Fdctech, Inc 10-Q for FY2024 Q3
Fdctech, Inc. (FDCT)
About this 10-Q
Fdctech, Inc filed this 10-Q on December 31, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $5.67M
- up 53.2% from $3.7M a year earlier
- Net loss
- $649.57K
- compared with net income of $689.39K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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 | ||
| OTC Markets |
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 Web site, 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 December 31, 2024, 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 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, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||
| Prepaid expenses – current | ||||||||
| Subscription receivable | ||||||||
| Loan receivable | ||||||||
| Total Current assets | ||||||||
| Capitalized software, net | ||||||||
| Investment through subsidiary | ||||||||
| Accrued income | ||||||||
| Acquired intangible assets | ||||||||
| Related party guarantee | ||||||||
| Tax receivable | ||||||||
| Fair value of trading positions for the firm, profit | ||||||||
| Right of use (lease) | ||||||||
| Fixed assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Line of credit | ||||||||
| Accrued expenses, related party | ||||||||
| Business acquisition loan | ||||||||
| Cares act- paycheck protection program advance | ||||||||
| Related party advances | ||||||||
| Customer funds | ||||||||
| Fair value of trading positions for the firm, loss | ||||||||
| Operating lease liability, current | ||||||||
| Other current liabilities | ||||||||
| Total Current liabilities | ||||||||
| Deferred tax liabilities | ||||||||
| SBA loan – non-current | ||||||||
| Operating lease liability, non-current | ||||||||
| Accrued interest – non-current | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 9) | ||||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock, par value $, shares authorized, and issued and outstanding, as of September 30, 2024, and December 31, 2023 | ||||||||
| Series B Preferred stock, par value $, shares authorized, and issued and outstanding, as of September 30, 2024, and December 31, 2023 | ||||||||
| Common stock, par value $, shares authorized; and shares issued and outstanding, as of September 30, 2024, and December 31, 2023 | ||||||||
| Additional paid-in capital, common stock | ||||||||
| Additional paid-in capital, preferred stock | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total FDCTech, Inc. stockholders’ equity (deficit) | ||||||||
| Noncontrolling interest | ||||||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See accompanying notes to the financial statements.
| F-2 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2024 | September 30, 2024 | September 30, 2024 | September 30, 2023 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (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 expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Income (loss) before provision for income taxes | ( | ) | ( | ) | ||||||||||||
| Provision (benefit) for income taxes | ||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
| Net income (loss) per common share, basic and diluted | ) | ) | ||||||||||||||
| Weighted average number of common shares outstanding basic and diluted | ||||||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Change in foreign currency translation | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||
| Comprehensive income (loss) attributable to noncontrolling interests | ( | ) | ( | ) | ||||||||||||
| Comprehensive income (loss) attributable to FDCTech stockholders | ( | ) | ( | ) | ||||||||||||
See accompanying notes to the financial statements
| F-3 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Shares | Amount | Shares | Amount | Capital | (loss) | Deficit | Deficit | |||||||||||||||||||||||||
| Preferred stock | Common stock | Additional Paid-in | Accumulated other comprehensive income | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | (loss) | Deficit | Deficit | |||||||||||||||||||||||||
| Three months ended September 30, 2023 | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Three months ended September 30, 2023 | ||||||||||||||||||||||||||||||||
| Change in APIC due to common control | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| FX gain (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Three months ended September 30, 2024 | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Three months ended September 30, 2024 | ||||||||||||||||||||||||||||||||
| Change in APIC due to common control | - | - | ||||||||||||||||||||||||||||||
| FX gain (loss) | - | - | ||||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| F-4 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Preferred stock | Common stock | Additional Paid-in | Accumulated other comprehensive income | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | (loss) | Deficit | Deficit | |||||||||||||||||||||||||
| Nine months ended September 30, 2023 | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Nine months ended September 30, 2023 | ||||||||||||||||||||||||||||||||
| Common shares issued for financing cost at $ per share | - | |||||||||||||||||||||||||||||||
| Common shares issued for cash valued at $ per share | - | |||||||||||||||||||||||||||||||
| Common shares issued for services at $ per share | - | |||||||||||||||||||||||||||||||
| Change in APIC due to common control | - | - | ||||||||||||||||||||||||||||||
| FX gain (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interest | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Nine months ended September 30, 2024 | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Nine months ended September 30, 2024 | ||||||||||||||||||||||||||||||||
| Series A Preferred canceled | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||
| Series B issuances at $ per share | - | |||||||||||||||||||||||||||||||
| Common stock issued for cash valued at $ | - | |||||||||||||||||||||||||||||||
| Common stock issued for cash valued | - | |||||||||||||||||||||||||||||||
| Increase in APIC due to shares issued at a discount | - | - | ||||||||||||||||||||||||||||||
| Change in APIC due to common control | - | - | ||||||||||||||||||||||||||||||
| FX gain (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interest | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
See accompanying notes to the financial statements
| F-5 |
FDCTECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
September 30, 2024 | September 30, 2023 | |||||||
| Nine months Ended | ||||||||
September 30, 2024 | September 30, 2023 | |||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Software amortization | ||||||||
| Depreciation | ||||||||
| Common stock issued for services | ||||||||
| Series B Preferred issued for services | ||||||||
| Accounts receivable allowance | ||||||||
| Fixed assets, net | ( | ) | ( | ) | ||||
| Acquired intangible assets | ( | ) | ( | ) | ||||
| Change in assets and liabilities: | ||||||||
| Gross accounts receivable | ( | ) | ||||||
| Prepaid | ||||||||
| OID Promissory Note | ||||||||
| Loan receivable | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Other current liabilities | ) | |||||||
| Accrued interest | ||||||||
| Customer funds | ( | ) | ||||||
| Fair value of trading position, net | ( | ) | ||||||
| Operating lease | ( | ) | ||||||
| Deferred taxes | ( | ) | ||||||
| Related party guarantee | ( | ) | ( | ) | ||||
| Tax receivable by subsidiaries | ( | ) | ( | ) | ||||
| Accrued income | ||||||||
| Right of use of assets (lease) | ||||||||
| Accrued expenses, related party | ( | ) | ||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| Investing Activities: | ||||||||
| Capitalized software | ( | ) | ||||||
| Effect of exchange rates | ( | ) | ( | ) | ||||
| Business acquisition loan | ||||||||
| Changes in paid-in capital | ||||||||
| Net cash used in investing activities | $ | $ | ||||||
| Financing Activities: | ||||||||
| Borrowing from (payments to) line of credit | ( | ) | ||||||
| Promissory Note | ( | ) | ||||||
| Net proceeds from cares act - paycheck protection program | ( | ) | ( | ) | ||||
| Net proceeds from SBA loan | ( | ) | ( | ) | ||||
| Related party advances | ( | ) | ||||||
| Common stock issued for cash | ||||||||
| Common stock issued for financing cost | ||||||||
| Series A Preferred cancelation | ( | ) | ||||||
| Noncontrolling interest | ( | ) | ||||||
| Net cash provided by financing activities | $ | ( | ) | $ | ||||
| Net increase in cash | ( | ) | ||||||
| Cash at beginning of the period | ||||||||
| Cash at end of the period | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Non - cash investing and financing activities: | $ | - | $ | - | ||||
See accompanying notes to the financial statements
| F-6 |
NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS
Under Delaware laws, the founders incorporated the Company as Forex Development Corporation on January 21, 2016. On February 27, 2018, the Company changed its name to FDCTech, Inc. The name change reflects the Company’s commitment to expanding its products and services in the FX and financial markets for OTC brokers. The Company provides innovative and cost-efficient financial technology (‘fintech’) and business solutions to OTC Online Brokerages (“customers”).
The Company intends to build a diversified global financial services company driven by proprietary Condor trading technologies, complementary regulatory licenses, and a proven executive team. The Company plans to acquire, integrate, transform, and scale legacy financial service companies. The Company believes its proprietary technology and software development capabilities allow legacy financial services companies immediate exposure to –forex, stocks, ETFs, commodities, social/copy trading, and other high-growth fintech markets.
From December 2021 onwards, the Company expects to grow from its acquisition strategy, specializing in buying and integrating small to mid-size legacy financial services companies. The Company intends to build a diversified global software-driven financial services company. The Company plans to acquire, integrate, transform, and scale legacy financial service companies. The Company replaces conventional legacy software infrastructure with its regulatory-grade proprietary Condor trading technologies, intending to improve end-user experience, increase client retention, and realize cost synergies.
Completed Acquisitions
On December 22, 2021, the Company entered into a Share Exchange Agreement (the “Agreement”) with AD Financial Services Pty Ltd ACN 628 331 117 of Level 38/71 Eagle St, Brisbane, Queensland, Australia, 4000 (“ADFP” or “Target”). According to the Agreement, the Company acquired % of ADFP’s issued and outstanding shares of capital stock in exchange for (the “Consideration”) newly issued “restricted” common shares. The operating and licensed entity of ADFP is AD Advisory Services Pty Ltd. ADFP owns one hundred percent (%) equity interest in AD Advisory Services Pty Ltd (“ADS”). As a result, the Company is % the owner of ADS. The Company closed the acquisition on December 22, 2021, and combined the financial statements of ADS in its annual report, 10-K, filed with the SEC on March 28, 2022.
On
December 31, 2022, the Company announced the sales purchase agreement (“Agreement”) under which the Company acquired a
The
Company assumed a business acquisition loan liability of $
The
Company completed the acquisition of the remaining
The
Company”) completed the acquisition of
Mr.
