UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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 | ||
| None | None | None |
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 November 13, 2026, was .
TABLE OF CONTENTS
| 2 |
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.
| 3 |
PART I.
| Item 1. | Financial Statements. |
FDCTECH, INC.
Index to Consolidated Financial Statements
| F-1 |
FDCTECH, INC.
CONSOLIDATED BALANCE SHEETS
| September 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (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 | ||||||||
| Trade receivable | ||||||||
| Fair value of trading positions for the firm, profit | ||||||||
| Right of use (lease) | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Line of credit | ||||||||
| Promissory notes, net of unamortized discount (Note 7) | ||||||||
| Accrued expenses, related party | ||||||||
| Business acquisition loan | ||||||||
| Related party advances | ||||||||
| Client funds payable | ||||||||
| Operating lease liability, current | ||||||||
| Other current liabilities | ||||||||
| Financial liability at fair value through profit and loss | ||||||||
| Income tax payable | ||||||||
| 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: | ||||||||
| Series A Preferred stock, par value $, shares authorized, and issued and outstanding, as of September 30, 2026 and December 31, 2025 | ||||||||
| Series B Preferred stock, par value $, shares authorized, and issued and outstanding, as of September 30, 2026 and December 31, 2025, respectively (all Series B Preferred stock converted to common stock on July 13, 2026) | ||||||||
| Common stock, par value $, and shares authorized as of September 30, 2026 and December 31, 2025, respectively; and shares issued and outstanding, as of September 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital, Common Series A, Series B | ||||||||
| Subscription receivable | ( | ) | ||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated surplus (deficit) | ||||||||
| Total FDCTech, Inc. stockholders’ equity | ||||||||
| Noncontrolling interest | ||||||||
| Total Stockholders’ Equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to the financial statements.
| F-2 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||
| (Unaudited) | (Restated, Unaudited) | (Unaudited) | (Restated, Unaudited) | |||||||||||||
| Revenues | ||||||||||||||||
| Technology & software | $ | $ | $ | $ | ||||||||||||
| Wealth management | ||||||||||||||||
| Brokerage (Trading) | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Technology & software | ||||||||||||||||
| Wealth management | ||||||||||||||||
| Brokerage (Trading) | ||||||||||||||||
| 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 (benefit) for income taxes | ||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||
| Less: Net income (loss) attributable to noncontrolling interest | ( | ) | ||||||||||||||
| Net income attributable to FDCTech’s shareholders | ( | ) | ||||||||||||||
| Net income (loss) per common share, basic | ( | ) | ||||||||||||||
| Net income (loss) per common share, diluted | ( | ) | ||||||||||||||
| Weighted average number of common shares outstanding, basic | ||||||||||||||||
| Weighted average number of common shares outstanding, 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)
| Preferred stock | Common stock | Additional Paid-in | Accumulated other comprehensive income | Subscription | Noncontrolling | Accumulated Surplus | Total Stockholders’ | |||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | (loss) | Receivable | Interest | (Deficit) | Equity | |||||||||||||||||||||||||||||||
| Three months ended September 30, 2025 (Restated) | ||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Three months ended September 30, 2025 (Restated) | ||||||||||||||||||||||||||||||||||||||||
| 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, September 30, 2025 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Three months ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
| Three months ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||
| Conversion of Series B Preferred stock into common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Common stock issued for consulting services | - | |||||||||||||||||||||||||||||||||||||||
| Stock subscription receivable settled | - | - | ||||||||||||||||||||||||||||||||||||||
| Change in APIC due to common control | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| FX gain (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interest | - | - | ||||||||||||||||||||||||||||||||||||||
| Foreign currency translation — noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Rounding | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to FDCTech shareholders | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| F-4 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Preferred stock | Common stock | Additional Paid-in | Accumulated other comprehensive income | Subscription | Noncontrolling | Accumulated Surplus | Total Stockholders’ | |||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | (loss) | Receivable | Interest | (Deficit) | Equity | |||||||||||||||||||||||||||||||
| Nine months ended September 30, 2025 (Restated) | ||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 (Restated) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Nine months ended September 30, 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, September 30, 2025 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Nine months ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||
| Nine months ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||
| Conversion of Series B Preferred stock into common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Common stock issued for consulting services | - | |||||||||||||||||||||||||||||||||||||||
| Stock subscription receivable settled | - | - | ||||||||||||||||||||||||||||||||||||||
| Change in APIC due to common control | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| FX gain (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation — noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Rounding | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to FDCTech shareholders | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
See accompanying notes to the financial statements
| F-5 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, 2026 | September 30, 2025 | |||||||
| (Unaudited) | (Unaudited; Restated) | |||||||
| Net income (loss) | $ | $ | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Common stock issued for services | ||||||||
| Series B Preferred issued for services | ||||||||
| Amortization of debt discount — promissory notes | ||||||||
| Accounts receivable allowance | ||||||||
| Acquired intangible assets | ( | ) | ||||||
| Change in assets and liabilities: | ||||||||
| Accounts receivable, net of allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Prepaid – current and non-current | ( | ) | ||||||
| Related party receivable | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Other current liabilities | ( | ) | ( | ) | ||||
| Accrued interest – non-current | ( | ) | ( | ) | ||||
| Client funds payable | ||||||||
| Fair value of trading positions, net of financial liability at fair value | ( | ) | ||||||
| Operating lease liabilities, current and non-current | ( | ) | ( | ) | ||||
| Deferred tax liabilities | ( | ) | ||||||
| Trade and Tax receivable and income tax payable | ( | ) | ( | ) | ||||
| Trade receivables | ( | ) | ||||||
| Accrued income | ( | ) | ( | ) | ||||
| Right of use (lease) | ||||||||
| Accrued expenses, related party | ||||||||
| Net cash provided by (used in) operating activities | $ | ( | ) | $ | ( | ) | ||
| Investing Activities: | ||||||||
| Capitalized software, net | ( | ) | ( | ) | ||||
| Purchases of fixed assets | ( | ) | ( | ) | ||||
| Investment in private entities | ||||||||
| Net cash provided by (used in) investing activities | $ | ( | ) | $ | ( | ) | ||
| Financing Activities: | ||||||||
| Borrowing from (payments to) line of credit | ||||||||
| Proceeds from promissory notes, net of original issue discount and fees | ||||||||
| Net payments on SBA and PPP loans | ( | ) | ( | ) | ||||
| Related party advances | ( | ) | ||||||
| Stock subscription receivable collected in cash and capital contributions / common-control adjustments to paid-in capital, net | ||||||||
| Net cash provided by (used in) financing activities | $ | $ | ( | ) | ||||
| Effect of exchange rates on cash | ( | ) | ||||||
| Change in noncontrolling interest share of subsidiary net assets | ( | ) | ( | ) | ||||
| Non-cash assignment of liquidity-provider balance included within cash and cash equivalents | ( | ) | ||||||
| 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 | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Non - cash investing and financing activities: | ||||||||
| Common-control combination — Alchemy Markets (Cayman) Ltd.: | ||||||||
| Consideration paid directly by principal shareholder on behalf of the Company | $ | $ | ||||||
| Less: carryover book value of net assets acquired | ( | ) | ||||||
| Deemed distribution to principal shareholder | ||||||||
| Common-control adjustment to APIC, net of subscription-settlement capital | ( | ) | ||||||
| Excess consideration allocated to acquired intangible assets on consolidation of ADS | ||||||||
| Supplemental non-cash disclosures: | ||||||||
| Cash and cash equivalents acquired in the common-control combination | ||||||||
| Noncontrolling interest movements recognized directly in equity | ( | ) | ( | ) | ||||
| Conversion of 2,371,844 shares of Series B Preferred stock into 118,592,200 shares of common stock | ||||||||
| Stock subscription receivable settled on a non-cash basis under the Settlement Agreement (Note 9) | ||||||||
| Reclassification of receivable from Iconic Advisors and Consulting Limited to acquired intangible assets under the IP Purchase Agreement (Note 5) | ||||||||
See accompanying notes to the financial statements
| F-6 |
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, 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 foreign exchange, equities, commodities, and digital assets. The Company is publicly traded on the OTC markets under the ticker symbol OTC: FDCT and 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 OTC brokerage and financial services industries and has transformed into a comprehensive, end-to-end trading platform offering foreign exchange (“FX”), contracts for difference (“CFDs”), equities, bonds, and wealth management services. The Company follows a strategic growth model centered on acquiring, integrating, and scaling legacy financial services firms, and through its acquisitions has expanded its global footprint in wealth management, brokerage, and financial advisory services. These acquisitions and formations include AD Advisory Services Pty Ltd. (2021), Crestmark Trading Ltd. (formerly Alchemy Markets Ltd.) (2022–2023), Alchemy Prime Limited (2023), Alchemytech Ltd., now T.I.C.G. Integrated Solutions Ltd. (2024), Alchemy International Ltd. (2025), XOALA (formerly Xoala Asia) (2025), and Alchemy Markets (Cayman) Ltd. (2026), collectively expanding the Company’s operational footprint across Australia, Malta, the United Kingdom, Cyprus, Seychelles, Mauritius, and the Cayman Islands.
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 and nine months ended September 30, 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 September 30, 2026:
| Subsidiary | Ownership | Jurisdiction | Primary Business | Markets Served | Technology | |||||
| AD Advisory Services Ltd. (ADS) | ||||||||||
| Crestmark Trading Ltd. (formerly Alchemy Markets Ltd.) (Crestmark or AML) | ||||||||||
| Alchemy Prime Ltd. (APL) | ||||||||||
| T.I.C.G. Integrated Solutions Ltd. (ATECH) | ||||||||||
| Alchemy International Ltd. (AIL) | ||||||||||
| XOALA (formerly Xoala Asia) (XOA) | ||||||||||
| Prime Intermarket Group Eurasia (PIG) | ||||||||||
| Alchemy Markets (Cayman) Ltd. (AML Cayman) | ||||||||||
| Xoala AP Cyprus Ltd. (XOA, Cyprus) |
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-7 |
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 Crestmark Trading Ltd. (formerly 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 26 financial advisors collectively managing and advising on approximately $
(c) Technology and Software Development
Through FDCTech, Inc. and T.I.C.G. Integrated Solutions Ltd. (Cyprus), a technology, sales, and marketing service provider supporting the Company’s subsidiaries and affiliated companies, 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 (formerly 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 September 30, 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), FSC (Mauritius), and, following the acquisition of AML Cayman in June 2026 described below, CIMA (Cayman Islands). The Company’s Cyprus subsidiaries, T.I.C.G. Integrated Solutions Ltd. and Xoala AP Cyprus Ltd., provide intra-group technology, treasury, and payment-processing services; XOA, Cyprus operates under the intra-group exemption in Section 3(3)(n) of the Cyprus Payment Services Law and does not hold a Central Bank of Cyprus payment institution or electronic money institution license. 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 and nine months ended September 30, 2026.
Reverse Stock Split
On June 29, 2026, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware effecting the reverse stock split, with any resulting fractional share rounded up to the nearest whole share for each holder of record. The Financial Industry Regulatory Authority announced the reverse stock split on its Daily List on July 9, 2026, and the reverse stock split became effective, and the Company’s Common Stock began trading on a post-split basis, at the open of business on July 10, 2026. The number of authorized shares of Common Stock was not affected by the reverse stock split.
