are otherwise acquired by the Company are restored to the status of authorized but unissued shares of preferred stock, without designation as to class, and may thereafter be issued, but not as shares of Series B Convertible Preferred Stock. As of March 31, 2026, shares of Series B Convertible Preferred Stock were issued and outstanding.
| F-27 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
Outstanding Capital Stock
As of March 31, 2026, and December 31, 2025, the Company had and common shares issued and outstanding, respectively.
As of March 31, 2026, and December 31, 2025, the Company had and Series A Preferred Stock issued and outstanding, respectively.
As of March 31, 2026, and December 31, 2025, the Company had and Series B Preferred Stock issued and outstanding, respectively. There were issuances or repurchases of common or preferred stock during the three months ended March 31, 2026.
Series A Preferred Stock – Beneficial Ownership
The percentages below are calculated based on shares of our Series A Preferred Stock issued and outstanding for the period ended March 31, 2026.
| Name and Address(1) | Title of Class (4) | Number of Shares Beneficially Owned | Percent of Class | |||||||
| Mitch Eaglstein | % | |||||||||
| Gope S. Kundnani (5) | % | |||||||||
| Officers and Directors as a group (2 persons) | % | |||||||||
| (4) | |
| (5) |
On
November 30, 2023, the Company issued Series A Preferred Stock to Kundnani, valued at $
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.
| F-28 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
Series B Preferred Stock – Beneficial Ownership
The percentages below are calculated based on shares of our Series B Preferred Stock issued and outstanding for the period ended March 31, 2026.
| Name and Address(1) | Title of Class (6) | Number of Shares Beneficially Owned | Percent of Class | |||||||
| Alchemy Prime Holdings Ltd. | % | |||||||||
| Gope S. Kundnani | % | |||||||||
| Mitchell M. Eaglstein | % | |||||||||
| Imran Firoz | % | |||||||||
| FRH Group | % | |||||||||
| William B. Barnett | % | |||||||||
| Susan E. Eaglstein | % | |||||||||
| Nicky G. Kundnani | % | |||||||||
| Officers and Directors as a group (3 persons) | % | |||||||||
| (6) |
On
November 30, 2023, the Company issued Series B Preferred Stock to Kundnani, valued at $
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.
Cross-Reference to Form 10-K/A
For a complete history of the Company’s authorized share capital, common stock issuances, and preferred stock issuances, refer to Note 9 (Stockholders’ Equity (Deficit)) in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025, filed with the SEC on April 22, 2026.
| F-29 |
NOTE 10. WARRANTS
As
of March 31, 2026, and December 31, 2025, the Company had
NOTE 11. COMPREHENSIVE INCOME
The Company’s other comprehensive income (“OCI”) comprises foreign currency translation adjustments from subsidiaries that do not use the U.S. dollar as their functional currency.
The following table shows the changes in accumulated other comprehensive income (loss) (“AOCI”) by component for the three months ended March 31, 2026, and 2025:
| Accumulated Comprehensive Income: | Cumulative Foreign Currency Translation | |||
| Balance as of December 31, 2024 | $ | ( | ) | |
| 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) | ||||
| Balance as of March 31, 2025 | $ | |||
| Accumulated Comprehensive Income: | Cumulative Foreign Currency Translation | |||
| Balance as of December 31, 2025 | $ | |||
| 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 | ( | ) | ||
| Other comprehensive income (loss), attributed to AIL | ||||
| Total other comprehensive income (loss) | ( | ) | ||
Less: Other comprehensive income (loss) attributable to noncontrolling interest | ( | ) | ||
| Balance as of March 31, 2026 | $ | |||
No amounts were reclassified out of accumulated other
comprehensive income (loss) to net income during the three months ended March 31, 2026 or March 31, 2025. Total AOCI rolled forward above
was $187,072 at March 31, 2026, of which $
NOTE 12. NONCONTROLLING 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
| F-30 |
NOTE 12. NONCONTROLLING INTEREST (continued)
Changes
in noncontrolling interest. The carrying amount of noncontrolling interest was $
The following table presents the activity in the noncontrolling interest balance for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |||||||
| Balance, beginning of period | $ | $ | ||||||
| Net income (loss) attributable to NCI | ||||||||
| Foreign currency translation — NCI | ( | ) | ||||||
| Balance, end of period | $ | $ | ||||||
NOTE 13. 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 14. SUBSEQUENT EVENTS
AIL Seller’s Note
The
maturity of the $
Alchemy Markets (Cayman) Ltd.
On
May 19, 2026, the Cayman Islands Monetary Authority granted conditional approval for the transfer to the Company of
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. This is a Type II non-recognized subsequent event under ASC 855-10 and is not expected to have a material effect on the Company’s consolidated financial statements.
