RCT 20-F
RedCloud Holdings plc (RCT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OR
For
the fiscal year ended
OR
For the transition period from _________ to _____________.
OR
Date of event requiring this shell company report:
Commission
file number:
(Exact name of Registrant as Specified in its Charter)
(Address of Principal Executive Offices)
Tel:
Email:
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange On Which Registered | ||
| The
|
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
The number of the issuer’s ordinary shares as of May 15, 2026, was ordinary shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes
☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Emerging
growth company |
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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.
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to 240.10D-1(b) ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| ☒
|
International Financial Reporting Standards as issued by the International ☐ | Other ☐ | ||
| Accounting Standards Board ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No
REDCLOUD HOLDINGS PLC
FORM 20-F ANNUAL REPORT
TABLE OF CONTENTS
| i |
PART I
CERTAIN INFORMATION
Unless otherwise indicated or the context otherwise requires, all references in this annual report to the terms “RedCloud,” the “Company,” “we,” “our,” “ours,” “us,” and words of like import refer to RedCloud Holdings plc, together with its subsidiaries.
Industry and Market Data
Unless otherwise indicated, information in this annual report concerning economic conditions, our industry, our markets and our competitive position is based on a variety of sources, including information from third-party industry analysts and publications and our own estimates and research. Some of the industry and market data contained in this annual report are based on third-party industry publications. This information involves a number of assumptions, estimates and limitations.
The industry publications, surveys and forecasts and other public information generally indicate or suggest that their information has been obtained from sources believed to be reliable. None of the third-party industry publications used in this annual report were prepared on our behalf. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors” in this annual report. These and other factors could cause results to differ materially from those expressed in these publications.
Trademarks, Trade Names and Service Marks
We own or have rights to trademarks, trade names and service marks that it uses in connection with the operation of its business. In addition, our names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks appearing in this annual report are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this annual report are listed without the applicable “®,” “SM” and “TM” symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains “forward-looking statements” (as defined in Section 21E of the Exchange Act, as amended) that reflect our current expectations and views of future events and that are subject to risks and uncertainties. Statements that are not historical facts, including statements about us and our perspectives and expectations, are forward-looking statements. Such statements include, but are not limited to, statements regarding possible or anticipated future results of our business, financial condition, results of operations, liquidity, plans and objectives. The words “expect,” “believe,” “estimate,” “intend,” “plan,” “anticipate,” “project,” “may,” “will,” “could,” “should,” “potential” and similar words or expressions indicate forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to various risks and uncertainties, assumptions (including assumptions about general economic, market, industry and operational factors), known or unknown, which could cause the actual results to vary materially from those indicated or anticipated.
The statements contained in this annual report regarding the following matters are forward-looking by their nature:
| ● | our lack of operating history; | |
| ● | our estimates regarding future revenue, expenses and needs for additional financing; | |
| ● | ineffectively competing in our industry; | |
| ● | the impact of governmental laws and regulation; | |
| ● | difficulties with certain third-party service providers we rely on or will rely on; | |
| ● | failure to maintain our corporate culture as we grow and changes in consumer recognition of our brand; | |
| ● | changes in senior management, loss of one or more key personnel or an inability to attract, hire, integrate and retain highly skilled personnel; | |
| ● | our ability to expand our business in the jurisdictions in which we currently operate and our ability to expand our business into new jurisdictions; | |
| ● | the continued performance of our RedAI infrastructure and its artificial intelligence (“AI”) and machine learning capabilities; | |
| ● | our ability to retain and grow the brands, distributors and retailers on our infrastructure and associated products; | |
| ● | our ability to continue to innovate and expand our technological capabilities; | |
| ● | labor shortages, unionization activities, labor disputes or increased labor costs, including increased labor costs resulting from minimum wage increases; and | |
| ● | inadequately protecting our intellectual property or breaches of security of confidential consumer information. |
| 1 |
The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks described under “Risk Factors” in Section D under Item 3 of this annual report.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this annual report, to confirm these statements to actual results or to changes in our expectations.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
A. Reserved
B. Capitalization and Indebtedness.
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
D. Risk Factors
An investment in our ordinary shares involves significant risks. You should carefully consider all of the information in this annual report, including the risks and uncertainties described below, before making an investment in our ordinary shares. Any of the following risks could have a material adverse effect on our business, financial condition and results of operations. In any such case, the market price of our ordinary shares could decline, and you may lose all or part of your investment.
The risks set out below are not exhaustive and do not comprise all of the risks associated with an investment in us. Additional risks and uncertainties not currently known to us or which we currently deem immaterial may also have a material adverse effect on our business, financial condition, results of operations, prospects and/or our share price.
Risks Relating to Our Platform
We currently rely on a single third-party cloud service provider to host or support a significant portion of our Platform, and any interruptions or delays in services from this third party could impair our Platform and harm our business.
We currently host our Platform and support our operations using a sole third-party cloud service provider, Amazon Web Services, and our accompanying Red 101 App is hosted by Google’s Play Store and the Apple App Store. We do not, and will not, have control over the operations of the facilities or infrastructure of the third-party service providers that we use. Such third parties’ facilities may experience break-ins, computer viruses, denial-of-service or other cyber-attacks, sabotage, acts of vandalism, and other misconduct. These facilities may also be vulnerable to damage or interruption from power loss, telecommunications failures, fires, floods, earthquakes, hurricanes, tornadoes, and similar events. Our Platform’s continuing and uninterrupted performance is critical to our success.
We have experienced, and expect that in the future we will experience, interruptions, delays, and outages in service and availability from these third-party service providers from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints. Any such limitation on the capacity of our third-party service providers could impede our ability to onboard new registered users or expand the usage of our existing registered users, which could adversely affect our business, financial condition, and results of operations. In some instances, we may not be able to identify the cause or causes of these performance problems within a period of time acceptable to our registered users. A prolonged service disruption affecting our service for any of the foregoing reasons would negatively impact our ability to serve our registered users and could damage our reputation with current and potential registered users, expose us to liability, cause us to lose registered users, or otherwise harm our business. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the third-party service providers we use.
| 2 |
In addition, any changes in our hosting provider’s service levels may adversely affect our ability to meet the expectations of registered users. Our systems do not provide complete redundancy of data storage or processing, and as a result, the occurrence of any such event, or other unanticipated problems may result in our inability to serve data reliably or require us to migrate our data. This could be time-consuming and costly and may result in the loss of data, any of which could significantly interrupt the provision of our operations and harm our reputation and brand. We may not be able to easily switch to another public cloud or to a data center provider in the event of any disruptions or interference to the services we use, and even if we do, other public cloud or data center providers are subject to the same risks.
Elements of our Platform make use of legacy applications which do not permit us to make full use of the robustness of the cloud. We are constantly evaluating our technology stack and replacing with technologies which make full use of cloud technologies to provide scaling.
Our dependency on a single cloud service provider for technology services and deployment could restrict our flexibility and deployment options, leading to overreliance on a single provider.
Currently, we solely depend on a single cloud service provider, AWS, for technology services and deployment. Relying exclusively on a single cloud service provider can pose significant risks for businesses. It can result in vendor lock-in, where organizations become tightly bound to proprietary technologies and contractual terms, making it challenging and costly to switch providers. Dependency on a sole provider also exposes businesses to potential disruptions or outages, which could lead to downtime, data loss, or service unavailability. Moreover, it limits flexibility in adopting specialized services, pricing models, or geographic coverage that might better align with organizational needs or regulatory requirements.
We may try to mitigate these risks by implementing a multi-cloud strategy that leverages services from multiple cloud providers. Nevertheless, multi-cloud strategies are complex endeavors that involve inherent risks. They necessitate sophisticated tooling and entail increased operational complexity, which we must carefully manage to realize the anticipated benefits. Our failure to do so may negatively impact the operations of our Company.
Our company faces a risk of increased latency due to cloud providers’ limited point-of-presence (“PoP”) coverage.
Cloud providers may not have a PoP in each of the countries we operate in. If PoP locations are not positioned close to or within the countries in which we operate, it can result in slower response times for customers interacting with our services. This latency can negatively impact the user experience, potentially leading to reduced customer satisfaction, increased bounce rates, and lower engagement levels with our products.
We rely on third-party mobile operating systems to make our Red 101 App available to registered users and if those systems are adversely impacted, we may not effectively operate as our usage could decline and our business, financial condition, and results of operations could be adversely affected.
Our technology systems are not located locally within each territory in which we operate. Instead, they are principally run out of two main regions, Brazil and Europe, with our Platform being hosted over the public internet. Some of the territories in which we operate have experienced issues with global connectivity, which can create uptime issues as well as other specific risks which may impact our registered users from accessing and using the Red 101 App, which could adversely affect our business, financial condition, and results of operations.
In some of the territories in which we operate, principally Nigeria and South Africa, mobile coverage is generally sufficient but can sometimes suffer from overloaded networks and outdated infrastructure. This causes networks to become congested or fail. Additionally, in South Africa, the electrical grid has scheduled power outages resulting in local networks going down when their emergency backup power supply is depleted. For example, there have been several incidences in Africa this year, arising from damage to underwater cables, which have impacted the continent’s internet connectivity. In May 2024, two underwater cables off the coast of Durban in South Africa, which carry data around the continent, were cut and caused disruption to the internet to parts of eastern Africa and South Africa. In March 2024, damage to four underwater cables off the West African coast caused similar problems, and in February 2024, three cables in the Red Sea were similarly damaged. Anchor dragging from ships close to shore is one of the most common causes of damage, but underwater rockfalls, as was believed to be the case in West Africa in March, and seismic activity can also affect the cables. Repairing the damage, which requires specialized equipment and expertise, can take days or weeks, depending on the weather, sea conditions and the extent of the problem.
These disruptions to the mobile and or internet third-party networks or facilities that we rely upon could delay our expansion into other countries and prevent registered users from accessing the Red 101 App.
| 3 |
We rely on mobile operating systems and app marketplaces to make Red101 available to registered users and if we do not effectively operate with such app marketplaces, our usage or brand recognition could decline and our business, financial condition, and results of operations could be adversely affected.
We depend in part on mobile operating systems, such as Android and iOS, and their respective app marketplaces to make our Platform available to our registered users. As the markets within which we operate are extensive users of Android as opposed to iOS, we currently provide an Android mobile application (the Red 101 App) released through Google’s Play Store and the Apple App Store. We also provide a mobile web interface for devices which cannot use Android applications or are unable to download apps from Google Play Store and the Apple App Store. The Red 101 App is the main entry point for a retailer to purchase goods and services through our Platform from distributors. Any changes in such systems and app marketplaces that degrade the functionality of our Red 101 App or give preferential treatment to our competitors’ apps could adversely affect our registered user’s usage and engagement on mobile devices.
If such mobile operating systems or app marketplaces limit or prohibit us from making our apps available to our registered users, make changes that degrade the functionality of our app, change the way we collect or use data, increase the cost of using our app, impose terms of use unsatisfactory to us, alter how payments can be made, increase our compliance costs, or modify their search or ratings algorithms in ways that are detrimental to us, or if our competitors’ placement in such mobile operating systems’ app marketplace is more prominent than the placement of our app, our growth could slow.
We are subject to requirements imposed by app marketplaces such as those operated by Google, who may change their technical requirements or policies in a manner that adversely impacts the way in which a registered user can use our Platform and how we collect, use and share data from registered users. The long-term impact of these and any other changes remains uncertain. If we do not comply with applicable requirements imposed by app marketplaces, we could lose access to the app marketplaces and users, and our business would be harmed. Any of the foregoing risks could adversely affect our business, financial condition, and results of operations.
As new mobile devices and mobile platforms are released in to the marketplace, we are unable to guarantee that certain mobile devices will continue to support our Red 101 App or that we can effectively roll out updates to our Red 101 App. Additionally, in order to deliver high-quality apps, we need to ensure that our Platform is designed to work effectively with a range of mobile technologies, systems, networks, and standards. If our registered users encounter any difficulty accessing or using our apps on their mobile devices or if we are unable to adapt to changes in popular mobile operating systems, we expect that our growth and engagement would be adversely affected.
We rely on software and services from third parties. Defects in, or the loss of access to, software or services from such third parties could harm our business and adversely affect the quality of our Platform.
Our offerings incorporate certain third-party software obtained under licenses from other third-party Software-as-a-Service (“SaaS”) providers, including for our Know-Your-Customer (“KYC”) checks, marketing, authentication, customer relationship management (“CRM”), monitoring, data visualization, mapping, and database tools. Such third parties may discontinue their products, cease to provide their products or service to us, go out of business, or otherwise cease to provide support for such products or services in the future. Commercially reasonable alternatives to the third-party software or services we currently license or receive, may not always be available, or it may be difficult or costly to replace existing third-party software or find a replacement third-party service. Our use of additional or alternative third-party software would require us to enter into license agreements with third parties, and we may not be able to enter into such agreements on advantageous terms. In addition, integration of the software used in our offerings with new third-party software may require significant work and substantial investment of our time and resources. Also, to the extent that our offerings depend upon the successful operation of third-party software, any undetected errors or defects in, or disruptions to the functionality of, such third-party software could prevent the deployment or impair the functionality of our offerings, delay new offering introductions, result in a failure of our offerings, and injure our reputation, which in each case could harm our financial condition and results of operations.
We rely on third parties for our payment processing infrastructure underlying our Platform. If these third parties become unavailable or their terms become unfavorable, our business could be adversely affected.
The convenient payment mechanisms provided on Red101 are key factors contributing to the development of our business. We rely on third parties, including CoralPay, DLocal, Pay@ and Stripe, for elements of our payment processing infrastructure to process payments for the sale and purchase of goods and services between registered users on Red101 by accepting payments from retailers and remitting payments to distributors and or brands. These third parties may refuse to renew our agreements with them on commercially reasonable terms or at all. If these companies become unwilling or unable to provide these services to us on acceptable terms or at all, our business may be disrupted. For certain payment methods, including credit and debit cards, we generally pay a higher fee which results in significant costs. In addition, online payment providers are under continued pressure to pay increased fees to banks to process funds, and there is no assurance that such online payment providers will not pass any increased costs on to us. If these fees increase over time, our operating costs will increase, which could adversely affect our business, financial condition, and results of operations. If the quality or convenience of our payment processing infrastructure declines for any reason, the attractiveness of our trading networks to retailers and distributors for the sale and purchase of goods and services could be adversely affected. If we are forced to migrate to other third-party payment service providers for any reason, the transition would require significant time and management resources, and may not be as effective, efficient, or well-received by retailers, distributors and brands.
| 4 |
Use of AI and machine learning in our operations may present additional legal, regulatory, and social risks, which could lead to additional costs and impact our business.
Because AI is a developing technology in its nascency, legal frameworks for AI governance are in their infancy quickly developing, and unpredictable. The misuse of AI raises new ethical issues and poses a number of risks that cannot be fully mitigated. Using AI while the technology is still developing may expose us to additional liability, reputational harm, and threats of litigation, particularly if the AI we adopt produces errors, intellectual property infringement or misappropriation, data privacy or cybersecurity issues, or otherwise does not function as intended.
The emergence of AI in recent years has also prompted lawmakers to consider regulation of AI. These regulations may impose certain obligations on organizations, and the costs of monitoring and responding to such regulations, as well as the consequences of non-compliance, could have an adverse effect on our operations or financial condition. For example, the EU’s Artificial Intelligence Act (“EU AI Act”), one of the first comprehensive regulations on AI came into force on August 1, 2024. The legislation introduces a risk-based framework for regulating AI systems and models with unacceptable risk models banned and the most stringent obligations applying to providers of AI systems classified as high risk. Non-compliance with the EU AI Act’s strictest prohibitions may lead to fines of up to €35 million, or 7% of a group’s total worldwide annual turnover, whichever is higher. After coming into effect, the EU AI Act will apply in stages, provisions relating to AI systems taking effect after six months, provisions on General Purpose AI in one year, two years for some high-risk AI systems and three years for the remainder. Whilst the EU AI Act only applies to output of AI that reaches the EU market, other substantial markets including the United States and the United Kingdom, are also in the process of considering AI-specific regulation. Notably, a Bill is making progress in California. In the United Kingdom, there has been a shift away from previous policy and the King’s Speech set out the new Labour government’s plans to “seek to establish the most appropriate legislation to place requirements on those working to develop the most powerful AI models”. The UK’s Prime Minister recently said that AI “must be within a regulated framework” but details of what the legislation might cover are thin on the ground. The legal landscape surrounding AI will require close monitoring in the coming years. There are no specific laws or regulations that directly regulate AI in Nigeria, South Africa, Brazil or Argentina. However, each of these countries is in the process of adopting AI regulation policies and we expect to be subject to them once they are adopted. For example, the African Union Development Agency, which includes Nigeria and South Africa, published a draft of a blueprint for regulation in its member states, which incorporates recommendations for industry-specific codes and practices, standards, and certification bodies. Argentina’s Undersecretariat of Information Technologies under the Office of the Chief of Staff approved the “Recommendations for a Reliable Use of Artificial Intelligence”, consisting of guidelines for the development of AI systems under the principles of security, non-discrimination, sustainability, privacy, data protection, human supervision, transparency, explainability, responsibility, accountability, education and governance, among others. In addition, Argentina’s Agency for Access to Public Information issued Resolution 161/2023, the “Programme for Transparency and Protection of Personal Data in the Use of Artificial Intelligence”, aimed at the promotion of processes of analysis, regulation and the strengthening of government capabilities in order to support the development and use of AI. In addition, Brazil intends to regulate AI through Bill No. 2,338/2023, which creates rules for making intelligence systems available in Brazil, establishes rights for people affected by their operation, and provides for penalties for violations, as well as information regarding the supervising body.
There can be no assurance that the planned legislation in the jurisdictions in which we operate will not have a material impact on our operations and the Company is monitoring the legislation in each of these jurisdictions with local counsel.
Use of AI in our operations poses inherent risks and could adversely affect our results of operations, reputation and brand.
We have and are continuing to incorporate AI, including machine learning, on our Platform, including with data collection, recommendations, fraud detection and pricing and promotions. This is a major aspect of our current business plan and our future business plan. If the output from these services is deemed to be inaccurate or questionable, we may not be able to rely on the use of AI and machine learning for our Platform. Without the use of AI and machine learning for our Platform, we will lose a number of the competitive advantages that we believe we have as compared to our competitors, which could lead to a loss in revenue. Such inaccurate or questionable information could also lead to a loss in our reputation and brand, which could further affect our results of operations. We may also be subject to litigation in the event that such inaccurate or questionable causes damage to one of our customers.
Risks Related to our Financial Condition and Capital Requirements
We have incurred significant net losses to date and we may continue to experience significant losses in the future.
We have incurred significant net losses since our inception. We incurred net losses of $46,236,849 for the year ended December 31, 2025 and $50,715,696 for the year ended December 31, 2024. As of December 31, 2025, we had an accumulated deficit of $194,547,170.
As we have a short operating history, it is difficult for us to predict our future operating results. We will need to generate and sustain increased total transaction value (“TTV”) and revenue and manage our costs to achieve profitability. Even if we do, we may not be able to become profitable.
Our ability to achieve profitability depends in large part on our ability to scale the business across our current markets and territories, which requires adding more brands, distributors and retailers to our Platform. Additionally, we need to be able to drive operational efficiencies in our business. We also intend to continue to invest heavily for the foreseeable future in our technology systems, particularly our AI and machine learning capabilities, our sales and marketing, and our personnel. As a consequence, we are of the view that we may incur net losses for some time in the future.
| 5 |
Our ability to generate profit also depends on our ability to manage our costs. We have expended and expect to continue to expend substantial financial and other resources to:
| ● | increase the engagement of registered users on our RedAI infrastructure and associated products (“RedAI”); | |
| ● | drive adoption of our Platform through marketing and incentives and increase awareness through brand campaigns; | |
| ● | enhance RedAI with newAI-powered infrastructure and products now coming to fruition, such as RAID (Realtime AI for Distribution), special AI agents and other functionality to maximize the value of our vast data foundation; and | |
| ● | invest in our operations to continue scaling our business to achieve and sustain long-term efficiencies. |
These investments may contribute to net losses in the near term. We may discover that these initiatives are more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these expenses or realize the benefits we anticipate. Certain initiatives may also require incremental investments or recurring expenses and may not be accretive to revenue growth, margin, or profitability for a longer time period, if at all. Many of our efforts to increase revenue and manage operating costs are new and unproven given the unique and evolving complexities of our business and the evolving nature of the RedAI infrastructure. Any failure to adequately increase revenue or manage operating costs could prevent us from sustaining or increasing any future profitability. Expansion of our offerings to include new services, additional technologies, additional markets and geographic territories, may initially harm any future profitability. We may also incur higher operating expenses as we implement strategic commercial initiatives. Additionally, we may not realize, or there may be limits to, the efficiencies we expect to achieve through our efforts to scale the business, enhance the functionality of our Platform, and optimize costs such as payment processing, support for our registered users and onboarding costs.
As such, due to these factors and others described in this “Risk Factors” section, we may not be able to become or sustain profitability or generate profitable growth in the future. If we are unable to sustain or increase profitability, the value of our business and the trading price of our ordinary shares may be negatively impacted.
The reports of our independent registered public accounting firm for the fiscal years ended December 31, 2024 and 2025 contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.
Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on our audited annual financial statements as of and for the years ended December 31, 2024 and December 31, 2025, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price of our ordinary shares and we may have a more difficult time obtaining financing. Further, the perception that we may be unable to continue as a going concern may impede our ability to raise additional funds or operate our business due to concerns regarding our ability to discharge our contractual obligations.
We will need additional capital, and financing may not be available on terms favorable to us, or at all.
We believe that our current cash and cash equivalents and anticipated cash flow from operations will not be sufficient to meet our anticipated cash needs for the next 12 months and will need to raise additional capital in the next month. As of December 31, 2025, we had cash and cash equivalents of only approximately $479,000 and used approximately $35 million of cash for operating activities in the year ended December 31, 2025. Furthermore, we had a net loss from operations in 2025 of approximately $43.6 million and marketing and commissions were approximately $49 million when revenue was only $48.5 million in the year ended December 31, 2025. We may also require additional cash resources due to changed business conditions or other future developments, including any changes in our account payable policy, marketing initiatives or investments we may decide to pursue. If these resources are insufficient to satisfy our cash requirements, we may seek to obtain a credit facility or sell additional equity or debt securities. The sale of additional equity securities could result in dilution of our existing shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all.
Our ability to obtain the necessary capital in the form of equity or debt to carry out our business plan is also subject to several risks, including general economic and market conditions, as well as investor sentiment regarding our planned business. These factors may make the timing, amount, terms and conditions of any such financing unattractive or unavailable to us. The prevailing macroeconomic environment may increase our cost of financing or make it more difficult to raise additional capital on favorable terms, if at all. If we are unable to raise sufficient capital, we may have to significantly reduce our spending and/or delay or cancel our planned activities, our operations and prospects could be negatively affected, and our business could fail.
| 6 |
Risks Relating to Our Business, Strategy and Industry
We have experienced significant operational expansion and continued revenue growth, operational and strategic expansion, and related impacts to margin and profitability in recent periods. Such historical trends, including growth rates, may not continue in the future.
We have grown rapidly since we launched what is now known as our RedAI infrastructure and associated products in April 2022. Our revenue increased $2,040,068, or approximately 4.4%, from $46,499,285 for the year ended December 31, 2024 to $48,539,353 for the year ended December 31, 2025. Our recent rapid growth has also resulted in increased costs as we expanded our operations to scale our business and increase the reach of RedAI and add additional registered users in each territory in which we operate. The rapid growth of RedAI over the past two years and related changes to our business and operations may not continue to develop as we expect. In addition, we have increased, and we expect to continue to increase, our sales and marketing teams as well as our sales and marketing campaigns. We also have increased and expect to continue to increase incentives to our registered users, continue engaging existing registered users and add new registered users to RedAI. Our growth initiatives may increase operating expenses in the near term, but the long-term benefits may vary. We also expect future trends in our revenue, margin, and profitability to vary in ways that we may not anticipate or predict, including as we experience shifts in revenue mix and service preferences of our registered users. These variations may be driven by external factors, such as macroeconomic conditions (including inflation), and our strategic initiatives, such as investments in new technologies and offerings, the focus on increasing TTV and revenue from registered users, and our strategic focus on further scaling our operations to improve our margin and profitability in the future. There can be no assurance whether we will drive greater engagement from our existing registered users, or from new brands, distributors or retailers or maintain the current level of demand for our offerings over the long term. Overall growth of our TTV and revenue depends in part on our ability to manage changes to our business and operations. As a result of the foregoing, our recent growth rates and financial performance should not necessarily be considered indicative of our future performance and results of operations.
Our metrics, including TTV and revenue, may also decline or fluctuate in the future as a result of other factors, including macroeconomic factors, increasing competition, strategic initiatives, and the maturation of our business, among others. Overall growth of our TTV, revenue, margin, and profitability depends on a number of factors, including our ability to:
| ● | attract new registered users to our Platform and sustain and expand our relationships with existing registered users; | |
| ● | accurately forecast our revenue and plan our operating expenses and investments for future growth; | |
| ● | successfully compete with other companies that are currently in, or may in the future enter, the markets and territories in which we compete, and respond to developments from these competitors such as pricing changes and the introduction of new services; | |
| ● | hire, integrate, and retain talented sales, customer service, engineering, and other personnel; | |
| ● | comply with existing and new laws and regulations applicable to our business; | |
| ● | successfully expand in existing markets and enter new markets and territories; | |
| ● | increase the adoption of and the revenue generated by our RedAI infrastructure and its associated products; | |
| ● | successfully launch new offerings and enhance RedAI and its features, including in response to new trends or competitive dynamics or the needs of our registered users and the technical impact of AI on the technology industry; | |
| ● | avoid interruptions or disruptions in our services; | |
| ● | effectively manage the growth of our technology infrastructure, personnel, and operations, particularly if our workforce becomes increasingly distributed as a result of our hybrid workforce model; and | |
| ● | maintain and enhance our reputation and the value of our brand. |
As a result, you should not rely on our TTV, revenue growth rate, or other key business metrics for any prior quarterly or annual period as an indication of our future performance.
We have a limited history operating our business at its current scale, scope, and complexity in an evolving market and economic environment, which makes it difficult to plan for future operations and strategic initiatives, predict future results, and evaluate our future prospects and the risks and challenges we may encounter.
We launched our Platform in April 2022, and the Platform has since significantly scaled and expanded. Accordingly, we have limited experience in, and data and results from, operating our business at its current scale, scope, and complexity and across several territories in a rapidly evolving market and economic environment. As a result, our ability to plan for future operations and strategic initiatives, predict future results of operations, and plan for and model future growth in revenue and expenses and prospects is subject to significant risk and uncertainty as compared to companies with longer and more consistent operating histories and in more stable macroeconomic environments and industries. In particular, we face risks and challenges relating to our ability to, among other things:
| ● | accurately forecast our revenue and budget for and manage our expenses; |
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| ● | attract new brands, distributors and retailers as registered users on our Platform and retain or increase the engagement of existing registered users in a cost-effective manner; | |
| ● | comply with existing and new laws and regulations applicable to our business; | |
| ● | plan for and manage capital expenditures; | |
| ● | anticipate and respond to macroeconomic changes and changes in the markets and territories in which we operate; | |
| ● | maintain and enhance the value of our reputation and brand; | |
| ● | effectively manage our growth; | |
| ● | successfully expand our geographic reach; | |
| ● | hire, integrate, and retain talented people at all levels of our organization; and | |
| ● | successfully maintain and enhance our Platform and our technology infrastructure for brands, distributors and retailers. |
Any predictions about our future revenue and expenses may not be as accurate as they would be if we had a longer history operating our business at its current scale, scope, and complexity, operated in a more predictable markets and territories, or had more certainty regarding levels of demand for our offerings.