In
accordance with ASC 260-10-55-12 and SEC Staff Accounting Bulletin Topic 4C, because the reverse stock split became effective on July
10, 2026, during the three months ended September 30, 2026, all share and per-share amounts in these consolidated financial statements
and the accompanying notes have been retroactively adjusted to reflect the reverse stock split for all periods presented. The retroactive
adjustment reduced the number of shares of Common Stock issued and outstanding at December 31, 2025, from to , after
rounding fractional shares up to the nearest whole share for each holder of record, reduced the par value of Common Stock from $
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 not an independent director because he beneficially owns more than 10% of the Company’s outstanding 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-8 |
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 and nine months ended September 30, 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.
Name Change of Alchemytech Ltd.
In June 2026, Alchemytech Ltd. changed its name to T.I.C.G. Integrated Solutions Ltd. (“ATECH” or “TICG”). The name change did not affect the Company’s ownership of, or the nature of the services provided by, that subsidiary.
Xoala AP Cyprus Ltd.
Xoala
Asia holds
Acquisition of Alchemy Markets (Cayman) Ltd.
On May 1, 2026,
The aggregate purchase price is $, payable in two installments: a closing payment of $ due within thirty (30) days of execution of the Share Purchase Agreement, and a regulatory payment of $ due within five (5) business days following receipt of CIMA approval of the change of control. In addition, the Company agreed to pay the seller $ in respect of the regulatory own funds capital of AML Cayman.
On May 19, 2026, CIMA granted conditional approval under Section 8(1) of the Securities Investment Business Act (2020 Revision) for the change in the shareholding and control of AML Cayman, resulting in a change of the ultimate beneficial owner from Mr. Raymond Yip to Mr. Gope Shyamdas Kundnani. The conditional approval requires the licensee to deliver specified board resolutions, director due diligence documentation, an updated register of members, and an updated business plan including outsourcing arrangements, in each case within one (1) month of approval. The transfer of the shares from Mr. Yip to the Company was entered in AML Cayman’s register of members on June 19, 2026, from which date the Company became the sole legal and beneficial owner of AML Cayman.
Because AML Cayman was under the control of Mr. Kundnani both before and after the transfer, the transaction is a transfer of an entity under common control and has been accounted for in accordance with ASC 805-50, Business Combinations — Related Issues. The assets and liabilities of AML Cayman have accordingly been recorded at the transferor’s historical carrying values, applied prospectively from the date of transfer, consistent with the Company’s treatment of its other transfers of entities under common control described in Note 2. No goodwill or intangible asset was recognized in connection with the transfer, and no fair value measurement of the assets acquired or liabilities assumed was performed. AML Cayman conducted no material operations during the period, and its results of operations for the nine months ended September 30, 2026, have been included in the consolidated statements of operations; the amounts attributable to the period prior to the transfer are not material to the Company’s consolidated results of operations for any period presented.
Consideration
for the acquisition was $
| F-9 |
NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
AML
Cayman is licensed to conduct securities investment business and, in the period from the acquisition date through September 30, 2026,
did not conduct material brokerage operations. For the nine months ended September 30, 2026, AML Cayman contributed revenue of $
Name Changes of Alchemy Markets Ltd. and Xoala Asia
On June 1, 2026, the Malta Financial Services Authority (“MFSA”) confirmed its no objection to a change in the name of the Company’s wholly owned Maltese subsidiary, Alchemy Markets Ltd. (C 56519) (“AML”), to “Crestmark Trading Ltd.” On August 24, 2026, the Malta Business Registry issued an altered certificate of registration under Article 80 of the Companies Act, 1995 reflecting the new name, effective that date. The name change does not affect AML’s ownership, governance, capital position, or regulated activities, and has no effect on the Company’s consolidated financial statements. The subsidiary is referred to as “Crestmark” or “AML” in this Report. Separately, on August 26, 2026, the Registrar of Companies of Mauritius certified that Xoala Asia had changed its name to “XOALA”; the name change has no effect on its ownership, governance, capital position, or licensed activities.
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 effect a reverse stock split of all outstanding shares of common stock in a ratio of not less than 1-for-10 and not more than 1-for-100, to be determined by the Board. The increase in authorized shares of common stock was effected by the Certificate of Amendment filed with the Secretary of State of the State of Delaware on June 29, 2026, which also effected the reverse stock split, and the increase in authorized shares of preferred stock from to was effected by a Certificate of Amendment filed on August 17, 2026. Following these amendments, the Company is authorized to issue shares of capital stock, consisting of shares of common stock and shares of preferred stock.
Certificate of Designation of Series B Convertible Preferred Stock
On
December 4, 2023, 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
Reorganization of Alchemy Markets Ltd. Shareholding
On
June 16, 2026, the MFSA confirmed, in terms of Article 10 of the Investment Services Act (Malta), its no objection to the transfer of
ordinary A shares in Alchemy Markets Ltd. (“AML”) from Alchemy Markets Holdings Ltd. to FDCTech, Inc. Alchemy Markets
Holdings Ltd. formed part of a prior ownership structure that the Company inherited on its acquisition of AML and no longer serves a
functional purpose within the group; the transfer removes it from the ownership chain so that AML is held directly by FDCTech, Inc. The
consideration for the transfer is €
Conversion of Series B Convertible Preferred Stock
On
July 13, 2026, the Board of Directors, acting by unanimous written consent, approved and the Company effected the conversion of all
outstanding shares of Series B Convertible Preferred Stock into shares of Common Stock at a conversion rate of fifty ()
shares of Common Stock for each one (1) share of Series B Convertible Preferred Stock. The reverse stock split constituted a Rate Determination
Event under the Series B Certificate of Designation, as amended, pursuant to which the Board determined and fixed the conversion rate.
Following the conversion, no shares of Series B Convertible Preferred Stock remain outstanding. The conversion was recorded as a non-cash
reclassification of $
August 2026 Charter and Certificate of Designation Amendments
On
August 17, 2026, the Company filed with the Secretary of State of the State of Delaware (i) a Certificate of Amendment of its Certificate
of Incorporation increasing the number of authorized shares of preferred stock from to , (ii) a Certificate of Amendment
to the Certificate of Designation of the Series A Convertible Preferred Stock, which increased the number of shares designated as Series
A Preferred Stock from to , confirmed that
Common Stock Issued for Consulting Services
On
August 27, 2026, and August 28, 2026, the Company issued and restricted shares of Common Stock, respectively, to
two consultants in consideration of consulting services. The shares were valued at an aggregate of $
Vanquish Funding Group Promissory Notes
On
August 20, 2026, and September 15, 2026, the Company entered into Securities Purchase Agreements with Vanquish Funding Group Inc. (“Vanquish”)
and issued promissory notes in the aggregate principal amounts of $
| F-10 |
Share Purchase Agreement for the Acquisition of The Millionaire’s Club Ltd
On August 7, 2026, the Company entered into a Share Purchase Agreement with TMC Holdings Ltd to acquire 100% of the issued and outstanding share capital of The Millionaire’s Club Ltd, a Malta company holding Type 1, Type 2 and Type 3 business-to-consumer gaming licenses issued by the Malta Gaming Authority (the “MGA”), for a purchase price of €, consisting of a non-refundable deposit of € paid to an escrow agent in connection with the execution of the letter of intent and a non-refundable balance of € payable to the escrow agent at closing. As a condition precedent to closing, the Seller and its ultimate beneficial owner are required to deliver irrevocable waiver declarations extinguishing shareholder liabilities of the acquired company aggregating €. Closing is deemed to occur upon submission of the executed share transfer documentation to the Malta Business Registry, and the Company is responsible for obtaining the MGA’s approval of the change of ownership following closing. As of September 30, 2026, closing had not occurred, and no assets or liabilities of The Millionaire’s Club Ltd have been recognized in the consolidated financial statements; the deposit paid, amounting to $, is included in tax and other receivables on the consolidated balance sheet.
Term Sheet for the Acquisition of Larstal Limited
On
August 3, 2026, the Company entered into a non-binding term sheet to acquire the entire issued share capital of Larstal Limited, a United
Kingdom company authorized by the Financial Conduct Authority, and its Danish subsidiary, for aggregate consideration of $
Conditional Appointment of Directors
On
September 18, 2026, the Board of Directors approved an increase in the size of the Board from four to six directors and appointed Jeff
M. Pies and Dena Lauren Decker to fill the resulting vacancies. The increase in Board size and each appointment are conditional and will
become effective only on the date on which the Company’s common stock is approved for listing on The Nasdaq Stock Market LLC or
the New York Stock Exchange and all conditions to such approval, other than the commencement of trading, have been satisfied. If that
date does not occur on or before September 18, 2028, the appointments will lapse. On September 18, 2026, the Company entered into a Board
of Directors Agreement with each director designee providing, from the effective date, for an annual cash fee of $
Nasdaq Listing Application
In September 2026, the Company submitted an application to list its common stock on The Nasdaq Stock Market LLC (“Nasdaq”) and the related corporate governance certification. The application remains under review by Nasdaq. Approval of the application is subject to the Company satisfying all applicable initial listing requirements, including minimum stockholders’ equity, market value of unrestricted publicly held shares, minimum bid price, and corporate governance standards, and there can be no assurance that the Company’s common stock will be approved for listing or as to the timing of any such approval. Until any such listing becomes effective, the Company’s common stock will continue to be quoted on the OTC Markets under the symbol FDCT.
Relocation of Principal Executive Offices
Effective September 9, 2026, the Company relocated its principal executive offices from 200 Spectrum Center Drive, Suite 300, Irvine, California 92618 to Ground Floor, 10A Eleftheriou Venizelou Street, 3035 Limassol, Cyprus, in order to place senior management in closer geographic proximity to the Company’s principal operating subsidiaries and their regulators. The Company remains incorporated in Delaware and continues to maintain a registered office and registered agent in Delaware; the relocation does not change its state of incorporation, its status as a domestic issuer, or its reporting obligations, and is not expected to have a material effect on its results of operations or financial condition.
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 September 30, 2026, the Company had shares of Common Stock and shares of Series A Preferred Stock issued and
outstanding, and no shares of Series B Preferred Stock outstanding following the conversion of all outstanding shares of Series
B Preferred Stock into shares of Common Stock on July 13, 2026.
| F-11 |
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 subsidiaries, including subsidiaries in which the Company holds a controlling but less-than-wholly-owned interest. 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).
The Company provides trading technology, software development, and related
support services to its subsidiary Crestmark Trading Ltd. (formerly Alchemy Markets Ltd.) (“Crestmark”) under an intercompany
services arrangement. Technology and service fees charged by the Company to Crestmark totaled $
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, and restated by Amendment No. 1 on Form 10-Q/A filed June 8, 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-12 |
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. The share and per-share amounts in the reconciliation tables below are presented on a pre-reverse-stock-split basis, consistent with the amounts as previously reported, and have not been retroactively adjusted for the reverse stock split described in Note 1:
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) | ||||||||||||
| F-13 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 at March 31, 2026, 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 September 30, 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 September 30, 2026, and December 31, 2025, the Company had $
Restricted Cash — Client Funds Segregated
The Company’s regulated brokerage subsidiaries — Crestmark Trading Ltd. (formerly 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).”
Segregated client funds are held in designated client bank and payment-service-provider
accounts and as margin in accounts at liquidity providers used to hedge client positions. Because client-money liabilities are measured
at clients’ marked-to-market account equity and a portion of client money is placed with liquidity providers, the balance in segregated
bank accounts at any date is not expected to equal the related liability; each subsidiary reconciles client-money resources to its client-money
requirement in accordance with the rules of its regulator. Of total client-money resources of $
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:
| September 30, 2026 | December 31, 2025 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash (client funds, segregated) | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
| F-14 |
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 September 30, 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. |
| F-15 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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-16 |
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-17 |
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-18 |
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 serves two client channels within its brokerage business: 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-19 |
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 September 30, 2026. As of September 30, 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 September 30, 2026, and
December 31, 2025, the Company had $
Revenues
For
the three months ended September 30, 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 and nine months ended September 30, 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.