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, 2026 (as included in the Original Filing), 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, and as of and for the three and nine months ended September 30, 2025, as well as the audited consolidated financial statements as of and for the fiscal year ended December 31, 2024 and the audited consolidated financial statements as of and for the fiscal year ended 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 is concurrently filing 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 for the periods listed above, to restate the affected financial statements in accordance with ASC 250-10.
The Company will provide the required pro forma financial information and significant analyses in its SEC filings according to Rule 3-05 of Regulation S-X.
The Company has evaluated all other events occurring after March 31, 2026, through the date of issuance of this Amendment and has concluded that no other material subsequent events have occurred that would require disclosure or adjustment to these condensed consolidated financial statements.
| F-31 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This Quarterly Report Form 10-Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “forecast” and similar expressions (or the negative of such expressions). Forward-looking statements include, but are not limited to, financial and operational information, the volatility of our stock price, current competitive conditions, and the impact of U.S. tariffs, trade barriers, and restrictions. The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed 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.
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 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 Trading & 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 |
| 5 |
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.
During the three months ended March 31, 2026, the Company generated total revenue of $15,214,492, an increase of $9,237,544 (154.6%) over total revenue of $5,976,948 for the three months ended March 31, 2025.
The substantial growth in revenue was driven primarily by the full-quarter contribution of Alchemy International Ltd. (“AIL”) following the change of control approved by the Seychelles Financial Services Authority on October 29, 2025, and the closing of the acquisition on November 11, 2025.
AIL, a Seychelles-licensed securities dealer (license SD136) regulated by the Financial Services Authority, broadened the Company’s regulated multi-asset brokerage footprint to include Seychelles in addition to Malta (AML, MFSA-regulated) and the United Kingdom (APL, FCA-regulated), and added a base of offshore brokerages, high-frequency traders, and institutional clients seeking regulated access to foreign exchange and multi-asset markets.
The full-quarter contribution from AIL during the three months ended March 31, 2026 (compared with no contribution during the three months ended March 31, 2025) accounted for the substantial majority of the year-over-year increase in the Margin Brokerage segment. The Technology and Software Development segment also contributed to the increase, while the Wealth Management segment was substantially flat compared with the prior-year period. The Company also benefited from continued operating leverage on a substantially fixed cost base.
The Company is also pursuing a potential listing of its common stock on a national securities exchange (the New York Stock Exchange or the Nasdaq Stock Market) in connection with a proposed public offering of equity securities. In connection with these initiatives, the Company has engaged Lucosky Brookman LLP as legal counsel and is in discussions with E.F. Hutton and ThinkEquity LLC as financial advisors. The completion of any such offering or listing is subject to market conditions and customary regulatory and exchange approvals, and no assurance can be given that any such transaction will be completed.
| 6 |
Financial Condition as of March 31, 2026
As of March 31, 2026, the Company had total assets of $72,807,161, compared to $64,051,886 as of December 31, 2025, representing an increase of $8,755,275, or approximately 13.7%. Total assets at March 31, 2026, were comprised primarily of cash, cash equivalents, and restricted cash of $32,461,760 (including segregated client funds of $28,339,255), related party receivables of $35,019,729, accounts receivable (net of allowance for doubtful accounts) of $358,932, prepaid expenses (current and non-current) of $535,408, capitalized software (net) of $1,578,353, acquired intangible assets (net) of $1,239,879, right-of-use lease assets of $766,338, property and equipment (net) of $187,657, and other current and non-current assets aggregating $659,105.
The $8,755,275 increase in total assets during the three months ended March 31, 2026 was primarily attributable to: (i) an increase in cash, cash equivalents, and restricted cash of $14,792,011, reflecting cash generated from operations and the receipt by Alchemy International Ltd. (“AIL”) of customer funds in connection with the expansion of its brokerage operations; partially offset by (ii) a decrease in related party receivables of $5,070,322, as further described in Note 5, principally reflecting the net effect of cash collections and non-cash netting arrangements with Alchemy DMCC during the period; (iii) a decrease in the fair value of trading positions for the firm of $1,111,487, reflecting the closing-out and transfer of certain trading positions in the ordinary course; and (iv) net decreases in acquired intangible assets, right-of-use lease assets, and other non-current assets in the ordinary course.
Total Liabilities
As of March 31, 2026, the Company had total liabilities of $38,920,903, compared to $41,360,598 as of December 31, 2025, representing a decrease of $2,439,695, or approximately 5.9%. Total liabilities at March 31, 2026 were comprised primarily of client funds payable of $28,339,255, related party advances payable of $3,821,179, accrued expenses to related parties of $1,002,546, business acquisition loan of $2,350,000, accounts payable of $502,087, operating lease liabilities (current and non-current) of $482,055, the SBA loan and accrued non-current interest aggregating $141,915, deferred tax liabilities of $372,339, and other current liabilities of $1,909,527.