You should consider and evaluate our prospects in light of the risks and uncertainties frequently encountered by growing companies in emerging markets. If our assumptions regarding the risks and uncertainties that we consider in planning and operating our business are incorrect or change, or if we do not address these risks and uncertainties successfully, including due to the lack of historical data from and experience in operating our business at its current scale, scope, and complexity or other factors, our results of operations could differ materially from our expectations, and our business, financial condition, and results of operations could be adversely affected.
If we fail to manage and expand our relationships with brands, distributors and retailers, our business and growth prospects may suffer.
Our business model involves connecting the fast-moving consumer goods (“FMCG”) “supply chain,” which consists of brands, distributors and retailers, and enable them to conduct business digitally. The success of RedAI in the territories in which we operate is dependent upon us onboarding a sufficient number of brands, distributors and retailers to create ecosystem dynamics that generate competitively priced goods and services to both attract new and retain existing registered users.
Although historically we have had a retention rate of approximately 78% for our distributors and we continue to attract new brands, distributors and retailers, There can be no assurance that in the future brands, distributors or retailers will continue to sell and buy products and services on our RedAI infrastructure and its associated products. Although we have sales agents in the territories in which we operate to identify and onboard brands, distributors and retailers, There can be no assurance as to the actual quantity we onboard as registered users and or the trading activity of each registered user.
We are increasingly pursuing licensing, infrastructure and joint venture arrangements, which may introduce operational, commercial and execution risks.
As part of our evolving commercial strategy, we are increasingly pursuing enterprise infrastructure licensing through our joint venture arrangements in selected markets, including arrangements relating to the deployment of our AI trading infrastructure and AI enabled features. These arrangements differ from our historical transaction-based commercial model where we entered the market without a joint venture arrangement which involved longer implementation timelines, enterprise integration requirements, and regulatory considerations.
These joint venture arrangements may also result in differences in revenue timing, revenue mix and commercial structure compared to our historical operations, including recurring or fixed fee licensing models in certain markets. The successful deployment and scaling of these arrangements may depend on enterprise adoption, integration into existing distribution environments and the continued expansion of AI enabled trade workflows.
While we believe these arrangements will support the long-term expansion and commercialization of our AI trading infrastructure, there can be no assurance regarding the timing or scale of AI trading revenue, profitability or market adoption associated with such initiatives.
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Our industry is highly competitive, with well-capitalized and better-known competitors. If we are unable to compete effectively, our business and financial prospects could be adversely impacted.
Delivery of intelligent trading infrastructure within business-to-business (“B2B”) commerce and supply chains is new, rapidly evolving and competitive. The FMCG industry is also intensely competitive. We are currently, and will continue to compete, with technology vendors including SAP, Oracle, Infor, and other smaller DMS vendors and suppliers. These competitors have substantially greater financial, research and development, personnel, and marketing resources than we do currently. Though these competitors are not currently primarily focusing on the markets and territories in which we operate, if these markets are developed or their potential is exposed on a greater scale, larger competitors may increase their focus on our markets over time, which could increase competitive pressure. Our competitors may also be able to develop competing platforms with broader capabilities, greater resources, or stronger market penetration.
For these and other reasons, we may not be able to compete successfully against our current and future competitors. Our inability to compete effectively with such competitors could have an adverse effect on our ability to bring new registered users to our Platform or increase the engagement of our existing registered users, or would otherwise harm our business, financial condition, and results of operations.
Our expansion into new product ranges and the substantial increase in the number of products sold on our Platform may expose us to new challenges and more risks.
Since launch, we have expanded the product offerings on RedAI to include a wide range of FMCG products. Expansion into new product ranges with a substantially increased number of products available across our trading networks involves new risks and challenges. Our lack of familiarity with these products and lack of relevant consumer data relating to these products may make it more difficult for us to anticipate demand and preferences. We cannot assure you that we will be able to recoup our investments in introducing these new product categories.
If we are unable to conduct our marketing activities more cost-effectively, our results of operations and financial condition may be materially and adversely affected.
We have incurred significant expenses on a variety of different marketing initiatives in each of the markets and territories in which we operate, designed to enhance our brand recognition and increase the number of registered users on our Platform by attracting new brands, distributors and retailers. We incurred $49,124,526 (or approximately 101% of our revenue) of marketing expenses in the year ended December 31, 2025, and $52,918,949 (or approximately 113.8% of our revenue) of marketing expenses in the year ended December 31, 2024.
Historically, we have prioritized growth investments, including customer acquisition and infrastructure expansion, which have resulted in elevated marketing expenditures relative to revenue. We may make and continue to make concessions to distributors that are designed to maximize any future profitability in the long term but may decrease revenue in the short term. These distributor concessions may negatively impact our revenue and financial results and the process for determining and quantifying the impact of these concessions requires judgment and estimates on the success of our distributors’ engagement. As a result, the impact of distributor concessions on our financial results may continue into future periods or have higher impacts than we anticipate.
Returns on our ongoing infrastructure investments may be slower than anticipated or may not reach expected levels, and such investments may be unsuccessful, resulting in partial or total loss.
We have invested and will continue to invest significant sums in expanding and upgrading our infrastructure. Since inception through December 31, 2025, we have invested approximately $13.6 million in developing our infrastructure and associated products, including approximately $2.5 million of capitalized software development costs during 2025. We expect to continue to invest in our technology capabilities for several years to come, to expand our product offerings, particularly data driven offerings, available to registered users. These costs will include the cost of hiring personnel to assist in that development as well as those of software providers. We expect to recognize the costs associated with these investments earlier than we receive some of the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect. We may not be able to recover our capital expenditures or investments, in part or in full and we cannot assure that the investments we undertake in expanding RedAI’s capabilities will be successful or that any of our competitors will not be able to create an infrastructure that is more advanced than our own.
Any interruption in the operation of brands and distributors’ fulfillment centers, front distribution centers, standalone warehouses, delivery stations or pickup stations for an extended period may have an adverse impact on our business.
The ability of brands and distributors registered on RedAI to process and fulfill orders accurately and provide a quality service depends on the smooth operation of their fulfillment centers, front distribution centers, standalone warehouses, and their delivery and pickup stations. We have limited control over these fulfillment centers, front distribution centers, standalone warehouses, and their delivery or pickup stations and any extended period of disruption, for whatever reason, could have a material adverse effect on our business, prospects, financial condition and results of operations. Their fulfillment infrastructure may be vulnerable to damage caused by fire, flood, power outage, telecommunications failure, break-ins, earthquake, human error and other events. If any of their fulfillment centers were rendered incapable of operations, then they may be unable to fulfill any orders, which could have a material adverse effect on our business, prospects, financial condition and results of operations.
The brands and distributors registered on RedAI maintain cooperation arrangements with a number of third-party logistics providers to deliver their products to retailers registered on Red101. Interruptions or failures in these third-party delivery services could prevent the timely or proper delivery of products to retailers. These interruptions may or may not be due to events that are within the control of the logistics providers. However, we have limited control over the logistics providers used by a brand or a distributor, thus any extended period of disruption, for whatever reason, to the supply chain could have a material adverse effect on our business, prospects, financial condition and results of operations.
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We depend on highly skilled personnel to grow and operate our business, and if we are unable to hire, retain, and motivate our personnel, our business may be severely disrupted.
We depend on our executive and senior management team and other key personnel, including our Chief Executive Officer and Founder, Justin Floyd. From time to time, there may be changes in our executive and senior management team. The loss of one or more of our executive officers and/or senior management team or the failure by our executive team to effectively work with our employees and lead our Company could harm our business. We do not maintain key person life insurance with respect to any member of our executive or senior management team.
In addition, our future success will depend, in part, on our continued ability to identify and hire employees with the skills and technical knowledge and ability that we will require to develop and expand the capability of our AI infrastructure business. These will include people in key management roles and responsibilities as well as talented software and AI engineers, marketing and merchandising personnel as well as operational personnel. We anticipate we shall face competition to be able to hire and retain these key people.
Our revenue and net income may be materially and adversely affected by any economic slowdown in the jurisdictions in which we operate as well as globally.
The success of our business ultimately depends on consumer spending in the FMCG market. We derive all of our revenue from Nigeria, South Africa, Brazil, Argentina, Türkiye and Saudi Arabia. As a result, our revenue and net income are impacted to a significant extent by economic conditions in these countries and globally. The global economy, markets and levels of consumer spending are influenced by many factors beyond our control, including consumer perception of current and future economic conditions, political uncertainty, levels of employment, inflation or deflation, real disposable income, interest rates, taxation and currency exchange rates.
An economic downturn, whether actual or perceived, a further decrease in economic growth rates or an otherwise uncertain economic outlook in any market in which we may operate could have a material adverse effect on our business, financial condition and results of operations.
Security breaches and attacks against our systems and network, and any potentially resulting breach or failure to otherwise protect confidential and proprietary information, could damage our reputation and negatively impact our business, as well as materially and adversely affect our financial condition and results of operations.
We have employed significant resources to develop our security systems and protect our infrastructure and our systems generally against breaches. While we maintain cybersecurity controls and monitoring systems, sophisticated attacks may nevertheless occur to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain. Breaches of our cybersecurity measures could result in unauthorized access to our systems, misappropriation of information or data, deletion or modification of client information, or a denial-of-service or other interruption to our business operations. As techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers, we may be unable to anticipate, or implement adequate measures to protect against, these attacks. If we are unable to avert these attacks on our technology systems, we could be subject to significant legal and financial liability, our reputation could be harmed and we could suffer a material adverse effect to our business, financial condition and results of operations.
We rely primarily on third-party insurance policies to insure our operations-related risks. If our insurance coverage is insufficient for the needs of our business or our insurance providers are unable to meet their obligations, we may not be able to mitigate the risks facing our business, which could adversely affect our business, financial condition, and results of operations.
We procure third-party insurance policies to cover various operations-related risks including employment practices liability, workers’ compensation, business interruptions, errors and omissions, cybersecurity and data breaches, crime, directors’ and officers’ liability, and general business liabilities. For certain types of operations-related risks or future risks related to our new and evolving offerings, we are not able to, or may not be able to, acquire insurance. In addition, we may not obtain enough insurance to adequately mitigate such operations-related risks or risks related to our new and evolving offerings, and we may have to pay high premiums, co-insurance, self-insured retentions, or deductibles for the coverage we do obtain. We rely on a limited number of insurance providers, and should such providers discontinue or increase the cost of coverage, we cannot guarantee that we would be able to secure replacement coverage on reasonable terms or at all. If our insurance carriers change the terms of our policies in a manner not favorable to us, our insurance costs could increase. Further, if the insurance coverage we maintain is not adequate to cover losses that occur, or if we are required to purchase additional insurance for other aspects of our business, we could be liable for significant additional costs.
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If the amount of one or more operations-related claims were to exceed our applicable aggregate coverage limits, we would bear the excess, in addition to amounts already incurred in connection with deductibles, self-insured retentions, co-insurance, or otherwise paid by our insurance policy. Historically, insurance providers have raised premiums and deductibles for many businesses and may do so in the future. As a result, our insurance costs and claims expense could increase, or we may decide to raise our deductibles or self-insured retentions when our policies are renewed or replaced. Our business, financial condition, and results of operations could be adversely affected if (i) the cost per claim, premiums, severity of claims, or number of claims significantly exceeds our historical experience and coverage limits; (ii) we experience a claim in excess of our coverage limits; (iii) our insurance providers fail to pay on our insurance claims; (iv) we experience a claim for which coverage is not provided; (v) or the severity or number of claims under our deductibles or self-insured retentions differs from historical averages.
We are subject to local laws, rules, and regulations in the jurisdictions in which we operate relating to insurance coverage which could result in proceedings or actions against us by governmental entities or others. Any failure, or perceived failure, by us to comply with existing or future local laws, rules, and regulations or contractual obligations relating to insurance coverage could result in proceedings or actions against us by governmental entities or others. Additionally, anticipated or future local laws, rules, and regulations relating to insurance coverage, could require additional fees and costs. Compliance with these rules and any related lawsuits, proceedings, or actions may subject us to significant penalties and negative publicity, require us to increase our insurance coverage and amend our insurance policy disclosure, increase our costs, and disrupt our business.
We face risks related to natural disasters, civil unrest, health epidemics and other outbreaks, which could significantly disrupt our operations.
Our business could be materially and adversely affected by natural disasters or the outbreak of health epidemics. Material adverse effects from diseases could result in numerous known and currently unknown ways including quarantines and lockdowns which impair the abilities of merchants to ship products. Any such occurrence could cause severe disruption to our daily operations and may even require the temporary closure of our operations.
Exchange rate fluctuations may materially affect our results of operations and financial condition.
Owing to the international scope of our operations, with our principal trading territories at present being in Nigeria, South Africa, Brazil and Argentina, fluctuations in exchange rates, particularly between the pound sterling and the U.S. dollar, as well as between the pound sterling and the Nigerian Naira, South African rand, Brazilian real and the Argentinean peso, may adversely affect us. As a result, our business and the price of our ordinary shares may be affected by fluctuations in foreign exchange rates, which may have a significant impact on the results of our operations and cash flows from period to period.
As a result of fluctuations in the exchange rate between the U.S. dollar and the pound sterling, the U.S. dollar equivalent of the proceeds that a holder of our ordinary shares could decline.
Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and share price.
As a publicly traded company, we are required to comply with the U.S. Securities and Exchange Commission’s (the “SEC”) rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in certain of our reports and provide an annual management report on the effectiveness of controls over financial reporting. We are not required to make an annual assessment of our internal control over financial reporting pursuant to Section 404. As an “emerging growth company,” as defined in the JOBS Act, we may take advantage of certain temporary exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act (and the rules and regulations of the SEC thereunder).
Risks Related to our Intellectual Property and Trademarks
We may not be able to prevent others from the unauthorized use of our intellectual property or trademarks, which could harm our business and competitive position.
We regard our trademarks, copyrights, patents, domain names, know-how, proprietary technologies, and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality, invention assignment and non-compete agreements with our employees and others, to protect our proprietary rights. Although we are not currently aware of any copycat websites that attempt to cause confusion or diversion of traffic from us at the moment, we may become an attractive target to such attacks in the future because of our brand recognition in the online retail industry in the jurisdictions in which we operate. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages.
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It is often difficult to register, maintain and enforce intellectual property and trademark rights in the jurisdictions in which we operate. We also have not registered our trademarks or other intellectual property rights in the jurisdictions in which we operate and would need to rely on our intellectual property and trademarks in the United Kingdom, Argentina and Europe to attempt to enforce our rights. Accordingly, we may not be able to effectively protect our intellectual property or trademark rights in the jurisdictions in which we operate. Policing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent the infringement or misappropriation of our intellectual property or trademarks. In the event we resort to litigation to enforce our intellectual property and trademark rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources and could put our intellectual property at risk of being invalidated or narrowed in scope. We can provide no assurance that we will prevail in such litigation, and even if we do prevail, we may not obtain a meaningful recovery. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in maintaining, protecting or enforcing our intellectual property or trademark rights could have a material adverse effect on our business, financial condition, and results of operations.
We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
There can be no assurance that our operations or any aspects of our business do not or will not infringe upon or otherwise violate patents, copyrights or other intellectual property rights held by third parties. We may from time to time in the future be subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be other third-party intellectual property that is infringed by our services or other aspects of our business. There could also be existing patents of which we are not aware that our Platform may inadvertently infringe. We cannot assure you that holders of patents purportedly relating to some aspect of our Platform or business, if any such holders exist, would not seek to enforce such patents against us in the United Kingdom, the United States, or any other jurisdictions in which we operate. If we are found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. In addition, we may incur significant expenses and may be forced to divert management’s time and other resources from our business and operations to defend against these third-party infringement claims, regardless of their merits. Successful infringement or licensing claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use of the intellectual property in question. Finally, we use open-source software in connection with our products and services. Companies that incorporate open-source software into their products and services have, from time to time, faced claims challenging the ownership of open-source software and compliance with open-source license terms. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open-source software or noncompliance with open-source licensing terms. Some open-source software licenses require users who distribute open-source software as part of their software to publicly disclose all or part of the source code to such software and make available any derivative works of the open-source code on unfavorable terms or at no cost. Any requirement to disclose our source code or pay damages for breach of contract could be harmful to our business, results of operations and financial condition.
Risks Related to our Ordinary Shares
Our failure to meet Nasdaq’s continued listing requirements, including compliance with the minimum bid price requirement, could result in a delisting of our ordinary shares.
If we fail to satisfy the continued listing requirements of The Nasdaq Capital Market (“Nasdaq”) such as the corporate governance requirements or the minimum stock price requirement, Nasdaq may take steps to delist our securities. Such a delisting would likely have a negative effect on the price of our securities and would impair your ability to sell or purchase our securities when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the Nasdaq minimum stock price requirement, or prevent future non-compliance with Nasdaq’s listing requirements. Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
On April 15, 2026, we received written notice from the Listing Qualifications Department of Nasdaq notifying us that, for a period of 30 consecutive business days, we failed to maintain a minimum closing bid price of $1.00 as required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have 180 calendar days, or until October 12, 2026, to regain compliance.
We have never paid dividends on our capital shares, and we do not anticipate paying dividends for the foreseeable future.
We have never declared or paid any cash dividends on our capital shares, and we do not anticipate paying any cash dividends in the foreseeable future. The payment of dividends, if any, in the future is within the discretion of our Board of Directors (the “Board”) and will depend on our earnings, capital requirements and financial condition and other relevant facts. We currently intend to retain all future earnings, if any, to finance the development and growth of our business. Accordingly, you must rely on the sale of your ordinary shares after price appreciation, which may never occur, as the only way to realize any future gain on your investment.
Our executive officers, directors, and principal shareholders have substantial control over our company, which could limit your ability to influence the outcome of key transactions, including a change of control.
As of the date of this annual report, our executive officers, directors, and principal shareholders and their affiliates beneficially own an aggregate of approximately 68% of our outstanding ordinary shares. As a result, these shareholders will be able to exercise a significant level of control over all matters requiring shareholder approval, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree, and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our shareholders of an opportunity to receive a premium for their ordinary shares as part of a sale of our company and might ultimately affect the market price of our ordinary shares.
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We are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies may make our ordinary shares less attractive to investors.
We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from various requirements that are applicable to other public companies that are not emerging growth companies.
For as long as we remain an emerging growth company we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not “emerging growth companies.” These exemptions include:
| ● | being permitted to provide only two years of audited financial statements, in addition to any required unaudited condensed interim financial statements, with correspondingly reduced “Management’s discussion and analysis of financial condition and results of operations” disclosure; | |
| ● | not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; | |
| ● | not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; | |
| ● | reduced disclosure obligations regarding executive compensation; and | |
| ● | exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. |
We will remain an emerging growth company until the earliest to occur of: (i) our reporting $1.235 billion or more in annual gross revenues; (ii) the end of fiscal year 2029; (iii) our issuance, in a three year period, of more than $1 billion in non-convertible debt; and (iv) the end of the fiscal year in which the market value of our ordinary shares held by non-affiliates exceeded $700 million on the last business day of our second fiscal quarter.
We have elected to take advantage of certain of the reduced disclosure obligations and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our shareholders may be different than the information you might receive from other public reporting companies in which you hold equity interests.
When we are no longer deemed to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. We cannot predict if investors will find our ordinary shares less attractive as a result of our reliance on exemptions under the JOBS Act. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share price may be more volatile.
We are a “smaller reporting company” and, even if we no longer qualify as an emerging growth company, we may still be subject to reduced reporting requirements.
We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of any fiscal year for so long as either: (i) the market value of our ordinary shares held by non-affiliates does not equal or exceed $250 million as of the prior June 30th; or (ii) our annual revenues did not equal or exceed $100 million during such completed fiscal year. To the extent we take advantage of such reduced disclosure obligations, it may also make the comparison of our financial statements with other public companies difficult or impossible.
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Risks Related to the Company being a Foreign Private Issuer or United Kingdom Company
We are a “foreign private issuer” under the rules and regulations of the SEC and, as a result, are exempt from a number of rules under the Exchange Act and are permitted to file less information with the SEC than a company incorporated in the United States.
We are incorporated as a public limited company in England and Wales and are deemed to be a “foreign private issuer” under the rules and regulations of the SEC. As a foreign private issuer, we are exempt from certain rules under the Exchange Act that would otherwise apply if we were a company incorporated in the United States, including:
| ● | the requirement to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies with securities registered under the Exchange Act; | |
| ● | the requirement to file financial statements prepared in accordance with U.S. GAAP; | |
| ● | the proxy rules, which impose certain disclosure and procedural requirements for proxy or consent solicitations; and | |
| ● | the requirement to comply with Regulation FD, which imposes certain restrictions on the selective disclosure of material information. |
In addition, our officers, directors and principal shareholders are exempt from the “short swing” profit recovery provisions of Section 16 of the Exchange Act and the related rules with respect to their purchases and sales of our securities. Accordingly, you may receive less information about us than you would receive about a public company incorporated in the United States and may be afforded less protection under the United States federal securities laws than you would be if we were incorporated in the United States.
As a foreign private issuer, we are not required to comply with many of the corporate governance standards of Nasdaq applicable to companies incorporated in the United States.
Our Board is required to maintain an audit committee comprised solely of three or more directors satisfying the independence standards of Nasdaq applicable to audit committee members. As a foreign private issuer whose ordinary shares are listed on Nasdaq, we are not required to comply with most of the other corporate governance rules of Nasdaq and have the option to follow certain UK corporate governance practices rather than those of Nasdaq, except to the extent that such laws would be contrary to U.S. securities laws and provided that we disclose the practices we are not following and describe the home country practices. While we intend to comply with the rules generally applicable to U.S. domestic companies listed on Nasdaq, we may in the future decide to use other foreign private issuer exemptions with respect to some or all of the other Nasdaq listing requirements. Following our home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on Nasdaq, may provide less protection than is accorded to investors under Nasdaq listing requirements applicable to domestic issuers. For example, there is no requirement in the UK corporate governance rules for independent directors to have regularly scheduled meetings at which independent directors are present, or for the nomination committee to be solely comprised of independent directors. In addition, the roles and responsibilities of the various board committees are different under the corporate governance rules in the United Kingdom when compared to the Nasdaq listing requirements.
We intend to rely on the “foreign private issuer exemption” with respect to the following requirements:
| ● | We do not intend to follow Nasdaq Rule 5605(b) pursuant to which a majority of the board of directors of the Company must be comprised of independent directors as defined in Rule 5605(a)(2). Such independence requirement is not required under our Articles or the Companies Act. In accordance with generally accepted business practice, the composition of the board of directors of the Company will be governed by the Articles, which do not impose independence requirements. | |
| ● | We do not intend to follow Nasdaq Rule 5620(c) regarding quorum requirements applicable to meetings of shareholders. Such quorum requirements are not required under English law. In accordance with generally accepted business practice, our Amended and Restated Articles of Association and the Companies Act 2006 (the “Companies Act”) provide alternative quorum requirements that are generally applicable to meetings of shareholders. | |
| ● | We do not intend to follow Nasdaq Rule 5635(c) regarding shareholder approval requirements for the issuance of securities in connection with a share option or purchase plan that is established or materially amended or other equity compensation arrangement is made or materially amended. Pursuant to the Companies Act, we cannot allot shares or grant rights to subscribe for or to convert any security into shares in the Company without an ordinary resolution of the shareholders. | |
| ● | We do not intend to follow Nasdaq Rule 5635(d) regarding shareholder approval requirements for the issuance of more than 20% of the outstanding ordinary shares of the issuer. Pursuant to the Companies Act, we cannot allot ordinary shares or grant rights to subscribe for or to convert any security into ordinary shares in the Company without an ordinary resolution of the shareholders. |
Except as stated above, we intend to comply with the rules generally applicable to U.S. domestic companies listed on Nasdaq. We may in the future decide to use other foreign private issuer exemptions with respect to some or all of the other Nasdaq listing requirements. Following our home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on Nasdaq, may provide less protection than is accorded to investors under Nasdaq listing requirements applicable to domestic issuers.
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It may be difficult for you to bring any action or enforce any judgment obtained in the United States against us or members of our Board, which may limit the remedies otherwise available to you.
We are incorporated as a public limited company in England and Wales and all of our assets are located outside the United States. In addition, several members of our Board are nationals and residents of countries outside the United States, including the United Kingdom. Most or all of the assets of the members of the Board domiciled located of the United States are also located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce judgments obtained in U.S. courts against them or us, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws.
The United States and the United Kingdom do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether or not predicated solely upon U.S. securities laws, is not automatically recognized or enforceable in England and Wales. In addition, uncertainty exists as to whether the English and Welsh courts would entertain original actions brought in England and Wales against us or our directors or executive officers predicated upon the securities laws of the United States or any state in the United States. Any final and conclusive monetary judgment for a definite sum obtained against us in U.S. courts would be treated by the courts of England and Wales as a cause of action in itself and sued upon as a debt so that no retrial of the issues heard in the U.S. courts would be necessary, provided that certain requirements are met consistent with English law (i.e. jurisdictional requirements. and public policy). Whether these requirements are met in respect of a judgment based upon the civil liability provisions of the U.S. securities laws is an issue for the English court making such decision. If an English court gives judgment for the sum payable under a U.S. judgment, the English judgment will be enforceable by methods generally available for this purpose.
As a result, U.S. investors may not be able to enforce against us or our executive officers, Board or certain experts named herein who are residents of the United Kingdom or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.
We intend to operate so as to be treated exclusively as a resident of the United Kingdom for tax purposes, but the relevant tax authorities may treat us as also being a resident of another jurisdiction for tax purposes or as otherwise being subject to income tax in another jurisdiction.
Under English law we are treated as a resident of the United Kingdom for tax purposes because we are incorporated in the United Kingdom.