Gope S. Kundnani (“Kundnani”) is the (sole) natural person holding one hundred percent (
Termination of CIM Acquisition
On
July 19, 2022, the Company signed a non-binding letter of intent to acquire fifty-one percent (
At July 31, 2023, the Company sent the notice of termination of the purchase agreement to CIM Securities as future events may result in a change of ownership in the CMA application. The Company believes that this would cause further delays in the approval process. Our board has mandated the management team to concentrate on expanding and developing our core non-US forex business to maximize shareholder value.
| F-7 |
NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
Technology & Software Development – Condor Trading Technology
The Company has three sources of revenue.
| ● | Technology Solutions – The Company licenses its proprietary and sometimes resells third-party technologies to customers. Our proprietary technology includes but is not limited to Condor Risk Management Back Office (“Condor Risk Management”), Condor Pro Multi-Asset Trading Platform (previously known as Condor FX Pro Trading Terminal), Condor Pricing Engine, Digital Assets Web Trader Platform, and other digital assets-related solutions. | |
| ● | Customized Software Development – The Company develops software for Customers with unique requirements outlined in the Software Development Agreement (“Agreement”). |
The Company has completed the Condor Pro Multi-Asset Trading Platform, previously known as the Condor FX Trading Platform. The Condor Pro Multi-Asset Trading Platform is a regulatory-grade trading platform targeted at day traders and retail investors. The industry characterized such platforms by their ease of use and helpful features, such as the simplified front-end (user interface/user experience), back-end (reporting system), news feeds, and charting system. The Condor Pro Multi-Asset Trading Platform includes risk management (dealing desk, alert system, margin calls, etc.), a pricing engine (best bid/ask), and connectivity to multiple liquidity providers or market makers. We have tailored the Condor Pro Multi-Asset Trading Platform to markets such as forex, stocks, commodities, digital assets, and other financial products.
The Company has ten (10) licensing agreements for its Condor Pro Multi-Asset Trading Platform as of September 30, 2024. The Company continuously negotiates additional licensing agreements with several retail online brokers to use the Condor Pro Multi-Asset Trading Platform. Condor Pro Multi-Asset Trading Platform is available in desktop, web, and mobile versions.
The Company is developing the Condor Investing & Trading App, a simplified trading platform for traders with varied experiences in trading stocks, ETFs, and other financial markets from their mobile phones. The Company expects to commercialize the Condor Investing & Trading App by the end of the second quarter of the fiscal year ending December 31, 2025.
| F-8 |
NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
Wealth Management – AD Advisory Services Pty Ltd.
AD Advisory Services Pty Ltd. (ADS) is an Australian-regulated wealth management company with 28 financial advisors and $530+ million in funds under advice. ADS provides licensing solutions for financial advisers and accountants in Australia and offers financial planners different licensing, compliance, and education solutions to meet their practice’s specific needs.
Investment and Margin Brokerage Business (Malta and UK)
AML is authorized to deal with its account (market maker) as a Category 3 licensed entity by the MFSA, receive and transmit orders for retail and professional clients, hold and control clients’ money and assets. AML trading platform services in the English, French, German, Italian, and Arabic-speaking markets, whereby customers can trade in currency, commodity, equity, and digital assets-linked derivatives in real time. AML is authorized countries to do business include Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Liechtenstein, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden. In May 2024, Mitchell M. Eaglstein, CEO, was appointed as the CEO of Alchemy Markets Ltd. (AML) to oversee operations in Malta.
APL is an investment firm regulated by the Financial Conduct Authority (‘FCA’) – it provides investment advice, dealing as agent and principal, safeguarding and administrating assets in forex, equity, commodities, spread bets, and other financial assets. APL is authorized countries to do business, including England, Scotland, Wales, and Northern Ireland.
IT, Sales & Marketing Service Provider (Cyprus)
In March 2024, the Company established Alchemytech Ltd. (ATECH), a Cyprus company. ATECH provides the Company’s subsidiaries and affiliate companies with information technology, sales, and marketing services.
2021-2022 Equity Line of Credit
On
October 04, 2021, the Company filed a prospectus that relates to the resale of up to shares of our Common Stock issued or
issuable to selling shareholders for up to $
From
January 2021 to February 2022, the Company executed five “Purchase Notice Rights” under an Investment Agreement with White
Lion and received a net of $
| F-9 |
NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
2022 Promissory Note
On
January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’),
a Delaware limited liability company, for the principal amount of $
Related Party Investments in 2022 to 2023
On
September 30, 2022, the Company issued restricted common shares for cash valued at $
On
January 25, 2023, the Company issued restricted common shares for cash valued at $
On
March 28, 2023, the Company issued restricted common shares for cash valued at $
At
July 31, 2023, the Company sent the notice of termination of the purchase agreement to CIM Securities as future events may result in
a change of ownership in the CMA application. The Company terminated the escrow agreement and released $
On
November 30, 2023, Kundnani, considered a related party, purchased Series A Preferred stock of the Company for $
Governmental Regulation
FDCTech is a publicly traded company subject to SEC and FINRA’s rules and regulations regarding public disclosure, financial reporting, internal controls, and corporate governance.
Our wealth management business, AD Advisory Services (ADS), is subject to enhanced regulatory scrutiny and is regulated by multiple regulators in Australia. The Australian Securities and Investments Commission (ASIC) administers a licensing regime for ‘financial services’ providers where ADS holds an Australian Financial Services License (AFSL) and meets various compliance, conduct, and disclosure obligations.
AML is an investment firm regulated by the Malta Financial Services Authority (MFSA).
APL is an investment firm regulated by the Financial Conduct Authority (FCA).
Board of Directors
The Company currently has four Board of Directors. Mitchell M. Eaglstein is the acting Chairman of the Company. Mitchell M. Eaglstein and Imran Firoz are the Company’s executive directors and officers. Gope S. Kundnani is considered an executive director by owning the Company’s stock of at least 10%. Jonathan Baumgart is an independent director under NYSE and NASDAQ listing standards.
| F-10 |
NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
On September 30, 2022, the Company appointed Gope S. Kundnani as the Director of the Company. Upon the appointment of Mr. Kundnani, the Company currently has four Board of Directors. Mr. Kundnani is a seasoned entrepreneur with several decades of experience building successful businesses in the United States, the Middle East, and the United Kingdom. From May 2018 to the present, Mr. Kundnani was the founder and current Director of Alchemy Prime Markets, a financial brokerage services company regulated by the Financial Conduct Authority (FCA). From December 2018 to the present, Mr. Kundnani founded and is the Director of Blackthorn Finance Limited, an authorized payments financial services company regulated by the FCA. From May 2004 to April 2008, Mr. Kundnani was the Director of Tristar Group, responsible for investing and acquiring small retail businesses in the Texas region. From February 1999 to the present, Mr. Kundnani has been a partner and CEO of Flexo Pack, a polyethylene product manufacturer with a global customer base. Mr. Kundnani holds an undergraduate business degree from Mulund College of Commerce, Mumbai, India.
Changes in Registrant’s Certifying Accountant
On July 2, 2021, the Board of Directors of FDCTech, Inc. (the “Company”) approved the dismissal of Farber Hass Hurley LLP (“FHH”) as the Company’s independent registered public accounting firm. The reports of FHH on the Company’s consolidated financial statements for the fiscal years ended December 31, 2020, and 2019 did not contain an adverse opinion or a disclaimer of opinion. It was not qualified or modified for uncertainty audit scope or accounting principles.
On July 2, 2021, the Company appointed BF Borgers CPA PC (“BFB”) as the Company’s new independent registered public accounting firm, effective immediately, to perform independent audit services for the fiscal year ending December 31, 2021. BFB has been the Company’s auditor since July 2021. On April 18, 2023, the board of directors of FDCTech, Inc. (the “Company”) terminated its relationship with its independent registered public accounting firm, BF Borgers CPA PC, Lakewood, Colorado (“BF Borgers”), effective as of April 18, 2023. The reports of BF Borgers on the Company’s financial statements for the two years ended December 31, 2022, and 2021 did not contain an adverse opinion or disclaimer of opinion. They were not qualified or modified as to uncertainty, audit scope, or accounting principles, except for providing a qualification for the Company’s ability to continue as a going concern. During the year ended December 31, 2022, and in the subsequent period through September 30, 2023, there were no disagreements with BF Borgers on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of BF Borgers, would have caused BF Borgers to refer to the matter in its reports on the Company’s financial statements for such periods.
On April 18, 2023, the Company, based on the decision of its board of directors, approved the engagement of Bolko & Company, Boca Raton, Florida (“Bolko”) to serve as the Company’s independent registered public accounting firm, commencing April 18, 2023. On March 4, 2024, the board of directors of the “Company terminated its relationship with its independent registered public accounting firm, Bolko & Company, Boca Raton, Florida (“Bolko”), effective as of March 4, 2024.
The Company retained Bolko for less than a year, and we did not file any Form 10K reports with the SEC. During the period that Bolko was the Company’s auditor through March 4, 2024, there were no disagreements with Bolko on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Bolko, would have caused Bolko to refer to the matter in its reports on the Company’s financial statements for such periods.
On March 4, 2024, the Company, based on the decision of its board of directors, approved the engagement of Fortune CPA Inc., Orange, California (“FCPA”) to serve as the Company’s independent registered public accounting firm, commencing March 4, 2024.
On July 2, 2024, the Company, based on the decision of its board of directors, approved the engagement of Olayinka Oyebola & Co (“Olayinka”) to serve as the Company’s independent registered public accounting firm, commencing July 2, 2024. Olayinka is a member of the Public Company Accounting Oversight Board (PCAOB) in the United States and a member of the Canadian Public Accountability Board (CPAB) in Canada.
| F-11 |
NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
Description of Company’s Securities to be Registered
Effective September 03, 2021, the Company incorporated by reference the description of its common stock, par value $ per share, to be registered hereunder 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 (the “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.
Ukraine-Russia Conflict
The geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia’s invasion of Ukraine. The war between the two countries continues to evolve as military activity continues. The United States and certain European countries have imposed additional sanctions on Russia and specific individuals. By the end of August 2022, the Company closed its technical support and development office in Russia. We relocated our personnel to Almaty, Kazakhstan, which is currently considered a neutral zone. No individual associated with the Company is banned or under the Special Designated Nationals and Blocked Person list.
As of the date of this report, there has been no disruption in our operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the accounts of FDCTech, Inc. and its wholly-owned subsidiary. We have eliminated all intercompany balances and transactions. The Company has prepared the consolidated financial statements consistent with the accounting policies adopted by the Company in its financial statements. The Company has measured and presented its consolidated financial statements in US Dollars, the currency of the primary economic environment in which it operates (also known as its functional currency).
Financial Statement Preparation and Use of Estimates
The Company prepared consolidated financial statements according to accounting principles generally accepted in the United States of America (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions. This could affect the reported amounts of assets and liabilities and the related disclosures at the date of the consolidated financial statements, and 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. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the coronavirus (“COVID-19”).