For a description of the legal proceedings to which the Company and its subsidiaries are a party, see Note 8, Commitments and Contingencies — Pending Litigation.
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.
| F-20 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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. See Note 14 for more details.
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
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 September 30, 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 September 30, 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-21 |
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.
The
functional currency of ADS is the Australian Dollar (AUD), the functional currency of AML and ATECH is the Euro (EUR), and the functional
currency of APL is the British Pound (GBP). The Company’s remaining subsidiaries are U.S. dollar functional and accordingly give
rise to no translation adjustment. We have translated AUD, EUR, and GBP into US$
The exchange rate at the reporting end date:
| September 30, 2026 | December 31, 2025 | |||||||
| USD: AUD | $ | |||||||
| USD: EUR | $ | |||||||
| USD: GBP | $ | |||||||
Average exchange rate for the period:
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 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-22 |
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 1 | 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 and nine months ended September 30, 2026, and 2025, the weighted average number of shares of common stock outstanding, used to compute basic earnings per share, was and , respectively, and and , respectively, reflecting the conversion of the Series B Preferred Stock on July 13, 2026, and the issuance of shares for consulting services in August 2026. See Note 13 — Earnings Per Share for the computation of, and the reconciliation of the numerators and denominators used in, basic and diluted earnings per share for the periods 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-23 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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. Because the Company ceased to qualify as an emerging growth company effective December 31, 2022, the Company applies the effective dates applicable to public business entities. The Company’s accounting policy for revenue recognition under ASC 606, Revenue from Contracts with Customers, which the Company adopted effective January 1, 2019, using the modified retrospective method, is described under Revenue from Major Contracts with Customers above.
Recently Adopted Accounting Pronouncements
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 the Company’s segment disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhanced disclosures about a reporting entity’s effective tax rate and its income taxes paid (refunded). ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 effective January 1, 2025, on a prospective basis. The adoption expanded the Company’s annual income tax disclosures and did not affect the Company’s consolidated financial position, results of operations, or cash flows.
In December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which is effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. The Company adopted ASU 2023-08 effective January 1, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements because the Company does not hold crypto assets within the scope of the ASU.
In March 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, which provides guidance on determining the appropriate accounting treatment for the issuance of profits interest units and similar awards. The ASU is effective for public business entities for interim and annual periods for fiscal years beginning after December 15, 2024. The Company adopted ASU 2024-01 effective January 1, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements because the Company has not issued profits interest or similar awards.
In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements, which removes various references to the FASB’s Concepts Statements from the Codification. The amendments are effective for public business entities for fiscal years beginning after December 15, 2024. The Company adopted ASU 2024-02 effective January 1, 2025, and the adoption did not have a material impact on the Company’s consolidated financial statements.
In March 2025, the FASB issued ASU 2025-02, Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122, which removed Codification references related to SAB 121 following its rescission by SAB 122. The amendments were effective upon issuance on a fully retrospective basis to annual periods beginning after December 15, 2024. The Company adopted ASU 2025-02 during 2025, and the adoption did not have a material impact on the Company’s consolidated financial statements because the Company does not safeguard crypto assets for platform users.
In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company adopted ASU 2024-04 effective January 1, 2026. The adoption did not have a material impact on the Company’s consolidated financial statements because the Company had no induced conversions of convertible debt instruments during the periods presented.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose, in tabular format, disaggregated information about specified categories of expenses, along with a qualitative reconciliation to the captions on the face of the financial statements. In January 2025, the FASB issued ASU 2025-01, which clarified that ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the effect that ASU 2024-03, as clarified by ASU 2025-01, will have on its disclosures and does not expect the ASU to affect its consolidated financial position, results of operations, or cash flows.
| F-24 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of ASU 2025-03 on its consolidated financial statements.
In July 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer, which is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company does not currently have share-based consideration payable to customers within the scope of the ASU and does not expect adoption to have a material impact on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the recognition guidance for internal-use software costs by removing references to project-stage concepts and providing updated capitalization guidance. The Company is evaluating the impact of ASU 2025-06 on its capitalization policies for internally developed software and related disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which improves the navigability of ASC 270 and clarifies when it applies. Early adoption is permitted, and the ASU permits retrospective or prospective transition. The Company is evaluating the impact of ASU 2025-11 on its interim disclosures.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which includes 33 targeted improvements to U.S. GAAP across multiple topics, including clarifications to diluted earnings per share calculations when a loss from continuing operations exists. The Company is evaluating the impact of ASU 2025-12 on its consolidated financial statements and disclosures.
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 September 30, 2026, and December 31, 2025,
the Company had an accumulated surplus of $
For
the three months ended September 30, 2026, and 2025, the Company generated net income (loss) 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 results of operations during the nine months ended September 30, 2026, including the revenue growth, nine-month profitability, and strengthened liquidity position described above, as well as the net loss incurred during the third quarter, 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 September 30, 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-25 |
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 September 30, 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, as of September 30, 2026, the beneficial owner, directly and through APSI Holdings Limited (a United Kingdom entity), of shares of common stock, including shares issued upon the conversion of shares of Series B Convertible Preferred Stock on July 13, 2026 (approximately 80.90% of the outstanding common stock), and shares of Series A Preferred Stock (88.89%);
(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; and (iv) Sync Capital Limited (Seychelles), a shareholding company controlled and owned by Mr. Kundnani, which held the seller financing obligation described below and in Note 7 until its settlement during the three months ended September 30, 2026.
Related Party Receivables
Related
party receivables totaled $
| F-26 |
NOTE 5. RELATED PARTY TRANSACTIONS (continued)
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 nine months ended September 30, 2026, related party advances payable decreased by a net $
Supplemental Disclosure of Non-Cash Investing and Financing Activities
The
settlement of the related party balances described above was effected on June 30, 2026, without any payment or receipt of cash. During
the nine months ended September 30, 2026, the Company extinguished a net payable to Alchemy DMCC of $
Accrued Expenses to Related Parties
Accrued
expenses to related parties totaled $
Other Related Party Transactions
Other
than the settlements and accruals described above, the principal related party transactions during the three and nine months ended September
30, 2026, consisted of (i) the continued accrual of executive compensation to Messrs. Eaglstein and Firoz at $
Intellectual Property Purchase Agreement – Iconic Advisors and Consulting Limited
On September 30, 2026, the Company entered into an Intellectual Property Purchase Agreement (the “IP Purchase Agreement”) with Iconic Advisors and Consulting Limited (“Iconic”), a Nevada company owned by Robert J. Winters, a director of the Company’s subsidiary Alchemy International Ltd. Iconic is a related party of the Company within the meaning of ASC 850; however, Iconic and the Company are not under common control, and the transaction is accounted for as an asset acquisition under ASC 805-50 rather than as a business combination or a transfer between entities under common control.
Under
the IP Purchase Agreement, the Company acquired from Iconic certain customer data, risk management software, and machine-learning fraud
detection assets, together with the related intellectual property rights, books and records, and related rights (the “Purchased
Assets”). No liabilities were assumed. The purchase price is satisfied solely by the extinguishment of a receivable of $
As
of September 30, 2026, the Company reclassified the $
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 for the fiscal year ended December 31, 2025 (as most recently amended by Amendment No. 4 on Form 10-K/A filed July 1, 2026).
| F-27 |
NOTE 6. LINE OF CREDIT
In
June 2016, the Company obtained an unsecured revolving line of credit of $
As
of September 30, 2026, the Company was in compliance with the terms and conditions of each of its lines of credit. As of September 30,
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 September 30, 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
December 31, 2025, balance of $
(i)
$
(ii)
$
The
$
As
of September 30, 2026, the Company has accrued the $
The
settlement of the $
Vanquish Funding Group Promissory Notes
On
August 20, 2026, the Company entered into a Securities Purchase Agreement with Vanquish Funding Group Inc. (“Vanquish”) and
issued a promissory note in the aggregate principal amount of $
A
one-time interest charge of
The
original issue discount and one-time interest charge, totaling $
| F-28 |
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 September 30, 2026.
At
September 30, 2026, the Company and its subsidiaries operate offices across multiple jurisdictions. Leases that qualify under ASC 842
are recognized on the consolidated balance sheet as Right-of-Use (“ROU”) assets and corresponding lease liabilities. At September
30, 2026, the ROU asset was $
Office Facility and Other Operating Leases
Limassol, Cyprus (Company’s Principal Executive Offices) and Irvine, California, USA (Former Headquarters)
Effective
September 9, 2026, the Company relocated its principal executive offices to Ground Floor, 10A Eleftheriou Venizelou Street, 3035 Limassol,
Cyprus, within the premises subleased by ATECH described below. From October 29, 2019, through the relocation, the Company’s principal
executive offices were located at 200 Spectrum Center Drive, Suite 300, Irvine, CA 92618, under a coworking membership held on a month-to-month
basis. The membership provides access to shared office and meeting facilities on an as-needed basis rather than a dedicated, exclusively
controlled space. The Company may terminate the agreement by delivering an exit form at least one calendar month prior to the intended
termination month. The monthly membership fee is $
Brisbane, Australia (ADS Office)
Effective
January 1, 2024, to the present, ADS holds a coworking membership for office space at Level 38/71 Eagle St, Brisbane City, QLD 4000,
Australia, on a month-to-month basis. The membership provides access to shared office and meeting facilities on an as-needed basis rather
than a dedicated, exclusively controlled space. The monthly membership fee is approximately $
Limassol, Cyprus Lease (Company’s Executive Rental)
From
July 2023 to the present, the Company has leased office and residential space in the Limassol District, Cyprus, from an unrelated party,
at a monthly rent of approximately $
Limassol, Cyprus Lease, Europe (ATECH Office)
Effective
August 26, 2024, T.I.C.G. Integrated Solutions Ltd. (formerly Alchemytech Ltd.) (“ATECH”) entered into a Sublease Agreement
for office premises located at 10A-10C Eleftheriou Venizelou Street, Limassol, Cyprus, with Aldeon Property Partners Ltd. as Sublessor,
and FDCTech, Inc. acting as Guarantor. The leased premises are designated strictly for office use.
| F-29 |
NOTE 8. COMMITMENTS AND CONTINGENCIES (continued)
St. Julian, Malta (AML Office)
Effective
July 11, 2024, to the present, AML leases office space with Regus Malta at Portomaso Business Centre, Portomaso, St. Julian, PTM01, Malta,
on a month-to-month basis. The monthly membership fee is €
London, United Kingdom (APL Office)
Effective
December 20, 2024, Alchemy Prime Limited (“APL”) entered into a lease agreement for office space at the Fifth Floor, 142
Central Street, Clerkenwell, London, EC1V 8AR, with Agop Tanielian and Hourig Mercedes Tanielian as landlords. The lease has a fixed
term of
Consolidated
rent and lease expense for the three and nine months ended September 30, 2026, was $
Terminated Leases
Limassol,
Cyprus (Ecastica). From October 2023 to August 2024, the Company leased office space in the Limassol District, Cyprus, for the intended
establishment of ATECH. The monthly rent was approximately $
Chelyabinsk,
Russia. From April 2019 to August 2022, the Company leased office space in Chelyabinsk, Russia, at $
Tel
Aviv, Israel (AML Sales Office). From July 1, 2023, to June 30, 2026, AML held a service agreement with Mindspace Ltd. for office space
and related services at Menachem Begin 11, Ramat Gan, Israel, on a monthly auto-renewing basis. The monthly fee was $
Employment Agreement
The
Company compensates its key executives as independent contractors. Eaglstein and Firoz commit one hundred percent (100%) of their time
to the Company. The Company has not formalized performance bonuses or other incentive plans. Each executive is paid at the beginning
of each month. From September 2018 through September 30, 2020, the Company paid monthly compensation of $
The Company is not currently a party to any formal employment agreement and has no compensation agreement with any officer or director. The Company plans to enter into employment agreements with its officers in connection with the planned uplisting to a senior national securities exchange. For additional information regarding executive compensation, refer to Item 11 (Executive Compensation) of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as most recently amended by Amendment No. 4 on Form 10-K/A filed with the SEC on July 1, 2026.