The $2,439,695 net decrease in total liabilities during the three months ended March 31, 2026 was primarily attributable to: (i) a decrease in related party advances payable of $25,376,291, principally reflecting the settlement of AIL’s net advances payable to Alchemy DMCC through a combination of cash repayments and non-cash netting arrangements as further described in Note 5; partially offset by (ii) an increase in client funds payable of $22,525,367, reflecting growth in customer trading activity and customer deposits held by AIL in connection with the expansion of its brokerage operations; (iii) an increase in accrued expenses to related parties of $470,259, primarily representing accrued executive compensation; and (iv) an increase in accounts payable and line of credit of $491,449 in the aggregate, reflecting normal operating activity.
Stockholders’ Equity and Working Capital
As of March 31, 2026, total stockholders’ equity attributable to FDCTech, Inc. stockholders was $33,845,667, compared to $22,657,965 as of December 31, 2025, representing an increase of $11,187,702, or approximately 49.4%. Total stockholders’ equity, including noncontrolling interests, was $33,886,258 as of March 31, 2026, compared to $22,691,288 as of December 31, 2025. The components of stockholders’ equity as of March 31, 2026 consisted of preferred stock and common stock at par value, additional paid-in capital of $28,003,813, additional paid-in capital relating to Series B Preferred Stock of $3,344,063, subscription receivable of $(8,000,000), accumulated other comprehensive income of $186,045, and accumulated surplus of $10,268,751.
| 7 |
The $11,187,702 increase in stockholders’ equity attributable to FDCTech, Inc. stockholders during the three months ended March 31, 2026 was primarily attributable to: (i) net income attributable to FDCTech, Inc. shareholders of $6,867,266 for the period; and (ii) an increase in additional paid-in capital of $4,430,650 arising from a transaction between entities under common control accounted for in accordance with ASC 805-50, Transactions Between Entities Under Common Control, with the residual change reflecting movement in accumulated other comprehensive loss during the period. No new shares of the Company’s common stock or preferred stock were issued during the three months ended March 31, 2026.
Working capital, defined as total current assets less total current liabilities, was $30,117,637 as of March 31, 2026, compared to $17,831,410 as of December 31, 2025, representing an increase of $12,286,227, or approximately 68.9%. The increase in working capital reflects the combined effect of the increase in cash and cash equivalents and the settlement of the December 31, 2025, related party advances payable balance described above, partially offset by the increase in customer funds payable during the period. The Company’s improved working capital position, together with cash generated from operations, is expected to support the Company’s ongoing operations and growth initiatives for at least the next twelve months.
Note on Common Control Transactions Affecting Additional Paid-in Capital
The Company’s acquisitions of Alchemy Markets Ltd. (“AML”), Alchemy Prime Ltd. (“APL”), and Alchemy International Ltd. (“AIL”) were transactions between entities under common control, as each of AML, APL, and AIL was, at the date of the respective acquisition, controlled by Mr. Gope S. Kundnani, who is also a Director and the principal beneficial owner of the voting securities of the Company. Accordingly, the Company has accounted for these acquisitions in accordance with ASC 805-50, Transactions Between Entities Under Common Control. Under this guidance, the assets and liabilities of AML, APL, and AIL were recognized in the Company’s consolidated financial statements at the historical carrying values of the transferor on the respective dates of transfer, and no goodwill or intangible assets were recognized in connection with these common-control combinations. The difference between the consideration transferred by the Company and the historical carrying value of the net assets received was recorded as an adjustment to additional paid-in capital.
During the three months ended March 31, 2026, the Company recorded a net increase to additional paid-in capital of $4,430,650 in connection with the finalization of the consolidation entries relating to the acquisition of AIL, which was completed on November 11, 2025. The adjustment reflects the difference between the consideration transferred by the Company in connection with the AIL acquisition and AIL’s historical carrying value of net assets as of the acquisition date, the determination of which was finalized during the three months ended March 31, 2026. No new shares of the Company’s common stock or preferred stock were issued in connection with this adjustment, and the adjustment had no effect on the Company’s results of operations, cash flows, or total stockholders’ equity in the aggregate during the three months ended March 31, 2026, other than as reflected within the components of stockholders’ equity.
The Company’s acquisition of AD Advisory Services Pty Ltd. (“ADS”), an Australia-incorporated subsidiary, in which the Company acquired a 51% controlling interest, was not a transaction between entities under common control. The ADS acquisition was effected at arm’s length with an unrelated counterparty and was accounted for as a business combination under ASC 805-10, Business Combinations, using the acquisition method. Accordingly, the assets and liabilities of ADS were recognized at their estimated fair values as of the acquisition date, and acquired intangible assets, including goodwill (carrying value of $1,239,879 at March 31, 2026), were recognized in connection with the ADS acquisition, representing the excess of the consideration transferred over the fair value of the identifiable net assets acquired. The noncontrolling interest in ADS was measured at the proportionate share of the fair value of the identifiable net assets at the acquisition date. No adjustment to additional paid-in capital was recognized in connection with the ADS acquisition.