The tax authorities of another jurisdiction, for example the United States, may treat us as also being a resident of that other jurisdiction for tax purposes or otherwise subject to income tax in such other jurisdiction, where for example it considers that we exercise management and control from that other jurisdiction or are engaged in trade or business activities in such other jurisdiction. Because this analysis is highly factual and may depend on future changes in our management and organizational structure, there can be no assurance regarding the final determination of our tax residence or whether we will be subject to income tax in any other jurisdictions. However, on the basis that we operate such that, (i) meetings of our Board in which strategic decisions will be made will be held on not less than a quarterly basis in the United Kingdom; (ii) all or the majority of directors present at each Board meeting will, save in extremis, be physically present in the United Kingdom; (iii) decision making by way of written resolution will be limited to minor decisions required to bring into effect strategic decisions that have already been taken by the Board in meetings convened in the United Kingdom, and only on points of detail rather than on key decisions; (iv) non-UK resident directors will not act outside of the powers which have been delegated to them in meetings of the Board; (v) at those meetings there are and will be full discussions of, and decisions are made regarding, all key strategic issues affecting us and our subsidiaries; (vi) those meetings are and will be properly minuted noting the location of directors at the time of such meeting; and (vii) we have and will have permanent staffed office premises in the United Kingdom providing key functions, then we anticipate that the risks are low of us being treated as resident for tax purposes in any jurisdiction other than the United Kingdom or otherwise being subject to income tax in another jurisdiction. Such analysis is always subject to the tax residence and other tax rules of that other jurisdiction. Should we be treated as resident for tax purposes in another jurisdiction other than the United Kingdom or otherwise having economic substance or being subject to income tax in another jurisdiction, we would be subject to taxation in such jurisdiction in accordance with such jurisdiction’s laws, which could result in additional costs and expenses. However, if that is the case, where (a) that other jurisdiction has a double tax treaty with the United Kingdom and (b) there is a tiebreaker provision in that tax treaty which allocates exclusive residence to either that other jurisdiction or the United Kingdom, there should be no double taxation although our overall effective tax rate may increase if the other jurisdiction’s tax rate is greater. If there is double taxation, we may in certain circumstances be able to claim unilateral credit against United Kingdom taxes in respect of taxes paid in that other jurisdiction, capped at the lower of the United Kingdom tax rate and the overseas tax rate on the relevant income or gains.
The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.
We are incorporated under English law. The rights of holders of our ordinary shares are governed by English law, including the provisions of the Companies Act, and by our Amended and Restated Articles of Association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations.
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The UK City Code on Takeovers and Mergers, or the Takeover Code, may apply to the Company.
The Company is incorporated in, and has its registered office in, the United Kingdom, but its securities are not admitted to trading on a regulated market or multilateral trading facility in the United Kingdom (or a stock exchange in the Channel Islands or the Isle of Man). The City Code shall only apply to the Company if it is considered by the Panel to have its place of central management and control in the United Kingdom (or the Channel Islands or the Isle of Man). This is known as the “residency test”. The way in which the test for central management and control is applied for the purposes of the City Code may be different from the way in which it is applied by the United Kingdom tax authorities, HMRC. For the purposes of determining where the Company has its place of central management and control, the Panel will consider, among other things, the structure of the Board, the functions of the directors of the Board and where they are resident.
A majority of the Board resides outside of the United Kingdom, the Channel Islands and the Isle of Man. Accordingly, based upon the Company’s current Board and management structure and its intended plans for its directors and management, for the purposes of the City Code, the Company is considered to have its place of central management and control outside of the United Kingdom, the Channel Islands or the Isle of Man. Therefore, the City Code is not expected to apply to the Company.
It is possible that, in the future, circumstances, and in particular the Board’s place of central management, could change which may cause the City Code to apply to the Company, and it is at this point that the Company and its shareholders would have the benefit of the protections that the City Code affords, including, but not limited to, under Rule 9 of the City Code as set out below.
The City Code is issued and administered by the Panel and provides a framework within which takeovers of companies subject to it are conducted. In particular, the City Code contains certain rules in respect of mandatory offers. Under Rule 9 of the City Code, if a person:
| (a) | acquires, whether by a series of transactions over a period of time or not, an interest in our shares which, when taken together with shares in which he or persons acting in concert with him are interested, carries 30% or more of the voting rights of our shares (which percentage is treated by the City Code as the level at which effective control is obtained); or | |
| (b) | who, together with persons acting in concert with him, is interested in shares that in the aggregate carry not less than 30% and not more than 50% of the voting rights in us, acquires additional interests in shares that increase the percentage of shares carrying voting rights in which that person is interested, |
the acquirer, and depending on the circumstances, its concert parties would be required (except with the consent of the Panel) to make a cash offer to all other shareholders for all of their shares in our capital at a price not less than the highest price paid for any interests in the shares by the acquirer or its concert parties during the 12 months before the offer was announced.
In addition, if at the time of a takeover offer, the Panel determines that the Company’s place of central management and control is in the United Kingdom, the Company would be subject to a number of rules and restrictions under the City Code which could delay, prevent or make it more difficult to consummate a merger, tender offer, proxy contest or change of control. This includes, but not limited to, the following: (i) the Company’s ability to enter into deal protection arrangements with a bidder would be extremely limited; (ii) the Company might not, without the approval of shareholders, be able to perform certain actions that could have the effect of frustrating an offer, such as issuing shares or carrying out acquisitions or disposals; and (iii) the Company would be obliged to provide equality of information to all bona fide competing bidders.
If we are deemed or become a passive foreign investment company (“PFIC”), for U.S. federal income tax purposes, this may result in adverse U.S. federal income tax consequences for U.S. taxpayers that are holders of our ordinary shares.
We will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75% of our gross income is “passive income” or (2) on average at least 50% of our assets by value produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.
We do not believe we were a PFIC for 2024, but there can be no assurance that we were not a PFIC for 2024 or that the United States Internal Revenue Service (the “IRS”), will agree with any position we take regarding PFIC status for such taxable year. There can also be no assurance that we will not be a PFIC in 2025 or for any other taxable year, as our operating results for any such years may cause us to be a PFIC. If we were to be characterized as a PFIC for U.S. federal income tax purposes in any taxable year during which a U.S. Holder (defined as a beneficial owner of our ordinary shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise elected to be treated as a United States person under the Code) owns our ordinary shares, and such U.S. Holder does not make an election to treat us as a “qualified electing fund,” or a QEF, or make a “mark-to-market” election, then “excess distributions” to a U.S. Holder, and any gain realized on the sale or other disposition of our ordinary shares will be subject to special rules. Under these rules: (1) the excess distribution or gain would be allocated ratably over the U.S. Holder’s holding period for the ordinary shares; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the IRS determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, it may be too late for a U.S. Holder to make a timely QEF or mark-to-market election. U.S. Holders who hold or have held our ordinary shares during a period when we were or are a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. Holders who made a timely QEF or mark-to-market election. However, because we do not intend to prepare or provide the information that would permit the making of a valid QEF election, such an election will not be available to U.S. Holders.
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ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Our corporate name is RedCloud Holdings plc. We are a public limited company organized under the laws of England and Wales and incorporated on April 15, 2024 under registered number 15647424.
On October 11, 2024, we undertook a formation transaction pursuant to which all existing security holders of RedCloud Technologies Limited, a private limited company incorporated in England and Wales, exchanged the securities they held in RedCloud Technologies Limited for an equivalent class and number of securities in RedCloud Holdings plc. In this annual report, we refer to this transaction as the “Formation Transaction.” Prior to the Formation Transaction, our business was operated through RedCloud Technologies Limited. In connection with the initial public offering (the “IPO”) and as part of the Formation Transaction, RedCloud Technologies Limited and its subsidiaries (the “RedCloud Group”) undertook the reorganization of its corporate structure, that resulted in the Company becoming the ultimate holding company of the RedCloud Group, and RedCloud Technologies Limited becoming the Company’s direct subsidiary. The purpose of the Formation Transaction was to insert a new public limited company as the holding company of the RedCloud Group so that we were able to offer shares to the general public. Accordingly, our business is now operated through the following corporate structure:
Our principal executive office is located at 50 Liverpool Street, London, EC2M 7PY, United Kingdom, and our phone number is +44 (0) 207 754 3735. Our agent for service of process in the United States is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, DE 19711.
As an England and Wales public limited company, we are organized pursuant to and subject to the provisions of The Companies Act 2006 and the regulations promulgated thereunder (collectively the “The Companies Act”).
For a description of our principal capital expenditures and divestitures for the two years ended December 31, 2025 and for those currently in progress, see Item 5. “Operating and Financial Review and Prospects.”
Our Status as a Foreign Private Issuer under the Exchange Act
We are a “foreign private issuer” under SEC rules. Consequently, for so long as we continue to meet such qualification, we will be subject to the reporting requirements under the Exchange Act applicable to foreign private issuers. We are required to file our annual report for each year with the SEC by April 30 of the following year. In addition, we will furnish reports on Form 6-K to the SEC regarding certain information that is distributed or required to be distributed by us to our shareholders.
Based on such foreign private issuer status, under existing rules and regulations, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as a U.S. company whose securities are registered under the Exchange Act. We also are not required to comply with Regulation FD, which addresses certain restrictions on the selective disclosure of material information. As of March 18, 2026, our directors and executive officers, but not 10% shareholders, are required to file ownership reports pursuant to Section 16(a) of the Exchange Act, but our directors, executive officers and 10% shareholders are not subject to “short-swing” profit recovery provisions of Section 16(b) of the Exchange Act with respect to their purchases and sales of our securities.
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Due to our exemption having a foreign private issuer status, we nevertheless currently expect to issue interim half yearly financial information publicly and to furnish it to the SEC on Form 6-K.
The SEC has issued a concept release relating to potential changes in the definition of foreign private issuer which could make it more difficult for a foreign company to be able to meet the definition of foreign private issuer. Depending on the nature of any change which the SEC adopts in the definition, we may cease to meet the definition of foreign private issuer, which could both increase our costs and make it more difficult for us to raise capital. Further, if we are no longer a foreign private issuer, we will not be able to take advantage of the home company exemption from certain Nasdaq corporate governance regulations and our directors, executive officers and 10% shareholders will be subject to the short-swing profit recovery provisions of Section 16(b) of the Exchange Act. See Item “16G. Corporate Governance” for information as the Nasdaq rules for which we use the home country exception to the Nasdaq rules.
Our Status as an Emerging Growth Company
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we will be eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.. As long as we remain an emerging growth company we will be exempt from the auditor attestation requirement. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.
We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of our IPO, (b) in which our total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; and (ii) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References to “emerging growth company” in this proxy statement/annual report have the meaning associated with that term in the JOBS Act.
Functional and Reporting Currency
The functional currency of RedCloud Holdings plc is the Great British Pound, however, as a foreign private issuer with the SEC, we have elected to report in US dollars as permitted by SEC Regulation S-X 210.3. Our management believes that the U.S. dollar is the currency of the primary economic environment in which we operate. Thus, our functional and reporting currency is the U.S. dollar. All the Company’s foreign operations have determined the local currency to be their functional currency, except for Argentina, which is discussed in more detail below. Accordingly, the foreign subsidiaries with local currency as functional currency translate assets and liabilities from their local currencies into US dollars by using year-end exchange rates while income and expense accounts are translated at the average monthly rates in effect during the year, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as a component of other comprehensive income (loss). Gains and losses resulting from transactions denominated in non-functional currencies are recognized in earnings in the consolidated statements of operations as foreign currency loss (gain).
The Company reports its Argentine operations as highly inflationary status in accordance with US GAAP for the years ended December 31, 2025 and 2024, and changed the functional currency for its Argentine subsidiary from Argentine Pesos to the United States Dollar, which is the appropriate functional currency of the entity based on the highly inflationary status. Transactions are then converted to the US Dollar using Argentina’s official exchange rate.
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Where to Get Additional Information
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We are subject to the information requirements of the Exchange Act and will file annual and other reports, including this annual report, and other information with the SEC. You can read our SEC filings, over the Internet at the SEC’s website at www.sec.gov. These documents, and other information concerning us, is available on our website at https://redcloudtechnology.com. Information contained on, or that can be accessed through, our website or any other website is expressly not incorporated by reference into and is not a part of this annual report.
B. Business Overview
We have developed and operate the RedAI infrastructure and associated products, facilitating the trading of everyday consumer supplies of FMCG products across business supply chains in Nigeria, South Africa, Argentina, Brazil and through joint ventures in Türkiye and Saudi Arabia. We believe RedAI solves a longstanding structural inefficiency in how key purchase and sales data is shared between manufacturer brands, distributors and retailers in high-growth consumer markets. For the year ended December 31, 2025, we generated revenue of approximately $48.5 million, a 4.4% increase year-on-year, with TTV growing 31% to $3.2 billion, served across a network of over 1,017 active distributors and 68,089 active retailers.
Through the facilitation of that trade, we collect, cleanse and aggregate transactional and behavioural data at scale. Cumulative trades across RedAI reached $6.9 billion between January 2023 and December 2025, creating a proprietary data foundation that delivers market-level insights beyond what individual company datasets or publicly available data can provide. We believe this asset—built through every order placed, every product listed and every buying decision made across our network—represents a structural and growing competitive advantage that becomes more powerful as transaction volumes increase.
It is this data foundation that now underpins our AI-focused product strategy. We have directed increasing research and development (“R&D”) and product investment toward user applications and agentic AI, monetising the dataset through AI-powered recommendations and predictions that support FMCG and supply chain professionals in planning, operations and sales. This includes the development of specialist AI agents—covering optimum inventory levels, economic order quantities (“EOQ”) and product mix presented to downstream customers. We believe this positions RedAI to move beyond the facilitation of trade and towards becoming the decision intelligence layer across global FMCG supply chains, where more trade is then executed on our networks.
The RedAI infrastructure has to date been sold on a consumption-based model, with transaction-based revenue charged to brands and distributors. As we transition to a more intelligence-driven product portfolio, we expect to monetise decision intelligence through a combination of subscription revenue and transactional revenue generated when trading decisions are executed across our network. The Platform enables structured data exchange across the FMCG value chain, allowing participants to move away from fragmented and manual procurement processes toward a more data driven and coordinated trading environment. By consolidating transactional and behavioural data across retailers, distributors, and brands, RedAI improves the transparency and efficiency of B2B purchasing and supply chain decision-making.
Retailers using the Platform are able to access AI-driven recommendations that assist with inventory planning and procurement decisions across large and complex product catalogues. These insights are generated through the analysis of historical and real-time purchasing behaviour, enabling faster identification of relevant products and suppliers.
Additionally, our Platform has AI and machine learning capabilities that provide our brands, distributors and retailers with trading and product insights and data to help them make better commercial decisions regarding their business operations. For example, our Platform has the capability to (1) inform retailers when they are running low on products, (2) inform distributors what other retailers in the area in which they operate are selling, and (3) inform brands and distributors the type of goods and products retailers are looking for on the Platform. We currently operate in Argentina, Brazil, Nigeria, and South Africa which are high consumer growth markets and plan to expand to additional countries in the future.
The Platform also enhances demand side visibility for brands and distributors by identifying purchasing trends and product requirements across specific retail networks and geographies. This enables suppliers to better understand localised demand signals and to engage more efficiently with relevant retail partners, improving route-to-market effectiveness.
Our Mission
The global FMCG industry represents $14.6 trillion in annual trade, yet we believe an estimated $2 trillion of that value is lost to preventable inventory inefficiency — chronic overstocking and understocking caused by fragmentation and a near-total absence of shared data across supply chains. Brands, distributors and retailers operate in commercial isolation, making consequential buying and selling decisions without visibility into the demand signals and supply dynamics that surround them.
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This structural inefficiency has persisted for decades. What has changed is the technology available to address it. The emergence and rapid maturation of generative and agentic AI has created, for the first time, the means to collect, interpret and act on trading data at the scale and speed that FMCG supply chains require — yet the industry’s core infrastructure has not kept pace.
RedCloud’s mission is to build the intelligent infrastructure of global trade: generating and aggregating proprietary transactional and market data from across the FMCG industry through RedAI, and converting that data into the decisions, predictions and autonomous trading actions that enable brands, distributors and retailers to compete and grow in real time.
The RedAI Infrastructure
RedAI is an intelligent infrastructure and associated products that provides FMCG manufacturers, distributors and retailers with a faster, more intuitive way to trade effectively with each other to ensure the right products reach shelves, in appropriate quantities and at the right time. Before 2025, data collection and transactional volume was centered around the Red101 retailer app and B2B marketplace technology, increasingly delivering insights and recommendations to customers via RedInsights dashboards and reports. Since 2025, we have increased our commercial focus on aggregation and monetization of the proprietary data through RedAI as a unique selling proposition in the market, such that customers value RedAI for both predictive and decision intelligence and access to our trading networks to streamline their operations. Simultaneously the dramatic impact of generative AI and its increasing transformation of software development has provided an opportunity to reimagine the RedAI user experience and development roadmap through AI native infrastructure, AI agents, Model Context Protocol (“MCP”) integrations and a more flexible infrastructure to suit the needs of enterprise customers. This has enabled the Company to begin commercializing its RedAI infrastructure through enterprise licensing and joint venture deployment structures in selected international markets, including Saudi Arabia and Türkiye. These arrangements are intended to enable regional deployment of the Company’s AI-enabled trade infrastructure while leveraging local operating expertise, distribution relationships and infrastructure requirements.
We currently operate our Platform in what we consider the high growth consumer markets of Argentina, Brazil, Nigeria, and South Africa. As of December 31, 2025, we had approximately 996 sellers (distributors, wholesalers and brands), representing 7,910 brands, over 210,000 products listed and 65,512 retailers on our Platform. To date, we have generated our revenue from applying a transaction-based revenue on the TTV of each transaction conducted on our Platform. All revenue we receive is from the brand or distributors. Retailers on the Platform do not pay any fees on the transactions to which they are a party. The transaction-based revenue ranges from 1% to 5% of the TTV. For the year ended December 31, 2025, the average transaction-based revenue equated to approximately 1.5% of the TTV. For the year ended December 31, 2025, we had processed approximately 827,323 orders with approximately $3.2 billion in TTV. Furthermore, the decline in our Argentinian market reflects our strategic decision to reallocate capital to higher return opportunities, including our JV licensing model while the operations remain active in the country. As of January 2026, we began deploying RedAI ‘packages’ for mid-market distributors that attract a subscription fee in addition to transactional revenue, recognizing the value of our intelligence and forward operating officers in the field. In addition, our joint ventures are paying an annual fee to license the RedAI infrastructure into their markets.
Technological Capabilities
RedAI Infrastructure and Associated Product Today
The Company currently operates the following sub-branded propositions, powered by RedAI data and intelligence:
| ● | RedAI – the data foundation, machine learning and intelligence capabilities presented to users. Other product brands are ‘powered by’ RedAI. | |
| ● | Red101 — the Company’s retailer-facing ordering and re-order app, enabling account holders to place and pay for orders directly. | |
| ● | RedInsights — dashboards and reporting tools delivering data-driven insights and recommendations to distributor and brand customers. | |
| ● | TradeX — a bulk trading programme facilitating large-volume B2B transactions between distributors and retailers. |
Together these components formed an integrated trading platform, generating revenue primarily through transaction-based fees applied to the TTV of orders conducted across RedAI.
RedAI Roadmap
The Company is in late development of a significant evolution of RedAI, which is expected to undergo a phased launch to enterprise customers first, beginning in H2 2026. The upcoming RedAI releases retain and enhance the functionality of the legacy components while introducing a new layered architecture comprising three principal components: a business application layer with initial intelligence features, powered by recently announced RAID (Realtime AI for Distribution) engine.
The business application layer is expected to dedicated functional environments across three domains, each enabling Decision Intelligence — AI-generated recommendations and insights delivered within role-based application modules:
| ● | RedAI Strategy — commercial intelligence across market share, product information, and retailer coverage | |
| ● | RedAI Operations — inventory optimisation, stockout prevention, and automated replenishment | |
| ● | RedAI Sales — route optimisation, upsell recommendations, and autonomous order execution support |
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Other product elements already announced for future release include:
RAID (Realtime AI for Distribution) was announced for launch H2 in initially contains a two-tier, learning-to-rank system, designed to deliver highly relevant product recommendations at scale across distributor networks. Trained on 3.7 million completed trade transactions, RAID has achieved accuracy levels (NDCG) that are significantly above the >80% threshold generally considered commercially impactful for ranking systems in an R&D validation. Unlike consumer recommendation engines that infer intent from behavioural signals, RAID. is trained on executed trade. RAID is designed to be exposed at the application layer to drive decisions. By embedding intelligence directly at the point of transaction, RedAI enables distributors and retailers to act on predicted outcomes, increasing average order value, improving repeat rates and optimising inventory flow in near-live trading environments. This represents a shift from backward-looking analysis to forward-looking execution.
Specialist AI Agents:
| ● | RedAI Inventory Agent (Distribution): expected to support inventory managers to reduce both stockouts and excess inventory by continuously monitoring inventory levels versus predicted market demand signals to recommend optimal reorder quantities and timing. By dynamically balancing economic order quantity against actual market demand, the agent’s predictive recommendations are designed to streamline trade while improving working capital efficiency and service levels across the supply chain. | |
| ● | RedAI Sales Agent (Distribution): expected to support sales teams to maximise inventory sell-out performance by identifying high-propensity buyers, recommending pricing strategies and ‘best-sold with’ product bundles. Improves performance of each salesperson by automating research steps to reducing effort on low-propensity customers, while increasing sales order value. | |
| ● | RedAI Market Planning Agent (FMCG): provide FMCG brand managers with granular visibility of market performance of branded product at category and SKU level, including competitive activity, channel dynamics, and localized growth opportunities. By surfacing actionable intelligence from across RedCloud’s trade data network, and providing recommendations for action, the agent is expected to directly support the growth of market share and competitive advantage. |
The Company expects to make additional product announcements in due course about other planned elements of the RedAI infrastructure and expects to invest in a proactive roadmap of new products and features and improvements in due course.
Our Market Opportunity
The FMCG market is currently valued at over $14.6 trillion globally and growing at around 5% CAGR. FMCG products are the largest group of consumer products spread across various categories and represent those required in everyday life ranging from foods and beverages, non-prescription medicines and office supplies. In our operating markets of Nigeria, South Africa, Brazil, Argentina, and planned future markets of operation of Türkiye and Saudi Arabia, the FMCG market is collectively valued at over $1.2 trillion (2025 estimates, Cognitive Research). Additionally, according to Euromonitor, market weight and share of growth are increasingly moving to emerging markets, which include the countries we currently operate in. Emerging markets are expected to account for 47% to 75% of the sales growth (across verticals) in FMCG goods.
Revenue breakdown for the years ended December 31, 2025 and December 31, 2024 is as follows:
| (U.S. dollars) | ||||||||||||||||||||||||
| Nigeria | Argentina | South Africa | Brazil | Peru | Total | |||||||||||||||||||
| 2025 | $ | 38,541,234 | $ | 98,834 | $ | 9,734,927 | $ | 103,218 | $ | 61,140 | $ | 48,539,353 | ||||||||||||
| 2024 | $ | 22,962,513 | $ | 18,820,235 | $ | 4,070,887 | $ | 620,712 | $ | 24,938 | $ | 46,499,285 | ||||||||||||
For a further description of the principal services and products the Company provides, including a breakdown of the Company’s revenues by geographic market, see “Item 5. Operating and Financial Review and Prospects” and “Notes to the Consolidated Financial Statements – Note 10 – Reportable Segments,” included in “Item 18. Financial Statements.”
The majority of B2B FMCG trade within our operating markets occurs offline or over WhatAapp and email, relying on what we believe to be guesswork and ‘recency bias,’ where trades are based on previous purchases rather than anticipating changing demand or opportunity in the market. Globally, in emerging markets, distributors cater to around 500 million micro, and medium sized retailers. These businesses face immense costs, with an estimated three out of four FMCG product launches ending in failure, an annual inventory shortfall exceeding $2 trillion and escalating expenses in bringing FMCG products to market. The physical availability of products presents a trillion-dollar opportunity; having the right product at the right price at the point of purchase is crucial for the success of future commerce. We believe that our RedAI infrastructure, and the aggregated data and intelligence within it, can be useful across the supply chain to address the inventory gap, while enabling our customers to drive their own growth through increased competitiveness and efficiency.
Seasonality
Historically our business has not experienced material seasonal fluctuations in net revenue. However, we do observe moderately higher seasonal demand during the months of November and December due in part to holiday shopping, and a moderate reduction in demand in January. This seasonality also varies by country, as factors such as cultural festivals and climates impact everyday FMCG consumption across specific categories.
Our Growth Strategy
Our strategy is to enable the development of strong brand recognition, data engagement, and distribution at scale through an infrastructure-led, license-based economic model that competes against traditional B2B marketplaces. We approach markets with a proactive method for engaging distributors and retailers, aiming to rapidly gather essential data on key product information, inventory, and purchasing cycles. This data is instrumental in assisting distributors to optimize their market routes effectively. This data allows us to continually provide superior discovery, search, and trading and expand key FMCG products and services.
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The key elements of our strategy to grow our business include:
Increase Active Retailers and Trading Share
As of December 31, 2025, we had approximately 65,512 retailers and 996 sellers (distributors, wholesalers and brands) active on our Platform. Moving forward, we are committed to enhancing and promoting the value proposition of our Platform. Our focus lies on attracting new retailers while also expanding their buying frequency and product categories. This growth strategy will be driven by customer loyalty programs, top-tier customer service, targeted marketing initiatives, promotional campaigns, and the continuous expansion of our marketing affiliates. Additionally, we will encourage the use of our diverse range of mobile commerce apps.
Expand Products and Brands
We believe that the growth in both the number of product categories and brands purchased within each category will contribute to higher average spending per customer, ultimately driving trading volume upwards. As of December 31, 2025, our Platform featured over 42,572 products from 7,910 brands. Our primary objective is to elevate the retailer shopping experience, boost retailer engagement, and create new avenues for retailers by expanding and highlighting additional products and brands.
Enhance the Success of Retailers on a Broad Basis
Our goal is to enhance the success of a diverse range of retailers on our Platform by amplifying their visibility to pertinent buyer demand and equipping them with enhanced tools, such as data science applications, to foster personalized buyer interactions. Leveraging advanced data science and analytics to develop our own AI capabilities, we will assist distributors in pinpointing products and enhancing the conversion rate from visitor engagements to completed transactions.
Generate Data and Cloud Computing Technologies
We believe that the data generated within our Platform holds substantial value for our customers and various ecosystem participants. Our ongoing strategy involves the strategic application of data intelligence and deep learning technologies across multiple areas such as Platform design, user interface optimization, search functionalities, targeted marketing initiatives, logistics efficiency, location-based services, and financial services enhancements. This data can be used in numerous ways, including but not limited to creating new product offerings and monetization channels with commercial partners that improve access to finance, enhance cash-flow or increase product turnover for our customers.
We foresee AI evolving into a fundamental element of e-commerce infrastructure. Over the past five years, we have dedicated significant resources to developing our proprietary cloud infrastructure, not only to bolster our own operations but also to support the endeavors of third parties, including our valued brands and distributors. Moving forward, we remain committed to substantial investments in our RedAI infrastructure and products to fortify both our internal operations and those of our partners. We have a dedicated R&D data team focusing on innovation in deep learning and machine learning technologies with the primary aim of increasing transaction size and enhancing customer retention. This innovation combined with data gathered through our Platform can be used to create reports on market intelligence and trends around regional consumption, demand and inventory flows. We believe these reports can be commercialized and are valuable to retailers, distributors, brands and other trade bodies.
Sales and Partnerships
We currently have sales teams located in Nigeria, South Africa, Brazil and Argentina. We are particularly focused on new partnerships with leading FMCG companies as we believe this can cause substantial growth by also attracting their retailers throughout the jurisdictions in which we operate.
The Company also intends to selectively pursue expansion opportunities through joint venture and infrastructure licensing structures with regional partners, including recently initiated arrangements in Saudi Arabia and Türkiye, which the Company believes may provide a more capital efficient framework for international deployment of its RedAI infrastructure and enterprise trade technologies.