Accrued Interest
At
September 30, 2026, and December 31, 2025, the cumulative accrued interest for the SBA loan, the Vanquish promissory notes, and other
non-current loans was $
| F-30 |
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 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 on 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. Following the hearing, the court instructed FDCTech to conduct an adequate investigation as to the beneficial owner of Intelligenceline.com. 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 First Hall Civil Court (Constitutional Jurisdiction) has, in various instances, pronounced that administrative penalties imposed by the FIAU are more akin to penal sanctions and that subject persons should be afforded the full rights of an accused under criminal law, consistently quashing FIAU decisions on this basis. On April 14, 2026, the Company submitted its final submissions before the Court. On July 12, 2026, the First Hall Civil Court (Constitutional Jurisdiction) delivered its judgment rejecting the Company’s constitutional claims and determining that the FIAU decision did not breach the Company’s right to a fair hearing. Under Maltese law, the Company had the right to appeal the judgment within twenty statutory running days from the date of judgment, and the Company filed its appeal in late July 2026. The related appeal before the Court of Appeal (Inferior Jurisdiction) described above remains pending. No amount has been accrued in respect of the administrative penalty, as the Company continues to contest the matter and a loss is not considered probable and reasonably estimable at this time.
The Company believes it has meritorious defenses and counterclaims in all of the above matters and intends to defend them vigorously. However, litigation is inherently uncertain, and the Company cannot predict the outcome of these proceedings with certainty. 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 September 30, 2026, the Company believes payroll tax liabilities are not material. The Company’s federal taxes are compliant with Internal Revenue Service regulations.
| F-31 |
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 December 4, 2023, 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.
Prior
to its amendment, the Series B Certificate of Designation provided that each share of Series B Convertible Preferred Stock was convertible
at the option of the holder, without payment of additional consideration, into one hundred () shares of Common Stock, and that the
conversion rate was not subject to adjustment for stock splits or other changes to the Common Stock. In January 2026, and as further
amended on August 17, 2026, the Series B Certificate of Designation was amended to provide that, upon a Rate Determination Event —
consisting of either (i) the completion of a public offering of Common Stock resulting in gross proceeds 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 September 30, 2026, no shares of Series B Convertible Preferred Stock were issued and outstanding, compared to shares as of December 31, 2025.
| F-32 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
Outstanding Capital Stock
As
of September 30, 2026, and December 31, 2025, the Company had and common shares issued and outstanding, respectively.
The increase of shares during the three months ended September 30, 2026, consists of shares issued upon the conversion
of the Series B Convertible Preferred Stock on July 13, 2026, and
As of September 30, 2026, and December 31, 2025, the Company had and Series A Preferred Stock issued and outstanding, respectively.
As
of September 30, 2026, and December 31, 2025, the Company had and Series B Preferred Stock issued and outstanding, respectively.
Other than the conversion of the Series B Convertible Preferred Stock and the issuance of
Series A Preferred Stock – Beneficial Ownership
The percentages below are calculated based on shares of our Series A Preferred Stock issued and outstanding as of September 30, 2026, and as of the date of this Report. Series A Preferred Stock was not affected by the 1-for-100 reverse stock split effective July 10, 2026.
| Name and Address(1) | Title of Class (4) | Number of Shares Beneficially Owned | Percent of Class | |||||||
| Mitchell M. Eaglstein, CEO, Director | % | |||||||||
| Gope S. Kundnani, Director (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-33 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
Common Stock – Beneficial Ownership
The
percentages below are calculated based on shares of our Common Stock issued and outstanding as of September 30, 2026 ( shares as of the date of this Report, after giving effect to the issuance of shares on November
3, 2026, described in Note 16), being the number of shares outstanding following the
| Name and Address(1) | Title of Class | Number of Shares Beneficially Owned | Percent of Class | |||||||
| Mitchell M. Eaglstein, CEO, Director (2) | % | |||||||||
| Imran Firoz, CFO, Director (3) | % | |||||||||
| Brian Platt, CTO (4) | * | |||||||||
| Jonathan Baumgart, Director (5) | * | |||||||||
| Gope S. Kundnani, Director (6) | % | |||||||||
| Officers and Directors as a group (5 persons) (7) | % | |||||||||
| (1) | Unless
otherwise indicated, the business address of each beneficial owner is c/o FDCTech, Inc., Ground Floor, 10A Eleftheriou Venizelou
Street, 3035 Limassol, Cyprus. Beneficial ownership is determined in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934, as amended. Share amounts and percentages give effect to the |
| (2) |
| (3) |
| (4) |
| (5) |
| (6) |
| (7) |
| F-34 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
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.
Common Stock Issued for Consulting Services
On
August 27, 2026, the Company issued restricted shares of Common Stock to Lux Limited, and on August 28, 2026, the Company issued
restricted shares of Common Stock to Global Alliance Consulting Group, in each case in consideration of consulting services
rendered to the Company. The shares were valued at an aggregate of $
Stock Subscription Receivable
As
of December 31, 2025, the Company carried a stock subscription receivable of $
Series B Convertible Preferred Stock – Holdings Before and After Conversion
The
following table sets forth the shares of Series B Convertible Preferred Stock held by each holder immediately prior to conversion, and
the shares of Common Stock issued to each holder upon the conversion of those shares on July 13, 2026, at a conversion rate of fifty
() shares of Common Stock for each share of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock was not
subject to adjustment for the
| Holder | Series
B Preferred Shares Held Immediately Prior to Conversion |
Common Shares Issued
on July 13, 2026 |
||||||
| APSI Holdings Limited (formerly Alchemy Prime Holdings Limited) | ||||||||
| Gope S. Kundnani | ||||||||
| Mitchell M. Eaglstein | ||||||||
| Imran Firoz | ||||||||
| FRH Group Corporation | ||||||||
| William B. Barnett | ||||||||
| Susan E. Eaglstein | ||||||||
| Nicky G. Kundnani | ||||||||
| Total | ||||||||
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 for the fiscal year ended December 31, 2025, as most recently amended by Amendment No. 4 on Form 10-K/A filed with the SEC on July 1, 2026.
| F-35 |
NOTE 10. WARRANTS
As
of September 30, 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 tables show the changes in accumulated other comprehensive income (loss) (“AOCI”) by component for the nine months ended September 30, 2025, and the nine months ended September 30, 2026, respectively:
| 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 September 30, 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) | ( | ) | ||
| Balance as of September 30, 2026 | $ | |||
During
the three months ended September 30, 2026, and 2025, the Company recognized total other comprehensive income (loss) of $(
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-36 |
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 and nine months ended September 30, 2026, and 2025:
Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | |||||||
| Balance, beginning of period | $ | ( | ) | $ | ||||
| Net income (loss) attributable to NCI | ||||||||
| Foreign currency translation — NCI | ( | ) | ( | ) | ||||
| Balance, end of period | $ | $ | ||||||
Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | |||||||
| Balance, beginning of period | $ | $ | ||||||
| Net income (loss) attributable to NCI | ( | ) | ||||||
| Foreign currency translation — NCI | ( | ) | ( | ) | ||||
| Balance, end of period | $ | $ | ||||||
Basic 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 outstanding during the period. Diluted earnings per share is computed by dividing the same amount by the weighted average number of shares of Common Stock outstanding plus the dilutive effect of potentially dilutive securities. The weighted average number of shares of Common Stock outstanding, used to compute basic earnings per share, was and for the three months ended September 30, 2026, and 2025, respectively, and and for the nine months ended September 30, 2026, and 2025, respectively, in each case as retroactively adjusted for the reverse stock split described in Note 1, including fractional shares rounded up to the nearest whole share for each holder of record.
The Company had no options, warrants, or restricted stock units outstanding during the three and nine months ended September 30, 2026, or 2025. The Company had shares of Series B Convertible Preferred Stock outstanding from the beginning of each period until July 13, 2026, on which date all such shares were converted into shares of Common Stock at a conversion rate of fifty () shares of Common Stock for each share (see Note 9). For the nine months ended September 30, 2026, the Series B Convertible Preferred Stock was included in the computation of diluted earnings per share using the if-converted method for the portion of the period prior to conversion (January 1 through July 12, 2026), and the shares of Common Stock issued on conversion are included in the basic weighted average shares from July 13, 2026; the resulting incremental dilutive shares were , giving diluted weighted average shares outstanding of . For the three months ended September 30, 2026, the Company reported a net loss attributable to common stockholders, and accordingly the common-share equivalents of the Series B Convertible Preferred Stock for the period from July 1 through July 12, 2026, were antidilutive and excluded from the computation; diluted loss per share equals basic loss per share for that period. The Vanquish Notes described in Note 7 are convertible only upon an event of default and, because no event of default had occurred as of September 30, 2026, no shares were included in respect of those notes. The Series B Convertible Preferred Stock carried no cumulative dividend entitlement, and accordingly no adjustment to the numerator was required. The Series B Convertible Preferred Stock was antidilutive for the three and nine months ended September 30, 2025, and was therefore excluded from the computation of diluted loss per share for those periods.
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||
| (Unaudited) | (Restated, Unaudited) | (Unaudited) | (Restated, Unaudited) | |||||||||||||
| Net income (loss) attributable to FDCTech, Inc. shareholders — numerator | ( | ) | ||||||||||||||
| Weighted average shares outstanding — basic denominator | ||||||||||||||||
| Effect of dilutive Series B Convertible Preferred Stock | ||||||||||||||||
| Weighted average shares outstanding — diluted denominator | ||||||||||||||||
| Earnings (loss) per share — basic | ( | ) | ||||||||||||||
| Earnings (loss) per share — diluted | ( | ) | ||||||||||||||
The
weighted average shares outstanding for the three and nine months ended September 30, 2026, reflect the issuance of shares
of Common Stock upon the conversion of the Series B Convertible Preferred Stock on July 13, 2026, and
| F-37 |
NOTE 14. INCOME TAXES
FDCTech, Inc. (the “U.S. Parent”) is a standalone U.S. domestic C-corporation and files its U.S. federal and California state income tax returns separately. The Company’s operating subsidiaries — Crestmark Trading Ltd. (formerly Alchemy Markets Ltd.) (Malta), Alchemy Prime Limited (United Kingdom), AD Advisory Services Pty Ltd. (Australia), Alchemy International Ltd. (Seychelles) and T.I.C.G. Integrated Solutions Ltd. (Cyprus) — are separate legal entities that file and pay income tax in their own jurisdictions. The U.S. Parent does not include foreign subsidiary earnings in its U.S. returns, and the undistributed earnings of the foreign subsidiaries continue to be regarded as indefinitely reinvested outside the United States; accordingly, no deferred U.S. federal income tax liability has been recognized in respect of those earnings. The Company accounts for income taxes under ASC 740, Income Taxes, using the asset and liability method, and for interim periods applies the estimated annual effective tax rate to ordinary income in accordance with ASC 740-270.
provision for income taxes was recorded for the three or nine months ended September 30, 2026, or 2025. The U.S. Parent has a history
of standalone pre-tax losses and, as disclosed in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2025,
carries a full valuation allowance against its net deferred tax assets, together with an accumulated U.S. federal net operating loss
carryforward of approximately $
The
Company’s operating subsidiaries are separate taxpayers in Malta, the United Kingdom, Australia, Seychelles, Cyprus and the Cayman
Islands. As of the date of this Report, the Company had not received complete current and deferred income tax information, computed under
local law, from all of its foreign subsidiaries, nor confirmatory advice from local tax advisers regarding the treatment of intercompany
balances settled during the quarter and the availability of local loss relief. Based on information presently available, management estimates
that the consolidated provision for income taxes for the nine months ended September 30, 2026, once determined, will be in the range
of approximately $
The
consolidated balance sheet includes tax and other receivables of $
The Company is subject to examination by the U.S. Internal Revenue Service, the California Franchise Tax Board, and the tax authorities of Malta, the United Kingdom, Australia, Seychelles and Cyprus. No income tax examinations were in progress at September 30, 2026, and no change in the Company’s assessment of uncertain tax positions arose during the nine months ended September 30, 2026.