Financial Condition at December 31, 2025
As of December 31, 2025, the Company had total assets of $64,051,886, comprised primarily of cash, cash equivalents, and restricted cash of $17,669,749, related party receivables of $40,090,051, accounts receivable, net of $188,415, capitalized software (net) of $1,480,246, and other balance-sheet items as further described in the Company’s Annual.
Report on Form 10-K/A for the fiscal year ended December 31, 2025.
Total liabilities at December 31, 2025, were $41,360,598, comprised primarily of related party advances payable of $29,197,470 (of which $25,376,291 was settled during the three months ended March 31, 2026 — see Note 5 to the unaudited condensed consolidated financial statements); accounts payable, accrued expenses, and other current liabilities; the SBA loan; the business acquisition loan; and lease and other obligations.
Total stockholders’ equity at December 31, 2025, was $22,691,288, including an accumulated surplus of $3,401,487. Working capital at December 31, 2025, was $17,831,410.
| 8 |
RESULTS OF OPERATIONS
Three Months Ended March 31, 2026, compared with Three Months Ended March 31, 2025
The following table sets forth, for the periods indicated, the principal components of the Company’s consolidated results of operations and the change between the comparative periods (dollar amounts in U.S. dollars):
| Three Months Ended March 31, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Revenues: | ||||||||||||||||
| Technology & software | $ | 1,639,222 | 813,747 | 825,475 | 101.4 | % | ||||||||||
| Wealth management | 1,565,852 | 1,534,852 | 31,000 | 2.0 | % | |||||||||||
| Brokerage | 12,009,418 | 3,628,349 | 8,381,069 | 231.0 | % | |||||||||||
| Total revenue | $ | 15,214,492 | 5,976,948 | 9,237,544 | 154.6 | % | ||||||||||
| Cost of sales: | ||||||||||||||||
| Technology & software | - | - | - | - | ||||||||||||
| Wealth management | 1,435,250 | 1,349,827 | 85,423 | 6.3 | % | |||||||||||
| Brokerage | 2,148,088 | 1,767,562 | 380,526 | 21.5 | % | |||||||||||
| Total cost of sales | $ | 3,583,338 | 3,117,389 | 465,949 | 14.9 | % | ||||||||||
| Gross profit | $ | 11,631,154 | 2,859,559 | 8,771,595 | 306.7 | % | ||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 4,321,313 | 2,136,678 | 2,184,635 | 102.2 | % | |||||||||||
| Sales and marketing | 404,302 | 276,204 | 128,098 | 46.4 | % | |||||||||||
| Depreciation | 46,643 | 38,832 | 7,811 | 20.1 | % | |||||||||||
| Total operating expenses | $ | 4,772,258 | 2,451,714 | 2,320,544 | 94.7 | % | ||||||||||
| Operating income | $ | 6,858,896 | 407,845 | 6,451,051 | 1581.7 | % | ||||||||||
| Total other income (expense), net | 14,611 | (93,723 | ) | 108,334 | (115.6 | )% | ||||||||||
| Income before provision for income taxes | 6,873,507 | 314,122 | 6,559,385 | 2088.2 | % | |||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net income | $ | 6,873,507 | 314,122 | 6,559,385 | 2088.2 | % | ||||||||||
| Less: Net income attributable to noncontrolling interest | 6,241 | 21,310 | (15,069 | ) | (70.7 | )% | ||||||||||
| Net income attributable to FDCTech, Inc. | $ | 6,867,266 | 292,812 | 6,574,454 | 2245.3 | % | ||||||||||
Revenue
Total revenue increased to $15,214,492 for the three months ended March 31, 2026, compared to $5,976,948 for the three months ended March 31, 2025, an increase of $9,237,544, or approximately 154.6%. The growth was driven primarily by the Margin Brokerage segment, which contributed $12,009,418 total revenue for the three months ended March 31, 2026, compared to $3,628,349 for the comparable prior-year period, representing an increase of $8,381,069, or approximately 231.0%. The increase in Margin Brokerage revenue reflects the full-quarter contribution of Alchemy International Ltd. (“AIL”) following the closing of the AIL acquisition on November 11, 2025 (with the change of control approved by the Seychelles Financial Services Authority on October 29, 2025), together with the continuing operations of the Company’s other regulated brokerage subsidiaries, Alchemy Markets Ltd. (“AML”) in Malta and Alchemy Prime Ltd. (“APL”) in the United Kingdom.