Licensing
As part of our growth strategy, we have entered into two license agreements, one covering Saudi Arabia and one covering Türkiye, which are intended to support the expansion of our infrastructure-led, license-based economic model into key international markets. Through these arrangements, we plan to enable the development of strong brand recognition, scaled distribution, and enhanced data engagement while competing against traditional B2B marketplaces. Our approach focuses on proactively engaging distributors and retailers to rapidly collect and analyze critical market data, including product information, inventory trends, and purchasing cycles, which we believe will help distributors optimize their market routes and improve trading efficiency. We expect to launch operations under these license agreements during 2026 and believe we will begin to generate revenue from these markets in 2026.
Marketing and Advertising
To grow our business, we need to increase user participation and activity on our Platform. Our approach to meet this goal includes product marketing, growth and digital marketing initiatives, brand and content and targeted lead generation, including but not limited to, messages and promotional campaigns, automated and distributed through our channels including SMS, E-mail, WhatsApp, Notifications, In-app banners, promotional categories and events.
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Once brands, distributors and retailers became users of RedAI and Red101, we drive further user acquisition, engagement, and retention, and to cultivate a dynamic ecosystem that appeals to brands, distributors and retailers alike. Specifically, we use our transactional data, customer profiles, and interaction insights to uncover purchasing trends and preferences. These insights are then used for our check-out voucher program, which is designed to incentivize customers at the point-of-sale by offering vouchers that can be applied to future purchases. This program serves three primary purposes: (1) encouraging customer acquisition & retention, (2) increasing Average Transaction Value and (3) enhancing our data source. To date, the program has demonstrated measurable success. Our customer retention rate has decreased by 2% in the fiscal year 2025, to 77%, compared to 2024. The Average Transaction Value decreased by approximately 37% in the fiscal year 2025 to $3,915, compared to $6,182 in the fiscal year 2024. This decrease was a direct and anticipated result of our deliberate strategic expansion into Nigeria’s open market retail segment. Over the same period, the number of active retailers on the Platform increased by 94%, reflecting a substantial shift in the composition of our retail network toward a larger base of smaller-format retailers whose individual purchasing capacity is structurally lower than that of wholesalers and larger retail partners. This expansion is consistent with our strategic focus on the distributor-to-retailer leg of the FMCG supply chain, where secondary sales activity has historically not been captured by brand owners
Competition
Delivery of intelligent trading infrastructure within B2B commerce and supply chains is new, rapidly evolving and competitive. We are currently, and will continue to, compete with technology vendors including SAP, Oracle, Infor, and other smaller DMS vendors and suppliers.
Though these competitors are not currently primarily focusing on the markets and territories in which we operate, if these markets are developed or their potential is exposed on a greater scale, larger competitors may increase their focus on our markets over time, which could increase competitive pressure. Our competitors may also be able to develop competing platforms and/or infrastructure with broader capabilities, greater resources, or stronger market penetration.
Our Competitive Strengths
Experienced Management Team
Our Chief Executive Officer and Co-founder, Justin Floyd, has a 30-year track record of founding and scaling technology companies in what he considers underserved industries. He is a pioneer in the open commerce movement which seeks to bring trust to today’s global B2B supply chains. Additionally, the rest of our senior management have experience in technology and finance, having previously worked at Orange Money, Microsoft, Vodafone, and Deutsche Bank.
Trusted Partner in Our Jurisdictions of Operation
As of December 31, 2025, we had approximately 996 national, regional, and local distributors, wholesalers and brands that collectively represent more than 7,910 brands transacted on RedAI. We believe this represents the broadest selection of FMCG products through a single platform in the markets we operate and provides a competitive edge over international giants like Alibaba by fostering local trade and business ecosystems. This focus on regional transactions translates to a smaller carbon footprint due to reduced reliance on lengthy global supply chains. We also believe this strengthens the resilience of local economies by promoting internal trade networks and lessening dependence on outside sources.
Based on our experience, we believe the jurisdictions in which we operate have issues with fraud and retailers are skeptical of purchasing products online due to fear of fraud. RedAI has been built and developed specifically for markets where brands want to establish a trusted presence and local supply chain for their inventory to help alleviate this fear. We believe RedAI is recognized in our jurisdictions of operation as a reliable source for brands and retailers to trade their inventory in a secure environment where products can be tracked efficiently. Additionally, we require all third-party brands and distributors to meet our standards for product authenticity and service reliability to provide credibility and appeal for RedAI. Our retailers can then confidently navigate through Red101 and trust the strength and authenticity of the offered brands, ensuring a superior product selection, convenience, and cost. We believe this provides us with an advantage over larger competitors who do not have the ability to meet these standards.
AI and Machine Learning Capabilities
RedAI’s machine learning algorithms can process millions of data points each day to optimize a range of purchasing behavior by retailers, including order build, inventory turn ratios, restock and out of stock, personalization, ads quality, inventory forecasting, order fulfillment, delivery mobilization, rebates and payment. We believe our data first approach is a key driver of our customer engagement across the markets in which we operate and provides our brands and distributors with an advantage over other local distributors that do not have these capabilities.
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Connectivity
As opposed to our competitors, like Amazon and Alibaba, that do not allow for parties on their platforms to directly communicate, brands, distributors and retailers can directly connect on RedAI. This allows brands, distributors and retailers several advantages, including but not limited to, the following:
| ● | Retailers can source inventory from local brands and distributors directly to expedite the delivery process. | |
| ● | Brands and distributors can obtain higher returns on investment through improved product launches due to having discussions with retailers about what they really need. |
Scalable Logistics Infrastructure
We have invested significantly in our proprietary technology, including a distributed relational database, computing clusters, and personalized product search engines. This infrastructure supports our high volume of transactions and ensures reliability, scalability, and cost-effectiveness. We believe our scalability allows distributors to offer retailers the best selection, quality, value, and convenience, which helps them attract more customers and drives higher engagement. This results in more orders and increased retailer spending compared to the traditional methods previously utilized by our brands and distributors.
Third-Party Ecosystem Business Model
Our exclusively third-party ecosystem model allows for rapid scaling without the risks of providing such products ourselves, including but not limited to, inventory management, logistical operations and warehouse storage. We believe this approach drives profitability, strong cash flow, and enables us to aggressively invest in our technology, product innovation, and ecosystem expansion instead of having to resources on inventory management, logistical operations and warehouse storage.
Intellectual Property
Our intellectual property consists primarily of proprietary software which operates on our data lake of proprietary trading data, powering our AI-native Intelligent infrastructure. We have not obtained any patents on our software, but instead protect it as confidential know-how/trade secrets and/or as unregistered copyrightable software.
As of the date of this annual report, we own the registered trademarks REDCLOUD and RED 101 which are registered in the United Kingdom and the European Union. We also own several trademark registrations in Argentina for the mark RED 101. We intend to seek trademark protection in other countries by registering our trademarks in those countries in which we operate or plan to operate. The below table identifies the current trademark registrations we own for REDCLOUD and RED 101.
| Mark | Country | Status | Owner | Reg. Date | Reg. No. | Classes | ||||||||||||||
| REDCLOUD
(stylized with design) |
UK | Registered | RedCloud Technologies Limited | 3/4/15 | UK00003085845 | 9 | ||||||||||||||
| REDCLOUD | UK | Registered | RedCloud IP Limited | 3/28/20 | UK00917082983 | 36, 45 | ||||||||||||||
| REDCLOUD | EU | Registered | RedCloud IP Limited | 3/28/20 | 017082983 | 36, 45 | ||||||||||||||
| RED 101 | UK | Registered | RedCloud IP Limited | 1/26/19 | UK00917958937 | 9, 35, 36, 42, 45 | ||||||||||||||
| RED 101 | EU | Registered | RedCloud IP Limited | 1/26/19 | 017958937 | 9, 35, 36, 42, 45 | ||||||||||||||
| RED 101 | AR | Registered | RedCloud IP Limited | 5/10/18 | 3024752 | 9 | ||||||||||||||
| RED 101 | AR | Registered | RedCloud IP Limited | 5/10/18 | 3145810 | 36 | ||||||||||||||
| RED 101 | AR | Registered | RedCloud IP Limited | 2/23/21 | 3145876 | 45 | ||||||||||||||
| RED 101 | AR | Registered | RedCloud IP Limited | 2/23/21 | 3145809 | 35 | ||||||||||||||
| RED 101 | AR | Registered | RedCloud IP Limited | 2/23/21 | 3145875 | 42 | ||||||||||||||
We also own several domain names that incorporate our trademarks REDCLOUD and RED 101, with our primary domain name being used for our Company’s main website, namely, www.redcloudtechnology.com.
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Government Regulations
Regulatory Matters in the Principal Jurisdictions in which We Operate
We have conducted reviews of the regulatory frameworks in the principal jurisdictions in which we operate and believe we follow the relevant regulatory frameworks in such jurisdictions, including Nigeria, Brazil, Argentina and South Africa. Due to the different regulations in each jurisdiction, we are required to have a different variation of our infrastructure in each jurisdiction in order to comply with the applicable jurisdiction’s laws. The effort needed to comply with each jurisdiction’s legislation requires a substantial amount of time and resources. For example, we have been required to hire local counsel in each of these jurisdictions to ensure we are in compliance with the laws. This has a material effect on our results of operations due to increase costs related to payments to employees and consultants to adjust RedAI to comply with each jurisdiction’s laws. We also compete against parties in our jurisdictions that do not consummate transactions on the internet and are therefore not required to utilize resources to comply with certain of these laws.
Nigeria
We are subject to applicable laws and regulations that relate directly or indirectly to our operations in Nigeria. These laws, regulations, and standards govern issues such as worker classification, labor and employment, anti-discrimination, payments, worker confidentiality obligations, product liability, environmental protection, personal injury, text messaging, subscription services, intellectual property, consumer protection and warnings, marketing, taxation, privacy, data security, competition, unionizing and collective action, arbitration agreements and class action waiver provisions, terms of service, mobile application and website accessibility, money transmittal, and background checks. We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to our services in Nigeria and to operation of any facility in any jurisdiction which we would conduct activities.
The Company and Allied Matters Act (CAMA)
The CAMA provides a regulatory framework for how businesses should be carried out within Nigeria and provides for the incorporation, registration, organization and management of corporate organizations in Nigeria, including online business such as B2B platforms. All foreign entities are required to register their business in Nigeria with the Corporate Affairs Commission.
National Digital Economy and E-Governance Bill
The National Digital Economy and E-Governance Bill is pending before the National Assembly for consideration. This bill when enacted into law will cover electronic transactions, e-contract and some aspects of consumer protection. The timeline for passing a bill into law in the National Assembly is difficult to predict, as the legislative process can take a considerable amount of time. The duration depends on several factors, including the complexity of the bill, its economic significance, the extent of debate, and the speed at which both chambers of the National Assembly conduct their reviews and deliberations.
National Information Technology Development Agency Act (NITDA Act)
The NITDA Act established the National Information Technology Development Agency (“NITDA”) as the regulatory body responsible for creating the enabling environment for the development, deployment, adoption and application of information communication technology and systems in Nigeria. The functions of NITDA include: (i) the development, standardization, application, monitoring, evaluation and regulation of information technology practices, activities and systems in Nigeria; (ii) the development of guidelines for electronic governance and monitoring the use of electronic data interchange and other forms of electronic communication transactions as an alternative to paper-based methods in commerce; (iii) the provision of guidelines to facilitate the development and maintenance of appropriate information technology systems in Nigeria.
In line with its mandate, NITDA issued the Guidelines for Nigerian Content Development in Information and Communication Technology, 2019 (the “Guidelines”). The Guidelines apply to all Federal Ministries, Departments, Agencies, Federal Government-owned companies (either fully or partially owned), Federal institutions, private sector organizations, business enterprises and individuals engaged in any information and communication technology- related activities or services within Nigeria. The Guidelines specify the various roles and obligations of: (i) software development firms; (ii) hardware manufacturers; and (iii) providers of software-enabled products/services.
The Federal Competition and Consumer Protection Act (FCCPA) 2018
The FCCPA aims to: (a) promote and maintain competitive markets in the Nigerian economy; (b) promote economic efficiency; (c) protect and promote the interests and welfare of consumers; (d) prohibit restrictive or unfair business practices which prevent, restrict or distort competition, or constitute an abuse of a dominant position of market power in Nigeria. The FCCPA applies to all undertakings and all commercial activities within, or having effect within Nigeria. In particular, it applies to all commercial activities aimed at making profit and geared towards the satisfaction of any public demand.
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The FCCPA established the Federal Competition and Consumer Protection Commission (“FCCPC”) to develop and promote fair, efficient, and competitive markets in the Nigerian economy and to also facilitate access by all citizens to safe products and secure the protection of rights for all consumers in Nigeria. Some of the functions of the FCCPC include:
| (a) | identifying anti-competitive, anti-consumer protection and restrictive practices and making rules and regulations under the FCCPA with regards to competition and protection of consumers; | |
| (b) | eliminating anti-competitive agreements, misleading, unfair, deceptive or unconscionable marketing, trading and business practices; | |
| (c) | protecting consumer interests; | |
| (d) | ensuring that all service providers comply with local and international standards of quality and safe service delivery; | |
| (e) | causing an offending company, firm, trade, association or individual to protect, compensate, provide relief and safeguards to injured consumers; | |
| (f) | compel manufacturers, suppliers, dealers, importers, wholesalers, retailers, or other undertaking where appropriate to certify that all prescribed standards for their goods and services have been met; | |
| (g) | impose sanction on any entity that violates the FCCPA or any regulation issued by the FCCPC. |
The FCCPA also established the Competition and Consumer Protection Tribunal. The Tribunal has the powers to hear appeals from or review any decision of the FCCPC or any sector-specific regulatory authority in a regulated industry in respect of competition and consumer protection matters.
The FCCPA grants consumers various rights. Among these rights is the requirement that businesses must display the price of goods or services whenever they are offered for sale. Consumers also have a right to receive goods that are fit for purpose, of good quality, and compliant with applicable industry sector regulations.
Central Bank of Nigeria’s Regulation on Electronic Payments and Collections for Public and Private Sectors in Nigeria 2019
The Central Bank of Nigeria (“CBN”) issued the “Regulation on Electronic Payments and Collections for Public and Private Sectors in Nigeria 2019” to provide guidelines and standards for electronic payments and collections across various sectors, including e-commerce. This Regulation also includes provisions that are relevant for online businesses and e-commerce activities in Nigeria The objective of the Regulation is to guide the end-to-end electronic payment of salaries, pensions and other remittances, suppliers and revenue collections in Nigeria by CBN regulated entities such as payment processors in order to ensure the availability of safe, effective and efficient mechanisms for conveniently making and receiving all types of payments from any location and at any time, through multiple electronic channels.
Under the Regulations, specific roles and obligations are imposed on the various stakeholders. All payers are required to: (a) maintain appropriate account with Deposit Money Bank; (b) adopt a CBN approved end-to-end electronic payment platform for all forms of payment and collections; (c) provide basic infrastructure for making and receiving electronic payments; (d) bear the cost of electronic payments while ensuring that beneficiaries receive actual amounts due to them.
Suppliers are required to: (a) obtain and provide details of Tax Identification Number to the payers; (b) report all wrongfully received funds or excess payments to their financial institution’s customer service desk; and (c) in the event of duplicated/excess payment not noticed but withdrawn by the beneficiary, the beneficiary shall make funds available for refund to the payer in line with the Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria.
Whilst the Regulation did not make provisions for payment gateway integration, transaction security, consumer protection, anti-money laundering and KYC compliance, cross-border transactions, there are other CBN guidelines and circulars that addresses these areas.
AI Regulation in Nigeria
There is currently no AI-specific regulation in Nigeria. Notwithstanding, the existing legal and regulatory frameworks (such as data protection laws, human right laws, cybersecurity law, copyright and patent laws) may cover some aspects AI development, deployment and application in Nigeria. For instance, if we use an AI system that processes personal data of individuals, then we must comply with the requirements of the data protection laws.
The NITDA recently issued a Draft National Artificial Intelligence Strategy to address the challenges and opportunities presented by AI. This policy aims to provide a strategic framework for AI development and deployment in Nigeria. The Draft National Artificial Intelligence Strategy seeks to set Nigeria as “a global leader in harnessing the transformative power of AI through responsible, ethical, and inclusive innovation, fostering sustainable development through collaborative efforts.”
Data Protection Legislation
Processing of personal data is primarily regulated by the Nigerian Data Protection Commission (“NDPC”), a regulatory authority set up under the Nigerian Data Protection Act 2023 (the “NDPA”). In addition to the NDPA, Nigeria’s data protection regime is also governed by the Nigeria Data Protection Regulations, 2019 (the “NDPR”), the NDPR Implementation Framework 2020, and the Guidance Notice on the Registration of Data Controllers and Data Processors of Major Importance 2024.
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The NDPA applies where:
| a. | the data controller or data processor is domiciled in, resident, or operating in Nigeria; | |
| b. | the processing of personal data occurs within Nigeria or | |
| c. | the data controller or the data processor is not domiciled in, resident, or operating in Nigeria but is processing the personal data of data subjects in Nigeria. |
The NDPA requires that the data controller must have a lawful basis for every personal data processing activity. We can rely on one of the following lawful bases to process personal data: consent, performance of a contract, legitimate interests, vital interests, compliance with legal obligations and performance of a public task. The data protection laws further require every data controller to implement appropriate technical and organizational measures to ensure the security of the personal data it processes. Accordingly, each data controller shall develop internal data protection policies to guide its data protection practices. The data controller is required to inform the data subjects via a privacy notice of how it handles the personal data of the data subjects.
The reporting obligations under the data protection laws are:
| a. | Filing of Annual Data Protection Audit: data controllers are required to conduct annual data protection audits if they process the personal data of more than 1,000 data subjects in six months or 2,000 data subjects in twelve months. The data controller is to conduct the audit through Data Protection Compliance Organization licensed by the NDPC. The audit report is to be submitted to the NDPC on or before March 15th of each year. | |
| b. | Data Breach Notification: Where a personal data breach occurs, the data controller is required to inform the NDPC within 72 hours of becoming aware of the breach if the breach is likely to result in any risk to the rights and freedoms of the data subjects. The notification should state, where feasible, the nature of the breach, including the categories and approximate number of data subjects and personal data records affected. Where the personal data breach is likely to result in high risk to the rights and freedoms of the data subjects, the data controller shall immediately notify the affected data subjects. |
The NDPA requires data controllers of major importance (“DCMIs”) to register with the NDPC. A data controller qualifies as a DCMI if it keeps or has access to a filing system (analogue or digital) for processing personal data and it:
| a. | processes personal data of more than 200 data subjects within a period of six months; or | |
| b. | carries out information and communication technology services on any digital device that has storage capacity and belong to another individual; or | |
| c. | process personal data as a service provider in any of the following sectors – finance, communications, health, education, insurance, export and import, aviation, tourism, oil and gas, and electric power. |
As such, where we keep a filing system for processing personal data and meet at least one of the above requirements, we qualify as a DCMI and need to register with the NDPC.
The penalty for violating the NDPA and NDPR is:
| a. | N10,000,000 (Ten Million Naira) or 2% of the annual gross revenue in the preceding financial year, whichever is higher, in the case of a data controller who is a DCMI; or | |
| b. | N2,000,000 (Two Million Naira) or 2% of the annual gross revenue, whichever is higher, in the case of a data controller who is not a DCMI. |
Brazil
E-Commerce, Data Protection and Taxes
In addition to regulations affecting digital payment schemes, we are also subject to laws relating to Internet activities, e-commerce and data protection, as well as tax laws and other regulations applicable to Brazilian companies generally. Internet activities in Brazil are regulated by Brazilian Federal Law No. 12,965/14, as amended, known as the Brazilian Civil Rights Framework for the Internet, which embodies a substantial set of rights of Internet users, and obligations relating to Internet service providers. This law exempts intermediary platforms from liability for user-generated content in certain cases. On the other hand, this law provides for penalties (including fines) in case of non-compliance.
The laws and regulations applicable to the Brazilian digital payments industry and to the offering of financial services are subject to ongoing interpretation and change, and our digital payments business may become subject to regulation by other authorities.
Changes in tax laws, tax incentives, benefits or differing interpretations of tax laws may adversely affect our results of operations
Changes in tax laws, regulations, related interpretations and tax accounting standards in Brazil, may result in a higher tax rate on our earnings, which may reduce our profits and cash flows from operations.
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The Brazilian government may propose changes to the tax regime applicable to different sectors of the economy, including changes that represent an increase in our tax burden and the tax burden of our consumers and suppliers, which can negatively impact our business. These changes include changes in tax rates, tax base, tax deductibility and, occasionally, the creation of taxes (temporary or non-temporary). If these changes directly or indirectly increase our tax burden, we may have our gross margin reduced, adversely affecting our business and the results of operations.
On December 20, 2023, the Brazilian Congress enacted Constitutional Amendment No. 132, which provided a broad reform of the Brazilian tax system, with the extinction of a variety of taxes, including social contributions, federal tax on industrialized products, the Municipal tax on services and the tax on the circulation of goods and services, for the creation of two new taxes on operations with goods and services.
We are still unable to quantify the effects of these changes or any other additional reforms, if approved, as certain proposed amendments to the Constitution provide for the enactment of regulations regarding these new taxes, which regulations have not been presented yet. These changes may result in impacts for us that cannot be assessed yet. Accordingly, any increase in tax rates in Brazil, the creation of new taxes or the recognition of taxes that affect our operations may adversely affect us.
Furthermore, we are subject to tax laws and regulations that may be interpreted differently by tax authorities and us. The application of indirect taxes, such as sales and use tax, value-added tax, goods and services tax, to businesses like ours is a complex and evolving issue. Significant judgment is required to evaluate applicable tax obligations. In many cases, the ultimate tax determination is uncertain because it is not clear how existing statutes apply to our business. One or more states or municipalities, the federal government or other countries may seek to challenge the taxation or procedures applied to our transactions imposing the charge of taxes or additional reporting, record-keeping or indirect tax collection obligations on businesses like ours. New taxes could also require us to incur substantial costs to capture data and collect and remit taxes. If such obligations were imposed, the additional costs associated with tax collection, remittance and monitoring could have a material adverse effect on our business and financial results.
Consumer Protection Laws
We are subject to several laws and regulations designed to protect consumer rights—most importantly, Brazilian Federal Law No. 8,078/90, as amended, (Código de Defesa do Consumidor, or the “Consumer Protection Code”), which sets forth the legal principles and requirements applicable to consumer relations in Brazil. This law regulates, among other things, commercial practices, product and service liability, strict liability of the supplier of products or services, reversal of the burden of proof to the benefit of consumers as the hypo sufficient party, the joint and several liability of all companies within the supply chain, abuse of rights in contractual clauses, advertising and information on products and services offered to the public. The Consumer Protection Code further establishes the consumers’ rights to access and modify personal information collected about them and stored in private databases. These consumer protection laws could result in substantial compliance costs.
Data Privacy and Protection
With regard to the compliance with data protection regulations, besides the Brazilian Federal Constitution, we are subject to the Brazilian Civil Rights Framework for the Internet, the Consumer Protection Code, Bank Secrecy Law and the Brazilian Federal Law No. 13.709 of August 14, 2018, called the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados, or the “LGPD”). We are also subject to intellectual property rules, and to tax laws and related obligations such as the rules governing the sharing of customer information with tax and financial authorities. It is unclear whether the tax and regulatory authorities would seek to obtain information regarding our customers. Any such request could come into conflict with the data protection rules, which could create risks for our business.
The Brazilian Civil Rights Framework for the Internet establishes principles, guarantees, rights and duties for the use of the Internet in Brazil, including regulation about data privacy for Internet users.
In September 2020, the LGPD came into effect, except for its administrative sanctions, which became effective on August 1, 2021. The LGPD establishes detailed rules to be observed in the maintenance and processing of personal data and provides, among other measures, rights to the data subjects, cases in which the processing of personal data is allowed, obligations and requirements relating to security incidents involving personal data and the transfer and sharing of personal data.
The LGPD further establishes penalties for non-compliance with its provisions, ranging from a warning and exclusion of personal data processed in an irregular way to fines or the prohibition from processing personal data. The LGPD also authorized the creation of the ANPD, an authority that oversees compliance with the rules on data protection. The ANPD initiated its activities in 2020 and has been acting mainly in the regulation of specific provisions of the LGPD, the analysis of communications of security incidents involving personal data, and has initiated administrative sanctioning procedures, as well applied sanctions, mainly against public entities. See “Risk Factors—Risks Relating to Intellectual Property, Privacy and Cybersecurity—Unauthorized disclosure of, improper access to, or destruction or modification of data through cybersecurity breaches, computer viruses or otherwise, or disruptions to our systems or services, could expose us to liability, protracted and costly litigation and damage our reputation.”
Any additional privacy laws or regulations enacted or approved in Brazil or in other jurisdictions in which we operate could harm our business, financial condition or results of operations.
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Artificial Intelligence Regulation
There is currently no specific regulation on artificial intelligence (“AI”) in Brazil. However, some Brazilian laws in force already regulate at some extent the development, use, and exploitation of said technology. For example, the processing of personal data through AI systems is subject to the LGPD, the use of material protected by copyright by AI systems is covered by Brazilian Law n. 9,610/1998 (“Copyright Law”), and the civil liability of AI providers is subject to the Brazilian Civil Code or, where applicable, to the Consumer Protection Code.
Additionally, the Brazilian National Congress has been discussing Bill of Law 2,338/2023 (the “AI Bill of Law”), which aims to regulate the development and ethic use of AI systems in Brazil. The AI Bill of Law is heavily inspired in the European Union’s AI Act and provides for an approach based on risk.
In this regard, the AI Bill of Law sets forth an AI risk classification (prohibiting AI systems deemed as ‘excessively risky’), defines a governance structure for the development and use of AI systems by private or public entities, and provides for the rights of individuals affected by AI systems. It is not possible to say by when the AI Bill of Law will be approved by the Brazilian National Congress and converted into a law.
Argentina
Consumer Protection
The Argentine Constitution expressly establishes in Article 42 that consumers and users of goods and services have a right to protection of health, safety and economic interests in a consumer relationship. Consumer Protection Law No. 24,240, as amended, regulates several issues concerning the protection of consumers and end users in a consumer relationship, in the arrangement and execution of contracts.
The Consumer Protection Law, and the applicable sections of the Argentine Civil and Commercial Code are intended to regulate the constitutional right conferred under the Constitution on the weakest party to the consumer relationship and prevent potential abuses deriving from the stronger bargaining position of vendors of goods and services in a market economy where standard form contracts are widespread.
As a result, the Consumer Protection Law and the Argentine Civil and Commercial Code deem void and unenforceable certain contractual provisions included in consumer contracts entered into with consumers or end users, including those which:
| ● | deprive obligations of their nature or limit liability for damages; | |
| ● | imply a waiver or restriction of consumer rights and an extension of distributor rights; and | |
| ● | impose the shifting of the burden of proof from the consumer to the distributor in order to protect the consumers. |
In addition, the Consumer Protection Law imposes penalties ranging from warnings to the forfeiture of concession rights, privileges, tax regimes or special credits to which the sanctioned party may be entitled, including closing down establishments for a term of up to 30 days.