NOTE 15. 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 16. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these consolidated financial statements were issued and, other than as described below, has identified no events requiring recognition or disclosure.
Effectiveness of Registration Statement on Form S-1
On October 1, 2026, the Securities and Exchange Commission declared effective the Company’s Registration Statement on Form S-1 (File No. 333-298944), as amended. The registration statement does not relate to any underwritten offering by the Company, and no proceeds were received by the Company upon effectiveness.
Definitive Agreements for the Acquisition of Larstal Limited and Larstal Denmark ApS
On
October 6, 2026, the Company entered into two related share purchase agreements to acquire all of the issued share capital of Larstal
Limited, a United Kingdom company authorized by the Financial Conduct Authority (“FCA”) as an electronic money institution,
and Larstal Denmark ApS, a Danish company authorized by the Danish Financial Supervisory Authority (“DFSA”) as an electronic
money institution (together, the “Larstal Companies”), from their respective sellers, with AstroPay Global Holdings as guarantor.
The base purchase price under each agreement is $
In connection with the FCA’s assessment of the change-in-control application, the Company has disclosed that its subsidiary Alchemy Prime Limited (“APL”) has, at the FCA’s invitation, accepted a voluntary requirement on its Part 4A permission under the U.K. Financial Services and Markets Act 2000, and that a skilled person review of APL under section 166 of that Act, which began on October 24, 2025, remains ongoing. The Company cannot predict the outcome of the skilled person review or its effect, if any, on the outcome or timing of the FCA’s assessment.
Directors’ and Officers’ Liability Insurance
Under the side letters described in Note 1, the Company was required to bind conforming directors’ and officers’ liability insurance by October 18, 2026. The Company has engaged an insurance broker to procure the required coverage, which had not been bound as of October 18, 2026, or as of the date of this Report. Neither director designee has exercised his or her right to terminate his or her Board of Directors Agreement as a result, and both conditional appointments remain in effect. There can be no assurance that the Company will obtain the required coverage on acceptable terms, or that a director designee will not subsequently elect to terminate his or her agreement.
Issuance of Common Stock for Services
On November 3, 2026, the Board of Directors approved, and the Company subsequently
issued, restricted shares of Common Stock to a director of the Company’s subsidiary Alchemy International Ltd. (“AIL”)
as compensation for services rendered to AIL in connection with the oversight of its dealing desk and brokerage operations. The shares
were fully vested upon issuance and were not issued under any equity incentive plan of the Company. The Company valued the shares at $
| F-38 |
| 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.
FDCTech follows a strategic growth model centered on acquiring, integrating, and scaling legacy financial services firms. Through its acquisitions, the Company has expanded its global footprint in wealth management, brokerage, and financial advisory services.
Founded in January 2016 as a back-office technology solution provider, FDCTech has transformed into a comprehensive, end-to-end trading platform offering foreign exchange (FX), contracts for difference (CFDs), equities, bonds, and wealth management services. Our growth trajectory includes the acquisitions of AD Advisory Services Pty Ltd. (2021), Alchemy Markets Ltd. (2022–2023), Alchemy Prime Limited (2023), Alchemy International Ltd. (2025), and Alchemy Markets (Cayman) Ltd. (2026), together with the establishment of Alchemytech Ltd., now T.I.C.G. Integrated Solutions Ltd. (2024), and Xoala Asia (2025), expanding our global footprint across Australia, Malta, the United Kingdom, Cyprus, Seychelles, Mauritius, and the Cayman Islands.
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 | |||||
| T.I.C.G. Integrated Solutions 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 | |||||
| Alchemy Markets (Cayman) Ltd. (AML Cayman) | 100.00% | Cayman Islands | Securities Investment Business (Broker/Dealer) | International | Condor Trading & Third-party | |||||
| Xoala AP Cyprus Ltd. (XOA, Cyprus) | 100.00% | Cyprus | Intra-group Treasury and Payment Processing | Europe | Third-party |
| 4 |
In June 2026, Alchemytech Ltd. changed its name to T.I.C.G. Integrated Solutions Ltd. (“ATECH”). Xoala Asia holds 100% of Xoala AP Cyprus Ltd. (“XOA, Cyprus”), a Cyprus-based subsidiary providing intra-group treasury and payment-processing services. In June 2026, the Company acquired 100% of Alchemy Markets (Cayman) Ltd. (“AML Cayman”), a Cayman Islands company licensed and regulated by the Cayman Islands Monetary Authority as a securities investment business licensee holding a Broker/Dealer license, which authorizes it to buy, sell, subscribe for, or underwrite securities. AML Cayman has been consolidated since June 19, 2026. Under the intra-group exemption in Section 3(3)(n) of the Cyprus Payment Services Law, no Central Bank of Cyprus payment institution or electronic money institution license is required for XOA, Cyprus.
The Company’s operating subsidiaries are described below:
AD Advisory Services Pty Ltd. (ADS) – An Australian-regulated wealth management firm regulated by the Australian Securities and Investments Commission (ASIC), managing and advising on approximately $770 million in client funds under advice with a network of 26 financial advisors.
Crestmark Trading Ltd. (formerly Alchemy Markets Ltd.) (AML) – A Malta-based investment firm regulated by the Malta Financial Services Authority (MFSA), offering trading services across multiple asset classes in various European markets.
Alchemy Prime Limited (APL) – A UK-based investment firm regulated by the Financial Conduct Authority (FCA), providing investment advisory and brokerage services.
T.I.C.G. Integrated Solutions Ltd. (ATECH) – A Cyprus-based technology, sales, and marketing service provider supporting the Company’s subsidiaries and affiliated companies.
Alchemy International Ltd. (AIL) – A Seychelles-licensed securities dealer regulated under license number SD136 by the Financial Services Authority (FSA).
XOALA (formerly Xoala Asia) (XOA) – A Mauritian-based payment provider regulated by the Financial Services Commission of Mauritius (the “FSC”) to operate as a payment intermediary in Mauritius.
Prime Intermarket Group Eurasia (PIG) – A Mauritian-based company structured as a private company limited by shares and regulated by the Financial Services Commission.
Alchemy Markets (Cayman) Ltd. (AML Cayman) – A Cayman Islands company licensed and regulated by the Cayman Islands Monetary Authority (CIMA) as a securities investment business licensee. AML Cayman holds a Broker/Dealer license, which authorizes it to buy, sell, subscribe for, or underwrite securities.
Xoala AP Cyprus Ltd. (XOA, Cyprus) – A Cyprus-based subsidiary of Xoala Asia providing intra-group treasury and payment-processing services.
Corporate History and Transformation
In 2021, the Company’s revenues came solely from technology licensing. By fiscal year 2024 and during fiscal year 2025, the Company had transformed into a diversified global fintech with revenues from technology, financial planning, and brokerage trading operations. The Company has undergone a significant transformation since its inception to the present:
In December 2021, the Company acquired 51% of AD Advisory Services Pty Ltd. (ADS), an Australian wealth management firm. For fiscal year 2021, the Company reported revenue of $0.46 million and net assets of $1.41 million.
In June 2023, the Company acquired 51% of Alchemy Markets Ltd. (AML), a Malta-based financial services firm regulated by the Malta Financial Services Authority. For fiscal year 2022, the Company reported revenue of $6.4 million and net assets of $1.60 million.
In November 2023, the Company acquired 100% of AML and Alchemy Prime Ltd. (APL), a UK-based prime-of-prime brokerage regulated by the Financial Conduct Authority. For fiscal year 2023, the Company reported revenue of $12.8 million and net assets of $13.05 million.
In March 2024, the Company established Alchemytech Ltd. (ATECH) in Cyprus as a technology, sales, and marketing service provider supporting the Company’s subsidiaries and affiliated companies.
Fiscal year 2024 represented the first full year of integration of ADS, AML, and APL. For fiscal year 2024, the Company reported revenue of $26.9 million and net assets of $14.45 million.
In October 2025, the Company acquired AIL, a key operational subsidiary within the Company’s expanding global architecture, enabling the Company to serve a broader base of offshore brokerages, high-frequency traders, and institutional clients seeking regulated access to foreign exchange and multi-asset markets.
In November 2025, the Company established Xoala Asia, which was granted a Payment Intermediary Services (“PIS”) license by the Financial Services Commission of Mauritius (the “FSC”) to operate as a payment intermediary in Mauritius. Xoala Asia holds 100% of Xoala AP Cyprus Ltd., a Cyprus company providing intra-group treasury and payment-processing services.
In June 2026, Alchemytech Ltd. changed its name to T.I.C.G. Integrated Solutions Ltd., and the Company acquired 100% of Alchemy Markets (Cayman) Ltd. (AML Cayman), a Cayman Islands company licensed by the Cayman Islands Monetary Authority to conduct securities investment business under a Broker/Dealer license. The acquisition extends the Company’s regulated brokerage footprint to the Cayman Islands.
| 5 |
Our Business Segments
We operate through four complementary business segments:
Margin Brokerage: Through Crestmark Trading Ltd. (formerly 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 26 financial advisors managing and advising over $770 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 T.I.C.G. Integrated Solutions Ltd. (formerly 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 (formerly 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 September 30, 2026, the Company generated total revenue of $3,671,775, a decrease of $2,200,597 (37.5%) from total revenue of $5,872,372 for the three months ended September 30, 2025. During the nine months ended September 30, 2026, the Company generated total revenue of $35,924,742, an increase of $18,655,631 (108.0%) over total revenue of $17,269,111 for the nine months ended September 30, 2025.
The substantial growth in nine-month revenue was driven primarily by the 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, which generated significant brokerage revenue during the first half of 2026. Brokerage revenue declined sharply during the three months ended September 30, 2026, reflecting lower client trading volumes and market-making results at AIL and the Company’s other brokerage subsidiaries, and the Company recorded a gross loss for the quarter as brokerage cost of sales, including liquidity-provider, rebate, and trading-related costs, exceeded brokerage revenue.
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 contribution from AIL during the nine months ended September 30, 2026 (compared with no contribution during the nine months ended September 30, 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 nine-month increase, while the Wealth Management segment was substantially flat compared with the prior-year periods. For the three months ended September 30, 2026, the Company reported a net loss, reflecting the decline in brokerage revenue, higher brokerage cost of sales, and an increase in general and administrative expenses, which included $915,000 of stock-based consulting expense and a $186,975 provision for doubtful accounts.