Technology and software revenue was $1,639,222 for the three months ended March 31, 2026, compared to $813,747 for the comparable prior-year period, representing an increase of $825,475, or approximately 101.4%, reflecting the expansion of the Company’s technology and platform services to its expanded broker-dealer client base. Wealth Management revenue was $1,565,852 for the three months ended March 31, 2026, compared to $1,534,852 for the comparable prior-year period, representing an increase of $31,000, or approximately 2.0%, and was substantially consistent with the prior-year period.
Cost of Sales and Gross Profit
Cost of sales was $3,583,338 for the three months ended March 31, 2026, compared to $3,117,389 for the three months ended March 31, 2025, an increase of $465,949, or approximately 14.9%. The increase in cost of sales principally reflects higher liquidity-provider, payment-processing, and clearing costs incurred in support of the Margin Brokerage and Wealth Management segments. The rate of increase in cost of sales was substantially lower than the rate of increase in revenue, principally as a result of (i) operating leverage on the Margin Brokerage segment’s fixed-cost base relative to substantially higher transaction volumes, and (ii) the reclassification, in the restated comparative period, of Alchemytech Ltd. cost of sales from the Technology & Software segment to the Brokerage segment, which eliminated technology cost of sales in both periods presented.
| 9 |
Gross profit was $11,631,154 for the three months ended March 31, 2026, compared to $2,859,559 for the three months ended March 31, 2025, an increase of $8,771,595, or approximately 306.7%. Consolidated gross margin was approximately 76.4% for the three months ended March 31, 2026, compared to approximately 47.8% for the three months ended March 31, 2025, principally reflecting the change in revenue mix toward the higher-margin Margin Brokerage segment.
Operating Expenses
Total operating expenses were $4,772,258 for the three months ended March 31, 2026, compared to $2,451,714 for the three months ended March 31, 2025, an increase of $2,320,544, or approximately 94.7%. The increase in total operating expenses reflects higher general and administrative expense of $4,321,313 (compared to $2,136,678 for the comparable prior-year period, representing an increase of $2,184,635, or approximately 102.2%), higher sales and marketing expense of $404,302 (compared to $276,204 for the comparable prior-year period, representing an increase of $128,098, or approximately 46.4%), and higher depreciation expense of $46,643 (compared to $38,832 for the comparable prior-year period, representing an increase of $7,811, or approximately 20.1%).
The increase in general and administrative expense principally reflects additional compliance, audit, legal, and personnel-related expenses to support the Company’s expanded operating footprint following the AIL acquisition, together with professional fees and other costs incurred in connection with the Company’s contemplated listing of its common stock on a national securities exchange and the related proposed public offering. The increase in sales and marketing expense reflects expanded promotional and marketing activities in support of the Company’s broader brokerage and technology client base, as further described in Note 2.
Operating Income
Operating income was $6,858,896 for the three months ended March 31, 2026, compared to operating income of $407,845 for the three months ended March 31, 2025, representing an increase of $6,451,051. The increase in operating income reflects the increase in gross profit described above, partially offset by the increase in total operating expenses described above.
Other Income (Expense), Net
Total other income (expense), net, was net other income of $14,611 for the three months ended March 31, 2026, compared to net other expense of $(93,723) for the three months ended March 31, 2025, an improvement of $108,334. Total other income (expense), net, for the three months ended March 31, 2026, consisted of net interest and recharge income of $132,448 (compared to $4,483 for the comparable prior-year period) and other income (expense) of $(117,837) (compared to $(98,206) for the comparable prior-year period). The change principally reflects foreign exchange gains and losses on transactions denominated in currencies other than the functional currency of the applicable subsidiary, interest income on operating cash balances, and other miscellaneous items.
Net Income and Earnings per Share
Net income was $6,873,507 for the three months ended March 31, 2026, compared to net income of $314,122 for the three months ended March 31, 2025, an increase of $6,559,385. No provision for income taxes was recorded for either period. Net income attributable to FDCTech, Inc. stockholders was $6,867,266 for the three months ended March 31, 2026 ($0.02 per share, basic and diluted), compared to net income attributable to FDCTech, Inc. stockholders of $292,812 for the three months ended March 31, 2025 ($0.00 per share, basic and diluted).
| 10 |
LIQUIDITY AND CAPITAL RESOURCES
Cash, Working Capital and Overview
As of March 31, 2026, the Company had cash, cash equivalents, and restricted cash of $32,461,760, compared to $17,669,749 as of December 31, 2025, representing an increase of $14,792,011, or approximately 83.7%. Working capital, defined as total current assets less total current liabilities, was $30,117,637 as of March 31, 2026, compared to $17,831,410 as of December 31, 2025, representing an increase of $12,286,227, or approximately 68.9%. The increase in working capital principally reflects the settlement of $25,376,291 of related party advances payable during the three months ended March 31, 2026, together with the continued generation of operating cash flow, partially offset by an increase in customer funds payable in connection with the expansion of the Company’s brokerage operations.