The Consumer Protection Law and the Argentine Civil and Commercial Code define consumers or end users as the individuals or legal entities that acquire or use goods or services, free of charge or for a price for their own final use or benefit or that of their family or social group. In addition, both laws extend consumer protections to those who acquire or use goods or services, with or without consideration, for their own final use or that of their family or social group. The protection under the laws afforded to consumers and end users encompasses the entire consumer relationship, from the offering of the product or service, to cover more than just those relationships established by means of a contract.
The Consumer Protection Law defines the suppliers of goods and services as those who produce, import, distribute or commercialize goods or supply services to consumers or users.
The Argentine Civil and Commercial Code defines a consumer agreement as an agreement that is entered into between a consumer or end user and an individual or legal entity that acts professionally or occasionally either with a private or public company that manufactures goods or provides services, for the purpose of acquisition, use or enjoyment of goods or services by consumers or users for private, family or social use.
The Consumer Protection Law establishes joint and several liability of any producer, manufacturer, importer, distributor, supplier, seller and anyone who has placed its trademark on the thing or service for damages caused to consumers derived from a defect or risk inherent in the thing or the provision of a service.
The Consumer Protection Law excludes the services supplied by professionals that require a college degree and registration in officially recognized professional organizations or by a governmental authority. However, this law regulates the advertisements that promote the services of such professionals.
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The Consumer Protection Law determines that the information contained in the offer addressed to undetermined prospective consumers binds the offeror during the period in which the offer takes place and until its public revocation. Further, it determines that specifications included in advertisements, announcements, prospectuses, circulars or other media bind the offeror and are considered part of the contract entered into by the consumer.
Pursuant to Resolution No. 104/2005 issued by the Secretariat of Technical Coordination reporting to the Argentine Ministry of Treasury, Consumer Protection Law adopted Resolution No. 21/2004 issued by the Mercosur’s Common Market Group which requires that those who engage in commerce over the Internet (E-Business) disclose in a precise and clear manner the characteristics of the products and/or services offered and the sale terms. Failure to comply with the terms of the offer is deemed an unjustified denial to sell and gives rise to sanctions.
On September 17, 2014, the Argentine Congress enacted a revised Consumer Protection Law through Law No. 26,993. This law, known as “Conflict Resolution in Consumer Relationships System,” provides for the creation of new administrative and judicial procedures for this field of Law. It created a two-instance administrative system: the Preliminary Conciliation Service for Consumer Relationships (Servicio de Conciliación Previa en las Relaciones de Consumo) (“COPREC”) and the Consumer Relationship Audit, and a number of courts assigned to the resolution of conflicts between consumers and producers of goods and services (Fuero Judicial Nacional de Consumo). In order to file a claim, the amount claimed may not exceed a fixed amount equivalent to 55 adjustable minimum living wages, which are determined by the Ministry of Labor, Employment and Social Security. The claim is required to be filed with the administrative agency. If an agreement is not reached between the parties, the claimant may file the claim in court. COPREC is currently in full force and effect. However, the court system (Fuero Judicial Nacional de Consumo) is not in force yet. Therefore, any court claim should be currently filed with the existing applicable courts. A considerable volume of claims filed against us are expected to be settled pursuant to the system referred to above, without disregarding the full force and effect of different instances for administrative claims existing in the provincial sphere and the City of Buenos Aires, which remain in full force and effect, where potential claims related to this matter could also be filed.
Credit Card Law
Law No. 25,065, as amended by Law No. 26,010 and Law No. 26,361, governs certain aspects of the business activity known as “credit card system.” Regulations impose minimum contract contents and approval thereof by the Argentine Ministry of Industry, as well as limitations on chargeable interest by users and commissions charged by the retail stores subject to the system. The Credit Card Law applies both to banking and non-banking cards, such as “Tarjeta Shopping,” issued by Tarshop S.A. Pursuant to Communication “A” 5477 issued by the Central Bank, interest rates charged by non-financial entities may not exceed the interest rate published by the financial system for unsecured loans to individuals, as reported monthly by the Central Bank by more than 25%.
South Africa
The Protection of Personal Information Act
To give effect to the constitutional right to privacy, on August 20, 2013, the National Assembly passed the Protection of Personal Information Bill [B9D of 2009], which is largely based on the European Data Protection Directive, which was replaced by the General Data Protection Regulation in May 2018. The Bill was signed into law by the President on November 19, 2013 and was gazetted as an Act on November 26, 2013.
The majority of the provisions of the Protection of Personal Information Act, No. 4 of 2013, as amended (“POPIA”) (including the Processing Conditions) commenced on July 1, 2020 and responsible parties have had to comply with these provisions since July 1, 2021.
POPIA applies to the automated or non-automated processing of personal information entered into a record in any form (provided that when the recorded personal information is processed by non-automated means, it forms part of a filing system or is intended to form part thereof) by or for a responsible party who or which is domiciled in South Africa, or not domiciled in South Africa, unless the processing relates only to the forwarding of personal information through South Africa.
“Personal information” is widely defined in POPIA and means information relating to an identifiable, living, natural person, and (where applicable) an identifiable, existing juristic person, including the name, race, gender, marital status, address and identifying number of a person, symbol, e-mail address, physical address, telephone number, location information, online identifier or other particular assignment to the person.
POPIA applies to both public and private bodies who process personal information, but excluded from its application is, among other things, the processing of personal information (among other things) that has been de-identified to the extent that it cannot be re-identified again.
POPIA places compliance obligations on “responsible parties”. A responsible party (i.e. a public or private body or any other person which, alone or in conjunction with others, determines the purpose of and means for processing personal information) is, among other things, obliged to comply with the 8 (eight) conditions for lawful processing of personal information set out in Chapter 3 of POPIA.
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Additionally, there are a number of South African statutes regulate electronic communications, including the Electronic Communications and Transactions Act, No. 25 of 2002 (“ECTA”), as amended, which apply to a number of aspects of our business. ECTA seeks to give functional equivalence to electronic transactions by ensuring that, generally, such transactions have the same status as physically concluded transactions. ECTA is therefore a law of general application which applies to transactions which are concluded electronically or by way of data messages.
Consumer Protection
The Consumer Protection Act, No. 68 of 2007, as amended (the “CPA”) which came into effect on March 31, 2011, consolidated a previously fragmented legislative regime related to consumer protection.
The CPA, as a general rule, in terms of section 5, applies to: (i) the promotion of goods and services within South Africa; (ii) every transaction for the supply of goods and services occurring within South Africa, unless specifically exempt; (iii) the goods and services themselves after the transaction is completed.
The CPA does not apply to transactions which are specifically exempt, including where a consumer is a juristic person whose asset value or annual turnover, at the time of the transaction, equals or exceeds the threshold (currently ZAR2 million rand) and a transaction which constitutes a credit agreement under the National Credit Act, 34 of 2005 although it will continue to apply to the goods or services supplied in terms of that credit agreement.
Notwithstanding the exclusion listed above, section 5(5) provides that if any goods are supplied within South Africa to a person in terms of a transaction that is exempt from the application of the CPA, those goods and the importer or producer, distributor and retailer of those goods are nonetheless subject to the safety recall and product liability provisions set out in sections 60 and 61, respectively.
Section 60 regulates a product recall. Section 61 applies to unsafe goods, a product failure, defect or hazard in any goods or inadequate instructions or warnings provided to the consumer pertaining to any hazard associated with the use of any goods and all the persons in the supply chain (producer, importer, distributor and retailer) and suppliers of services could potentially face a claim for product liability if the unsafe, hazardous or defective goods caused harm to persons or damage to property.
The CPA has far-reaching consequences for both consumers and suppliers of goods and services in South Africa. It provides a comprehensive framework for the rights and the duties of consumers and suppliers. Contracts between consumers and suppliers, the manner in which suppliers interact with consumers, including market-related communications, suppliers’ liability, suppliers’ accountability to consumers and the administration of suppliers and practices are all regulated by the CPA. A “consumer”, for the purposes of the CPA, includes a customer to whom goods or services are marketed, a customer who enters into a transaction with a supplier and the user, recipient or beneficiary of the goods or services (irrespective of whether the consumer was a party to the transaction involving the actual supply of the goods or services). The implication of this qualification is that there need not be a contract between the supplier and the consumer of the goods or services in order for the CPA to apply.
The CPA introduced some significant departures from the South African common law. Most notably, section 61 of the CPA, referred to above, does not require fault (i.e., negligence or intent) on the part of a supplier of products to be proven in a claim for loss or harm arising from a faulty product. It also extends the type of loss or damages that may be claimed by a plaintiff beyond what would ordinarily be permitted under the common law, by allowing a plaintiff to institute a claim against not only the supplier who supplied the goods to it, but to other suppliers in the supply chain as well. In addition, this section of the CPA, extends liability to consequential damages (i.e., economic loss). Thus, a consumer may be able to claim indirect damages suffered, such as medical expenses, loss of income and/or loss of profits.
Although the CPA imposes liability on all suppliers in the supply chain irrespective of their fault, the liability imposed is not absolute. A consumer must still prove the other elements necessary to sustain a claim against a supplier in terms of the common law, such as causation (i.e. whether the failure of the product caused the loss allegedly suffered) and loss suffered.
Section 61 also provides for a number of defenses which, if proved by a supplier, will exonerate or limit the liability of the supplier.
In addition, the CPA provides consumers with a number of remedies. If a consumer has a complaint against a supplier, they can take that complaint to the National Consumer Commission, and, in certain instances, the National Consumer Tribunal or a Court.
Artificial Intelligence Regulation
AI is currently largely unregulated in South Africa and has not yet formalized any policy documents or presented bills to parliament for the regulation thereof. In April 2019, the President appointed members to the Presidential Commission on the Fourth Industrial Revolution (“PC4IR”), which will assist the government in taking advantage of the opportunities presented by the digital industrial revolution. In addition, the Artificial Intelligence Institute of South Africa was launched by the Department of Communication and Digital Technologies on November 30, 2022 based on the vision set out by the PC4IR. Regulatory development regarding AI will in due course follow, but socio-economic factors, including inequality and unemployment, with job losses due to AI, are a concern. Existing laws may impact AI. For example, the Copyright Act, 1978 provides for a class of computer-generated works, but, insofar as AI creations do not have human authors, there is uncertainty as to who the author of the work would be and whether it can be said that the work itself is original. In July 2021, a patent was awarded by South Africa’s patent office, the South African Companies and Intellectual Property Commission, to an invention generated by AI and it was likely the first country in the world to do so. Where AI inventions process personal information in South Africa, it would also trigger the application of the Protection of Personal Information Act, 2013.
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C. Organizational Structure
As a result of the Formation Transaction, the Company is the holding company of the RedCloud Group, which includes RedCloud Technologies Limited as the direct wholly-owned operating subsidiary. Our corporate structure is as follows:
D. Property, Plants and Equipment
We do not have any material tangible fixed assets. We do not own any real estate. Our corporate headquarters is located in London, England, at 50 Liverpool Street, London, EC2M 7PY, where we have a license to occupy an office suite and meeting rooms of approximately 100 square meters. The current term of our license expires end October 2026. We also had access to WeWork shared office space in London & Buenos Aires, until our contract expired in January 2026. Our corporate headquarters is an administrative hub and base for senior management. In the other jurisdictions in which we operate, we do not have any agreements for offices in place and we utilize space on an ad hoc basis when we need space.
We believe our existing facility arrangements are sufficient for our needs for the foreseeable future. To meet the future needs of our business, we may lease additional or alternate space in each country, and we believe suitable additional or alternative space will be available in the future on commercially reasonable terms.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not Applicable
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements as of December 31, 2025 and 2024 and for the years ended December 31, 2025 and 2024 and the notes to those statements included elsewhere in this annual report. Some of the information contained in this discussion and analysis or set forth elsewhere in this annual report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Cautionary Note Concerning Forward-Looking Statements” and “Risk Factors” in Section D under Item 3 of this annual report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
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Overview
RedCloud offers an the RedAI infrastructure and associated products. We connect FMCG brands, distributors and retailers using a single infrastructure, providing AI-powered insights, data, and trading networks to help these stakeholders make better selling and buying decisions, while trading between each other.
Our RedAI infrastructure and products are designed to solve the estimated $2Tn inventory gap within a $14.7Tn global FMCG market, where overstock and understock of inventory occurs due to lack of predictive capabilities relating to supply and demand of everyday consumer goods. Full commercialization of the original platform commenced in the second quarter of 2022. Today, RedAI has a large and diverse group of FMCG manufacturer brands and distributors offering goods in a wide range of FMCG categories. Current markets of operation are Nigeria, South Africa, Argentina, and Brazil, with recent joint venture and infrastructure licensing arrangements entered into in Saudi Arabia and Türkiye as part of the Company’s broader international commercialization and expansion strategy. These initial markets were selected due to highly fragmented B2B supply chains, favorable demographics and existing regional infrastructure opportunities. In connection with these arrangements, the Company intends to deploy elements of its RedAI infrastructure and AI-enabled trade and distribution technologies through local operating and infrastructure partners. The Company believes this strategy may support a more capital-efficient expansion model while enabling localized deployment, integration and commercialization of its enterprise trade technology infrastructure.
Being an AI infrastructure business, we view our business model as being efficient with regards to the deployment of capital. Specifically, we do not engage in direct sales or compete with our sellers in any way. We do not handle or hold inventory, have no warehouses or fulfillment centers, and do not own or operate delivery vehicles. Instead, we aggregate trading data across FMCG categories for the mutual benefit of brands, distributors and retailers, creating efficiencies and growth of B2B trade flows, reducing waste.
Since we commenced operations in the second quarter of 2022, our business has grown substantially. As our infrastructure, data foundation and trading networks scale, we believe an increased numbers of brands and distributors will recognize the benefits and business value in joining our ecosystem to grow and compete in their markets.
We generate our revenue by applying both subscription and transactional based revenue to the TTV (as defined below). The transaction-based revenue we apply is different for our distributors in different jurisdictions and ranges from 1% to 5% of the TTV. For the fiscal year ended December 31, 2025, the blended transaction-based revenue equated to 1.5% of the TTV. The transaction-based revenue is paid solely by distributors. The retailers on the Platform do not pay us any fees on transactions. “TTV” means the total value of goods sold in a transaction on our Platform.
Key Performance Indicators
Distributors & Brands Count
We believe the success of RedAI is driven by the breadth, supply and quality of the products offered, which depends largely on the number of quality and trustworthy distributors we can attract. To accomplish this goal, our sales acquisition team seeks distributors and brands that sell fast-moving high-demand product categories. As of December 31, 2025, we had approximately 996 sellers (distributors, wholesalers and brands) on our RedAI infrastructure. This includes 981 active distributors, which we define as distributors that have made sales on our RedAI infrastructure in the previous three months, up 40% from 701 distributors we had on December 31, 2024, and 15 brands, down 75% from 59 brands we had on December 31, 2024. We expect the number of distributors to continue to increase as we expand RedAI in our key markets. The decrease in the number of brands directly selling through our trading networks reflects our strategic focus on the distributor-to-wholesaler-and-retailer leg of the FMCG supply chain, where secondary sales activity has historically been invisible to brand owners. By concentrating activity at this layer, we capture the trade data that brands cannot otherwise access, which we believe is the more durable source of long-term value than mediating direct brand-led transactions.
Retailers Count
We believe our success is also a function of the number of active retailers, which we define as retailers that have made purchases on Red101 in the previous three months, and the amount that they spend on products on the app. We attract new distributors by illustrating to them the large number of potential new retailers our Platform offers because our revenue is generated from the transaction-based revenue we charge distributors. As of December 31, 2025, we had 65,512 active retailers, which we define as retailers that have recorded sales on Red101 in the previous three months, up by 94% from 33,786 retailers we had as of December 31, 2024. We also expect this number to continue to increase as we expand our infrastructure in our key markets.
Stock Keeping Unit (“SKU”) Count
RedAI allows our distributors to list their products on our trading networks to encourage range sales and give our retailers maximum choice. We believe a key driver of our success is our ability to provide our retailers with choices, both in the number and variety of distributors, and availability of a wide array of products and brands such as canned products, powdered milk, biscuits, cooking oil, juices, pastas, and noodles. Specifically, among other brands, we sell major brands such as Diageo (alcoholic beverages), Dano (dairy), Yale & Pure Bliss (biscuits), Golden Penny and Grand (cooking oil) & Chivita (juices). In some cases, we have also integrated with the ERPs (Enterprise Resource Planning systems) of our distributors and brands to replicate their product database into our master.
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As of December 31, 2025, there were 210,414 SKUs available on our Platform. Of the over 210,000 SKUs that were available, 42,572 SKUs were traded on the Platform in the year ended December 31, 2025, up 39% from 30,686 SKUs traded on the Platform in the year ended December 31, 2024. These 42,572 traded SKUs were from 2,401 different brands. We believe that the number of SKUs available will continue to increase and expect that to correlate to an increase in the number of SKUs traded on the Platform. We also intend to be more proactive going forward as to flagging and managing dormant products and categories and removing them from our Platform to enhance our customer experience. Dormant products and categories have not had a material impact on our results of operations.
Total Transaction Value (“TTV”)
We define TTV as the total value of goods sold in a transaction on our Platform. Our aggregate TTV increased from $2,470,223,763 in the year ended December 31, 2024 to $3,238,797,613 in the year ended December 31, 2025. We believe the increase can be attributed to the rapid increase in the number of products offered on the Platform during 2025, the introduction of a tier-based model of marketing promotions and increasing trust in the Platform with repeat usage.
Average Transaction Value
Accompanying the increased number of distributors and retailers on our Platform was a decrease in Average Transaction Value (as defined below) per order, from $6,182 in the year ended December 31, 2024 to $3,915 in the year ended December 31, 2025. This decrease was a direct and anticipated result of our deliberate strategic expansion into Nigeria’s open market retail segment—one of the most structurally underserved layers of the consumer goods supply chain in Sub-Saharan Africa. Over the same period, the number of active retailers on the Platform increased by 94%, reflecting a substantial shift in the composition of our retail network toward a larger base of smaller-format retailers whose individual purchasing capacity is structurally lower than that of wholesalers and larger retail partners. This expansion is consistent with our strategic focus on the distributor-to-retailer leg of the FMCG supply chain, where secondary sales activity has historically not been captured by brand owners.
Number of Orders
Orders placed on our Platform go through a cycle of pending to completed with options for the distributor to fulfil, partially fulfil, or cancel an order based on factors such as inventory availability. We only apply our transaction-based revenue to orders that are delivered and accepted by retailers, which is when we consider the order completed. Since we are a business that solely connects B2B retailers and distributors, we do not play any role in the delivery and acceptance process. In the scenario that there is a return on an order, it is managed between the distributor and the retailer directly, with RedCloud processing any invoice adjustment as required. The fulfilment rate (order placed, shipped, invoice, completed) on orders on the Platform was 99% in 2025.
Orders on our Platform increased significantly in the year ended December 31, 2025. Specifically, the number of orders completed was 827,323 in the year ended December 31, 2025, up over 107% compared to 399,710 in the year ended December 31, 2024.
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Results of Operations
Comparison of the year ended December 31, 2025 versus December 31, 2024
Comparison of the year ended December 31, 2025 to the year ended December 31, 2024 in dollar terms and as a percentage of total revenue for each period.
| (U.S. dollars) | 12/31/2025 | 12/31/2024 | 12/31/2025 vs 12/31/2024 | |||||||||||||||||||||
| Revenue | $ | 48,539,353 | 100.0 | % | $ | 46,499,285 | 100.0 | % | $ | 2,040,068.0 | 100.0 | % | ||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| General and administrative | 10,474,040 | 21.6 | % | 3,922,348 | 8.4 | % | 6,551,692.0 | 321.2 | % | |||||||||||||||
| Salaries, benefits, contractor costs | 21,761,699 | 44.8 | % | 19,256,255 | 41.4 | % | 2,505,444.0 | 122.8 | % | |||||||||||||||
| Marketing and commissions | 49,124,526 | 101.2 | % | 52,918,949 | 113.8 | % | (3,794,423.0 | ) | (186.0 | )% | ||||||||||||||
| Travel | 988,075 | 2.0 | % | 1,930,599 | 4.2 | % | (942,524.0 | ) | (46.2 | )% | ||||||||||||||
| Professional fees | 2,691,821 | 5.5 | % | 2,112,047 | 4.5 | % | 579,774.0 | 28.4 | % | |||||||||||||||
| Product and technology development | 4,386,105 | 9.0 | % | 3,126,087 | 6.7 | % | 1,260,018.0 | 61.8 | % | |||||||||||||||
| Depreciation and amortization | 2,717,640 | 5.6 | % | 1,881,323 | 4.0 | % | 836,317.0 | 41.0 | % | |||||||||||||||
| Total operating expenses | 92,143,906 | 187.6 | % | 85,147,608 | 183.1 | % | 6,996,298 | 342.9 | % | |||||||||||||||
| Net loss from operations | (43,604,553 | ) | (88.8 | )% | (38,648,323 | ) | (83.1 | )% | (4,956,230 | ) | (242.9 | )% | ||||||||||||
| Other (expense) income: | ||||||||||||||||||||||||
| Interest expense | 2,189,963 | 4.5 | % | 3,120,054 | 6.7 | % | (930,091.0 | ) | (45.6 | )% | ||||||||||||||
| Loss from change in fair-value of convertible shareholder loans | - | - | 5,951,087 | 12.8 | % | (5,951,087.0 | ) | (291.7 | ) | |||||||||||||||
| Loss on Debt Extinguishment | - | - | % | 4,377,051 | 9.4 | % | (4,377,051.0 | ) | (214.6 | )% | ||||||||||||||
| Stock based Compensation | - | - | - | - | - | - | ||||||||||||||||||
| Foreign currency (loss) gain | 1,607,877 | 3.3 | % | 470,219 | 1.0 | % | 1,137,658.0 | 55.8 | % | |||||||||||||||
| Other Income | (1,165,544 | ) | (2.4 | )% | - | - | % | (1,165,544.0 | ) | (57.1 | )% | |||||||||||||
| Net loss before income taxes | (46,236,849 | ) | (94.1 | )% | (52,566,734 | ) | (113.0 | )% | 6,329,885.0 | 310.3 | % | |||||||||||||
| Income tax benefit | - | - | % | (1,851,038 | ) | (4.0 | )% | 1,851,038.0 | 90.7 | % | ||||||||||||||
| Net loss | (46,236,849 | ) | (94.1 | )% | (50,715,696 | ) | (109.1 | )% | 4,478,847 | 219.5 | % | |||||||||||||
Revenue
Revenue for the year ended December 31, 2025 was $48,539,353, an increase of $2,040,067, or approximately 4.4%, from $46,499,286 for the year ended December 31, 2024. For the year ended December 31, 2025, revenue in Nigeria increased approximately $15.6 million, or 68%, to $38.5 million, compared to $22.9 million for the year ended December 31, 2024, primarily driven by increased acquisition of distributors & retailers, higher order volumes from existing customers, and deeper engagement with distributors on RedAI. Revenue in South Africa increased approximately $5.6 million, or 136%, from $4.1 million for the year ended December 31, 2024 to $9.7 million for the year ended December 31, 2025, driven primarily by deeper engagement with established distributors and retailers in a more formalized retail environment than our Nigerian market. Revenue from Argentina decreased approximately $18.7 million, or 99%, from $18.8 million for the year ended December 31, 2024 to $0.1 million for the year ended December 31, 2025, reflecting our strategic decision to reallocate capital to higher return opportunities, including our joint venture and licensing model, while the operations remain active in the market. The Company’s operational prioritization during the period also reflected increasing focus on international expansion initiatives associated with joint venture and infrastructure licensing opportunities, including recently initiated arrangements in Saudi Arabia and Türkiye as part of the Company’s evolving RedAI commercialization strategy.
Nigeria remained our largest revenue-generating market in 2025, followed by South Africa. Brazil and Peru contributed immaterial revenue during the year, while the Company continued to wind down operations in Peru.
Revenue for the year ended December 31, 2025 was generated from an aggregate TTV of approximately $3.24 billion, compared to $2.47 billion for the year ended December 31, 2024. with an average transaction-based revenue of approximately 1.5% in the year ended December 31, 2025 (versus an average transaction-based revenue of approximately 1.9% in for the year ended December 31, 2024). The change in aggregate TTV and transaction-based revenue relates to the upward trend in our aggregate TTV and transaction-based revenue seen in 2025 and will continue in 2024 due to our anticipated consistent sales in our key markets. The average transaction-based revenue for the year ended December 31, 2025 in our four main markets were: Nigeria 1.5%, South Africa 1.5%, Argentina 2.8% and Brazil 1.6%. We also believe that as we add retailers, we will be able to charge a higher transaction-based revenue because we will be able to show them that they have more opportunities to sell.