Cash and Cash Equivalents
Cash
and cash equivalents include cash on hand, deposits held with banks, and other short-term, highly liquid investments with three months
or less of original maturities. On September 30, 2024, and December 31, 2023, the Company had $
| F-12 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounts Receivable
Accounts Receivable primarily represent the amount due from four (4) technology customers. In some cases, the customer receivables are due immediately on demand; however, in most cases, the Company offers net 30 terms or n/30, where the payment is due in full 30 days after the invoice’s date. The Company has based the allowance for doubtful accounts on its assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering historical experience, credit quality, the accounts receivable balances’ age, and economic conditions that may affect a customer’s ability to pay and expected default frequency rates. Trade receivables are written off at the point when they are considered uncollectible.
At
September 30, 2024, and December 31, 2023, the Management determined that allowance for doubtful accounts was $
Sales, Marketing, and Advertising
The Company recognizes sales, marketing, and advertising expenses when incurred.
The
Company incurred $
The
sales, marketing, and advertising expenses represented
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-13 |
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, nonrefundable upfront fees, licensing, customer acceptance, and other relevant categories.
The Company accounts for a contract when the Company and the customer (‘parties’) have approved the contract and are committed to performing their respective obligations. Each party can identify its rights, obligations, and payment terms; the contract has commercial substance. The Company will probably collect all of the consideration. Revenue is recognized when performance obligations are satisfied by transferring control of the promised service to a customer. The Company fixes the transaction price for goods and services at contract inception. The Company’s standard payment terms are generally net 30 days and, in some cases, due upon receipt of the invoice.
The Company considers the change in scope, price, or both as contract modifications. The parties describe contract modification as a change order, a variation, or an amendment. A contract modification exists when the parties approve a modification that either creates new or changes existing enforceable rights and obligations. The Company 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 incapable of being distinct and distinct within the contract context are combined and treated as a single performance obligation in determining the allocation and recognition of revenue. For multi-element transactions, the Company allocates the transaction price to each performance obligation on a relative stand-alone selling price basis. The Company determines the stand-alone selling price for each item at the transaction’s inception involving these multiple elements.
Since January 21, 2016 (‘Inception’), the Company has derived its revenues mainly from consulting services, technology solutions, and customized software development. The Company recognizes revenue when it has satisfied a performance obligation by transferring control over a product or delivering a service to a customer. We measure revenue based on the consideration outlined in an arrangement or contract with a customer.
| F-14 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company’s typic The Company’s typical performance obligations include the following:
| Performance Obligation | Types of Deliverables | When Performance Obligation is Typically Satisfied | ||
| Consulting Services | Consulting related to Start-Your-Own-Brokerage (“SYOB”), Start-Your-Own-Prime Brokerage (“SYOPB”), 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 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 specified in the contract. | The Company recognizes the software development revenues when the Customer obtains control of the deliverables as stated in the Statement-of-Work contract. |
The Company assumes that the goods or services promised in the existing contract will be transferred to the customer to determine the transaction price. The Company believes that the contract will not be canceled, renewed, or modified; therefore, the transaction price includes only those amounts to which the Company has rights under the present contract. For example, if the Company enters a contract with a customer with an original term of one year and expects the customer to renew for a second year, the Company will determine the transaction price based on the initial one-year period. When choosing the transaction price, the company first identifies the fixed consideration, including non-refundable upfront payment amounts.
To allocate the transaction price, the Company gives an amount that best represents the consideration 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 relative 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 customers would pay for those goods or services when sold separately.
The Company recognizes revenue when transferring the promised goods or services into the contract. The Company considers the “transfers” 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-15 |
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 resources readily available to the Customer and if the promise to transfer the service is separately identifiable from other promises in the contract.
The transaction price is the amount of consideration ADS expects to be entitled to in exchange for transferring the promised goods or services to the Customer. These services include fixed fees, commissions from insurance products, and variable consideration for performance-based fees. ADS estimates the amount of variable consideration to which it will be entitled in a manner that reflects the likelihood and magnitude of a revenue reversal.
If a contract includes more than one performance obligation, ADS allocates the transaction price to each performance obligation based on its standalone selling price. When standalone selling prices are not directly observable, ADS estimates them using methods that may include cost-plus margin, market assessment, or residual approach, considering the Customer’s perceived value of each service.
ADS recognizes revenue when (or as) a performance obligation is satisfied, i.e., when the control of the promised good or service is transferred to the Customer. For ongoing services, revenue is recognized over time, reflecting the continuous transfer of services. For services that are performed at a specific point in time, revenue is recognized when the service is completed. The pattern of revenue recognition is determined based on when the Customer obtains control of the promised good or service, which for advisory services is typically throughout the contract, and for transaction-based services (like insurance commissions or fees for specific planning activities), is at the point in time when the transaction is executed, or the service is rendered. If we receive payments before services, we defer and recognize them as revenue when satisfied with our performance obligation. Advisory revenue includes fees charged to clients in advisory accounts for which we are the licensed investment advisor. We bill advisory fees weekly.
| F-16 |
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 with authorized countries, including Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Liechtenstein, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden. Financial Conduct Authority (FCA) regulates Alchemy UK with authorized countries such as England, Scotland, Wales, and Northern Ireland.
The Company operates its brokerage business in two segments: retail and institutional (“clients” or “customers”). Through its retail and institutional segment, the Company provides its customers (individuals) around the world with access to a diverse range of global financial markets, including spot forex, precious metals, spread bets, and contracts for difference (“CFDs”) on currencies, commodities, indices, individual equities, cryptocurrencies, bonds, and interest rate products, as well as OTC options. The FCA defines a retail customer as a client who is not a professional or eligible counterparty. A professional client is an entity that must be authorized or regulated to operate in the financial markets. According to the MFSA, a retail client is a client who is not a professional client or an eligible counterparty. A professional client has the knowledge, experience, and expertise to assess the risks and make investment decisions.
We recognize Brokerage (Trading) revenue through the principal model following the guidance outlined in ASC 606, Revenues from Contracts with Customers. The Company primarily generates revenue through market-making and trading execution services for its clients, known as Brokerage (Trading) revenues. The Brokerage (Trading) revenue is the Company’s largest source of revenue. Brokerage (Trading) revenue comprises Brokerage (Trading) revenue from the retail OTC business and advisory business. OTC trading includes forex trading (“forex”), precious metals trading, CFDs, and spread betting (in markets that do not prohibit such transactions), as well as other financial products.
We realize gains or losses when we liquidate customer transactions. We revalue unrealized gains or losses on trading positions at prevailing market rates at the date of the balance sheet. We include them in Receivables from brokers, Payables to customers, and Payables to brokers on the Consolidated Balance Sheets. We record changes in net unrealized gains or losses in Brokerage (Trading) revenue on the Consolidated Statements of Operations and Comprehensive (Loss)/Income. We record Brokerage (Trading) revenue on a trade date basis.
We also generate business through an agency model by earning commissions and spreads for executing customer trades. We book these revenues on a trade-date basis. The Company acts as an agent concerning clearing trades but is the principal on fees paid to introducing brokers. The Company does not assume any market-making risk concerning customer trade 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.
Significant Acquisitions
The
Company completed the Acquisition of
The
Company completed the Acquisition of the remaining
The
Company estimated the total purchase price for the Acquisition(s) or Transaction(s) to be $
Further, the Company, Kundnani, and the current management make strategic and operational decisions for APL and AML (“Targets”).
| F-17 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
As
there is no quoted market for Series B Preferred convertible stock, and the Acquisition of
The
net financial assets of
Table 1. Closing Acquisition Consideration Breakdown
Series B Preferred convertible stock Issued for Purchase of APL and AML
SCHEDULE OF ACQUISITION CONSIDERATION BREAKDOWN
| Net Financial Assets (Book Value) | Purchase % | Purchase Price ($) | Type of Shares | Price per Shares | # of Shares | |||||||||||||||||||||
| Local Currency | USD ($) | |||||||||||||||||||||||||
| Shares of | ||||||||||||||||||||||||||
| APL | £ | % | $ | Series B | $ | |||||||||||||||||||||
| AML | € | % | $ | Series B | $ | |||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||||
| (1) |
| (2) |
Under ASC 805-50-15-6, based on the ownership of Kundnani and the management structure post-acquisition, we believe the following guidance in the transactions between entities under common control subsections applies to combinations between entities or businesses under common control:
| a) | The Seller (APHL or Kundnani) transfers its controlling interest in APL and AML to the Company controlled by the Seller, directly or indirectly through his ownership as an individual or through APHL. This transaction is a legal organization change but not the reporting entity. The reporting entity remains the Company. |
The SEC staff’s conclusions expressed during the deliberations in EITF 02-5 that common control exists between (or among) separate entities in the following situations: An individual or enterprise holds more than 50% of the voting ownership interest of each entity. A group of shareholders has more than 50% of the voting ownership interest of each entity, and contemporary written evidence of an agreement to vote a majority of the entities’ shares in concert exists. Kundnani meets these criteria.
We have accounted for the Acquisition under the acquisition method of accounting per ASC 805, with the Company treated as the accounting acquirer and Targets treated as the “acquired” Company for financial reporting purposes. We determine the Company an accounting acquirer based on the following facts: (i) after the Acquisition(s), shareholders of the Company held the majority of the voting interest of the combined Company; (ii) the Board of Directors of the Company possess majority control of the Board of Directors of the combined Company; and (iii) members of the management of the Company are responsible for the management of the combined Company. As such, we have treated the financial statements of the Company as the historical financial statements of the combined Company. The Company will present consolidated or combined financial statements in place of financial statements of individual entities.
We have identified the Company as the legal acquirer, as it is the entity that issued securities. Comparatively, we have identified Targets as the legal acquiree, the entity whose equity interests are acquired.
| F-18 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
We have recognized Targets ‘assets and liabilities as their carrying amounts in the combined financial statements of the controlling party, the Company, immediately before the Acquisition. This approach does not necessitate a fair value adjustment or a recognition of goodwill that would typically follow a standard business combination. Therefore, we have recorded assets and liabilities at book value.
The
transaction’s equity structure involves the issuance of Series B preferred convertible stock valued at $
The post-acquisition consolidation process eliminates any existing intercompany transactions or balances between the Company and Target(s). Although the initial recognition does not adjust assets and liabilities to fair value, the Company evaluates intangible assets in Target’s financial statements on December 31, 2023.