Cash Flows from Operating Activities
Net cash provided by operating activities was $35,789,946 for the three months ended March 31, 2026, compared to net cash provided by operating activities of $385,516 for the three months ended March 31, 2025. The increase in net cash provided by operating activities principally reflects (i) net income of $6,873,507 for the three months ended March 31, 2026 (compared to $314,122 for the comparable prior-year period); (ii) an increase in client funds payable of $22,525,367, reflecting the expansion of the Company’s brokerage operations and customer trading activity at Alchemy International Ltd.; (iii) a decrease in related party receivables of $5,070,322, principally reflecting the net effect of cash collections and non-cash netting arrangements with related parties as further described in Note 5; (iv) a decrease in the fair value of trading positions for the firm of $1,111,487, reflecting the closing-out of certain trading positions in the ordinary course; (v) a decrease in tax receivables from subsidiaries of $2,838; and (vi) an increase in accrued expenses to related parties of $470,259 and an increase in accounts payable of $335,875; partially offset by (vii) a decrease in other current liabilities of $490,392 and an increase in gross accounts receivable of $192,899.
Cash Flows from Investing Activities
Net cash provided by investing activities was $4,334,095 for the three months ended March 31, 2026, compared to net cash provided by investing activities of $622,555 for the three months ended March 31, 2025. Net cash provided by investing activities for the three months ended March 31, 2026 principally consisted of (i) $4,430,650 representing changes in paid-in capital arising from a transaction between entities under common control accounted for in accordance with ASC 805-50, Transactions Between Entities Under Common Control, in connection with the Company’s prior acquisitions of subsidiaries under common control, as further described elsewhere in this Report; and (ii) $1,552 of net investment activity through a subsidiary, partially offset by (iii) capitalized software development costs of $98,107.
Cash Flows from Financing Activities
Net cash used in financing activities was $25,221,818 for the three months ended March 31, 2026, compared to net cash used in financing activities of $6,699,762 for the three months ended March 31, 2025. Net cash used in financing activities for the three months ended March 31, 2026 principally consisted of (i) the $25,376,291 settlement of related party advances payable as further described in Note 5, and (ii) net repayments of $2,126 on the Company’s SBA loan, partially offset by (iii) net draws of $155,574 on the Company’s lines of credit and (iv) $1,025 of net activity attributable to noncontrolling interest.
Net Change in Cash
The Company’s cash, cash equivalents, and restricted cash increased by $14,792,011 during the three months ended March 31, 2026, comprising net cash provided by operating activities of $35,789,946, net cash provided by investing activities of $4,334,095, net cash used in financing activities of $(25,221,818), and the effect of exchange rate changes on cash of $(110,212). Cash, cash equivalents, and restricted cash were $32,461,760 as of March 31, 2026, compared to $17,669,749 as of December 31, 2025.
Long-Term Obligations and Capital Adequacy
As of March 31, 2026, the Company’s principal long-term contractual obligations consisted of (i) the SBA loan in the non-current principal amount of $103,552, which bears interest at a rate of 3.75% per annum and is scheduled to mature thirty (30) years from the date of the underlying promissory note; (ii) the Business acquisition loan of $2,350,000, comprising the $350,000 withheld portion of the purchase consideration owed to the former shareholders of Alchemy Markets Ltd. (which is currently the subject of litigation as further described in Note 7) and the $2,000,000 non-interest bearing seller financing obligation owed to Sync Capital Limited, an entity controlled and owned by Mr. Gope S. Kundnani, a Director and majority shareholder of the Company, which obligation matures on September 30, 2026 and is repayable from the proceeds of the Company’s contemplated listing of its common stock on a national securities exchange; (iii) operating lease liabilities (current and non-current) of $482,055 in the aggregate, principally relating to the Company’s office facilities (see Note 8); and (iv) deferred tax liabilities of $372,339 and accrued non-current interest of $38,363.
Management believes that the Company’s existing cash and cash equivalents, anticipated cash flows generated from operations, and available borrowings under its existing credit lines will be sufficient to fund the Company’s operations and meet its known contractual obligations and capital commitments for at least the twelve (12) months following the date of this Report. The Company may, from time to time, raise additional capital through private or public offerings of equity or debt securities, or through additional credit facilities, to support its strategic growth initiatives, including in connection with the Company’s contemplated listing of its common stock on a national securities exchange and any related underwritten public offering. There can be no assurance that additional capital, if needed, will be available on terms acceptable to the Company or at all.
| 11 |
GOING CONCERN CONSIDERATION
The Company has prepared its accompanying consolidated financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and other commitments in the ordinary course of business. In accordance with Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements — Going Concern, management has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.