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Operating Expenses
Operating expenses for the year ended December 31, 2025 were $92,143,906, representing an increase of $6,996,298, or approximately 8.2%, from $85,147,608 for the year ended December 31, 2024. The increase primarily reflects continued investment in personnel, technology and public company infrastructure to support the Company’s growth, partially offset by reduced marketing and travel expenditures, but not limited to the following:
| ● | General and administrative expenses increased $6,551,692, or approximately 167.1%, to $10,474,040 in the year ended December 31, 2025, compared to $3,922,348 in the year ended December 31, 2024. The increase was primarily driven by higher corporate, compliance, banking, insurance and administrative costs associated with operating as a public company. | |
| ● | Salaries, benefits and contractor costs increased $2,505,444, or approximately 13.0%, to $21,761,699 in the year ended December 31, 2025, compared to $19,256,255 in the year ended December 31, 2024, reflecting increased headcount and contractor usage across infrastructure operations, technology and commercial functions. During the year, we undertook a targeted restructuring to reduce headcount costs in areas not directly impacting current or future revenue generation, while prioritizing investment in skills and personnel expected to enhance productivity in the near term and support development in emerging technical areas. Despite these skills being in high demand and associated with higher cost, this approach resulted in only a marginal overall increase in headcount-related costs. | |
| ● | Marketing and commissions expenses for the year ended December 31, 2025 were $49,124,526, a $3,794,423 or 7.2% decrease from $52,918,949 for the year ended December 31, 2024. The decrease was primarily due to lower spend on point-of-check-out vouchers, funded discounts and rebates as we focused on improving marketing efficiency and optimizing promotional spend. As in prior periods, voucher-based incentives continued to represent the majority of this expense, with the remainder relating to digital marketing campaigns, including Google and Facebook, and promotional materials. Our voucher-based marketing strategy continues to be designed to drive repeat purchasing behavior and increase customer lifetime value. Vouchers are generally targeted at existing retailers based on purchasing patterns and are typically applied to subsequent orders rather than initial transactions, reinforcing engagement and encouraging higher transaction volumes. As a result, marketing and commissions expenses are closely linked to revenue generation and tend to vary with transaction activity on our infrastructure. We expect that these expenses may increase in absolute terms as revenue grows and as we continue to invest in customer acquisition, retention and market expansion, particularly in newer markets. However, we are focused on improving the effectiveness of these expenditures and expect marketing and commissions to decline as a percentage of revenue over time. Given our current gross margin profile, managing the level and efficiency of marketing and commissions spend is a key priority. We are actively refining our promotional approach, including reducing reliance on heavily subsidized incentives and focusing on more targeted, data-driven campaigns. While such expenditures remain necessary in the near term to support growth and infrastructure scale, our objective is to improve gross margins over time through a combination of better marketing efficiency, increased scale and higher contribution from more profitable revenue streams. | |
| ● | Travel expenses decreased to $988,075 in 2025 from $1,930,599 in 2024, a decrease of $942,524, or approximately 48.8%, due primarily to reduced international and executive travel following the completion of the IPO. | |
| ● | Professional fees increased to $2,691,821 in 2025 from $2,112,047 in 2024, an increase of $579,774, or approximately 27.4%, driven by higher audit, legal and regulatory costs associated with public company requirements. | |
| ● | Product and technology development expenses increased to $4,386,105 in 2025 from $3,126,087 in 2024, an increase of $1,260,018, or approximately 40.3%. The increase was primarily driven by higher personnel-related costs, including the expansion of our engineering and product teams, as well as increased investment in infrastructure development activities. These included enhancements to core functionality, development of new products and features, and scaling of our technology infrastructure to support increased transaction volumes and geographic expansion. Additional costs were incurred in relation to cloud hosting, data infrastructure and software tools required to support the growth and reliability of our products. | |
| ● | Depreciation and amortization expense increased to $2,717,640 for the year ended December 31, 2025, compared to $1,881,323 for the year ended December 31, 2024, representing an increase of $836,317, or approximately 44.5%. The increase was driven primarily by higher amortization of capitalized software development costs and increased depreciation of technology and office equipment resulting from prior-year investments. | |
| ● | As a result, net loss from operations was $43,604,554 for the year ended December 31, 2025, compared to $38,648,323 for the year ended December 31, 2024. | |
| ● | Interest expense decreased to $2,189,963 in the year ended December 31, 2025 from $3,120,054 in the year ended December 31, 2024 due to lower outstanding debt balances following the conversion of shareholder and convertible loans into equity in connection with the IPO. | |
| ● | Foreign currency loss was $1,607,877 in the year ended December 31, 2025 compared to $470,219 in the year ended December 31, 2024, reflecting currency volatility and the remeasurement of intercompany monetary balances. | |
| ● | Other income was $1,165,544 for the year ended December 31, 2025, relating primarily to qualifying UK R&D incentives for the year ended December 31, 2025. | |
| ● | There were no gains or losses from changes in fair value of convertible shareholder loans and no gains or losses on debt extinguishment recognized in 2025. |
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Liquidity and Capital Resources
As of December 31, 2025, and as of the date of this annual report, our liquidity position remains severely constrained, reflecting our history of operating losses, negative cash flows and limited available cash resources. These conditions raise substantial doubt about our ability to continue as a going concern for at least twelve months from the date of issuance of these financial statements. Our ability to continue operations is dependent on our ability to improve operating performance, including achieving revenue growth and improved gross margins, and obtaining sufficient additional financing to satisfy our liquidity needs and contractual obligations.
Subsequent to December 31, 2025, we have raised approximately $7.5 million in gross proceeds through a combination of financing activities.
These included:
| ● | approximately $4.0 million from the issuance of senior convertible notes in February 2026; | |
| ● | approximately $1.4 million from drawdowns under our Equity Line of Credit (“ELOC”) during April and May 2026; | |
| ● | approximately $0.9 million from the exercise of previously issued warrants; and | |
| ● | approximately $1.3 million shareholder loans. |
Notwithstanding the financing activities completed to date, our historical cash usage significantly exceeds our current liquidity resources. Based on our operating cash outflows of $34.9 million during the year ended December 31, 2025 and our current cost structure, the capital raised subsequent to year end is not sufficient to fund operations for the full 2026 financial year. Based on our current operating plan, we expect to require substantial additional capital during 2026 to fund ongoing operations, satisfy working capital requirements and meet our contractual obligations. The amount and timing of additional capital required will depend on several factors, including the pace of revenue growth, improvements in gross margin, the level of discretionary expenditures, particularly marketing and commission expenses, and our ability to reduce overall cash burn. We believe that our existing cash resources will be sufficient to fund our planned operations until June 2026. However, to date, our insiders have provided us with loans whenever we have required additional funds, and we expect that they will continue to do so in the future if additional financing is needed to support our operations. In addition, we plan to seek additional capital through the public markets and other financing sources as necessary to support our growth and operations, although there can be no assurance that such financing will be available on acceptable terms, or at all.
Management is actively implementing measures intended to improve liquidity and reduce operating expenses, including improving marketing efficiency and reducing reliance on subsidized incentives, optimizing working capital management and payment cycles, aligning the cost base with near-term revenue expectations, and focusing on higher-margin revenue streams and technology-driven efficiency. Management is also pursuing additional financing opportunities, including equity financings, debt arrangements and shareholder support initiatives. However, there can be no assurance that these efforts will be successful or that additional funding will be available on commercially reasonable terms, or at all.
If we are unable to obtain sufficient additional financing in the near term or achieve meaningful improvements in our operating performance, we may be forced to significantly curtail operations, substantially reduce our workforce and operating expenditures, dispose of assets, pursue restructuring or insolvency-related proceedings, or otherwise seek protection under applicable bankruptcy or similar laws. Any such actions could materially and adversely affect our business, financial condition, results of operations and the value of our securities, and there is a substantial risk that holders of our securities could lose all or a significant portion of their investment.
Contractual Obligations
As of May 15, 2026, our contractual obligations for 2026 include approximately $3.58 million of principal and interest payments under our senior convertible notes, approximately $3.78 million of repayment obligations under the Lienhardt & Partner Privatbank Zürich AG (“Lienhardt”) facility if demanded, approximately $10.0 million of shareholder loans (including accrued interest), which have defined repayment terms, approximately $11.0 million of trade payables, and approximately $10.0 million of ongoing operating expenses necessary to support our personnel and infrastructure. We intend to satisfy these obligations through a combination of existing cash balances, additional drawdowns under the ELOC, potential equity financings (including follow-on offerings and private placements), additional debt financing arrangements, cash generated from operations to the extent achieved, and shareholder support arrangements. As of March 31, 2026, we had approximately $3.8 million outstanding under the Lienhardt loan and overdraft facility, which represents a short-term financing arrangement that may be callable or repayable in accordance with its contractual terms. In connection with this facility, certain shareholders, Christina Byland and Dr. Nikolaus Senn, provided a written commitment that, if amounts up to $3.8 million become repayable prior to March 31, 2027, they will make available to the Company a term loan facility in an equivalent aggregate amount to enable the Company to satisfy such repayment obligations. This support commitment remains available through March 31, 2027.
In addition, on February 26, 2026, the Company entered into securities purchase agreements with certain institutional investors pursuant to which the Company issued senior convertible notes in an aggregate original principal amount of approximately $4.35 million, resulting in gross proceeds of approximately $4.0 million before fees and expenses. The notes were issued with an 8.0% original issue discount, accrue interest at 7.0% per annum, and mature on March 1, 2027, unless earlier converted, redeemed or extended in accordance with their terms. Beginning two months following the closing date, the Company is required to make monthly installment payments equal to the lesser of 10% of the original principal amount or the then-outstanding principal balance, together with accrued interest, late charges, if any, and any applicable make-whole amounts.
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Impairment Expense
In occurrence with ASC 360-10-35, the capitalized costs will be evaluated for impairment. Specifically, as significant enhancements and upgrades are built out, management will ensure any prior capitalizable work is not impaired and needs to be written off. So far, management has concluded no impairment exists based on the criteria in the above guidance.
Intangible Assets
Intangible assets consist primarily of capitalized software development costs related to the RED101 Platform. Intangible assets with a definite useful life are amortized on a straight-line basis over their estimated useful life of five years, which management believes represents the period over which the related economic benefits are expected to be realized.
Research expenditures are expensed as incurred and recorded within product and technology development expenses. Development costs are capitalized only when technical feasibility, commercial viability and financial feasibility have been established and the Company expects to derive future economic benefits from the asset.
For the year ended December 31, 2025, amortization expense related to capitalized software development costs was $2,422,054, compared to $1,717,575 for the year ended December 31, 2024. The increase reflects continued capitalization of infrastructure and product development costs over prior periods, resulting in a higher average balance of intangible assets subject to amortization.
Income Taxes
The Company recognizes, if any, uncertainty in income taxes by applying the accounting prescribed by U.S. GAAP, for which a more likely than not recognition threshold and measurement attribute for the financial statement recognition and measurement of an income tax position taken or expected to be taken in a tax return should be considered. It also provides guidance on derecognition, classification of a liability for unrecognized tax benefits, accounting for interest and penalties, accounting in interim periods and expanded income tax disclosures. The Company classifies interest and penalties, if any, separately, in the statement of income.
The Company operates in multiple tax jurisdictions and is subject to differing tax laws, regulations, and interpretations. Management evaluates its tax positions on an ongoing basis and, as of the reporting date, has concluded that there are no material uncertain tax positions requiring recognition in the consolidated financial statements. This assessment is based on the technical merits of the positions taken and consideration of applicable tax laws and regulations. However, the Company’s tax positions may be subject to challenge by relevant tax authorities, and the outcome of such matters cannot be predicted with certainty.
Management has evaluated its tax positions, including those subject to ongoing audit, and has concluded that no material uncertain tax positions require recognition in our financial statements. We believe that the income tax positions would be sustained on audit and do not anticipate any adjustments that would result in a material change to the financial position.
The Company has incurred taxable losses since inception in multiple jurisdictions. Based on the weight of available evidence, including a history of cumulative losses and the expectation of continued losses in certain jurisdictions, the Company has recorded a full valuation allowance against its deferred tax assets as of the reporting date. Accordingly, no net deferred tax assets have been recognized in the consolidated financial statements.
The Company is subject to tax audits and examinations by tax authorities in the jurisdictions in which it operates. During the year ended 2025, a tax audit was initiated by the Federal Inland Revenue Service in Nigeria covering the 2023–2024 financial years. The audit is ongoing as of the reporting date. While the Company believes that its tax positions are supportable, the ultimate outcome of such examinations cannot be predicted with certainty and may result in adjustments to previously reported tax positions.
Share-Based Compensation
We account for share-based compensation to employees, directors and non-employees in accordance with FASB ASC Topic 718, Compensation—Stock Compensation, which requires compensation cost to be recognized in the consolidated financial statements based on the grant-date fair value of equity awards. Compensation expense is recognized on a straight-line basis over the applicable vesting period and is adjusted for actual forfeitures as they occur.
The Company primarily grants share options and other equity-based awards under its equity incentive plans. For share option awards, the Black-Scholes-Merton option pricing model is used to estimate the grant-date fair value of the awards. The Black-Scholes-Merton model incorporates assumptions that require significant judgment, including the expected term of the award, expected share price volatility, risk-free interest rate and expected forfeiture rates.
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The expected term of share options is estimated based on the simplified method permitted under ASC 718-10-55-76, which reflects the weighted-average period between vesting and contractual expiration, and is generally estimated to be approximately 10 years.
For awards granted prior to the Company’s initial public offering, including share options granted in December 2021, fair value estimates were determined with the assistance of external valuation specialists using the Black-Scholes-Merton model and, where appropriate, adjusted for lack of marketability due to the absence of a public market for the Company’s ordinary shares at the time of grant.
The expected volatility assumption is determined based on historical volatility data observed over a period consistent with the expected term of the award, using share price data from a peer group of publicly traded companies with operating and risk profiles similar to the Company. The risk-free interest rate is based on yields for zero-coupon government securities with maturities commensurate with the expected term of the awards, primarily using UK or U.S. government benchmark rates, depending on the currency and legal structure of the award.
During the year ended December 31, 2025, share-based compensation expense increased significantly compared to the prior year, reflecting equity awards granted in connection with the Company’s initial public offering, long-term incentive arrangements for management, and employee retention and incentive programs implemented following the IPO. Share-based compensation expense includes only non-cash charges and has no impact on the Company’s liquidity.
The following table summarizes our statement of cash flows for the twelve months ended December 31, 2025 and 2024.
| (U.S. dollars in thousands except share and per share data) | For the Twelve Months Ended | |||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | (36,983 | ) | (34,679 | ) | ||||
| Net cash used in investing activities | (3,265 | ) | (3,892 | ) | ||||
| Net cash provided by financing activities | 39,878 | 35,050 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 17 | 3,767 | ||||||
| Increase (decrease) in cash and cash equivalents | $ | (353 | ) | $ | 246 | |||
Net Cash Used in Operating Activities
Net cash used in operating activities for the year ended December 31, 2025 was approximately $36,983,000 compared to $34,679,000 for the year ended December 31, 2024, representing an increase in cash outflows of $2,304,000, or approximately 6.6%. While the net loss improved year-over-year, cash outflows remained elevated due to the underlying cost structure required to support infrastructure and product growth.
Working capital movements in 2025 were a net source of cash. This was primarily driven by a significant reduction in accounts receivable, reflecting improved collections and lower period-end balances, as well as a decrease in prepayments as prior period upfront costs were utilized. In addition, a reduction in income taxes receivable contributed to cash inflows during the year. These inflows were partially offset by decreases in accounts payable, vouchers payable and accrued expenses, reflecting the settlement of outstanding supplier obligations and operating expenses.
Looking ahead to 2026, we expect cash flows from operating activities to remain negative in the near term as we continue to invest in revenue growth, technology development and market expansion. However, we are focused on improving operating cash flow through a combination of initiatives, including tighter management of receivables and payables, reducing discretionary spend, particularly in marketing and commissions, and improving gross margins as the business scales. The timing and extent of improvement in operating cash flows will depend on our ability to accelerate revenue growth, improve unit economics and manage working capital efficiently.
Net Cash Used in Investing Activities
Net cash used in investing activities for the year ended December 31, 2025 was approximately $3,265,000 compared to $3,892,000 for the year ended December 31, 2024, representing a decrease in cash outflows of $627,000, or approximately 16.1%.
The decrease in investing cash outflows was primarily attributable to lower capitalized software development expenditures and reduced purchases of property and equipment in 2025, reflecting a moderation in capital investment following significant product development and infrastructure build-out in prior periods.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the year ended December 31, 2025 was approximately $39,878,000 compared to $35,050,000 for the year ended December 31, 2024, representing an increase of approximately $4,828,000 or 13.8%.
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Financing cash inflows in 2025 were primarily driven by proceeds from the issuance of ordinary shares in connection with the Company’s initial public offering, partially offset by conversion of shareholder loans and short-term borrowings. In contrast, financing activities in 2024 were driven primarily by shareholder loan financing rather than equity issuance.
Effect of Exchange Rate Changes on Cash and Cash Equivalents
The effect of exchange-rate changes on cash and cash equivalents was a positive approximately $17,000 for the year ended December 31, 2025, compared to a positive approximately $3,767,000 for the year ended December 31, 2024. The significantly lower impact in 2025 reflects currency volatility and the remeasurement of cash balances held in foreign currencies against the U.S. dollar.
Change in Cash and Cash Equivalents
As a result of the foregoing, cash and cash equivalents decreased by approximately $353,000 during the year ended December 31, 2025, compared to an increase of approximately $246,000 during the year ended December 31, 2024.
Macroeconomic Condition and Political Environment
Our current countries of operation are located in Africa and South America. Our results of operations and financial condition are significantly influenced by political and economic developments in these countries and the effect that these factors may have on demand for goods and services.
In the medium to long-term, we believe that there will be a number of positive macroeconomic developments in the regions such as an expanding demand for FMCG products and increasing disposable income.
In response to the recent and potential additional changes to U.S. tariff and import/export regulations, we have accelerated our development and technology investments to protect our revenue from the effects of tariffs on B2B supply chains.
Tariffs increase the cost of imported raw materials and intermediate goods. Large FMCG manufacturers often react by restructuring their supply chains—opting for cheaper alternatives, automating production, or cutting non-essential procurement. Distributors will also forward order higher stock levels. In addition, tariffs add cost pressures throughout the FMCG ecosystem. Margin compression from raw material costs increases, as well as delayed payments between suppliers, has forced us to accelerate third party services providers onto the Platform to enable faster trading.
Tariffs have also imposed market access challenges. In some cases, tariffs lead larger FMCG companies to scale back operations in certain geographies or reduce the scope of their product lines. When this happens, local producers who rely on these companies for distribution or visibility lose access to markets they cannot reach on their own.
Critical Accounting Estimates
An accounting estimate is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are uncertain and requires significant judgment at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated and combined financial statements.
We prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Our critical accounting estimates are:
Allowance for credit losses
Accounts receivables are recognized initially at fair value and subsequently measured at amortized cost, less any provisions. Provisions are estimated using the allowance for current expected credit losses (“CECL”) where any expected future credit losses are provided for, irrespective of whether a loss event has occurred at the reporting date. Estimates of expected credit losses consider the Company’s collection history by country and customer, deterioration of collection rates during the average credit period, as well as observable changes in and forecasts of future economic conditions that affect default risk. The Company utilizes a provision matrix by country to estimate lifetime CECL’s for accounts receivables, supplemented by specific allowance based on customer-specific data.
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Useful life of Intangible assets
Intangible assets consist of software development costs, which are valued at historical cost. Intangible assets with definite useful life are amortized over the period of estimated benefit to be generated by those assets and using the straight-line method; their estimated useful life is five years.
Impairment of long-lived assets
The Company reviews long-lived assets for impairments whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The impairment evaluation is performed at the lowest level of identifiable cash flows independent of other assets. The recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If such asset is considered to be impaired on this basis, the impairment loss to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of such asset.
Share-based payments
Share-based compensation to employees, contractors and the Company’s Board are measured at the fair value of the instruments issued and amortized over the vesting periods. Share based compensation to non-employees is measured at the fair value of goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The Company operates an employee stock option plan. The corresponding amount is recorded to the additional paid-in capital caption within shareholders’ deficit, and the expense to the consolidated statements of operations and consolidated statements of comprehensive loss caption General and Administrative over the vesting period. The fair value of options is determined using the Black–Scholes pricing model which incorporates all market vesting conditions.
Convertible Shareholder Loans at Fair Value
The Company elected to record the following convertible shareholder loans at fair value from their respective inception dates for the life of the loans. The loans are convertible into the most senior class of shares in issue due to an exit event, such as a Company initial public offering or sale of the Company, at a 35% discount to the exit event share price. The fair value of these convertible shareholder loans are classified as Level 2 in the fair value hierarchy. The primary input to the valuation model includes observable market interest rates from companies with similar estimated credit ratings, and observable interest rates on the Company’s borrowings. The valuation assumptions include a discount rate of 10% and conversion date of August 31, 2024.
Internal Controls and Procedures
We are not currently required to comply with the SEC’s rules implementing Section 404 of Sarbanes Oxley, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC’s rules Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in certain of our reports and provide an annual management report on the effectiveness of controls over financial reporting. We will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC.
Further, our independent registered public accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting, and will not be required to do so for as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act. See “Status as an Emerging Growth Company.”
Off Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such financing arrangements.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table provides information about our directors and our senior management. Our senior management consists of our chief executive officer and those current executive officers who have responsibility for a major segment of our business (“Senior Management”).
| Justin Floyd | 60 | Chief Executive Officer and Director | ||
| Raju Datla | 51 | Chief Financial Officer | ||
| Soumaya Hamzaoui | 41 | Chief Product and Commercial Officer and Director | ||
| Hans Rudolf Kunz | 71 | Chairperson of the Board of Directors | ||
| Dr. Nikolaus Senn | 66 | Director | ||
| David Chung-Hua Bolocan | 61 | Director | ||
| Prem Parameswaran | 57 | Director | ||
| Dr. Mustafa Ergen | 48 | Director |
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Executive Officers
Justin Floyd, Chief Executive Officer and Director
Mr. Floyd serves as the Chief Executive Officer and a director of the Company, positions he has held since our inception. A co-founder of the Company, Mr. Floyd brings decades of experience in founding and investing in pioneering technology companies and the global supply chain. In addition to his service with the Company, since September 2023, Mr. Floyd has served as a non-executive chairman of the board of Ocpus, a France-based social selling platform specifically designed for direct sales companies. Mr. Floyd was also appointed to the board of the AI Trust Foundation, a non-profit organization based in Washington, D.C., in June 2024. Prior to this, from January 2013 to July 2017, he co-founded CMR Surgical, a platform for surgical robots, where he helped create the original design of the business. Mr. Floyd also co-founded and ran Vecta, a cloud intelligence company that primarily operated in the United Kingdom, the Middle East, and EMEA until it was acquired by Kerridge Commercial Systems, and he co-founded CCL Group, one of the first transatlantic fintech companies, which saw immense successes in trading volumes under his guidance. We believe that Mr. Floyd is qualified to serve as our Chief Executive Officer and a director because of his extensive knowledge of our Company, as well as his retail, intelligence software, and business-to-business commerce expertise.
Raju Datla, Chief Financial Officer
Mr. Datla serves as our Chief Financial Officer. Mr. Datla has more than twenty years of experience in corporate finance, capital markets and strategic transactions within the technology and infrastructure sectors. Prior to becoming Chief Financial Officer, Mr. Datla served as our Chief Strategy Officer from October 2025 to March 2026. Prior to joining the Company, Mr. Datla held senior finance and strategy roles at several technology and digital infrastructure companies between December 2012 and July 2025, where his responsibilities included financial planning, capital markets activities, corporate development and investor relations. From July 2007 to June 2012, Mr. Datla served as Vice President in the Technology, Media and Telecommunications investment banking group at Deutsche Bank, where he advised corporate clients on mergers and acquisitions, equity and debt financings and other strategic transactions. Mr. Datla received a Master of Business Administration from Columbia Business School, a Master of Science in Computer Information Systems from St. Mary’s University, and a Bachelor of Engineering in Electronics and Communication Engineering from Bangalore University.
Soumaya Hamzaoui, Chief Product and Commercial Officer and Director
Ms. Hamzaoui, a co-founder of the Company, currently serves as our Chief Product and Commercial Officer, and has been a director of the Company since inception. From January 2021 to August 2025, Ms. Hamzaoui served as our Chief Operating Officer, and from February 2014 to December 2020, she served as our Chief Product Officer. Prior to her time with the Company, Ms. Hamzaoui was a Senior Project Manager at Altran (now Capgemini), a French multinational information technology services and consulting company, from June 2008 through October 2012. Ms. Hamzaoui’s dynamic work portfolio also includes working on the development of Orange Money, a mobile money service, in Africa and supporting industries such as banking, transport and telecommunication in their transformation advance toward new technologies. Ms. Hamzaoui received an engineer’s degree in business engineering from Télécom SudParis, and she holds a master’s degree in electrical and electronics engineering from the Abou Bekr Belkaid University in Algeria. We believe Ms. Hamzaoui is qualified to serve as a director because of her extensive experience in software and telecommunication, as well as her expertise in product management in financial services.
Non-Executive Directors
Hans Rudolf Kunz, Chairperson of the Board
Mr. Kunz, a co-founder of the Company, has served as the Chairperson of the Board since inception. Prior to joining the Company, he spent over twenty-two years at Bear Stearns & Co. Inc., and Bear Stearns International; the international arm of Bear Stearns, a global investment bank and securities trading firm that was one of the largest in the United States. While there, Mr. Kunz served as a Senior Managing Director at Bear Stearns & Co. Inc., New York, and a director of and member of the Executive Committee at Bear Stearns International Limited, London. In addition to being a member of various boards of Bear Stearns, Mr. Kunz’ direct responsibilities included co-heading the international equities department and running the European branches (banks and financial companies) of Bear Stearns International Limited. In addition to sitting on our Board, Mr. Kunz has been a member of the board of directors of Manorbois SA Casablanca, a Moroccan company that specializes in the import and distribution of sawing wood and panel, and insulation materials, since October 2017. Prior to this, he was the chairman and director of Advantis Insurance Consulting AG, Zurich, a provider of insurance, pension, and financial advice, including risk management, consulting, and insurance brokerages. Mr. Kunz has held Series 3, 7, 8, 15, and 21 certifications from the SEC and certifications 1, 3, 8, 10, 11, 21, 26, 27, and 30 from the FSA, and holds a banking degree from the Business School of Basel (KV) in Basel, Switzerland. We believe that Mr. Kunz is qualified to serve as a director because of his global knowledge and experience in finance, investment, and our Company.
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Dr. Nikolaus Senn, Director
Dr. Senn has been a member of the Board since inception. He brings over thirty years of experience in investment banking and asset management to the Company. From 2003 to 2011, Dr. Senn was a partner at NewSmith Capital LLP, an independent investment management and advisory partnership, and he was portfolio manager and Chief Executive Officer of the Credit Fund at NewSmith Asset Management LLP. Dr. Senn was also previously Managing Director and responsible for large trading operations in derivatives, fixed income, credit and currency markets at UBS London, Dresdner Kleinwort Benson and WestLB AG. He started his career in fixed income derivatives trading at UBS Zurich. Dr. Senn has been the Chief Executive Officer and chairman of the board of Heimberg Hotel A.G., a hotel in Switzerland, and Heimberg Immosen A.G, a Swiss business engaged in the acquisition, holding, management, and sale of real estate. since 2013. In this role, he runs an alpine resort hotel as well as a real estate company. Dr. Senn has also been the president of a golf club in Switzerland named Golfclub Lenzerheide, since 2015. Dr. Senn holds a Master’s Degree in Law from Zurich University and a Ph.D. in banking law from Fribourg University. We believe that Dr. Senn is qualified to serve as a director because of his extensive knowledge and experience in asset management and finance.
David Chung-Hua Bolocan, Director
David Chung-Hua Bolocan has been a member of the Board since March 2025. From 1994 to 2000, he served as Senior Engagement Manager in Mitchell Madison Group, a consulting company. From 2001 to 2006, he served as Executive Vice President - Head of Corporate Initiatives Group and CMO of specialized lending in Bank of America’s card division. From 2006 to 2018, he served as senior executive and Head of Consumer and Wealth deposits at Truist, and Head of Retail Banking Services at Verisk Analytics. From August 2018 to June 2021, he served as Business Line CEO for Retail Bank Deposits and Payments Business in BBVA Compass (now part of PNC). From June 2021 to March 2022, he served as head of deposit and payments for LendingClub, a fintech company. Since June 2022, he has served as a Senior Director at Western Alliance Bank. Mr. Bolocan also served as an independent director for Cellular Biomedicine Group, Inc., a Nasdaq listed company, from 2012 to 2016, and UTime Limited, a Nasdaq listed company, from April 2019 to May 2023. Mr. Bolocan received an M.S./M.B.A. from the MIT Sloan School of Management and a B.A. from Harvard University in Computer Science and Economics. We believe Mr. Bolocan is qualified to serve as a director because of his extensive experience as a director of companies listed on Nasdaq.