AML Purchase Price Allocation
AML’s Balance Sheet as of November 30, 2023 (Acquisition Date):
SCHEDULE OF PURCHASE PRICE ALLOCATION
| Description | Book Value, $ | |||
| Assets: | ||||
| Cash and cash equivalents (1) | ||||
| Prepaid | ||||
| Financial Assets through profit and less (2) | ||||
| Related party guarantee (3) | ||||
| Accrued income | ||||
| Tax receivable (4) | ||||
| Capitalized software, net | ||||
| Fixed assets (5) | ||||
| Total assets: | $ | |||
| Liabilities: | ||||
| Accounts Payable (6) | ||||
| Financial liability at fair value through profit and loss (7) | ||||
| Current liabilities - Creditors (11) | ||||
| Related party advances | ||||
| Customer funds(8) | ||||
| Deferred tax liabilities(9) | ||||
| Total liabilities | $ | |||
| Net assets, (A) | ||||
| Accumulated other comprehensive income (loss), (B) | ||||
| Purchase Price, Series B Preferred Shares valued at $, (C) | ||||
| Increase in APIC (A) – (B) – (C) | $ | |||
| F-19 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
APL Purchase Price Allocation
APL’s Balance Sheet as of November 30, 2023 (Acquisition Date):
| Description | Book Value, $ | |||
| Assets: | ||||
| Cash and cash equivalents, including cash at liquidity provider (1) | ||||
| Fixed assets (2) | ||||
| Prepaid | ||||
| Total assets: | $ | |||
| Liabilities: | ||||
| Deferred Tax(9) | ||||
| Current liabilities - Creditors (10) | ||||
| Customer funds (8) | ||||
| Related party advances | ||||
| Total liabilities | $ | |||
| Net assets (A) | ( | ) | ||
| Accumulated other comprehensive income (loss), (B) | ( | ) | ||
| Purchase Price, Series B Preferred Shares valued at $, (C) | ||||
| Increase in APIC (A) – (B) – (C) | $ | ( | ) | |
| (1) | |
| (2) | |
| (3) | |
| (4) | |
| (5) | |
| (6) | |
| (7) | |
| (8) | |
| (9) | |
| (10) |
| F-20 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentrations of Credit Risk
Cash
Cash
and cash equivalents include cash on hand, bank deposits, and other short-term, highly liquid investments with three months or less of
original maturities. The Company maintains its cash balances at a single financial institution. The Company maintains its cash balances
at a single financial institution. The balances do not exceed Federal Deposit Insurance Corporation (FDIC) limits as of September 30,
2024. Most cash balances were held with non-FDIC financial institutions in Malta, the UK, and other countries. On September 30, 2024,
and December 31, 2023, the Company had $
Revenues
For
the nine months ended September 30, 2024, and 2024, the Company generated $
Accounts Receivable
Accounts Receivable primarily represent the amount due to four (4) active technology customers. In some cases, the customer receivables are due immediately on demand; however, in most cases, the Company offers net 30 terms or n/30, where the payment is due in full 30 days after the invoice’s date. The Company has based the allowance for doubtful accounts on its assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering historical experience, credit quality, the accounts receivable balances’ age, and economic conditions that may affect a customer’s ability to pay and expected default frequency rates. Trade receivables are written off at the point when they are considered uncollectible.
At
September 30, 2024, and December 31, 2023, the Management determined that allowance for doubtful accounts was $
Research and Development (R and D) Cost
The
Company acknowledges that future benefits from research and development (R and D) are uncertain, so we cannot capitalize on R and D expenditure.
The GAAP accounting standards require us to expense all research and development expenditures as incurred. For the nine months ended
September 30, 2024, and 2023, the Company incurred R and D costs of $
Legal Proceedings
The Company discloses a loss contingency if at least there is 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 considered probable and the amount can be reasonably estimated. The Company can reasonably estimate a range of losses with no best estimate; 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 incurred. Please refer to subsequent events for potential legal claims and disputes after the period ending September 30, 2024.
| F-21 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of Long-Lived Assets
The
Company reviews long-lived assets for impairment under 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 are
Provision for Income Taxes
The provision for income taxes is determined using the asset and liability method. This method calculates deferred tax assets and liabilities based on the temporary differences between the consolidated financial statement and income tax bases of assets and liabilities using the enacted tax rates applicable each year.
The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions (“tax contingencies”). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount, more than 50%, likely to be realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and benefits, requiring periodic adjustments, which may not accurately forecast actual outcomes. The Company includes interest and penalties related to tax contingencies in the provision of income taxes in the operations’ consolidated statements. The Company’s management does not expect the total amount of unrecognized tax benefits to change significantly in the next twelve (12) months.
Software Development Costs
By ASC 985-20, Software development costs, including costs to develop software sold, leased, or otherwise marketed, are capitalized after establishing technological feasibility, if significant. The Company amortizes the capitalized software development costs using the straight-line amortization method over the application software’s estimated useful life. By the end of February 2016, the Company completed the technical feasibility of the Condor FX Back Office, Condor Pro Multi-Asset Trading Platform Version, and Condor Pricing Engine. The Company established the technical feasibility of the Crypto Web Trader Platform in February 2018. The Company completed the technical feasibility of the Condor Investing and Trading App in January 2021.
The
Company estimates the useful life of the software to be three (
Amortization
expenses were $
The Company is developing the Condor Investing and Trading App. The Company is currently capitalizing on costs associated with the development. There were no R and D Costs for the nine months ended September 30, 2024, and 2023.
The Company capitalizes all the significant costs incurred during the application development stage for internal-use software.
| F-22 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 (this includes certain convertible preferred stock that is 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 pursuant to ASC Topic 470-20, Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the BCF. The Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
Foreign Currency Translation and Re-measurement
The Company translates its foreign operations to US dollars following ASC 830, “Foreign Currency Matters.” Gains or losses resulting from translating the foreign currency financial statements are accumulated as a separate component of accumulated other comprehensive income (“AOCI”) in the Company’s stockholders’ equity and noncontrolling interests. Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than the functional currency of the applicable subsidiary are included in the Consolidated Statements of Income, within “Other (income) expense, net,” in the year in which the change occurs.
We have translated the local currency of ADS and AML in the Australian Dollar (“AUD”) and Euro Dollar (“EUR”), respectively, into US$1.00 at the following exchange rates for the respective dates:
The exchange rate at the reporting end date:
SCHEDULE OF EXCHANGE RATE
| September 30, 2024 | December 31, 2023 | |||||||
| USD: AUD | $ | |||||||
| USD:EUR | $ | |||||||
| USD: GBP | $ | |||||||
Average exchange rate for the period:
| Q1 2024 | Q2 2024 | Q3 2024 | ||||||||||
| USD: AUD | $ | |||||||||||
| USD:EUR | $ | |||||||||||
| USD: GBP | $ | |||||||||||
| Foreign currency exchange rate, translation | $ | |||||||||||
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-23 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value
The Company uses current market values to recognize certain assets and liabilities at a fair value. The fair value is the estimated price at which the Company can sell the asset or settle a liability in an orderly transaction to a third party under current market conditions. The Company uses the following methods and valuation techniques for deriving fair values:
Market Approach – The market approach uses the prices associated with actual market transactions for similar or identical assets and liabilities to derive a fair value.
Income Approach – The income approach uses estimated future cash flows or earnings, adjusted by a discount rate representing the time value of money and the risk of cash flows not being achieved to derive a discounted present value.
Cost Approach – The cost approach uses the estimated cost to replace an asset adjusted for the obsolescence of the existing asset.
The Company ranks the fair value hierarchy of information sources from Level 1 (best) to Level 3 (worst). The Company uses these three levels to select inputs for valuation techniques:
| Level I | Level 2 | Level 3 | ||
| Level 1 is a quoted price for an identical item in an active market on the measurement date. Level 1 is the most reliable evidence of fair value and is used whenever this information is available. | Level 2 is directly or indirectly observable inputs other than quoted prices. An example of a Level 2 input is a valuation multiple for a business unit based on comparable companies’ sales, EBITDA, or net income. | Level 3 is an unobservable input. It may include the company’s data, adjusted for other reasonably available information. Examples of a Level 3 input are an internally generated financial forecast. |
The Company follows ASC 260, Earnings Per Share, to account for earnings per share. Basic earnings per share (“EPS”) calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. As of the nine months ended September 30, 2024, and 2023, the Company had weighted and basic and dilutive shares issued and outstanding.
During the nine months ended September 30, 2024, common stock equivalents were anti-dilutive due to a net loss. Hence, they are not considered in the computation.
During the nine months ended September 30, 2023, common stock equivalents were dilutive due to a net profit. Hence, they are considered in the computation.
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-24 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific requirements. ASU 2014-09 establishes a five-step revenue recognition process; an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from customers’ contracts. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one (1) year. The Company adopted ASC 606 using the modified retrospective method 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. Refer to Note 2 Revenue from Major Contracts with Customers for further discussion on the Company’s accounting policies for revenue sources within the scope of ASC 606.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 840) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments to this standard are effective for fiscal years beginning after December 15, 2019. Early adoption of the amendments to this standard is permitted for all entities. The Company must recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company adopted this policy as of January 1, 2020, and there is no material effect on its financial reporting.
In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments modify the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty. The amendments removed and modified certain disclosure requirements in Topic 820. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Certain amendments are to be applied prospectively, while others are to be applied retrospectively. Early adoption is permitted.
The
Company adopted the ASU 2018-13 as of January 1, 2020. The Company used the Level 1 Fair Market Measurement to record, at cost, ADS’
intangible assets valued at $
ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, issued in August 2020 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to present certain conversion features in equity separately. In addition, the amendments also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring the use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. The amendments are effective for public companies for fiscal years beginning after December 15, 2021. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The guidance must be adopted as of the beginning of the fiscal year of adoption. The Company does not expect this ASU 2020-06 to impact its condensed consolidated financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
| F-25 |
NOTE 3. MANAGEMENT’S PLANS
The
Company has prepared consolidated financial statements on a going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the ordinary business course. At September 30, 2024, and December 31, 2023, the accumulated
deficit was $
During
the nine months ended September 30, 2024, and 2023, the Company incurred a net loss and net income of $
Until
the fiscal year ended December 31, 2023, the Company has sustained recurring losses and negative cash flows from operations. As of September
30, 2024, and December 31, 2023, the Company had $
The Company’s ability to continue as a going concern may depend on the Management’s plans discussed below. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary if the Company cannot continue as a going concern.