As of March 31, 2026, the Company had cash, cash equivalents, and restricted cash of $32,461,760, working capital of $30,117,637, total stockholders’ equity of $33,886,258, and an accumulated surplus of $10,268,751, compared to cash, cash equivalents, and restricted cash of $17,669,749, working capital of $17,831,410, total stockholders’ equity of $22,691,288, and an accumulated surplus of $3,401,487 as of December 31, 2025. During the three months ended March 31, 2026, the Company generated revenues of $15,214,492 (compared to $5,976,948 for the three months ended March 31, 2025), net income of $6,873,507 (of which $6,867,266 was attributable to the stockholders of FDCTech, Inc. and $6,241 was attributable to noncontrolling interests, compared to consolidated net income of $314,122 for the three months ended March 31, 2025), and net cash provided by operating activities of $35,789,946 (compared to $385,516 for the three months ended March 31, 2025).
Based on management’s evaluation of the Company’s historical and projected operating cash flows, existing cash and cash equivalents, working capital position, accumulated surplus, available borrowing capacity under existing credit facilities, and known contractual obligations and capital commitments, management has concluded that the Company’s existing cash and cash equivalents and anticipated cash flows from operations are sufficient to fund the Company’s operations and meet its known obligations as they become due for at least the twelve months following the date of issuance of these consolidated financial statements. Accordingly, management has concluded that there is no substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.
Critical Accounting Policies and Significant Judgments and Estimates
We have based our management’s discussion and analysis of our financial condition and results of operations on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. In preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses for the reporting periods.
In more detail, we have described significant accounting policies in Note 2 of our annual financial statements included in our 10-K/A for the fiscal year ended December 31, 2025, filed with the SEC on April 22, 2026. We continually evaluate our critical accounting estimates and judgments, as required by our policies, and update them as necessary based on changing conditions.
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JOBS Act Accounting Election
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies. As an emerging growth company, we have applied for an exemption; as a result, the Company may delay the adoption of certain accounting standards until the standards apply to private companies.
Off-Balance Sheet Arrangements and Contractual Obligations
We have not engaged in any off-balance sheet arrangements as defined in Item 303(c) of the SEC’s Regulation S-B. We had no relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes.
Recent Accounting Pronouncements
The Company evaluates all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”) for applicability and impact on its consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires public entities to disclose significant segment expenses regularly provided to the chief operating decision maker, an amount and description of other segment items, and additional segment information. The Company adopted ASU 2023-07 effective January 1, 2024, on a retrospective basis. The adoption did not have a material impact on the Company’s consolidated financial statements but expanded segment disclosures.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires public business entities to disclose, on an annual basis, specific categories in the rate reconciliation and information about income taxes paid by jurisdiction. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted. The Company will adopt ASU 2023-09 in its Annual Report on Form 10-K for the fiscal year ending December 31, 2026, and is currently evaluating the impact on its consolidated financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40),” which requires public business entities to disclose disaggregated information about specific income statement expense categories. ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact on its consolidated financial statement disclosures.
Other recently issued ASUs not yet adopted by the Company are not expected to have a material impact on the Company’s consolidated financial statements when adopted.
For a more detailed description of our significant and critical accounting policies, please refer to Note 2 in the consolidated financial statements included in our Annual Report on Form 10-K/A for the year ended December 31, 2025, filed with the SEC on April 22, 2026.
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| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS. |
Not Applicable.
| ITEM 4. | 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 Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Amendment, as further described below in connection with the restatement of our previously issued financial statements.
In light of the material weaknesses described below, management performed additional procedures to ensure that the unaudited condensed consolidated financial statements included in this Amendment have been prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management has concluded that, notwithstanding the material weaknesses identified, the unaudited condensed consolidated financial statements included in this Amendment present fairly, in all material respects, the Company’s financial position, results of operations, and cash flows for the periods presented.
Material Weaknesses in Internal Control over Financial Reporting
In connection with the preparation of this Amendment and the restatement described in Note 2 (Restatement of Previously Issued Financial Statements) to the unaudited condensed consolidated financial statements, the Company identified the following material weaknesses in its internal control over financial reporting: (i) Consolidation and Intercompany Elimination — the Company did not have effective controls to ensure that intercompany cash positions and one-sided intercompany residual balances were identified and eliminated or appropriately classified in consolidation, resulting in the overstatement of cash and cash equivalents and the misclassification of related party receivable and related party advance balances; (ii) Noncontrolling Interest Attribution — the Company did not have effective controls to ensure that net income (loss) attributable to the noncontrolling interest was attributed and presented on the face of the consolidated statements of operations in accordance with ASC 810-10; (iii) Account Classification and Footing Review — the Company did not have effective controls to ensure that the components of other income (expense) were presented with the correct sign and footed to the reported total; and (iv) Lease Accounting Updates — the Company did not have effective controls to ensure that modifications to the parent company operating lease were timely reflected in rent expense, the right-of-use asset, and the related operating lease liabilities in accordance with ASC 842.