Prem Parameswaran, Director
Prem Parameswaran has been a member of the Board since March 2025. Mr. Parameswaran serves as Managing Director at Stone Point Capital. Mr. Parameswaran previously served as Triller Group Inc.’s (“Triller”) President and Chief Financial Officer since February 2023 and previously served as Triller’s President of Corporate Finance and Investor Relations from May 2022 to February 2023. Mr. Parameswaran has been in Media, Entertainment & Technology finance for over 30 years as both an investment banker as well as President and Chief Financial Officer of Eros International Plc. Prior to joining Triller, Mr. Parameswaran served as Group Chief Financial Officer and President of North America of Eros International Plc from June 2015 to May 2022. Before joining Eros International, Mr. Parameswaran served as Global Head of Media & Telecommunications Investment Banking at Jefferies LLC from October 2012 to May 2015. Prior to that, Mr. Parameswaran was a Managing Director, Americas Head for the Global Telecommunications and Media Group in the Investment Banking Division at Deutsche Bank from June 2003 to October 2012 and had prior roles at Goldman Sachs and Salomon Brothers. Mr. Parameswaran was nominated in 2019 and subsequently sworn into a United States President’s Presidential Advisory Commission for Asian Americans and Pacific Islanders, where he was the only Indian American appointed to the committee. Mr. Parameswaran received a B.A. from Columbia University and an M.B.A. from Columbia Business School. We believe Mr. Parameswaran is qualified to serve as a director because of his extensive experience working with startup companies in the technology sector.
Dr. Mustafa Ergen, Director
Dr. Mustafa Ergen has been a member of the Board since April 2026. Dr. Ergen brings a combination of deep technical expertise and commercial execution across Silicon Valley, Europe and emerging markets. He has been a Professor at Istanbul Technical University since 2017 and founder and chairman of Ambeent Inc since 2016. Dr. Ergen also is a co-founder of multiple AI and deep-tech ventures, including Furna Quantum since 2023, and Nest-ion since 2019, and is an innovator in 5G and next-generation network architectures. Dr. Ergen previously served as Chief Innovation Officer at Sabanci University from 2022 to 2023, and has held senior advisory roles, including as Chief Technology Advisor to Türk Telekom Group. He began his career in advanced network research at The University of California, Berkeley. He is recognized among the world’s top 2% of scientists by Stanford University. Dr. Ergen received a B.S. in Electrical and Electronics Engineering from Orta Doğu Technical University, a M.S. in Electrical Engineering, M.A. in International and Area Studies and PhD in Electrical Engineering and Computer Science from the University of California, Berkeley. We believe Dr. Mustafa Ergen is quailed to serve as a director because of his deep roots in Türkiye’s technology ecosystem, combined with his global experience in building and scaling advanced infrastructure, strongly positions him to support the Company’s regional execution and broader international growth strategy.
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B. Compensation
Compensation of Executive Officers and Directors
The aggregate compensation, including share-based compensation, paid by the Company to our executive officers for the year ended December 31, 2025 was approximately $1,160,594. We did not pay any compensation to members of our Board for board services. These aggregate amounts include compensation paid, bonuses paid for the year, amounts received under the incentive plans described below under “Equity Incentive Plans,” contributions to pensions and other retirement benefits.
As of December 31, 2025, options to purchase 1,487,625 ordinary shares granted to our executive officers and directors were outstanding under our Equity Incentive Plans at a weighted average exercise price of £0.27 per share. Each option will expire ten years from the date of the grant thereof.
We paid each of our non-executive directors an annual retainer of $55,000, with an additional annual payment for service on board committees as follows: $10,000 for each member of the Audit Committee ($20,000 for the Chairperson of the Audit Committee), $7,500 for each member of the Compensation Committee ($15,000 for the Chairperson of the Compensation Committee) and $5,000 for each member of the Nominating and Corporate Governance Committee ($10,000 for the Chairperson of the Nominating and Corporate Governance Committee). The Chairperson of the Board will be paid an additional annual retainer of $75,000.
Employment and Service Agreements and Non-Executive Director Offer Letters
We entered into the following employment and service agreements with certain of our named executive officers and enter into offer letters with our non-executive directors. The material terms of each of those arrangements are summarized below. The summaries are not complete description of all provisions of the arrangements and are qualified in their entirety by reference to the written arrangements, each filed as an exhibit to the registration statement.
Employment Agreement with Justin Floyd
The Company entered into an executive employment agreement with Justin Floyd (the “Floyd Agreement”), pursuant to which Mr. Floyd will serve as the Company’s Chief Executive Officer, reporting to the Company’s Board. The Floyd Agreement will remain in effect indefinitely until terminated by either party. The Floyd Agreement provides for (A) a $500,000 annual base salary paid in accordance with our normal payroll practices and which may be increased in the discretion of our Board, but not reduced, (B) a relocation payment of $200,000, (C) a target annual bonus equal to 100% of base salary, with the actual amount of such bonus determined in the discretion of our Board, based on the achievement of individual and/or company performance goals determined by our Board or a subcommittee thereof and payable on the date annual bonuses are paid to our other senior executives, but in no event later than March 31st of the calendar year following the calendar year in which such bonus was earned, (D) a target annual equity compensation award equal to at least $4,000,000, each of which will be subject to a four-year vesting period and such other terms and conditions as determined by our Board or a subcommittee thereof, and (F) eligibility to participate in customary health, welfare, and fringe benefit plans we provide to our employees, but if we don’t offer customary health, welfare, and fringe benefit plans in New York, NY, the Company will reimburse Mr. Floyd (and Mr. Floyd’s spouse and/or eligible dependents) full monthly cost of market-standard health and welfare benefits.
The Floyd Agreement also provides that in connection with the Company’s IPO, the Company will recommend to the Board that it make a one-time equity grant to Mr. Floyd with a value of $3,000,000, and which will be subject to a four-year vesting period, with such other terms and conditions of the grant set forth in a separate grant agreement between the Company and Mr. Floyd. As of the date of this report, this equity grant has not been approved by the Board or granted.
The Floyd Agreement includes certain restrictive covenants, which include non-solicitation and non-competition covenants during the term of the Floyd Agreement and for the 12 months following.
The foregoing description of the Floyd Agreement is not complete and is qualified in its entirety by reference to the full text of the Floyd Agreement, which is filed as exhibit 10.1 to the IPO registration statement.
Employment Agreement with Soumaya Hamzaoui
The Company entered into an executive employment agreement with Soumaya Hamzaoui (the “Hamzaoui Agreement”), pursuant to which Ms. Hamzaoui will serve as the Company’s Chief Operating Officer, reporting to the Company’s Board. The Hamzaoui Agreement remains in effect indefinitely until terminated by either party. The Hamzaoui Agreement provides for (A) a £370,500 annual base salary paid in accordance with our normal payroll practices and which may be increased in the discretion of our Board, but not reduced, (B) a relocation payment of £50,000, (C) a target annual bonus equal to 90% of base salary, with the actual amount of such bonus determined in the discretion of our Board, based on the achievement of the individual and/or Company performance goals determined by our Board or a subcommittee thereof and payable on the date annual bonuses are paid to our other senior executives, but in no event later than March 31st of the calendar year following the calendar year in which such bonus was earned, (D) a target annual equity compensation award equal to at least $2,500,000, each of which will be subject to a four-year vesting period and such other terms and conditions as determined by our Board or a subcommittee thereof, and (F) eligibility to participate in customary health, welfare, and fringe benefit plans we provide to our employees.
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The Hamzaoui Agreement also provides that in connection with our IPO, the Company will recommend to the Board that it make a one-time equity grant to Ms. Hamzaoui with a value of $7,000,000, and which will be subject to a four-year vesting period, with such other terms and conditions of the grant set forth in a separate grant agreement between the Company and Ms. Hamzaoui. As of the date of this annual report, this equity grant has not been approved by the Board or granted.
The foregoing description of the Hamzaoui Agreement is not complete and is qualified in its entirety by reference to the full text of the Hamzaoui Agreement, which is filed hereto.
Non-Executive Director Offer Letters
Hans Rudolf Kunz, Nikolaus Beat Senn, David Chung-Hua Bolocan, Prem Parameswaran and Dr. Mustafa Ergen are Non-Executive Directors (each, an “NED”, collectively, the “NEDs”) of the Company. The NEDs entered into offer letters that are based on UK appointments, with appropriate modification to include the relevant SEC and Nasdaq reporting provisions and any particular SEC/Nasdaq rules that apply. Each NED has been appointed for an initial 12-month period, and the appointment may for reasons other than cause (with examples for cause being set out in the agreement) be terminated on either party serving the other with one month’s written notice. The appointment letters detail the specific and detailed duties, time commitments and compensation for their services. The offer letters also include appropriate protections for the Company in relation to confidential information and outside interests.
Equity Incentive Plans
RTL Enterprise Management Incentive Plan and RTL Share Option Plan for Contractors (the “Option Plans”)
We have currently established the RTL Enterprise Management Incentive Plan (the “EMI Plan”) and the RTL Share Option Plan for Contractors (the “Contractor Plan”, together the “Option Plans”). The Contractor Plan takes the same form as the EMI Plan, save for certain changes which are required for non-employee option grants and are specified in the rules of the Contractor Plan. The terms set out below apply to both the EMI Plan and the Contractor Plan unless otherwise specified.
Pursuant to the Option Plans, we have issued options to certain individuals both in the United Kingdom and overseas (the “Option Holders”) over ordinary shares in RedCloud Technologies Limited, and we intend to grant further options to such individuals prior to completion of the Formation Transaction (the “RTL Options”). These upcoming intended option grants shall be issued under slightly amended forms of the Option Plans.
Eligibility and Types of Awards
Under the EMI Plan, UK tax-favored Enterprise Management Incentive (“EMI”) options can be granted to eligible employees. An eligible employee is an employee of a group company who satisfies the EMI working time requirement (meaning that they work for the relevant group company on average for at least 25 hours per week, or, if less, 75% of their working time). Under the EMI Plan non-tax favored options can also be granted to such eligible employees.
Under the Contractor Plan, non-tax favored options can be granted to contractors. A contractor is defined as an individual who provides services personally to any group company as a consultant or contractor or otherwise. It includes individuals who provide services to a group company indirectly through a third-party employer/employer of record.
EMI limits
There is a legislative limit on the total unrestricted market value of outstanding EMI options which can be held by any one Option Holder (together with some other tax-favoured options in the United Kingdom). This limit is £250,000.
There is a similar legislative limit on the total unrestricted market value of EMI options which can be outstanding in RedCloud Technologies Limited at any given time. This limit is £3,000,000.
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Non-Transferability of Awards
Options granted under the Option Plans are not transferrable other than to the personal representatives of the Option Holder on the death of the Option Holder (and will lapse immediately if the Option Holder otherwise attempts such a prohibited transfer).
Exercise Events
Under the Option Plans, an option can be exercised (i) at any time after a listing/IPO, (ii) for a period of 30 days following a change in control, (iii) following notice from the Board that a change of control or asset sale is likely to occur, or that RedCloud Technologies Limited proposes to pass a resolution for voluntary winding up, but such exercise shall only take effect immediately prior to and conditional upon the relevant event occurring, (iv) during the period commencing immediately following the sanctioning of a compromise or arrangement by the UK court between RedCloud Technologies Limited and its members under Part 26 of the Companies Act and ending on the date it becomes effective, (v) for a period of 30 days following the sale of substantially all the business or assets of the RedCloud Group, or (vi) on the day immediately prior to the tenth anniversary of the date of grant of the option. The exercisability is also subject to the leaver provisions. The Board has the discretion to extend the aforementioned exercise periods in (ii) to (v).
The Board also has the discretion to permit exercise on any other event that it considers to have the character of an exit event.
For the new option grants, these options will also be exercisable on a secondary sale to the extent that the third-party purchaser is willing to buy the shares acquired on exercise.
Reorganization
In the event of a reorganization which meets specified criteria, the Option Holder may be offered a new option in exchange for their existing option. If such an offer is made, the option may not be exercisable by virtue of any of the exercise events set out above and the existing option shall lapse at the end of the period during which the new option is offered, unless RedCloud Technologies Limited gives notice to the Option Holder that their option may be so exercised.
Leavers
Under the EMI Plan, a Good Leaver is defined as an Option Holder who ceases to be an employee of a group company by reason of (i) injury, (ii) disability, (iii) redundancy (within the meaning of the Employment Rights Act 1996), (iv) retirement on reaching the age at which the employee is bound to retire in accordance with the contract of employment, or (v) because the employee’s employing company or business is transferred out of the RedCloud Group, or (vi) for any other reason determined by the Board in its absolute discretion.
Under the Contractor Plan, a Good Leaver is defined as an Option Holder who ceases to provide services to a group company by reason of injury or disability, or for any other reason determined by the Board in its absolute discretion.
A Good Leaver can retain the vested portion of their option (or such a greater extent if determined by the Board) to be exercised in accordance with the remainder of the rules. The Board also has the discretion to allow the Option Holder to exercise their option within 90 days of termination, and such option will continue to subsist to the extent not exercised at the end of this period. The portion of the option which is unvested or not otherwise permitted to be exercised/retained shall lapse.
If an Option Holder dies, the option can be retained by their personal representatives to the extent vested, to be exercised in accordance with the remainder of the rules. The option will lapse one year after the Option Holder’s death.
If an Option Holder ceases to be an employee/contractor and they are not a Good Leaver, then the Board has the discretion to allow the option to be exercised within 90 days of termination or to be retained after termination to be exercised in accordance with the reminder of the rules (to whatever extent the Board decides). The option will lapse to the extent that the Board does not exercise this discretion at all.
A contractor becoming an employee of a RedCloud Group company will not be treated as a leaver under the Contractor Plan.
Alterations and Term
No options can be granted under the Option Plans after the tenth anniversary of their date of adoption.
The Board may at any time resolve in writing to alter or add to all or any of the provisions of the Option Plans and/or the terms upon which any option has been granted under it in any respect. The amendment shall take effect from the date of such resolution. However, no alteration (unless of a minor nature to benefit the administration of the plan or to take account in changes to legislation or related rules/regulations) may be made if it is disadvantageous to an Option Holder without the consent of the majority in number of Option Holders affected by such alteration, or otherwise without the prior approval of RedCloud Technologies Limited in a general meeting.
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The amendments to the Option Plans shall only apply to the new options to be granted, and shall be approved by the Board.
Adjustments
In the event of a demerger or any increase or variation in the share capital of RedCloud Technologies Limited or if the Board pays a special dividend, the Board may make any adjustment to the number of shares under option, the exercise price or the number of shares to be acquired on exercise (if the event takes place after an exercise but before the shares are allotted/transferred) as it deems appropriate.
2024 Equity Incentive Plan
The following is a summary of the material features of the RedCloud Holdings plc 2024 Equity Incentive Plan (the “2024 Plan”, together with the Option Plans, the “Equity Incentive Plans”). The 2024 Plan was approved by both our shareholders and our Board effective October 10, 2024.
Eligibility
The Administrator may grant awards to any director, employee or consultant of the Company or its subsidiaries. Only employees are eligible to receive incentive share options.
Administration
The 2024 Plan will be administered by our Board or one or more committees or subcommittees of the Board, which will be comprised, unless otherwise determined by the Board, solely of not less than two members who will be non-employee directors (a “Committee”), or any officer that has been delegated administrative authority pursuant to the 2024 Plan for the duration such delegation is in effect (collectively, the “Administrator”). The Administrator, which initially will be the Board with respect to awards to non-employee directors and the Compensation Committee of our Board with respect to other participants. The Administrator will have the authority to make all determinations and interpretations under, prescribe all forms for use with, and adopt rules for the administration of the 2024 Plan, subject to the 2024 Plan’s express terms and conditions. The Administrator will also set the terms and conditions of all awards under the 2024 Plan, including any vesting and vesting acceleration conditions.
Share Reserve
The maximum aggregate number of shares that may be issued under the 2024 Plan is 8,845,327.
Shares issuable under the 2024 Plan may be authorized, or unissued, or reacquired shares. Shares underlying any awards under the 2024 Plan that are settled in cash, forfeited, canceled, repurchased, held back upon exercise of an option or settlement of an award to cover the exercise price or tax withholding satisfied without the issuance of shares or otherwise terminated (other than by exercise) will be added back to the shares available for issuance under the 2024 Plan, although shares shall not again become available for issuance as incentive share options. Additionally, shares issued as “substitute awards” (as defined in the 2024 Plan) will not count against the 2024 Plan’s share limit, except substitute awards that are incentive share options will count against the incentive share option limit.
The share reserve described herein may be subject to certain adjustments in the event of certain changes in the capitalization of the Company (see “Equitable Adjustments” below).
Annual Limitation on Awards to Non-Employee Directors
The 2024 Plan contains a limitation whereby the value of all awards under the 2024 Plan and all other cash compensation paid by the Company to any non-employee director may not exceed $750,000 for the first calendar year a non-employee director is initially appointed to the Board, and $500,000 in any other calendar year.
Types of Awards
The 2024 Plan provides for the grant of share options, share appreciation rights, restricted shares, restricted shares units, performance awards, dividend equivalent awards, and other share- or cash-based awards (collectively, “awards”).
Share Options. The 2024 Plan permits the granting of both options intended to qualify as incentive share options under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and options that do not so qualify. Options granted under the 2024 Plan will be nonqualified options if they fail to qualify as incentive share options or exceed the annual limit on incentive share options. Incentive share options may only be granted to employees of the Company and its subsidiaries. Nonqualified options may be granted to any persons eligible to receive awards under the 2024 Plan.
The exercise price of each option will be determined by the Administrator, but such exercise price may not be less than 100% of the fair market value of one ordinary share of the Company on the date of grant or, in the case of an incentive share option granted to a 10% or greater shareholder, 110% of such share’s fair market value. The term of each option will be set by the Administrator and may not exceed ten (10) years from the date of grant (or five (5) years for an incentive share option granted to a 10% or greater shareholder). The Administrator will determine at what time or times each option may be exercised, including the ability to accelerate the vesting of such options.
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Share Appreciation Rights. The Administrator may award share appreciation rights subject to such conditions and restrictions as it may determine. Share appreciation rights entitle the recipient to ordinary shares of the Company or cash, equal to the value of the appreciation in the Company’s share price over the exercise price, as set by the Administrator and which will be at least equal to the fair market value of an ordinary share of the Company on the grant date. The term of each share appreciation right will be set by the Administrator and may not exceed ten years from the date of grant. The Administrator will determine at what time or times each share appreciation right may be exercised, including the ability to accelerate the vesting of such share appreciation rights.
Restricted Shares. A restricted share award is an award of ordinary shares of the Company that vests in accordance with the terms and conditions established by the Administrator. The Administrator will determine the persons to whom grants of restricted share awards are made, the number of restricted shares to be awarded, the price (if any) to be paid for the restricted shares, the time or times within which awards of restricted shares may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of restricted share awards. Unless otherwise provided in the applicable award agreement, a participant generally will have the rights and privileges of a shareholder as to such restricted shares, including without limitation the right to vote such restricted shares and the right to receive cash dividends, if applicable.
Restricted Share Units. Restricted share units are the right to receive ordinary shares of the Company at a future date in accordance with the terms of such grant upon the attainment of certain conditions specified by the Administrator. Restrictions or conditions could include, but are not limited to, the attainment of performance goals, continuous service with the Company or its subsidiaries, the passage of time or other restrictions or conditions. The Administrator determines the persons to whom grants of restricted share units are made, the number of restricted share units to be awarded, the time or times within which awards of restricted share units may be subject to forfeiture, the vesting schedule, and rights to acceleration thereof, and all other terms and conditions of the restricted share unit awards. The value of the restricted share units may be paid in ordinary shares of the Company, cash, other securities, other property, or a combination of the foregoing, as determined by the Administrator.
The holders of restricted share units will have no voting rights. Prior to settlement or forfeiture, restricted share units awarded under the 2024 Plan may, at the Administrator’s discretion, provide for a right to dividend equivalents.
Performance Awards. The Administrator has the authority to grant share options, share appreciation rights, restricted shares, or restricted share units as a performance award, which means that such awards vest at least in part upon the attainment of one or more specified performance criteria. For each performance period, the Administrator will have the sole authority to select the length of such performance period, the types of performance awards to be granted, the performance criteria that will be used to establish the performance goals, and the level(s) of performance which shall result in a performance award being earned. At any time, the Administrator may adjust or modify the calculation of a performance goal for a performance period, to appropriately reflect any circumstance or event that occurs during a performance period and that in the Administrator’s sole discretion, warrants adjustment or modification. Depending on the type of performance award granted, the previously discussed terms and conditions will also apply to a performance award.
Performance criteria for a performance award may be based on the attainment of specific levels of performance of the Company (and/or one or more subsidiaries, divisions, business segments or operational units, or any combination of the foregoing) and may include, without limitation, any of the following: (i) net earnings or net income (before or after taxes); (ii) basic or diluted earnings per share (before or after taxes); (iii) revenue or revenue growth (measured on a net or gross basis); (iv) gross profit or gross profit growth; (v) operating profit (before or after taxes); (vi) return measures (including, but not limited to, return on assets, capital, invested capital, equity, or sales); (vii) cash flow (including, but not limited to, operating cash flow, free cash flow, net cash provided by operations and cash flow return on capital); (viii) financing and other capital raising transactions (including, but not limited to, sales of the Company’s equity or debt securities); (ix) earnings before or after taxes, interest, depreciation and/or amortization; (x) gross or operating margins; (xi) productivity ratios; (xii) share price (including, but not limited to, growth measures and total shareholder return); (xiii) expense targets; (xiv) margins; (xv) productivity and operating efficiencies; (xvi) customer satisfaction; (xvii) customer growth; (xviii) working capital targets; (xix) measures of economic value added; (xx) inventory control; (xxi) enterprise value; (xxii) sales; (xxiii) debt levels and net debt; (xxiv) combined ratio; (xxv) timely launch of new facilities; (xxvi) client retention; (xxvii) employee retention; (xxviii) timely completion of new product rollouts; (xxix) cost targets; (xxx) reductions and savings; (xxxi) productivity and efficiencies; (xxxii) strategic partnerships or transactions; and (xxxiii) personal targets, goals or completion of projects. Any one or more of the performance criteria may be used on an absolute or relative basis to measure the performance of the Company and/or one or more subsidiaries as a whole or any business unit(s) of the Company and/or one or more subsidiaries or any combination thereof, or any of the above performance criteria may be compared to the performance of a selected group of comparison or peer companies, or a published or special index that the Administrator deems appropriate, or as compared to various stock market indices.
Dividend Equivalents. An award of dividend equivalents entitles the holder to be credited with an amount equal to all dividends paid on one ordinary share of the Company while the holder’s tandem award is outstanding. Dividend equivalents may be paid currently or credited to an account for the participant, settled in cash or ordinary shares of the Company, and subject to the same restriction on transferability and forfeitability as the award with respect to which the dividend equivalents are granted.
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Other Share- or Cash-Based Awards. Other share-based awards may be granted either alone, in addition to, or in tandem with, other awards granted under the 2024 Plan and/or cash awards made outside of the 2024 Plan. The Administrator shall have authority to determine the service providers to whom and the time or times at which other share-based awards shall be made, the amount of such other share-based awards, and all other conditions of the other share-based awards including any dividend and/or voting rights. The Administrator may grant cash awards in such amounts and subject to such performance or other vesting criteria and terms and conditions as the Administrator may determine.
Repricing
Notwithstanding anything to the contrary in the 2024 Plan, unless a repricing is approved by shareholders, in no case may the Administrator (i) amend an outstanding option or share appreciation right to reduce the exercise price of the award, (ii) cancel, exchange, or surrender an outstanding option or share appreciation right in exchange for cash or other awards for the purpose of repricing the award, or (iii) cancel, exchange, or surrender an outstanding option or share appreciation right in exchange for an option or share appreciation right with an exercise price that is less than the exercise price of the original award.
Equitable Adjustments
In the event of a merger, consolidation, recapitalization, share split, reverse share split, reorganization, split-up, spin-off, combination, repurchase or other change in corporate structure affecting our ordinary shares, the Administrator will adjust (i) the number and class of shares which may be delivered under the 2024 Plan (or number and kind of other securities or other property); (ii) the number, class and price (including the exercise or strike price of options and share appreciation rights) of shares subject to outstanding awards, (iii) any applicable performance criteria, performance period, and other terms and conditions of outstanding performance awards, and (iv) the 2024 Plan’s numerical limits.
Change in Control
In the event of any proposed change in control (as defined in the 2024 Plan), the Administrator will take any action as it deems appropriate, which action may include, without limitation, the following: (i) the continuation of any award, if the Company is the surviving corporation; (ii) the assumption of any award by the surviving corporation or its parent or subsidiary; (iii) the substitution by the surviving corporation or its parent or subsidiary of equivalent awards; (iv) accelerated vesting of the award, with all performance objectives and other vesting criteria deemed achieved at targeted levels, and a limited period during which to exercise the award prior to closing of the change in control, or (v) settlement of any award for the change in control price (less, to the extent applicable, the per share exercise price). Unless determined otherwise by the Administrator, in the event that the successor corporation refuses to assume or substitute for the award, a participant shall fully vest in and have the right to exercise the award as to all of our ordinary shares, including those that would not otherwise be vested or exercisable, all applicable restrictions will lapse, and all performance objectives and other vesting criteria will be deemed achieved at targeted levels.
Term
The 2024 Plan will, unless terminated earlier, continue in effect for a term of five (5) years.
Amendment and Termination
Our Board may amend, alter, suspend or terminate the 2024 Plan at any time. No amendment or termination of the 2024 Plan will materially impair the rights of any participant, unless mutually agreed otherwise between the participant and the Company. Approval of the shareholders shall be required for any amendment, where required by applicable law and Nasdaq rules, as well as (i) to increase the number of shares available for issuance under the 2024 Plan and (ii) to change the persons or class of persons eligible to receive awards under the 2024 Plan.
Recoupment Policy
All awards granted under the 2024 Plan, all amounts paid under the 2024 Plan, and all ordinary shares issued under the 2024 Plan shall be subject to reduction, recoupment, clawback, or recovery by the Company in accordance with applicable laws and with Company policy.
Incentive Executive Compensation Clawback Policy
The compensation committee adopted the Executive Compensation Clawback Policy (the “Recovery Policy”), which adheres to the listing standards of Nasdaq and the rules of the SEC. The Recovery Policy will require the compensation committee to recoup certain cash and equity incentive compensation paid to or deferred by certain executives in the event the Company is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the federal securities laws. Under the Recovery Policy, the compensation committee will require recoupment if it determines that incentive-based compensation received by an executive exceeds the amount of incentive-based compensation that otherwise would have been received, had it been calculated based on the restated amounts.