To the extent the Company’s operations are insufficient to fund the Company’s capital requirements, the Management may attempt to enter into a revolving loan agreement with financial institutions or raise capital through the sale of additional capital stock or issuance of debt.
The Management intends to continue its efforts to enhance its revenue from its diversified portfolio of technological solutions, become cash flow positive, and raise funds through private placement offerings and debt financing. See Note 8 for Notes Payable. As the Company increases its customer base globally, it intends to acquire long-lived assets that will provide a future economic benefit beyond fiscal 2024.
NOTE 4. CAPITALIZED SOFTWARE COSTS
During
the nine months ended September 30, 2024, and 2023, the estimated remaining weighted-average useful life of the Company’s capitalized
software was three (
At
September 30, 2024, and December 31, 2023, the net capitalized software assets were $
| F-26 |
NOTE 5. RELATED PARTY TRANSACTIONS
In
September 2022, the Company issued common stock for cash consideration of $
In
January 2023, the Company issued common stock for a cash consideration of $
In January 2023, Eaglstein and Firoz transferred and shares to Kundnani, the Director of the Company. As of September 30, 2023, the Company had preferred shares issued and outstanding, with Eaglstein, Kundnani, and Hong holding,, and shares, respectively.
On
September 30, 2023, the Company signed the definitive agreement with Alchemy Group, where the Company acquired
On
November 30, 2023, the Company purchased shares of Alchemy Markets Holdings Ltd (Alchemy BVI) from Alchemy Prime Holdings Ltd (APHL)
in exchange for Series B Preferred Stock. The Company did not exchange cash in the transaction. The Company has issued the Series
B Preferred stock to APHL. Kundnani, a related party, is the sole shareholder of APHL, a related party. As a result, the Company now
owns one hundred percent (
On
November 30, 2023, the Company purchased one hundred percent (
Kundnani,
a related party, purchased Series A Preferred stock of FDCTech for $
Kundnani,
a related party, purchased Common stock of FDCTech for $
In
December 2023, Susan Eaglstein, mother of Mitchel Eaglstein, the Company’s CEO, provided $
On January 4, 2024, the Company issued Series B preferred stock to Gope S. Kundnani for cash valued at $ per share.
In January 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’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-27 |
NOTE 6. LINE OF CREDIT
From
June 24, 2016, the Company obtained an unsecured revolving line of credit from Bank of America to fund various purchases and travel expenses.
The line of credit has an average interest rate at the close of business on September 30, 2024, for purchases and cash withdrawals at
NOTE 7. NOTES PAYABLE
Cares Act – Paycheck Protection Program (PPP Note)
On
May 01, 2020, the Company received proceeds of Fifty-Thousand Six Hundred and Thirty-Two ($
SBA Loan
On
May 22, 2020, the Company received hundred and forty-four thousand nine hundred and 00/100 Dollars ($
AJB Note
On
January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’),
a Delaware limited liability company, for the principal amount of $
On December 27, 2023, the Company redeemed the Warrants on the following terms:
| i) | the
Company shall pay $ |
| ii) | the
Company shall pay $ |
the Company issued to the Purchaser restricted shares of the Company’s Common Stock (the “Shares”) on December 27, 2023 (the “Share Issuance”).
Economic Injury Disaster Loan (EIDL)
The
Small Business Administration offers the Economic Injury Disaster Loan program. The CARES Act changed the program to provide an emergency
grant of up to $
| F-28 |
NOTE 8. COMMITMENTS AND CONTINGENCIES
Office Facility and Other Operating Leases
Irvine Lease, California, USA (Headquarter)
Effective
October 29, 2019, to the present, the Company leased office space at 200 Spectrum Center Drive, Suite 300, Irvine, CA 92618. As per the
Commitment Term of the lease (“Agreement”), this Agreement shall continue on a month-to-month basis (any term after the Commitment
Term, also known as “Renewal Term”). The Commitment Term and all subsequent Renewal Terms shall constitute the “Term.”
The Company may terminate this Agreement by delivering to the lessor Form (“Exit Form”) at least one (1) whole calendar month
before the month in which the Company intends to terminate this Agreement (“Termination Effective Month”). The Company is
entitled to use the office and conference space if needed. The new rent payment or membership fee for the Irvine Office is $
Limassol, Cyprus Lease (Europe Office)
From
February 2019 to July 2023, the Company leased office space in Limassol District, Cyprus, from an unrelated party for a year. The office’s
monthly rent payment is $
Limassol, Cyprus Lease, Europe (Ecastica)
From
October 2023 to January 2024, the Company leased office space in the Limassol District, Cyprus, for a specific purpose. This space was
intended for our subsidiary, Alchemytech Ltd, to be established in Cyprus in March 2024. The monthly rent payment for this office was
approximately $
Chelyabinsk, Russia (Terminated)
Employment Agreement
Accrued Interest
At
September 30, 2024, and December 31, 2023, the cumulative accrued interest for SBA and other loans defined as an accrued non-current
was $
Pending Litigation
Please refer to subsequent events for potential legal claims and disputes after the period ending September 30, 2024. Other than what is described in the Subsequent Events, the management is unaware of any actions, suits, investigations, or proceedings (public or private) pending against or threatened against or affecting any of the assets or affiliates of the Company.
Tax Compliance Matters
From inception to date, the Company’s officers have been paid as independent contractors. As a result, as of December 31, 2023, the Company believes payroll tax liabilities are not estimated. The Company’s federal taxes are acceptable to Internal Revenue Services.
| F-29 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT)
Authorized Shares
On
February 12, 2021, the Company filed the Certificate of Amendment with the Secretary of State of Delaware to change authorized shares.
As per the Amendment, the Company shall have the authority to issue
On February 17, 2022, the Company filed the Information Statement pursuant to Section 14C of the Securities Exchange Act of 1934 and informed all holders of record on February 10, 2022 (the “Record Date”) of the common stock, $ par value per share (the “Common Stock”), of the Company, in connection with the approval of the following actions taken by the Board of Directors of the Company (the “Board”) and by written consent of the holders of a majority of the voting power of Company’s issued and outstanding capital stock (the “Approving Stockholders”):
| 1. | To amend our certificate of incorporation, as amended (the “Certificate”), to increase the number of authorized shares of common stock from to (the “Authorized Share Increase” and together with the 2022 Equity Plan, the “Corporate Action”), and |
| 2. | To approve the Company’s 2022 Equity Plan (the “2022 Equity Plan”) |
On
February 10, 2022, our Board unanimously approved the Corporate Actions. To eliminate the costs and management time for a special meeting
and to effect the actions, the Company chose to obtain the written consent of a majority of the Company’s voting power to approve
the actions described in the Information Statement following Sections 228 and 242 of the Delaware General Corporation Law (the “DGCL”)
and per our bylaws. On February 10, 2022, the Approving Stockholders approved the Corporate Actions by written consent. The Approving
Stockholders (common stock only) own shares, representing
As of December 31, 2022, the Company had no equity compensation plans.
On
February 21, 2024, our Board unanimously approved the Corporate Actions. In order to eliminate the costs and management time involved
in holding a special meeting and in order to effect the actions disclosed herein as quickly as possible in order to accomplish the purposes
of our Company, we chose to obtain the written consent of a majority of the Company’s voting power to approve the actions described
in this Information Statement in accordance with Sections 228 and 242 of the Delaware General Corporation Law (the “DGCL”)
and our bylaws. On February 21, 2024, the Approving Stockholders approved, by written consent, the Corporate Actions. The Approving Stockholders
(common stock only) own shares, representing
On March 12, 2024, the Company filed the Information Statement pursuant to Section 14C of the Securities Exchange Act of 1934 and informed all holders of record on February 21, 2024 (the “Record Date”) of the common stock, $ par value per share (the “Common Stock”), of the Company, in connection with the approval of the following actions taken by the Board of Directors of the Company (the “Board”) and by written consent of the holders of a majority of the voting power of Company’s issued and outstanding capital stock (the “Approving Stockholders”):
| 1. | To amend our certificate of incorporation, as amended (the “Certificate”), to increase the number of authorized shares of common stock from to (the “Authorized Share Increase”), and |
| 2. | To
authorize our Board of Directors, in its discretion, to amend our articles of incorporation not later than June 30, 2024, to effect
a Reverse Stock Split of all outstanding shares of our common stock in a ratio of | |
| 3. | To approve the Company’s 2023 Stock Incentive Plan (the “2023 Stock Incentive Plan”). |
Since the Board and the holders of a majority of the voting power of the Company’s issued and outstanding shares of capital stock have voted in favor of the Corporate Actions, all corporate actions necessary to authorize the Corporate Actions have been taken. We expect that each of the Corporate Actions will become effective on or about the 20th calendar day after the date on which this Information Statement and the accompanying notice are mailed to our stockholders. Our Board retains the authority to abandon either or both of the Corporate Actions for any reason at any time prior to the effective date of the respective Corporate Action.
As of December 31, 2023, and December 31, 2022, the Company’s authorized capital stock consists of shares of preferred stock, a par value of $ per share, and shares of common stock, a par value of $ per share.
As of December 31, 2023, and December 31, 2022, the Company had and , respectively, common shares issued and outstanding.
As of December 31, 2023, and December 31, 2022, the Company had and Series A Preferred stock issued and outstanding.
As of December 31, 2023, and December 31, 2022, the Company had and Series B Preferred stock issued and outstanding.
The Series A Preferred Stock has fifty votes for each share of preferred shares owned. The preferred shares have no other rights, privileges, and higher claims on the Company’s assets and earnings than common stock.
The
Series B Preferred Stock is non-dilutive and is not subject to stock splits or any other adjustments to the Company’s common stock.
Each share of Series B Preferred Stock can be converted into shares of the Company’s common stock at any time by the holder
of such shares.
| F-30 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
Series A Preferred Stock
On December 12, 2016, the Board agreed to issue , , and shares of Preferred Stock to Mitchell Eaglstein, Imran Firoz, and Felix R. Hong, respectively, as the founders in consideration of services rendered to the Company. As of December 31, 2022, the Company had preferred shares issued and outstanding.