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 September 30, 2026
As of September 30, 2026, the Company had total assets of $53,220,167, compared to $64,051,886 as of December 31, 2025, representing a decrease of $10,831,719, or approximately 16.9%. Total assets at September 30, 2026, were comprised primarily of cash and cash equivalents of $21,415,387 and restricted cash (client funds, segregated) of $11,729,042, related party receivables of $6,492,563, accrued income of $5,010,848, acquired intangible assets (net) of $4,457,595, capitalized software (net) of $1,760,022, right-of-use lease assets of $673,254, prepaid expenses (current and non-current) of $535,203, tax and other receivables of $581,073, accounts receivable (net of allowance for doubtful accounts) of $264,372, property and equipment (net) of $175,755, and other assets aggregating $125,053.
The $10,831,719 decrease in total assets during the nine months ended September 30, 2026, was primarily attributable to: (i) a decrease in related party receivables of $33,597,488, as further described in Note 5, principally reflecting the June 30, 2026, set-off and assignment arrangements with Alchemy DMCC and Alchemy Capital Markets and collections during the third quarter; and (ii) a decrease in the fair value of trading positions for the firm of $1,094,705, reflecting the closing-out and transfer of certain trading positions in the ordinary course; partially offset by (iii) an increase in cash, cash equivalents, and restricted cash of $15,474,680, including an increase in segregated client funds held by the Company’s regulated brokerage subsidiaries of $5,915,154; (iv) an increase in accrued income of $4,730,959, principally rebates receivable at AIL and Crestmark; (v) an increase in acquired intangible assets of $3,131,533, principally reflecting the reclassification of a $3,165,290 receivable from Iconic Advisors and Consulting Limited to acquired intangible assets under the IP Purchase Agreement described in Note 5; (vi) an increase in capitalized software (net) of $279,776; and (vii) an increase in tax and other receivables of $390,727, including deposits of $408,586 paid in connection with the proposed acquisitions of Larstal Limited and The Millionaire’s Club Ltd.
Total Liabilities
As of September 30, 2026, the Company had total liabilities of $18,935,187, compared to $41,360,598 as of December 31, 2025, representing a decrease of $22,425,411, or approximately 54.2%. Total liabilities at September 30, 2026, were comprised primarily of client funds payable of $11,729,042, related party advances payable of $1,939,946, other current liabilities of $1,697,778, accrued expenses to related parties of $1,040,112, accounts payable of $537,528, operating lease liabilities (current and non-current) of $390,406, promissory notes (net of unamortized discount) of $425,545, business acquisition loan of $350,000, line of credit of $245,617, deferred tax liabilities of $156,525, income tax payable of $128,031, financial liabilities at fair value through profit and loss of $85,856, and the SBA loan and accrued non-current interest aggregating $208,801.
The $22,425,411 net decrease in total liabilities during the nine months ended September 30, 2026, was primarily attributable to: (i) a decrease in related party advances payable of $27,257,524, principally reflecting the settlement of AIL’s net advances payable to Alchemy DMCC through non-cash set-off and assignment arrangements on June 30, 2026, as further described in Note 5; (ii) a decrease in the business acquisition loan of $2,000,000, reflecting the settlement of the seller financing obligation to Sync Capital Limited by set-off against the stock subscription receivable; (iii) a decrease in other current liabilities of $435,215; (iv) a decrease in deferred tax liabilities of $221,450; and (v) a decrease in operating lease liabilities (current and non-current) of $139,941; partially offset by (vi) an increase in client funds payable of $5,915,154, reflecting growth in customer deposits held by the Company’s regulated brokerage subsidiaries; (vii) an increase in accrued expenses to related parties of $507,825, primarily representing accrued executive compensation; (viii) the issuance of the Vanquish promissory notes with a net carrying amount of $425,545; (ix) an increase in accounts payable and line of credit of $505,581 in the aggregate; and (x) the recognition of income tax payable of $128,031, financial liabilities at fair value through profit and loss of $85,856, and additional accrued interest of $67,106.
Stockholders’ Equity and Working Capital
As of September 30, 2026, total stockholders’ equity attributable to FDCTech, Inc. stockholders was $34,277,475, compared to $22,657,965 as of December 31, 2025, representing an increase of $11,619,510, or approximately 51.3%. Total stockholders’ equity, including noncontrolling interests, was $34,284,980 as of September 30, 2026, compared to $22,691,288 as of December 31, 2025. The components of stockholders’ equity as of September 30, 2026, consisted of Series A preferred stock and common stock at par value of $450 and $12,532, respectively, additional paid-in capital of $22,532,234, accumulated other comprehensive income of $73,872, accumulated surplus of $11,658,387, and noncontrolling interest of $7,505. The subscription receivable of $(8,000,000) and the Series B preferred stock and related additional paid-in capital of $3,344,300 outstanding at December 31, 2025, were eliminated during the third quarter upon the settlement of the subscription receivable and the conversion of the Series B Convertible Preferred Stock, respectively.
| 7 |
The $11,619,510 increase in stockholders’ equity attributable to FDCTech, Inc. stockholders during the nine months ended September 30, 2026, was primarily attributable to: (i) net income attributable to FDCTech, Inc. shareholders of $8,256,902 for the period; (ii) the settlement of the $8,000,000 stock subscription receivable due from Mr. Gope S. Kundnani, as described in Note 9; and (iii) the issuance of 2,500,000 shares of common stock for consulting services valued at $915,000; partially offset by (iv) a net decrease in additional paid-in capital of $5,330,005 arising from transactions between entities under common control accounted for in accordance with ASC 805-50, Transactions Between Entities Under Common Control; and (v) a decrease in accumulated other comprehensive income of $222,385. The conversion of all 2,371,844 shares of Series B Convertible Preferred Stock into 118,592,200 shares of common stock on July 13, 2026, was a reclassification within stockholders’ equity and had no effect on total stockholders’ equity.
Working capital, defined as total current assets less total current liabilities, was $21,949,185 as of September 30, 2026, compared to $17,831,410 as of December 31, 2025, representing an increase of $4,117,775, or approximately 23.1%. 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 and seller financing balances described above, partially offset by the decrease in related party receivables, the increase in client funds payable (which is matched by segregated client funds presented as restricted cash), and the issuance of the Vanquish promissory notes during the period. The Company’s 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 nine months ended September 30, 2026, the Company recorded a net decrease to additional paid-in capital of $5,330,005 in connection with transactions between entities under common control, comprising a net increase of $2,295,047 during the six months ended June 30, 2026 (principally relating to the finalization of the consolidation entries for the acquisition of AIL, completed on November 11, 2025, and the acquisition of AML Cayman) and a net decrease of $7,625,052 during the three months ended September 30, 2026. The third-quarter decrease principally reflects the attribution of capital contributed by the Company’s principal shareholder directly to the Company’s subsidiaries in settlement of the stock subscription receivable, the deemed distribution to the principal shareholder arising from the AML Cayman common-control combination, and the allocation of excess consideration on the consolidation of ADS to acquired intangible assets. These adjustments reflect differences between the consideration transferred and the historical carrying values of the net assets of the entities under common control. No new shares of the Company’s common stock or preferred stock were issued in connection with these adjustments, and the adjustments had no effect on the Company’s results of operations or cash flows.
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 $1,280,522 at September 30, 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 $27,257,524 was settled during the three and nine months ended September 30, 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 and nine months ended September 30, 2026, compared with three and nine months ended September 30, 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 September 30, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Revenues: | ||||||||||||||||
| Technology & software | $ | 925,656 | 1,361,636 | (435,980 | ) | (32.0 | )% | |||||||||
| Wealth management | 1,759,384 | 1,788,079 | (28,695 | ) | (1.6 | )% | ||||||||||
| Brokerage | 986,735 | 2,722,657 | (1,735,922 | ) | (63.8 | )% | ||||||||||
| Total revenue | $ | 3,671,775 | 5,872,372 | (2,200,597 | ) | (37.5 | )% | |||||||||
| Cost of sales: | ||||||||||||||||
| Technology & software | - | - | - | - | ||||||||||||
| Wealth management | 1,582,285 | 1,576,991 | 5,294 | 0.3 | % | |||||||||||
| Brokerage | 4,474,097 | 60,237 | 4,413,860 | 7327.5 | % | |||||||||||
| Total cost of sales | $ | 6,056,382 | 1,637,228 | 4,419,154 | 269.9 | % | ||||||||||
| Gross profit | $ | (2,384,607 | ) | 4,235,144 | (6,619,751 | ) | (156.3 | )% | ||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 3,955,799 | 3,234,153 | 721,646 | 22.3 | % | |||||||||||
| Sales and marketing | 102,376 | 317,379 | (215,003 | ) | (67.7 | )% | ||||||||||
| Depreciation | 19,920 | 44,992 | (25,072 | ) | (55.7 | )% | ||||||||||
| Total operating expenses | $ | 4,078,095 | 3,596,524 | 481,571 | 13.4 | % | ||||||||||
| Operating income | $ | (6,462,702 | ) | 638,620 | (7,101,322 | ) | (1112.0 | )% | ||||||||
| Total other income (expense), net | 163,027 | 96,632 | 66,395 | 68.7 | % | |||||||||||
| Income before provision for income taxes | (6,299,675 | ) | 735,252 | (7,034,927 | ) | (956.8 | )% | |||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net income | $ | (6,299,675 | ) | 735,252 | (7,034,927 | ) | (956.8 | )% | ||||||||
| Less: Net income attributable to noncontrolling interest | 21,620 | 79,765 | (58,145 | ) | (72.9 | )% | ||||||||||
| Net income attributable to FDCTech, Inc. | $ | (6,321,295 | ) | 655,487 | (6,976,782 | ) | (1064.3 | )% | ||||||||
| Nine Months Ended September 30, | ||||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Revenues: | ||||||||||||||||
| Technology & software | 3,524,259 | 3,353,598 | 170,661 | 5.1 | % | |||||||||||
| Wealth management | 5,139,340 | 4,976,601 | 162,739 | 3.3 | % | |||||||||||
| Brokerage | 27,261,143 | 8,938,912 | 18,322,231 | 205.0 | % | |||||||||||
| Total revenue | 35,924,742 | 17,269,111 | 18,655,631 | 108.0 | % | |||||||||||
| Cost of sales: | ||||||||||||||||
| Technology & software | 115,610 | - | 115,610 | n/a | ||||||||||||
| Wealth management | 4,672,338 | 4,410,589 | 261,749 | 5.9 | % | |||||||||||
| Brokerage | 10,016,018 | 3,458,121 | 6,557,897 | 189.6 | % | |||||||||||
| Total cost of sales | 14,803,966 | 7,868,710 | 6,935,256 | 88.1 | % | |||||||||||
| Gross profit | 21,120,776 | 9,400,401 | 11,720,375 | 124.7 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 12,507,681 | 7,505,861 | 5,001,820 | 66.6 | % | |||||||||||
| Sales and marketing | 720,763 | 887,520 | (166,757 | ) | (18.8 | )% | ||||||||||
| Depreciation | 112,258 | 127,100 | (14,842 | ) | (11.7 | )% | ||||||||||
| Total operating expenses | 13,340,702 | 8,520,481 | 4,820,221 | 56.6 | % | |||||||||||
| Operating income | 7,780,074 | 879,920 | 6,900,154 | 784.2 | % | |||||||||||
| Total other income (expense), net | 469,763 | (256,002 | ) | 725,765 | 283.5 | % | ||||||||||
| Income before provision for income taxes | 8,249,837 | 623,918 | 7,625,919 | 1222.3 | % | |||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net income | 8,249,837 | 623,918 | 7,625,919 | 1222.3 | % | |||||||||||
| Less: Net income attributable to noncontrolling interest | (7,065 | ) | 113,542 | (120,607 | ) | (106.2 | )% | |||||||||
| Net income attributable to FDCTech, Inc. | 8,256,902 | 510,376 | 7,746,526 | 1517.8 | % | |||||||||||
| 9 |
Revenue
Total revenue decreased to $3,671,775 for the three months ended September 30, 2026, compared to $5,872,372 for the three months ended September 30, 2025, a decrease of $2,200,597, or approximately 37.5%. For the nine months ended September 30, 2026, total revenue was $35,924,742, compared to $17,269,111 for the nine months ended September 30, 2025, an increase of $18,655,631, or approximately 108.0%. The nine-month growth was driven primarily by the Margin Brokerage segment, which contributed $27,261,143 of total revenue for the nine months ended September 30, 2026, compared to $8,938,912 for the comparable prior-year period, representing an increase of $18,322,231, or approximately 205.0%, reflecting the 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, Crestmark Trading Ltd. (formerly Alchemy Markets Ltd.) (“AML”) in Malta and Alchemy Prime Ltd. (“APL”) in the United Kingdom. For the three months ended September 30, 2026, however, Margin Brokerage revenue declined to $986,735, compared to $2,722,657 for the comparable prior-year period, a decrease of $1,735,922, or approximately 63.8%, reflecting substantially lower client trading volumes and adverse market-making results across the Company’s brokerage subsidiaries during the quarter.