Remediation Plan
Management, under the oversight of the Board of Directors, has begun implementing the following remediation measures: (a) implementation of a standardized intercompany reconciliation and elimination checklist, including specific procedures to identify one-sided intercompany balances, performed as part of each quarterly close; (b) use of standardized templates and review procedures for the attribution of net income (loss) and other comprehensive income (loss) to the noncontrolling interest; (c) enhanced footing, cross-referencing, and sign-convention review procedures over the statement of operations and supporting schedules; and (d) a quarterly review of lease agreements and lease modifications to ensure timely recognition under ASC 842. These measures supplement the remediation actions previously described in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025. Management believes the steps outlined above, when fully implemented and operating effectively, will remediate the material weaknesses described herein; however, the material weaknesses cannot be considered remediated until the applicable controls have operated for a sufficient period and management has concluded, through testing, that the controls are designed and operating effectively.
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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 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, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Controls 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 Securities Exchange Act, as amended. Management, with the participation of the Chief Executive Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of March 31, 2026. In making this assessment, management utilized the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 Framework for Internal Control. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with 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.
Due to its inherent limitations, internal control over financial reporting may not be effective in preventing or detecting errors or misstatements in our consolidated financial statements. Additionally, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate due to changes in conditions or that the degree of compliance with policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2026. Based on our assessments, management determined that we did not maintain effective internal control over financial reporting as of March 31, 2026, due to the material weakness in our internal controls, including inadequate segregation of duties within account processes due to limited personnel and insufficient written policies and procedures for accounting, IT, and financial reporting and record keeping.
Management intends to implement remediation steps to enhance our internal controls, addressing inadequate segregation of duties within account processes, limited personnel resources, and insufficient written policies and procedures for accounting, IT, financial reporting, and record-keeping. We plan to further improve this process by enhancing the size and composition of our board upon the closing of the business, identifying third-party professionals with whom to consult regarding complex accounting applications, and considering additional staff with the requisite experience and training to supplement existing accounting professionals, and implementing additional layers of reviews in the internal controls and financial reporting process.
This Report does not include an attestation report from our independent registered public accounting firm, as we are an emerging growth company under the JOBS Act.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to affect, our internal control over financial reporting materially.
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PART II.
| ITEM 1. | LEGAL PROCEEDINGS. |
The Company and its subsidiaries are, from time to time, involved in legal proceedings arising in the ordinary course of business. The Company is currently a party to (or defending) the legal proceedings described in Note 8 (Commitments and Contingencies — Pending Litigation) to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report, which discussion is incorporated herein by reference.
Pursuant to Item 103 of Regulation S-K, the Company is required to disclose in this Item only those material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is the subject, and any such proceeding involving a governmental authority where the monetary sanctions, exclusive of interest and costs, are reasonably expected to exceed $1,000,000. Based on the Company’s assessment, the amounts at issue in the proceedings described in Note 8 do not exceed 10% of the Company’s consolidated current assets, and the Company has determined that the proceedings described therein, individually or in the aggregate, do not currently rise to the level of “material” for purposes of Item 103. Notwithstanding this determination, the Company has elected to provide the more comprehensive descriptions in Note 8 to assist readers in understanding the Company’s litigation posture.
As of March 31, 2026, the Company has not recorded a loss accrual with respect to any of the matters described in Note 8, as Management has determined that any loss is not both probable and reasonably estimable as of that date. Management is unaware of any other material actions, suits, investigations, or proceedings (public or private) pending or threatened against or affecting the Company, its subsidiaries, or any of their respective assets, other than the matters described in Note 8 and other than ordinary routine litigation incidental to the business.
| Item 1A. | Risk Factors. |
In accordance with the requirements of Form 10-Q, the Company, as a smaller reporting company, is not required to disclose this item.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
There were no unregistered sales of the Company’s equity securities during the three months ended March 31, 2026, that were not previously reported in a Current Report on Form 8-K. For information regarding the Company’s prior unregistered issuances, refer to Item 5 (Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities) and Item 13 (Certain Relationships and Related Transactions) of the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025, filed with the SEC on April 22, 2026.
| Item 3. | Defaults Upon Senior Securities. |
None
| Item 4. | Mine Safety Disclosures. |
None
| Item 5. | Other Information. |
None
| Item 6. | Exhibits. |
(a) Exhibits.
| 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 Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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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 8, 2026 | /s/ Mitchell Eaglstein |
Mitchell Eaglstein, President and CEO (Principal Executive Officer) |
| Date: June 8, 2026 | /s/ Imran Firoz |
Imran Firoz, CFO (Principal Accounting Officer) |
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EXHIBIT INDEX
| Exhibit | Item | |
| 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 Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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