In January 2023, Eaglstein and Firoz transferred and shares to Gope S. Kundnani, the Director of the Company. As of September 30, 2023, the Company had preferred shares issued and outstanding, with Eaglstein, Kundnani, and Hong holding , , and shares, respectively.
On
November 30, 2023, the Company issued Series A Preferred Stock to Kundnani valued at
The
Company will receive $
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.
Series B Preferred Stock
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 Gope S. Kundnani for cash valued at $ per share.
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.
Common Stock
On January 21, 2016, the Company collectively issued and common shares at par value to Mitchell Eaglstein and Imran Firoz, respectively, as the founders in consideration of services rendered to the Company.
On December 12, 2016, the Company issued common shares to the remaining two (2) founding members.
On
March 15, 2017, the Company issued restricted common shares for platform development valued at $
On
March 15, 2017, the Company issued restricted common shares for professional services to three (3) individuals valued at $
On
March 17, 2017, subject to the terms and conditions of the Stock Purchase Agreement, the Company issued shares to Susan Eaglstein
for a cash amount of $
On
March 21, 2017, subject to the terms and conditions of the Stock Purchase Agreement, the Company issued shares to Bret Eaglstein
for a cash amount of $
Ms. Eaglstein and Mr. Eaglstein are the mother and brother of Mitchell Eaglstein, the CEO and director of the Company.
From July 1, 2017, to October 03, 2017, the Company has issued units for a cash amount of $ under its offering Memorandum, where the unit consists of one (1) share of common stock and one Class A warrant (See Note 11).
On
October 31, 2017, the Company issued restricted common shares to management consultants valued at $
| F-31 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
On
January 15, 2019, the Company issued restricted common shares for professional services to eight (8) consultants valued at $
From
January 29, 2019, to February 15, 2019, the Company issued registered shares under the Securities Act of 1933 for a cash amount
of $
Effective
June 3, 2020, the Company issued shares to Benchmark Investments, Inc. (“Broker-Dealer” or “Kingswood Capital
Markets”) of common stock at $ per share for a total value of $
On
October 1, 2020, the Company issued restricted common shares to a digital marketing consultant valued at $
On
January 31, 2021, the Company issued restricted common shares for professional services to two (2) consultants valued at $
On
February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation.
The Company eliminated all four FRH Group convertible notes, including interest, of $
On
May 19, 2021, the Company issued restricted common shares for professional services to a consultant valued at $
On
June 02, 2021, the Company issued restricted common shares for Genesis Agreement to a consultant valued at $
On
June 15, 2021, the Company issued restricted common shares to a board member for services to a consultant valued at $
On
July 06, 2021, the Company issued restricted common shares to a board member for services to a consultant valued at $
On
July 20, 2021, the Company issued restricted common shares for professional services to a consultant valued at $
On
October 04, 2021, the Company filed a prospectus related to the resale of shares to White Lion and AD Securities America, LLC. The Company
issued shares to AD Securities America, LLC for $
On
October 5, 2021, the Company issued restricted common shares for professional services to a consultant valued at $
In
November 2021, the Company issued registered shares to White Lion for a gross cash amount of $
On
December 22, 2021, the Company issued restricted common shares to ADFP to acquire a
In
December 2021, the Company issued restricted common shares to two board members, a consultant, and two officers for services
and software development valued at $
| F-32 |
NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
On
January 4, 2022, the Company issued restricted common shares for professional services to a consultant valued at $
From
January 4, 2022, to February 10, 2022, the Company issued registered shares to White Lion for a gross cash amount of $
On
January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’).
The Company issued common stock valued at $
On
July 31, 2022, the Company issued restricted common shares for professional services to a consultant valued at $
On
September 30, 2022, the Company issued restricted common shares for cash valued at $
On
September 30, 2022, the Company issued restricted common shares to Gope S. Kundnani for services valued at $
On
December 12, 2022, the Company issued restricted common shares to two officers for services valued at $
On
December 15, 2022, the Company issued restricted common shares to two officers for services valued at $
On
January 25, 2023, the Company issued restricted common shares to AJB to compensate for consideration shares related to the
AJB Note valued at $
On
January 25, 2023, the Company issued restricted common shares for cash valued at $
On
March 28, 2023, the Company issued restricted common shares for cash valued at $
On
November 30, 2028, the Company issued restricted shares for cash valued at $
On
December 27, 2023, the Company issued restricted common stock to AJB to redeem warrants valued at $
On
May 9, 2024, the Company issued shares for a cash value of $
| F-33 |
NOTE 10. WARRANTS
The
Company issued common stock valued at $
NOTE 11. COMPREHENSIVE INCOME
The Company’s other comprehensive income (OCI) consists of foreign currency translation adjustments from those subsidiaries that do not use the U.S. dollar as their functional currency.
The following table shows the changes in AOCI by component for the three months ending September 30, 2024, and 2023:
SCHEDULE OF CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME
| Accumulated Comprehensive Income: | Cumulative Foreign Currency Translation | |||
| Balance as of June 30, 2023 | $ | ( | ) | |
| Other comprehensive income (loss) attributed to ADS | ||||
| Other comprehensive income (loss) attributed to AML | ( | ) | ||
| Total other comprehensive income (loss) | ( | ) | ||
| Balance as of September 30, 2023 | ( | ) | ||
| Balance as of June 30, 2024 | $ | ( | ) | |
| Other comprehensive income/(loss), ADS | ||||
| Other comprehensive income/(loss), AML | ||||
| Other comprehensive income/(loss), APL | ||||
| Other comprehensive income/(loss), ATECH | ||||
| Total other comprehensive income/(loss) | ||||
| Balance as of September 30, 2024 | $ | |||
The following table shows the changes in AOCI by component for the nine months ending September 30, 2024, and 2023:
| Accumulated Comprehensive Income: | Cumulative Foreign Currency Translation | |||
| Balance as of December 31, 2022 | $ | |||
| Other comprehensive income (loss) attributed to ADS | ||||
| Other comprehensive income (loss) attributed to AML | ( | ) | ||
| Total other comprehensive income (loss) | ( | ) | ||
| Balance as of September 30, 2023 | ( | ) | ||
| Balance as of December 31, 2023 | $ | |||
| Other comprehensive income/(loss), ADS | ||||
| Other comprehensive income/(loss), AML | ( | ) | ||
| Other comprehensive income/(loss), APL | ||||
| Other comprehensive income/(loss), ATECH | ||||
| Total other comprehensive income/(loss) | ( | ) | ||
| Balance as of September 30, 2024 | $ | |||
NOTE 12. 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 13. SUBSEQUENT EVENTS
In
April 2024, the Company terminated the letter of intent to acquire a community bank in Iowa. As part of the termination, the Company
shall pay the community bank $
On December 23, 2023, the Company received legal correspondence and supporting documents addressed to APSI Holdings Limited (formerly Alchemy Prime Holdings Limited) and FDCTech, Inc. The nature of the legal claims or disputes has not been fully specified in the received correspondence. The Company is assessing the situation and will respond appropriately. While management cannot predict the outcome of these matters, any adverse resolution could potentially have a material impact on the Company’s business, financial condition, and results of operations. The Company intends to defend its interests vigorously and will provide further updates as material developments arise.
The Company has evaluated subsequent events through the filing of this Form 10-Q and determined that no events would require adjustments to our disclosures in the consolidated financial statements.
| F-34 |
| 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. 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.
The Company is building a diversified global financial services company driven by proprietary Condor trading technologies, complementary regulatory licenses, and a proven executive team. The Company plans to acquire, integrate, transform, and scale legacy financial service companies. The Company believes its proprietary technology and software development capabilities allow legacy financial services companies immediate exposure to –forex, stocks, ETFs, commodities, digital assets, social/copy trading, and other high-growth fintech markets.
From December 2021 onwards, the Company expects to grow from its acquisition strategy, specializing in buying and integrating small to mid-size legacy financial services companies. The Company intends to build a diversified global software-driven financial services company. The Company plans to acquire, integrate, transform, and scale legacy financial service companies. The Company replaces conventional legacy software infrastructure with its regulatory-grade proprietary Condor trading technologies, intending to improve end-user experience, increase client retention, and realize cost synergies.
Currently, we have three primary business segments: (1) Technology and Software Development, (2) Wealth Management, and (3) Investment and Margin Brokerage Business.
The geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia’s invasion of Ukraine. The war between the two countries continues to evolve as military activity continues. The United States and certain European countries have imposed additional sanctions on Russia and specific individuals. By the end of August 2022, the Company closed its technical support and development office in Russia. We relocated our personnel to Turkey, which is currently considered a neutral zone. No individual associated with the Company is banned or under the Special Designated Nationals and Blocked Person list.
As of the date of this report, there has been no disruption in our operations.
| 4 |
Technology & Software Development Business
For the nine months ended September 30, 2024, and 2023, the Company had ten (10) and thirteen (13) licensing agreements for its Condor Pro Multi-Asset Trading Platform. The Company continuously negotiates additional licensing agreements with several retail online brokers to use the Condor Pro Multi-Asset Trading Platform. Condor Pro Multi-Asset Trading Platform is available in desktop, web, and mobile versions.
The Company is developing the Condor Investing & Trading App, a simplified trading platform for traders with varied experiences in trading stocks, ETFs, and other financial markets from their mobile phones. The Company expects to commercialize the Condor Investing & Trading App by the end of the first quarter of the 2025 fiscal year.