Technology and software revenue was $925,656 for the three months ended September 30, 2026, compared to $1,361,636 for the comparable prior-year period, representing a decrease of $435,980, or approximately 32.0%, and $3,524,259 for the nine months ended September 30, 2026, compared to $3,353,598 for the comparable prior-year period, representing an increase of $170,661, or approximately 5.1%, with the nine-month increase reflecting the expansion of the Company’s technology and platform services to its expanded broker-dealer client base. Technology and software revenue excludes technology and service fees of $214,506 and $648,567 charged by the Company to its subsidiary Crestmark Trading Ltd. for the three and nine months ended September 30, 2026, respectively, which have been eliminated in consolidation against the corresponding brokerage cost of sales. Wealth Management revenue was $1,759,384 for the three months ended September 30, 2026, compared to $1,788,079 for the comparable prior-year period, representing a decrease of $28,695, or approximately 1.6%, and $5,139,340 for the nine months ended September 30, 2026, compared to $4,976,601 for the comparable prior-year period, representing an increase of $162,739, or approximately 3.3%.
Cost of Sales and Gross Profit
Cost of sales was $6,056,382 for the three months ended September 30, 2026, compared to $1,637,228 for the three months ended September 30, 2025, an increase of $4,419,154, or approximately 269.9%. For the nine months ended September 30, 2026, cost of sales was $14,803,966, compared to $7,868,710 for the nine months ended September 30, 2025, an increase of $6,935,256, or approximately 88.1%. The increase in cost of sales principally reflects higher brokerage cost of sales, including liquidity-provider, rebate, payment-processing, and clearing costs, which was $4,474,097 for the three months ended September 30, 2026 (compared to $60,237 for the comparable prior-year period) and $10,016,018 for the nine months ended September 30, 2026 (compared to $3,458,121). Brokerage cost of sales is presented net of intercompany technology and service fees charged by the Company to Crestmark Trading Ltd. of $214,506 and $648,567 for the three and nine months ended September 30, 2026, respectively, which have been eliminated in consolidation. Brokerage cost of sales for the three months ended September 30, 2026, exceeded brokerage revenue for the quarter, reflecting rebate and liquidity-provider costs incurred on client trading volumes that were not matched by corresponding trading revenue during the period. Wealth Management cost of sales was $1,582,285 and $4,672,338 for the three and nine months ended September 30, 2026, respectively, compared to $1,576,991 and $4,410,589 for the comparable prior-year periods, consistent with the segment’s revenue trend.
| 10 |
Gross profit (loss) was $(2,384,607) for the three months ended September 30, 2026, compared to gross profit of $4,235,144 for the three months ended September 30, 2025, a decrease of $6,619,751. For the nine months ended September 30, 2026, gross profit was $21,120,776, compared to $9,400,401 for the nine months ended September 30, 2025, an increase of $11,720,375, or approximately 124.7%. Consolidated gross margin was approximately (64.9)% and 72.1% for the three months ended September 30, 2026, and 2025, respectively, and approximately 58.8% and 54.4% for the nine months ended September 30, 2026, and 2025, respectively. The nine-month improvement principally reflects the change in revenue mix toward the Margin Brokerage segment during the first half of 2026, while the third-quarter gross loss reflects the decline in brokerage revenue relative to brokerage cost of sales described above.
Operating Expenses
Total operating expenses were $4,078,095 for the three months ended September 30, 2026, compared to $3,596,524 for the three months ended September 30, 2025, an increase of $481,571, or approximately 13.4%. For the nine months ended September 30, 2026, total operating expenses were $13,340,702, compared to $8,520,481 for the nine months ended September 30, 2025, an increase of $4,820,221, or approximately 56.6%. For the three months ended September 30, 2026, the increase reflects higher general and administrative expense of $3,955,799 (compared to $3,234,153, an increase of $721,646, or approximately 22.3%), partially offset by lower sales and marketing expense of $102,376 (compared to $317,379, a decrease of $215,003, or approximately 67.7%) and lower depreciation expense of $19,920 (compared to $44,992, a decrease of $25,072, or approximately 55.7%). For the nine months ended September 30, 2026, general and administrative expense was $12,507,681 (compared to $7,505,861, an increase of $5,001,820, or approximately 66.6%), sales and marketing expense was $720,763 (compared to $887,520, a decrease of $166,757, or approximately 18.8%), and depreciation expense was $112,258 (compared to $127,100, a decrease of $14,842, or approximately 11.7%).
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, 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, and, for the three months ended September 30, 2026, $915,000 of stock-based consulting expense relating to 2,500,000 shares of common stock issued to consultants in August 2026 and a $186,975 provision for doubtful accounts. The decrease in sales and marketing expense reflects a shift toward lower-cost digital channels and reduced tradeshow and travel activity, as further described in Note 2.
Operating Income
Operating loss was $(6,462,702) for the three months ended September 30, 2026, compared to operating income of $638,620 for the three months ended September 30, 2025, a decrease of $7,101,322. For the nine months ended September 30, 2026, operating income was $7,780,074, compared to operating income of $879,920 for the nine months ended September 30, 2025, representing an increase of $6,900,154. The nine-month increase in operating income reflects the increase in gross profit described above, partially offset by the increase in total operating expenses, while the third-quarter operating loss reflects the gross loss for the quarter together with higher general and administrative expenses.
Other Income (Expense), Net
Total other income (expense), net, was net other income of $163,027 for the three months ended September 30, 2026, compared to net other income of $96,632 for the three months ended September 30, 2025, an increase of $66,395. For the nine months ended September 30, 2026, total other income (expense), net, was net other income of $469,763, compared to net other expense of $(256,002) for the nine months ended September 30, 2025, an improvement of $725,765. For the three months ended September 30, 2026, total other income (expense), net, consisted of other interest income (expense) of $64,353 (compared to $(172,107) for the comparable prior-year period), which is net of $19,200 of debt discount amortization on the Vanquish promissory notes, and other income of $98,674 (compared to $268,739 for the comparable prior-year period). For the nine months ended September 30, 2026, it consisted of other interest income (expense) of $269,649 (compared to $(156,638)) and other income (expense) of $200,114 (compared to $(99,364)). 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 loss was $(6,299,675) for the three months ended September 30, 2026, compared to net income of $735,252 for the three months ended September 30, 2025, a decrease of $7,034,927. For the nine months ended September 30, 2026, net income was $8,249,837, compared to net income of $623,918 for the nine months ended September 30, 2025, an increase of $7,625,919. No provision for income taxes was recorded for any period presented; as described in Note 14, the Company had not received complete income tax information from its foreign subsidiaries as of the date of this Report. Investors should not regard the absence of a recorded tax provision as an indication that the Company’s foreign operations bear no income tax. Net loss attributable to FDCTech, Inc. stockholders was $(6,321,295) for the three months ended September 30, 2026 ($(0.06) per share, basic and diluted), compared to net income attributable to FDCTech, Inc. stockholders of $655,487 for the three months ended September 30, 2025 ($0.15 per share, basic and diluted), and net income attributable to FDCTech, Inc. stockholders was $8,256,902 for the nine months ended September 30, 2026 ($0.21 per share basic and $0.07 per share diluted), compared to $510,376 for the nine months ended September 30, 2025 ($0.12 per share, basic and diluted).
Weighted average shares outstanding were 106,978,518 and 38,856,450 for the three and nine months ended September 30, 2026, respectively, compared to 4,230,868 for each of the comparable prior-year periods, reflecting the conversion of all 2,371,844 shares of Series B Convertible Preferred Stock into 118,592,200 shares of Common Stock on July 13, 2026, and the issuance of 2,500,000 shares for consulting services in August 2026. Diluted per-share amounts for the nine months ended September 30, 2026, reflect the assumed conversion of the Series B Convertible Preferred Stock for the portion of the period prior to its conversion; for the three months ended September 30, 2026, potentially dilutive shares were antidilutive because of the net loss. All share and per-share amounts give effect to the 1-for-100 reverse stock split effective July 10, 2026, as described in Note 1 and Note 13.
| 11 |
LIQUIDITY AND CAPITAL RESOURCES
Cash, Working Capital and Overview
As of September 30, 2026, the Company had cash, cash equivalents, and restricted cash of $33,144,429 (including segregated client funds of $11,729,042), compared to $17,669,749 as of December 31, 2025, representing an increase of $15,474,680, or approximately 87.6%. Working capital, defined as total current assets less total current liabilities, was $21,949,185 as of September 30, 2026, compared to $17,831,410 as of December 31, 2025, representing an increase of $4,117,775, or approximately 23.1%. The increase in working capital principally reflects the settlement of $27,257,524 of related party advances payable and the $2,000,000 seller financing obligation during the nine months ended September 30, 2026, together with the increase in cash and cash equivalents, partially offset by the decrease in related party receivables and the issuance of the Vanquish promissory notes.
Cash Flows from Operating Activities
Net cash used in operating activities was $(12,166,360) for the nine months ended September 30, 2026, compared to net cash used in operating activities of $(3,515,873) for the nine months ended September 30, 2025. Net cash used in operating activities for the nine months ended September 30, 2026, principally reflects (i) net income of $8,249,837 for the nine months ended September 30, 2026 (compared to $623,918 for the comparable prior-year period), adjusted for non-cash items including $915,000 of stock-based consulting expense, a $186,975 provision for doubtful accounts, depreciation of $112,258, and $19,200 of debt discount amortization; (ii) an increase in related party receivables of $(23,803,179), presented excluding the non-cash settlement arrangements described in Note 5; (iii) an increase in accrued income of $(4,730,959), principally rebates receivable at AIL and Crestmark; and (iv) a decrease in other current liabilities of $(435,215); partially offset by (v) an increase in client funds payable of $5,915,154, reflecting growth in customer deposits held by the Company’s regulated brokerage subsidiaries; (vi) a decrease in the fair value of trading positions for the firm, net of financial liabilities at fair value, of $1,180,561, reflecting the closing-out of certain trading positions in the ordinary course; (vii) an increase in accrued expenses to related parties of $507,825; and (viii) an increase in accounts payable of $371,316.