Technology & Software Development Revenue & Gross Margins:
Nine months ended September 30, (Unaudited) | Nine months ended September 30, (Unaudited) | |||||||
| Revenue, $ | 1,086,844 | 596,623 | ||||||
| Cost of sales, $ | 119,708 | 22,503 | ||||||
| Gross profit (loss), $ | 967,136 | 574,120 | ||||||
| Gross Margins | 88.99 | % | 96.23 | % | ||||
Wealth Management
On December 22, 2021, the Company entered into a Share Exchange Agreement (the “Agreement”) with AD Financial Services Pty Ltd ACN 628 331 117 of Level 38/71 Eagle St, Brisbane, Queensland, Australia, 4000 (“ADFP” or “Target”). According to the Agreement, the Company acquired 51% of ADFP’s issued and outstanding shares of capital stock in exchange for 45,000,000 (the “Consideration”) newly issued “restricted” common shares. The operating and licensed entity of ADFP is AD Advisory Services Pty Ltd. ADFP owns one hundred percent (100%) equity interest in AD Advisory Services Pty Ltd (“ADS”). As a result, the Company is 51% owner of ADS. Our wealth management business, AD Advisory Services (ADS), is subject to enhanced regulatory scrutiny and is regulated by multiple regulators in Australia. The Australian Securities and Investments Commission (ASIC) administers a licensing regime for financial services providers. ADS holds an Australian Financial Services License (AFSL) and meets various compliance, conduct, and disclosure obligations.
AD Advisory Services Pty Ltd. (ADS) is an Australian-regulated wealth management company with 28 advisors and $530+ million in funds under advice. ADS provides licensing solutions for financial advisers & accountants in Australia. ADS offers financial planners different licensing, compliance, and education solutions to meet their practice’s specific needs.
Wealth Management Revenue & Gross Margins:
Nine months ended September 30, (Unaudited) | Nine months ended September 30, (Unaudited) | |||||||
| Revenue, $ | 4,922,551 | 4,397,241 | ||||||
| Cost of sales, $ | 4,461,671 | 3,966,959 | ||||||
| Gross profit (loss), $ | 460,880 | 430,282 | ||||||
| Gross margins | 9.36 | % | 9.79 | % | ||||
| 5 |
Margin Brokerage Business (Malta and UK)
AML is authorized to deal with its account (market maker) as a Category 3 licensed entity by the MFSA, receive and transmit orders for retail and professional clients, hold and control clients’ money and assets. AML trading platform services in the English, French, German, Italian, and Arabic-speaking markets, whereby customers can trade in currency, commodity, equity, and digital assets-linked derivatives in real time. AML is authorized countries to do business include Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Liechtenstein, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden. In May 2024, Mitchell M. Eaglstein, CEO, was appointed as the CEO of Alchemy Markets Ltd. (AML) to oversee operations in Malta.
APL is an investment firm regulated by the Financial Conduct Authority (FCA). It provides investment advice, acts as agent and principal, and safeguards and administers assets in forex, equity, commodities, spread bets, and other financial assets. It is authorized to do business in several countries, including England, Scotland, Wales, and Northern Ireland.
Brokerage (Trading) revenue & Gross Margins*:
Nine months ended September 30, (Unaudited) | Nine months ended September 30, (Unaudited) | |||||||
| Revenue, $ | 12,169,469 | 1,955,319 | ||||||
| Cost of sales, $ | 6,363,631 | 327,110 | ||||||
| Gross Profit (loss), $ | 5,805,838 | 1,628,209 | ||||||
| Gross Margins | 47.71 | % | 83.27 | % | ||||
Consolidated Financial Summary
The Company has prepared consolidated financial statements on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the ordinary business course. The Company generated $34,123,056 in revenues from January 21, 2016 (inception) to September 30, 2024. For the nine months ended September 30, 2024, and 2023, the Company generated $18,178,864 and $6,949,183 in revenues, an increase of over 161.60%. At September 30, 2024, and December 31, 2023, the Company had a cash balance of $27,989,417 and $31,316,461 and an accumulated deficit of $3,488,102 and $2,643,647.
Financial Condition at September 30, 2024
On September 30, 2024, the accumulated deficit, cash balance, and working capital surplus were $3,488,102, $27,989,417, and $8,557,179, respectively.
Financial Condition at December 31, 2023
On December 31, 2023, the accumulated deficit, cash balance, and working capital surplus were $2,643,647, $31,316,461, and $7,460,959, respectively.
On November 30, 2023, Kundnani purchased 2,500,000 Series A Preferred stock of FDCTech for $2.5 million. The Company has issued the Series A Preferred stock to Kundnani. On November 30, 2023, Kundnani purchased 50,000,000 Common stock of the Company for $5.5 million. The Company has issued the Common stock to Kundnani. The Company expects to receive funds by the end of March 2025.
Even though we believe that our cash balance is sufficient to fund our operations and growth, the Company plans to raise additional capital as disclosed in Subsequent Events. The Company intends to continue its efforts to enhance its revenue from its diversified portfolio of technological solutions, become cash flow positive, and raise funds through private placement offerings and debt financing. As the Company increases its customer base globally, it intends to acquire long-lived assets that will provide a future economic benefit beyond fiscal 2024.
| 6 |
RESULTS OF OPERATIONS
Three Months Ended September 30, 2024, compared with Three Months Ended September 30, 2023
The consolidated revenues for the three months ended September 30, 2024, and 2023 were $5,673,008 and $3,703,091, respectively. During the three months ended September 30, 2024, and 2023, the Company incurred a net loss and net income of $649,565 and $689,390.
The total revenue breakdown for the three months ended September 30, 2024, and 2023 is below:
| Three Months Ended | September 30, 2024 | September 30, 2023 | ||||||
| Revenue Description | % of Total | % of Total | ||||||
| Technology Solutions | 9.38 | % | 6.00 | % | ||||
| Wealth Management | 29.43 | % | 41.20 | % | ||||
| Brokerage | 61.19 | % | 52.80 | % | ||||
| Total | 100.00 | % | 100.00 | % | ||||
During the three months ended September 30, 2024, and 2023, the Company incurred general and administrative costs (“G&A”) of $2,754,088 and $674,737 (excluding amortization expenses), respectively. The increase in G&A for the three months ended September 30, 2024, is due to the inclusion of G&A costs of all subsidiaries. The G&A costs were 48.55% and 18.22% of the revenue for the three months ended September 30, 2024, and 2023, respectively. Amortization expenses were $93,541 and $0 for the three months ended September 30, 2024, and 2023, respectively, included in the Cost of sales.
The rental expense was $10,861 and $11,039 for the three months ended September 30, 2024, and 2023, respectively.
The Company incurred $383,777 and $568,450 in sales, marketing, and advertising costs (“sales and marketing”) for the three months ended September 30, 2024, and 2023. The sales and marketing costs mainly included travel costs for tradeshows, customer meetings, online marketing on industry websites, press releases, and public relations activities. The sales, marketing, and advertising expenses represented 6.76% and 15.35% of the sales for the fiscal year ending September 30, 2024, and 2023, respectively.
Nine months Ended September 30, 2024, compared with Nine Months Ended September 30, 2023
The consolidated revenues for the nine months ended September 30, 2024, and 2023 were $18,178,864 and $6,949,183, respectively. During the nine months ended September 30, 2024, and 2023, the Company incurred a net loss and net income of $861,395 and $320,829.
The total revenue breakdown for the nine months ended September 30, 2024, and 2023 is below:
| Nine months Ended | September 30, 2024 |
September 30, 2023 |
||||||
| Revenue Description | % of Total | % of Total | ||||||
| Technology Solutions | 5.98 | % | 8.58 | % | ||||
| Wealth Management | 27.08 | % | 63.28 | % | ||||
| Brokerage | 66.94 | % | 28.14 | % | ||||
| Total | 100.00 | % | 100.00 | % | ||||
During the nine months ended September 30, 2024, and 2023, the Company incurred general and administrative costs (“G&A”) of $7,575,616 and $1,629,378 (excluding amortization expenses), respectively. The increase in G&A for the nine months ended September 30, 2024, is due to the inclusion of G&A costs of all subsidiaries. The G&A costs were 48.55% and 18.22% of the revenue for the nine months ended September 30, 2024, and 2023, respectively. Amortization expenses were $119,708 and $22,503 for the nine months ended September 30, 2024, and 2023, respectively, included in the Cost of sales.
The rental credit and expense were $27,195 and $23,828 for the nine months ended September 30, 2024, and 2023, respectively.
The Company incurred $1,211,724 and $610,274 in sales, marketing, and advertising costs (“sales and marketing”) for the nine months ended September 30, 2024, and 2023. The sales and marketing costs mainly included travel costs for tradeshows, customer meetings, online marketing on industry websites, press releases, and public relations activities. The sales, marketing, and advertising expenses represented 6.67% and 8.78% of the sales for the fiscal year ending September 30, 2024, and 2023, respectively.
| 7 |
LIQUIDITY AND CAPITAL RESOURCES
On September 30, 2024, and December 31, 2023, we had a cash balance of $27,989,417 and $31,316,461, respectively. At September 30, 2024, and December 31, 2023, the working capital surplus was $8,557,179 and $7,460,959, respectively. The increase in the working capital surplus was mainly due to the acquisition of AML and APL, resulting in an increase in current assets over current liabilities as of September 30, 2024.
We generate a substantial portion of our operating income outside the United States, deemed indefinitely reinvested in foreign jurisdictions. Consequently, as outlined under “Cash and Cash Equivalent,” most of our cash and short-term investments are held by our foreign subsidiaries. We do not intend to repatriate these funds and do not foresee a need.
We anticipate that our existing domestic cash, short-term investments, and cash flows from operations will be sufficient to fund our domestic operating activities and fulfill our cash commitments for investing and financing activities, such as regular quarterly dividends, debt repayments, and capital expenditures, for at least the next 12 months and for the foreseeable future.
Should we require additional capital in the United States beyond what our domestic operations generate—for instance, to fund significant discretionary activities such as business acquisitions or share repurchases—we could choose to repatriate future earnings from foreign jurisdictions or raise capital within the United States through debt or equity issuances. These alternatives may result in higher effective tax rates, increased interest expenses, or dilution of our earnings. We have previously borrowed funds domestically and believe we can continue doing so at reasonable interest rates.
In the next twelve (12) months, the Company will continue investing in sales, marketing, product development, new technology solutions, and existing technology support to serve our customers. We expect capital expenditure to increase to $500,000 in the next twelve (12) months to support the growth, including working capital, software development, sales & marketing, and purchasing computers and servers.
We expect the combination of existing cash, cash equivalents, cash flows from operations, and access to private equity and capital markets to be sufficient for at least twelve (12) months. The availability of funds will fund our operating activities to meet the need for investing and financing, such as debt maturities and material capital expenditures. However, we may need additional funds to achieve a sustainable sales level to fund our ongoing operations out of revenues. There is no assurance that any additional financing will be available or, if available, on terms that will be acceptable to us.
Should we require additional capital, the Company’s operations are insufficient to fund its capital requirements. The Company may attempt to restructure Notes, refinance existing Notes with financial institutions, or raise capital by selling additional capital stock or debt issuance. The Company intends to continue growing its operations and raising funds through private equity and debt financing.
Initial Seed Funding in 2016
Between February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder. Effective June 1, 2017, we raised $98,000 through our common stock’s private placement to our officers, directors, friends, relatives, and business associates. Between February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder (“FRH”). The Company executed Convertible Promissory Notes, due between February 28, 2018, and April 24, 2019. The Notes were initially convertible into common stock at $0.10 per share but may be discounted under certain circumstances. In no event will the conversion price be less than $0.05 per share with a maximum of 20,000,000 shares.
Going Public in 2019
From January 29, 2019, to February 15, 2019, the Company issued 33,000 registered shares under the Securities Act of 1933 for a cash amount of $4,950. The Company closed its offering effective February 26, 2019.
| 8 |
PPP and SBA Funding in 2020
On May 01, 2020, the Company received proceeds of Fifty-Thousand Six Hundred and Thirty-Two ($50,632) from the Promissory Note (“PPP Note”) under the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).
On May 22, 2020, the Company received proceeds of one hundred and forty-four thousand nine hundred and 00/100 Dollars ($144,900).
On July 15, 2020, the Company engaged Kingswood Capital Markets, a Benchmark Investments division, Inc., as its exclusive general financial advisor for strategic corporate planning and investment banking services. On August 25, 2020, the Company and Broker-Dealer terminated all obligations other than maintaining confidentiality with no fees to the Broker-Dealer. The Broker-Dealer agreed to return the 2,745,053 shares of the Company’s common stock.
On September 02, 2020, the Company engaged Garden State Securities Inc. (GSS) as its exclusive advisor for the private placement of debt or equity securities to fulfill the Company’s business plan and an offering of debt securities to assist in the Company’s acquisition strategy. On October 05, 2021, the Company and GSS terminated all obligations other than maintaining confidentiality, with no fees to the GSS. The Broker-Dealer agreed to return the 1,750,000 shares of the Company’s common stock.
Settlement of FRH Debt and Equity Line of Credit (Investment Agreement) in 2021
On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation. The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908 in return for the issuance of 12,569,080 of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH Group Corporation, also owned by Mr. Hong.
On September 27, 2021, the Company engaged EF Hutton, a division of Benchmark Investments, LLC (“EF Hutton”). EF Hutton will act as lead underwriter, deal manager, and investment banker for the proposed firm commitment public offering and uplisting (“Offering”) by the Company in connection with the offering of the Company’s equity, debt, or equity derivative instruments (the “Securities”). The Company engagement expired as of December 31, 2022.
On October 04, 2021, the Company filed a prospectus that relates to the resale of up to 22,670,000 shares of our Common Stock issued or issuable to selling shareholders for up to $2,200,000, including (i) up to 2,000,000 shares issued to AD Securities America, LLC, (ii) up to 20,000,000 issuable to White Lion Capital, LLC (“White Lion”), according to a “Purchase Notice Right” under an Investment Agreement and (iii) 670,000 shares issued to White Lion as a commitment fee associated with the Investment Agreement. From October 2021 to February 2022, the Company executed five “Purchase Notice Rights” under an Investment Agreement with White Lion and received a net of $38,824 after deducting financing costs associated with the Investment Agreement.
Investment Agreement, Promissory Note, Related Party Investments in 2022
From January 2021 to February 2022, the Company executed five “Purchase Notice Rights” under an Investment Agreement with White Lion and received a net of $33,596 after deducting financing costs associated with the Investment Agreement. From October 2021 to February 2022, the Company received $72,420 from the Investment Agreement.
On January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’), a Delaware limited liability company, for the principal amount of $550,000 with a maturity date of July 27, 2022, and a coupon of 10%. The parties extended the AJB Note maturity date by another nine months till January 23, 2023. As part of the AJB Note, the Company entered into a securities purchase agreement, where AJB Capital will receive equity equal to US $155,000 of the Company’s common stock. The Company issued 2,214,286 common stock valued at $71,521 upon issuance of the Note (the “Shares”) and 1,000,000 3-year cash warrants (‘Warrants’) priced at $0.30. The Warrants and the Shares, collectively known as the ‘Incentive Fee,’ are issued upon execution of the agreement.
In April 2022, the Company engaged CIM Securities, LLC as its private placement agent to raise capital. The Company did not raise any funds.
On September 30, 2022, the Company issued 30,000,000 restricted common shares for cash valued at $300,000 to Kundnani, considered a related party.
| 9 |
Related Party Investments and Acquisitions in 2023
On January 25, 2023, the Company issued 5,309,179 restricted common shares to AJB to compensate for consideration shares related to the AJB Note valued at $60,525.
On January 25, 2023, the Company issued 115,000,000 restricted common shares for cash valued at $550,000 to Kundnani, considered a related party.
On March 28, 2023, the Company issued 2,000,000 restricted common shares for cash valued at $20,000.
At July 31, 2023, the Company sent the notice of termination of the purchase agreement to CIM Securities as future events may result in a change of ownership in the CMA application. The Company terminated the escrow agreement and released $180,000 to increase cash on hand.
On November 30, 2023, Kundnani, considered a related party, purchased 2,500,000 Series A Preferred stock of the Company for $2.5 million. The Company has issued the Series A Preferred stock to Kundnani. On November 30, 2023, Kundnani purchased 50,000,000 Common stock of the Company for $5.5 million. The Company has issued the Common stock to Kundnani. The Company expects to receive funds by the end of April 2024.
GOING CONCERN CONSIDERATION
We have generated revenues of $18,178,864 and $6,949,183 for the nine months ended September 30, 2024, and the recent fiscal year ended December 31, 2023. As of September 30, 2024, and December 31, 2023, the accumulated deficit was $3,488,102 and $2,643,647. Our independent auditors included an explanatory paragraph in their report on the audited financial statements for the fiscal year ending December 31, 2023, and 2022 regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. Our financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classifications of liabilities that may result in the Company being unable to continue as a going concern.
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 following the 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 at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.
In more detail, we have described significant accounting policies in Note 2 of our annual financial statements included in our 10-K for the fiscal year ended December 31, 2023, filed with the SEC on October 15, 2024. We continuously evaluate our critical accounting estimates and judgments required by our policies and update them as appropriate based on changing conditions.
JOBS Act Accounting Election
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies. As an emerging growth company, we have applied for an exemption; as a result, the Company may delay the adoption of certain accounting standards until the standards apply to private companies.
Off-Balance Sheet Arrangements and Contractual Obligations
We have not engaged in any off-balance sheet arrangements as defined in Item 303(c) of the SEC’s Regulation S-B. We had no relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes.
Recent Accounting Pronouncements
The amendments in the ASU are effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. We have adopted this ASU as of March 31, 2020 for ASC 606, Revenue Recognition and Amended ASU 2016-02, Leases (Topic 840). The ASU is currently not expected to have a material impact on our consolidated financial statements. While we have described significant accounting policies in more details in Note 2 of our annual financial statements included in our 10-K for the fiscal year ended December 31, 2020, filed with the SEC on April 6, 2020, we believe the accounting policies as described in Note 2 to be critical to the judgments and estimates used in the preparation of our financial statements.
| 10 |
| 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.
Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Controls over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a- 15(f) under the Securities Exchange Act, as amended. Management, with the participation of the Chief Executive Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of September 30, 2024. In making this assessment, management used the criteria set forth by the committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and
(3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements. Also, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting of September 30, 2024. Based on our assessments, management determined that we did not maintain effective internal control over financial reporting as of September 30, 2024, due to the material weakness in our internal controls due to 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 improve our internal controls due to 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. 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 consideration of additional staff with the requisite experience and training to supplement existing accounting professionals and implemented additional layers of reviews in the internal controls and financial reporting process.
This Report does not include an attestation report of our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the nine months ended September 30, 2024, and 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 11 |
PART II.
| ITEM 1. | LEGAL PROCEEDINGS. |
There are no legal proceedings against the Company, and the Company is unaware of any proceedings contemplated against it.
| Item 1A. | Risk Factors. |
In accordance with the requirements of Form 10-Q, the Company, as a smaller reporting company, is not required to make the disclosure under this item.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
In January 2024, the Company issued 141,844 Series B preferred stock to Gope S. Kundnani for a cash value of $200,000.
In May 2024, the Company issued 2,000,000 common stock for a cash value of $20,000.
The issuance of the aforementioned securities relied on the exemption from registration afforded under Section 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D and/or Regulation S promulgated thereunder. Such offers and sales were not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the Purchaser in connection with the issuance by the Company of the securities.
| Item 3. | Defaults Upon Senior Securities. |
None
| Item 4. | Mine Safety Disclosures. |
None
| Item 5. | Other Information. |
None
| 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 and 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) |
| 12 |
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: December 31, 2024 | /s/ Mitchell Eaglstein |
Mitchell Eaglstein, President and CEO (Principal Executive Officer) |
| Date: December 31, 2024 | /s/ Imran Firoz |
Imran Firoz, CFO (Principal Accounting Officer) |
| 13 |
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 and 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) |
| 14 |
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Mitchell Eaglstein, certify that:
| 1. | I have reviewed this report on Form 10-Q of FDCTech, Inc., a Delaware corporation (“registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of condensed consolidated financial statements for external purposes with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Mitchell Eaglstein | |
| Mitchell Eaglstein | |
| President (Principal Executive Officer) | |
| December 31, 2024 |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Imran Firoz, certify that:
| 1. | I have reviewed this report on Form 10-Q of FDCTech, Inc., a Delaware corporation (“registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of condensed consolidated financial statements for external purposes with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Imran Firoz | |
| Imran Firoz, Chief Financial Officer | |
| (Principal Accounting Officer) | |
| December 31, 2024 |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the report of FDCTech, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Mitchell Eaglstein | |
| Mitchell Eaglstein | |
| President (Principal Executive Officer) | |
| /s/ Imran Firoz | |
| Imran Firoz | |
| Chief Financial Officer (Principal Accounting Officer) | |
| December 31, 2024 |