Cash Flows from Investing Activities
Net cash used in investing activities was $(368,554) for the nine months ended September 30, 2026, compared to net cash used in investing activities of $(359,968) for the nine months ended September 30, 2025. Net cash used in investing activities for the nine months ended September 30, 2026, principally consisted of (i) capitalized software development costs, net, of $367,154 and (ii) purchases of fixed assets of $1,577, partially offset by (iii) $177 of net investment activity in private entities. The non-cash reclassification of a $3,165,290 receivable from Iconic Advisors and Consulting Limited to acquired intangible assets under the IP Purchase Agreement described in Note 5, and the deposits paid in connection with the proposed acquisitions of Larstal Limited and The Millionaire’s Club Ltd did not involve investing cash flows in the period and are disclosed as non-cash activities or within changes in operating assets, as applicable. The comparable prior-year period reflects capitalized software development costs of $224,177 and purchases of fixed assets of $135,791.
Cash Flows from Financing Activities
Net cash provided by financing activities was $33,508,404 for the nine months ended September 30, 2026, compared to net cash used in financing activities of $(3,938,513) for the nine months ended September 30, 2025. Net cash provided by financing activities for the nine months ended September 30, 2026, principally consisted of (i) $32,839,241 of net related party advances received, presented excluding the non-cash settlement arrangements described in Note 5; (ii) $475,000 of net proceeds from the Vanquish promissory notes described in Note 7; (iii) $66,277 of stock subscription receivable collected in cash and capital contributions, net of common-control adjustments to additional paid-in capital, comprising $2,339,524 of cash collected in settlement of the stock subscription receivable less $2,273,247 of net common-control adjustments; and (iv) net draws of $134,265 on the Company’s lines of credit, partially offset by (v) net repayments of $6,379 on the Company’s SBA and PPP loans. The remaining $5,660,476 of the stock subscription receivable was settled by non-cash set-off, as described in Note 9.
Net Change in Cash
The Company’s cash, cash equivalents, and restricted cash increased by $15,474,680 during the nine months ended September 30, 2026, comprising net cash used in operating activities of $(12,166,360), net cash used in investing activities of $(368,554), net cash provided by financing activities of $33,508,404, the effect of exchange rate changes on cash of $(222,387), a $(18,753) change in the noncontrolling interest share of subsidiary net assets, and the $(5,257,670) non-cash assignment of the Company’s liquidity-provider balance previously included within cash and cash equivalents. Cash, cash equivalents, and restricted cash were $33,144,429 as of September 30, 2026, compared to $17,669,749 as of December 31, 2025.
Long-Term Obligations and Capital Adequacy
As of September 30, 2026, the Company’s principal long-term contractual obligations consisted of (i) the SBA loan in the non-current principal amount of $99,299, 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 $350,000, comprising the 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); (iii) the Vanquish promissory notes with an aggregate principal amount of $572,130 (carrying amount of $425,545, net of unamortized discount), which are payable in installments through June 30, 2027, as described in Note 7; (iv) operating lease liabilities (current and non-current) of $390,406 in the aggregate, principally relating to the Company’s office facilities, including the ATECH sublease renewed through October 31, 2028 (see Note 8); and (v) deferred tax liabilities of $156,525 and accrued non-current interest of $109,502. The $2,000,000 seller financing obligation to Sync Capital Limited outstanding at December 31, 2025, was settled during the three months ended September 30, 2026, by set-off against the stock subscription receivable, as described in Notes 7 and 9.
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 application, submitted in September 2026, to list its common stock on The Nasdaq Stock Market and any related underwritten public offering. The listing application remains under review, and there can be no assurance that it will be approved, that any offering will be completed, or that additional capital, if needed, will be available on terms acceptable to the Company or at all.
| 12 |
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 September 30, 2026, the Company had cash, cash equivalents, and restricted cash of $33,144,429, working capital of $21,949,185, total stockholders’ equity of $34,284,980, and an accumulated surplus of $11,658,387, 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 nine months ended September 30, 2026, the Company generated revenues of $35,924,742 (compared to $17,269,111 for the nine months ended September 30, 2025), net income of $8,249,837 (of which $8,256,902 was attributable to the stockholders of FDCTech, Inc. and $(7,065) was attributable to noncontrolling interests, compared to consolidated net income of $623,918 for the nine months ended September 30, 2025), and net cash used in operating activities of $(12,166,360) (compared to net cash used in operating activities of $(3,515,873) for the nine months ended September 30, 2025). The Company incurred a net loss of $(6,299,675) for the three months ended September 30, 2026.
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 Form 10-K for the fiscal year ended December 31, 2025, as most recently amended by Amendment No. 4 on Form 10-K/A filed with the SEC on July 1, 2026. We continually evaluate our critical accounting estimates and judgments, as required by our policies, and update them as necessary based on changing conditions.
| 13 |
JOBS Act Accounting Election
Prior to December 31, 2022, the Company qualified as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as permitted under the JOBS Act, elected to delay the adoption of new or revised financial accounting standards until those standards would otherwise apply to private companies. The Company ceased to qualify as an emerging growth company effective December 31, 2022. Accordingly, the extended transition period for complying with new or revised financial accounting standards is no longer available to the Company, and the Company applies the effective dates applicable to public business entities for all periods presented in this Report.
Off-Balance Sheet Arrangements and Contractual Obligations
We have not engaged in any off-balance sheet arrangements as defined in Item 303 of the SEC’s Regulation S-K. 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. The Company adopted ASU 2023-09 effective January 1, 2025, on a prospective basis; the adoption expanded the Company’s annual income tax disclosures and did not affect its consolidated financial position, results of operations, or cash flows.
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 complete description of accounting pronouncements recently adopted and issued but not yet adopted, see Note 2, Summary of Significant Accounting Policies — Recent Accounting Pronouncements, to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.
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 for the year ended December 31, 2025, as most recently amended by Amendment No. 4 on Form 10-K/A filed with the SEC on July 1, 2026.
| 14 |
| 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 Report, 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 Report 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 Report 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 Report and the restatement described in Note 2 (Summary of Significant Accounting Policies — 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.
| 15 |
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 and the Chief Financial Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of September 30, 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 September 30, 2026. Based on our assessments, management determined that we did not maintain effective internal control over financial reporting as of September 30, 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 on the effectiveness of our internal control over financial reporting, as the Company is a non-accelerated filer and is therefore not subject to the auditor attestation requirement of Section 404(b) of the Sarbanes-Oxley Act of 2002.
Changes in Internal Control over Financial Reporting
During the three and nine months ended September 30, 2026, in connection with the remediation efforts described above, the Company implemented changes in its internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. These changes were directed principally at the Company’s operating subsidiaries and consisted of: (i) the designation of finance personnel at each of Alchemy Markets Ltd. (“AML”), Alchemy Prime Limited (“APL”) and Alchemy International Ltd. (“AIL”) with defined responsibility for the completeness and accuracy of the reporting package submitted to the parent for consolidation; (ii) implementation of a standardized monthly intercompany reconciliation and confirmation process under which each subsidiary agrees its intercompany and related party balances to the corresponding counterparty balance and identifies one-sided or unmatched items for resolution before the consolidation is prepared; (iii) introduction of a standardized subsidiary reporting template incorporating footing, cross-referencing and sign-convention checks over the statement of operations and supporting schedules; (iv) establishment of a preparer-and-reviewer approval hierarchy requiring sign-off at the subsidiary level and a second-level review at the parent level prior to submission for consolidation; and (v) enhanced segregation of duties over the recording and approval of intercompany transfers, related party advances and client money movements at the regulated subsidiaries. Management believes these changes strengthen the checks and balances applied at the subsidiary level; however, as described above, the material weaknesses will not be considered remediated until the applicable controls have operated for a sufficient period and management has concluded, through testing, that they are designed and operating effectively.
| 16 |
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, a threshold the Company has elected to apply in lieu of the $300,000 default threshold specified in Item 103(c)(3)(iii) of Regulation S-K. 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 September 30, 2026, other than the $350,000 withheld purchase consideration accrued within Business acquisition loan in respect of the AML Litigation as described in Note 7, the Company has not recorded a loss accrual with respect to the matters described in Note 8, as Management has determined that any additional 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. |
During the three months ended September 30, 2026, the Company issued the following unregistered equity securities: (i) on July 13, 2026, 118,592,200 shares of Common Stock to eight holders upon the conversion of all 2,371,844 outstanding shares of Series B Convertible Preferred Stock, as described in Item 5 below and in Note 9; and (ii) on August 27, 2026, and August 28, 2026, 1,500,000 and 1,000,000 restricted shares of Common Stock, respectively, to two consultants in consideration of consulting services valued at an aggregate of $915,000. In addition, on August 20, 2026, and September 15, 2026, the Company issued promissory notes to Vanquish Funding Group Inc. in the aggregate principal amounts of $329,940 and $242,190, respectively, which are convertible into Common Stock only upon an event of default, as described in Note 7. Subsequent to the end of the quarter, on November 3, 2026, the Company issued 25,000 restricted shares of Common Stock, valued at $103,750, or $4.15 per share, to a director of the Company’s subsidiary Alchemy International Ltd. as compensation for services rendered to that subsidiary, as described in Note 16. Each of these issuances was made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D thereunder, and the securities are restricted securities. No underwriters were involved, and no commissions were paid. Other than as set forth above or previously reported in a Current Report on Form 8-K, there were no unregistered sales of the Company’s equity securities during the three months ended September 30, 2026, or through the date of this Report. 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 for the fiscal year ended December 31, 2025, as most recently amended by Amendment No. 4 on Form 10-K/A filed with the SEC on July 1, 2026.
| Item 3. | Defaults Upon Senior Securities. |
None
| Item 4. | Mine Safety Disclosures. |
None
| 17 |
| Item 5. | Other Information. |
Reverse Stock Split and Conversion of Series B Convertible Preferred Stock
On June 29, 2026, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware, effecting a one-for-one hundred (1-for-100) reverse stock split of its issued and outstanding shares of Common Stock, with any resulting fractional share rounded up to the nearest whole share for each holder of record. Following announcement by the Financial Industry Regulatory Authority on its Daily List on July 9, 2026, the reverse stock split became effective, and the Company’s Common Stock began trading on a post-split basis at the open of business on July 10, 2026. All share and per-share amounts in the consolidated financial statements and the accompanying notes have been retroactively adjusted to reflect the reverse stock split for all periods presented, in accordance with ASC 260-10-55-12 and SEC Staff Accounting Bulletin Topic 4C. See Note 1.
On July 13, 2026, the Board of Directors, acting by unanimous written consent, approved the conversion of all 2,371,844 outstanding shares of Series B Convertible Preferred Stock into 118,592,200 shares of Common Stock at a rate of fifty (50) shares of Common Stock for each share of Series B Convertible Preferred Stock. Following the conversion, no shares of Series B Convertible Preferred Stock remain issued or outstanding.
The shares of Common Stock issued upon conversion were issued to eight holders in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and are restricted securities. The conversion is described in Note 9 (Stockholders’ Equity) to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report. These matters were also reported in the Company’s Current Report on Form 8-K filed with the SEC on August 17, 2026. On August 17, 2026, the Company also filed Certificates of Amendment to its Certificate of Incorporation and to the Certificates of Designation of its Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, as described in Notes 1 and 9, and, effective September 9, 2026, relocated its principal executive offices to Limassol, Cyprus, as described in Note 1.
Rule 10b5-1 Trading Arrangements
During
the three months ended September 30, 2026, no director or officer of the Company
| Item 6. | Exhibits. |
(a) Exhibits.
| 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) |
| 18 |
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: November 13, 2026 | /s/ Mitchell M. Eaglstein |
Mitchell M. Eaglstein, President and CEO (Principal Executive Officer) |
| Date: November 13, 2026 | /s/ Imran Firoz |
Imran Firoz, CFO (Principal Financial and Accounting Officer) |
| 19 |
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) |
| 20 |