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C. Board Practices
Corporate Governance Practices
As a foreign private issuer whose shares are listed on Nasdaq, we have the option to follow certain UK corporate governance practices rather than those of Nasdaq, except to the extent that such laws would be contrary to U.S. securities laws and provided that we disclose the practices we are not following and describe the home country practices we are following. We intend to rely on this “foreign private issuer exemption” with respect to the following requirements:
| ● | We do not intend to follow Nasdaq Rule 5605(b) pursuant to which a majority of the board of directors of the Company must be comprised of independent directors as defined in Rule 5605(a)(2). Such independence requirement is not required under our Articles or the Companies Act. In accordance with generally accepted business practice, the composition of the board of directors of the Company will be governed by the Articles, which do not impose independence requirements. | |
| ● | We do not intend to follow Nasdaq Rule 5620(c) regarding quorum requirements applicable to meetings of shareholders. Such quorum requirements are not required under English law. In accordance with generally accepted business practice, our Amended and Restated Articles of Association and the Companies Act provide alternative quorum requirements that are generally applicable to meetings of shareholders. | |
| ● | We do not intend to follow Nasdaq Rule 5635(c) regarding shareholder approval requirements for the issuance of securities in connection with a share option or purchase plan that is established or materially amended or other equity compensation arrangement is made or materially amended. Pursuant to the Companies Act, we cannot allot shares or grant rights to subscribe for or to convert any security into shares in the Company without an ordinary resolution of the shareholders. | |
| ● | We do not intend to follow Nasdaq Rule 5635(d) regarding shareholder approval requirements for the issuance of more than 20% of the outstanding ordinary shares of the issuer. Pursuant to the Companies Act, we cannot allot shares or grant rights to subscribe for or to convert any security into shares in the Company without an ordinary resolution of the shareholders. |
Except as stated above, we intend to comply with the rules generally applicable to U.S. domestic companies listed on Nasdaq. We may in the future decide to use other foreign private issuer exemptions with respect to some or all of the other Nasdaq listing requirements. Following our home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on Nasdaq, may provide less protection than is accorded to investors under Nasdaq listing requirements applicable to domestic issuers.
We expect to maintain our status as a foreign private issuer under the applicable corporate governance requirements of the rules and regulations adopted by the SEC and other existing rules. Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.
Number and Terms of Office of Officers and Directors
Our Board consists of seven (7) members. Our directors will be appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our Amended and Restated Articles of Association.
Pursuant to our Amended and Restated Articles of Association, the Company may by ordinary resolution appoint a person who is willing to act as a director and the Board shall have power at any time to appoint any person who is willing to act as a director, in both cases either to fill a vacancy or as an addition to the existing Board, provided the total number of directors shall not exceed the maximum number of ten.
There are no family relationships among any of our directors or executive officers.
Director Independence and Committees of the Board of Directors
Director Independence
Nasdaq Rule 5605 requires a majority of a listed company’s board of directors to be comprised of independent directors; however, we intend to rely on the “foreign private issuer exemption” with respect with this requirement as such independence requirement is not required under our Articles or the Companies Act. In accordance with generally accepted business practice, the composition of our Board will be governed by the Articles, which do not impose such independence requirements. Nasdaq Rule 5605 also requires that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. We have determined that David Chung-Hua Bolocan, Prem Parameswaran and Dr. Mustafa Ergen are “independent” directors under the Nasdaq listing standards, while Justin Floyd, Soumaya Hamzaoui, Hans Rudolf Kunz and Nikolaus Senn are not independent under such standards. We have also determined that each of the three members of the Audit Committee is “independent” for purposes of Section 10A(m)(3) of the Exchange Act and the rules promulgated thereunder and under the Nasdaq listing standards. Further, the Board has determined that each of the two members of both the Compensation Committee and the Nominating and Corporate Governance Committee is “independent” under the Nasdaq listing standards. In making determinations concerning independence of members of our Board and the committees thereof, our Board will consider the relationships that each such person has with our Company and all the other facts and circumstances our Board deems relevant in determining independence, including the beneficial ownership of our capital stock by each such person.
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Board Committees
We have three standing committees of the Board: the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Each of the board committees act pursuant to a separate written charter adopted by our Board, each of which are available on our website at https://redcloudtechnology.com. Our Board may at any time or from time to time appoint certain other committees in its sole discretion as it deems necessary or appropriate to carry out its functions.
Audit Committee
The Audit Committee consists of David Chung-Hua Bolocan (Chairperson), Prem Parameswaran and Dr. Mustafa Ergen. The Board has determined that all of the members of the Audit Committee are “independent,” as defined by the Nasdaq listing standards and by applicable SEC rules. In addition, the Board has determined that David Chung-Hua Bolocan is an audit committee financial expert, as that term is defined by the SEC rules, by virtue of having the following attributes through relevant experience: (i) an understanding of generally accepted accounting principles and financial statements; (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves; (iii) experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by our financial statements, or experience actively supervising one or more persons engaged in such activities; (iv) an understanding of internal controls and procedures for financial reporting; and (v) an understanding of audit committee functions.
The function of the Audit Committee relates to oversight of the auditors, the auditing, accounting, and financial reporting processes, and the review of our financial reports and information. In addition, the functions of the Audit Committee will include, among other things, recommending to the Board the engagement or discharge of independent auditors, discussing with the auditors their review of our half yearly results and the results of their audit, and reviewing our internal accounting controls.
Compensation Committee
The Compensation Committee consists of David Chung-Hua Bolocan and Prem Parameswaran (Chairperson). The Board has determined that all of the members of the Compensation Committee are “independent,” as defined by Nasdaq listing standards. The responsibility of the Compensation Committee is to review and approve the compensation and other terms of employment of our President and Chief Executive Officer and our other executive officers, including all of the “named executive officers.” Among its other duties, the Compensation Committee oversees all significant aspects of our compensation plans and benefit programs. The Compensation Committee annually reviews and approves corporate goals and objectives for the President and Chief Executive Officer’s compensation and evaluates the Chief Executive Officer’s performance in light of those goals and objectives. The Compensation Committee also recommends to the Board the compensation and benefits for members of the Board. The Compensation Committee has also been appointed by the Board to administer our Equity Incentive Plans. The Compensation Committee does not delegate any of its authority to other persons.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is comprised of David Chung-Hua Bolocan and Prem Parameswaran (Chairperson). The committee members are independent under applicable Nasdaq rules and regulations. The Nominating and Corporate Governance Committee is responsible for, among other things, considering potential Board members, making recommendations to the full Board as to nominees for election to the Board, assessing the effectiveness of the Board and implementing our corporate governance guidelines.
Code of Ethics and Insider Trading Policy
Our Board has adopted a Code of Ethics, which applies to all of our executive officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, and an Insider Trading Policy. A copy of each are filed as an exhibit to this annual report. The Code of Ethics is also available on our website at https://redcloudtechnology.com. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics or Insider Trading Policy in a Current Report on Form 6-K.
Limitation of Directors Liability and Indemnification
We have entered into deeds of indemnity with all of our directors and named executive officers whereby we agree to indemnify those directors and officers to the fullest extent permitted by law, including indemnification against liabilities, costs, charges, expenses, judgments, settlements, compensation and other awards, damages and losses (including any direct, indirect or consequential losses and all interest, penalties, fines, taxes and legal costs (calculated on a full indemnity basis) and all other reasonable professional costs and expenses) in legal proceedings to which the director or officer was, or is threatened to be made, a party by reason of the fact that such director or officer is or was a director, officer of ours, except where, amongst other things, the Board reasonably determines arises out of, or is attributable to, the director or officer’s fraud, willful default, willful misconduct, reckless conduct, dishonesty, deliberate criminal conduct or act of bad faith.
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We have director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us, including matters arising under the Securities Act. The Amended and Restated Articles of Association also provide that every director or other officer of the Company shall be entitled to be indemnified by the Company out of the Company’s assets against all liabilities incurred by him in the actual or purported execution or discharge of his duties or the exercise or purported exercise of his powers or otherwise in relation to or in connection with his duties, powers or office to the maximum extent permitted by applicable law.
There is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees, which, are specified in the Nominating and Corporate Governance Committee’s charter, generally provide that persons to be nominated:
| ● | should have demonstrated notable or significant achievements in business, education or public service; | |
| ● | should possess the requisite intelligence, education and experience to make a significant contribution to the Board and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and | |
| ● | should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders. |
D. Employees
As of December 31, 2025, our company boasts a highly diverse and dynamic team of talented individuals from Africa, Europe and Latin America, speaking multiple languages. Such countries include Argentina, Bahrain, Brazil, Canada, France, Germany, Lebanon, Morocco, Nigeria, Portugal, Saudi Arabia, South Africa, Spain, Switzerland, Turkey, United Kingdom, United States.. Specifically, as of December 31, 2025, our human capital resources consisted of 255 full-time, part-time employees, including independent contractors and temporary personnel to supplement our workforce. Of this, 9 are in C-Suite, 16 in Finance, 3 in Legal, 20 in Marketing, 4 are Non Exec Directors, 34 in Operations, 8 in People, 99 in Sales and 62 in Technology. Competition for qualified personnel is intense, particularly for software engineers, computer scientists, and other technical staff, and constrained labor markets have increased competition for personnel across other parts of our business. Additionally, we have 1014 field officers operating on the ground across our current markets..
None of our employees are represented by a labor union, and we consider our employee relations to be satisfactory. To date, we have not experienced any work stoppages.
E. Share Ownership
Based solely upon information made available to us, the following table sets forth information as of May 15, 2026 regarding the beneficial ownership of our ordinary shares after giving effect to the Formation Transaction:
| ● | each person known by us to be the beneficial owner of more than 5% of our outstanding ordinary shares; | |
| ● | each of our named executive officers and directors; and | |
| ● | all our executive officers and directors as a group. |
The percentage ownership information shown in the table is based upon 59,362,026 ordinary shares outstanding as of May 15, 2026.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Except as otherwise indicated, each person or entity named in the table has sole voting and investment power with respect to all shares of our capital shown as beneficially owned, subject to applicable community property laws.
In computing the number and percentage of shares beneficially owned by a person, shares that may be acquired by such person (for example, upon the exercise of options or warrants) within 60 days of the date of this annual report are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person.
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The address of each holder listed below, except as otherwise indicated, is 50 Liverpool Street, London, EC2M 7PY.
| Name of Beneficial Owner | Ordinary Shares Beneficially Owned | Percent of Ordinary Shares Beneficially Owned | ||||||
| Named Executive Officers and Directors | ||||||||
| Justin Floyd (1) | 2,221,412 | 3.70 | % | |||||
| Raju Datla | - | * | % | |||||
| Soumaya Hamzaoui (2) | 507,750 | * | % | |||||
| Hans Rudolf Kunz (3) | 7,735,431 | 12.98 | % | |||||
| Nikolaus Senn (4) | 7,874,955 | 13.23 | % | |||||
| David Chung-Hua Bolocan | - | * | % | |||||
| Prem Parameswaran | - | * | % | |||||
| All directors and executive officers as a group (seven persons) | 18,339,548 | 30.9 | % | |||||
| 5% Shareholders | ||||||||
| Christina Byland (5) | 28,224,721 | 47.54 | % | |||||
*Less than 1%.
| (1) | Includes 1,587,037 ordinary shares, 634,375 options for the purchase of ordinary shares, which are exercisable within 60 days of the date of this annual report. |
| (2) | Includes 507,750 options for the purchase of ordinary shares, which are exercisable within 60 days of the date of this annual report held by Soumaya Hamzaoui, our Chief Product and Commercial Officer and director. |
| (3) | Represents 7,525,431 ordinary shares held by HRK Participations SA, an entity incorporated under the laws of Luxembourg, and includes 210,000 options for the purchase of ordinary shares, which are exercisable within 60 days of the date of this annual report, held by Hans Rudolf Kunz, our Chairperson of the Board. HRK Participations SA is wholly owned by HRK Holding (HK) Ltd. (“HRK Holding”), and HRK Holding is wholly owned by Mr. Kunz. |
| (4) | Represents 7,874,955 ordinary shares held by Nikolaus Senn, a director of our Company, and includes 135,000 options for the purchase of ordinary shares and warrants to purchase 376,000 ordinary shares, which are exercisable within 60 days of the date of this annual report. |
| (5) | Represents 23,895,330 ordinary shares held by Christina Byland and warrants to purchase 4,329,391 ordinary shares, which are exercisable within 60 days of the date of this annual report. |
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
See Section E, “Share Ownership,” under Item 6 for information as to our major shareholders.
B. Related Party Transactions
Other than compensation arrangements for our directors and executive officers, which are described elsewhere in this annual report, the following section describes transactions we have entered into during the last two completed fiscal years, and currently outstanding or recently outstanding transactions, in which:
| ● | we have been or are to be a participant; | |
| ● | the amounts involved exceed the lesser of (i) $120,000 or (ii) one percent of our average total assets at year-end for the last two completed fiscal years; and | |
| ● | any of our directors, executive officers, holders of more than 5% of our outstanding ordinary shares, or any immediate family member of, or person sharing the household with, such individuals, had or will have a direct or indirect material interest. |
Credit Facilities
Framework Loan Agreement with Lienhardt & Partner Privatbank Zürich AG
During 2025, RedCloud Technologies Limited entered into short term credit facilities with Lienhardt to support the Company’s working capital and liquidity requirements.
On September 22, 2025, the Company entered into an overdraft facility with a limit of GBP 2.0 million, which was fully guaranteed by Christina Byland, a shareholder of the Company, and Dr. Nikolaus B. Senn, a shareholder and member of the Company’s Board. On October 27, 2025, the Company drew an additional GBP 0.8 million under the same facility, subject to the same related party guarantees.
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Under the facility, Lienhardt provides the Company with an overdraft facility that may be drawn exclusively as an overdraft and does not provide for fixed term advances. The facility is subject to collateral accepted by Lienhardt and applicable loan to value ratios.
Key terms of the facility include:
| ● | Loan limit: GBP 2,800,000 | |
| ● | Loan type: Overdraft only | |
| ● | Interest rate: |
| ○ | 4.95% per annum, calculated daily on the outstanding debit balance | |
| ○ | Lienhardt may adjust the interest rate from time to time based on market conditions |
| ● | Maturity: |
| ○ | No stated maturity date | |
| ○ | The facility is repayable on demand |
| ● | Fees: Interest and bank charges are debited periodically in accordance with Lienhardt’s general terms | |
| ● | Governing law: Swiss law |
As of December 31, 2025, the total outstanding balance under this facility was GBP 2.8 million, which is classified as short term borrowings in the consolidated financial statements.
Borrowings under the Framework Loan Agreement are intended to support the Company’s liquidity needs and financial transactions and are classified as short-term borrowings in the consolidated financial statements.
Guarantees and Collateral (Related Parties)
In connection with the Framework Loan Agreement:
| ● | Dr. Nikolaus B. Senn, a member of the Company’s Board, has provided collateral to support the facility. | |
| ● | Christina Byland, a holder of more than 5% of the Company’s outstanding ordinary shares, and | |
| ● | Hans Rudolf Kunz, Chairperson of the Board, together with Darisse Summers, each holders of more than 5% of the Company’s outstanding ordinary shares, |
have agreed to indemnify Dr. Senn in the event that the Company defaults on its obligations under the facility.
Unsecured Shareholder Term Loans
Term Loans from Christina Byland
Between November 26, 2025 and December 17, 2025, the Company entered into two unsecured term loan agreements with Ms. Christina Byland, a holder of more than 5% of the Company’s outstanding ordinary shares:
| ● | CHF 2,000,000, bearing interest at 10% per annum, maturing on May 25, 2027; and | |
| ● | CHF 2,000,000, bearing interest at 10% per annum, also maturing on May 25, 2027. |
As of December 31, 2025, the aggregate outstanding balance of unsecured shareholder term loans totaled $8,123,835, as reflected in the consolidated balance sheet.
On March 25, 2026, subsequent to year-end, the Company received an additional GBP 1.0 million (Great British Pounds) unsecured loan from Ms. Christina Byland on substantially similar terms, increasing the total outstanding balance of unsecured shareholder term loans following year-end. On March 26, 2026, the Company also received an unsecured loan of GBP 136,000 with a maturity date of March 25, 2027, from Dr. Nikolaus Senn. In addition, subsequent to year-end, on May 7, 2026, the Company received an unsecured loan of $195,000 jointly from Dr. Nikolaus Senn and Ms. Christina Byland with a maturity date of March 25, 2027, comprised of $65,000 from Dr. Senn and $130,000 from Ms. Byland, respectively. These loans are unsecured, interest-bearing and were provided to support the Company’s working capital and liquidity requirements.
These loans are unsecured, interest-bearing and were provided to support the Company’s working capital and liquidity requirements.
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Historical Related-Party Loans Converted to Equity
Term Loans, Bridging Loans and Convertible Instruments
From 2022 through early 2025, the Company entered into multiple unsecured financing arrangements with related parties, including Christina Byland, Nikolaus Senn, and HRK Participations SA (an entity wholly owned by Hans Rudolf Kunz, Chairperson of the Board). These arrangements included:
| ● | unsecured term loans, | |
| ● | bridging loans advanced pending the Company’s initial public offering, and | |
| ● | unsecured convertible loan notes. |
On September 30, 2024, substantially all outstanding related-party loans were consolidated into a Restated Consolidated Loan Agreement, which carried an interest rate of 15% per annum.
On February 17, 2025, the Company entered into an Amended and Restated Loan Capitalization Agreement with the related-party lenders, pursuant to which the entire outstanding balance of £33.2 million ($41.5 million) under the Restated Consolidated Loan Agreement and related instruments was converted into ordinary shares upon consummation of the Company’s initial public offering in March 2025.
As a result, no amounts remained outstanding under these historical term loans, bridging loans or convertible loan notes as of December 31, 2025.
Arm’s-Length Considerations
The related-party financing arrangements described above were not negotiated on an arm’s-length basis. The terms were based on the Company’s liquidity needs at the time, the availability of capital from the related parties, and prevailing market conditions, rather than through a competitive third-party financing process.
Summary of Related-Party Debt as of December 31, 2025
As of December 31, 2025:
| ● | Outstanding related-party debt consisted of: |
| ○ | unsecured shareholder term loans from Ms. Christina Byland totaling $8.1 million, and | |
| ○ | borrowings under the Framework Loan Agreement with Lienhardt (guaranteed by related parties), classified as short-term borrowings. |
| ● | All historical related-party loans, bridging facilities and convertible instruments were converted into equity upon consummation of the Company’s initial public offering in March 2025. |
Agreements with Our Executive Officers and Directors
Employment Agreement with Justin Floyd
The Company entered into an executive employment agreement with Justin Floyd (the “Floyd Agreement”), pursuant to which Mr. Floyd will serve as the Company’s Chief Executive Officer, reporting to the Company’s Board. The Floyd Agreement remains in effect indefinitely until terminated by either party. The Floyd Agreement provides for (A) a $550,000 annual base salary paid in accordance with our normal payroll practices and which may be increased in the discretion of our Board, but not reduced, (B) a relocation payment of $200,000, (C) a target annual bonus equal to 100% of base salary, with the actual amount of such bonus determined in the discretion of our Board, based on the achievement of individual and/or Company performance goals determined by our Board or a subcommittee thereof and payable on the date annual bonuses are paid to our other senior executives, but in no event later than March 31st of the calendar year following the calendar year in which such bonus was earned, (D) a target annual equity compensation award equal to at least $5,092,000, each of which will be subject to a four-year vesting period and such other terms and conditions as determined by our Board or a subcommittee thereof, and (F) eligibility to participate in customary health, welfare, and fringe benefit plans we provide to our employees, but if we don’t offer customary health, welfare, and fringe benefit plans in New York, NY, the Company will reimburse Mr. Floyd (and Mr. Floyd’s spouse and/or eligible dependents) full monthly cost of market-standard health and welfare benefits.
The Floyd Agreement also provides that in connection with our IPO, the Company will recommend to the Board that it make a one-time equity grant to Mr. Floyd with a value of $10,000,000, and which will be subject to a four-year vesting period, with such other terms and conditions of the grant set forth in a separate grant agreement between the Company and Mr. Floyd. As of the date of this annual report, this equity grant has not been approved by the Board or granted.
The Floyd Agreement includes certain restrictive covenants, which include non-solicitation and non-competition covenants during the term of the Floyd Agreement and for the 12 months following.
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The foregoing description of the Floyd Agreement is not complete and is qualified in its entirety by reference to the full text of the Floyd Agreement, which is filed hereto.
Employment Agreement with Soumaya Hamzaoui
The Company entered into an executive employment agreement with Soumaya Hamzaoui (the “Hamzaoui Agreement”), pursuant to which Ms. Hamzaoui will serve as the Company’s Chief Operating Officer, reporting to the Company’s Board. The Hamzaoui Agreement remains in effect indefinitely until terminated by either party. The Hamzaoui Agreement provides for (A) a £370,500 annual base salary paid in accordance with our normal payroll practices and which may be increased in the discretion of our Board, but not reduced, (B) a relocation payment of £50,000, (C) a target annual bonus equal to 90% of base salary, with the actual amount of such bonus determined in the discretion of our Board, based on the achievement of the individual and/or Company performance goals determined by our Board or a subcommittee thereof and payable on the date annual bonuses are paid to our other senior executives, but in no event later than March 31st of the calendar year following the calendar year in which such bonus was earned, (D) a target annual equity compensation award equal to at least $2,500,000, each of which will be subject to a four-year vesting period and such other terms and conditions as determined by our Board or a subcommittee thereof, and (F) eligibility to participate in customary health, welfare, and fringe benefit plans we provide to our employees.
The Hamzaoui Agreement also provides that in connection with our IPO, the Company will recommend to the Board that it make a one-time equity grant to Ms. Hamzaoui with a value of $7,000,000, and which will be subject to a four-year vesting period, with such other terms and conditions of the grant set forth in a separate grant agreement between the Company and Ms. Hamzaoui. As of the date of this annual report, this equity grant has not been approved by the Board or granted.
The foregoing description of the Hamzaoui Agreement is not complete and is qualified in its entirety by reference to the full text of the Hamzaoui Agreement, which is filed hereto.
Indemnification Agreements
We have entered into a deed of indemnity with each of our directors and executive officers. Our Amended and Restated Articles of Association empower us to indemnify our directors and executive officers to the fullest extent permitted by applicable law.
Policies and Procedures with Respect to Related Party Transactions
Pursuant to our Audit Committee charter, our Audit Committee will be responsible for reviewing and approving transactions with related persons. A related person includes directors, executive officers, beneficial owners of 5% or more of any class of our voting securities, immediate family members of any of the foregoing persons, and any entities in which any of the foregoing is an executive officer or is an owner of 5% or more ownership interest.
If a transaction involving an amount in excess of $120,000 has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, information regarding the related person transaction will be reviewed by our Audit Committee, which will determine whether to approve the transaction.
In considering related person transactions, our audit committee will take into account the relevant available facts and circumstances including, but not limited to:
| ● | the related person’s interest in the related person transaction; | |
| ● | the approximate dollar value of the amount involved in the related person transaction; | |
| ● | the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss; | |
| ● | whether the transaction was undertaken in the ordinary course of business of our Company; | |
| ● | whether the transaction with the related person is proposed to be, or was, entered into on terms no less favorable to us than terms that could have been reached with an unrelated third party; |
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| ● | the purpose, and the potential benefits to our Company, of the transaction; and | |
| ● | any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction. |
In determining whether to approve, ratify or reject a related person transaction, the audit committee will review all relevant information available to it about such transaction, and it will approve or ratify the related person transaction only if it determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, the best interests of our company.
C. Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
Our consolidated financial statements begin on page F-1.
Legal Proceedings
From time to time, we are subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Although the results of litigation and claims cannot be predicted with certainty, as of the date of this annual report, we do not believe we are party to any claim or litigation, the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Dividends
We have never declared or paid any cash dividends on our equity interests, and we do not anticipate paying any cash dividends in the foreseeable future. The payment of dividends, if any, in the future is within the discretion of our Board and will depend on our earnings, capital requirements and financial condition and other relevant facts. We currently intend to retain all future earnings, if any, to finance the development and growth of our business.
No Significant Changes
Except as disclosed elsewhere in this annual report, no other significant changes to our financial condition have occurred since the date of the annual financial statements contained herein.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Our ordinary shares, par value £0.002 per share, are listed for trading on the Nasdaq Stock Market under the symbol “RCT”.
B. Plan of Distribution
Not Applicable.
C. Markets
Our ordinary shares are currently traded on the Nasdaq Stock Market.
D. Selling Shareholders
Not Applicable.
E. Dilution
Not Applicable.
F. Expenses of the Issuer
Not Applicable.
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ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not Applicable.
B. Memorandum and Articles of Association
We are an England and Wales public limited company and our affairs are governed by our Amended and Restated Articles of Association and the Companies Act. The following are summaries of material provisions of our Amended and Restated Articles of Association and the Companies Act insofar as they relate to the material terms of our ordinary shares. This description does not purport to be complete and is qualified in its entirety by reference to the full text of our Amended and Restated Articles of Association, which is filed as an exhibit to this Form 20-F, and by the Companies Act.
General
This section summarizes the material rights of the holders of ordinary shares under the Companies Act, and the material provisions of the Amended and Restated Articles of Association.
Ordinary Shares
Each ordinary share has a nominal value of £0.002 per share. Each issued ordinary share will be fully paid. There is no limit to the number of ordinary shares that we are authorized to issue, as the concept of authorized capital is no longer applicable under the provisions of the Companies Act. Each holder of our ordinary shares is entitled to one vote per ordinary share on all matters to be voted on by shareholders generally. The holders of our ordinary shares are entitled to receive such dividends as are recommended by our directors and declared by our shareholders. There are no conversion rights, redemption provisions or sinking fund provisions relating to any ordinary shares.
We are not permitted under English law to hold our own ordinary shares unless they are repurchased by us and held in treasury. We do not currently hold any of our own ordinary shares. See “Articles of Association” below for additional information.
Articles of Association
A summary of the key terms of the Amended and Restated Articles of Association is set out below. The summary below is not a complete copy of the terms of the Amended and Restated Articles of Association.
The Amended and Restated Articles of Association contain, among other things, provisions to the following effect:
Objects
No objects clause is included in the Amended and Restated Articles of Association and therefore, pursuant to the Companies Act, the objects of the Company are unrestricted.
Share Rights
Subject to the Companies Act and any rights attaching to shares already in issue, our shares may be issued with or have attached to them any rights and restrictions as we may by ordinary resolution of the shareholders determine or, in the absence of any such determination, as our Board may determine.
Voting Rights
Subject to any rights or restrictions attached to any shares from time to time, the general voting rights attaching to shares are as follows:
| ● | on a show of hands: |
| ○ | every shareholder who is present in person shall have one vote; | |
| ○ | every proxy present who has been duly appointed by one or more shareholders entitled to vote on the resolution shall have one vote, except that if the proxy has been duly appointed by more than one shareholder entitled to vote on the resolution and is instructed by one or more of those shareholders to vote for the resolution and by one or more others to vote against it, or is instructed by one or more of those shareholders to vote in one way and is given discretion as to how to vote by one or more others (and wishes to use that discretion to vote in the other way) he shall have one vote for and one vote against the resolution; and |
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| ○ | every corporate representative present who has been duly authorized by a corporation shall have the same voting rights as the corporation would be entitled to; |
| ● | on a poll every shareholder who is present in person or by duly appointed proxy or corporate representative shall have one vote for every share of which he is the holder or in respect of which his appointment of proxy or corporate representative has been made; | |
| ● | a shareholder entitled to more than one vote need not, if they vote, use all their votes or cast all the votes in the same way; | |
| ● | in the case of an equality of votes, whether on a show of hands or on a poll, no person shall have a second or casting vote; and | |
| ● | if two or more persons are joint holders of a share, then in voting on any question the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the names of the holders stand in the share register. |
The preference shares shall not confer any voting rights on their holders
Restrictions on Voting
No shareholder shall be entitled to vote (either personally or by proxy) at any general meeting or at any separate class meeting in respect of any share held by him unless all calls or other sums payable by him in respect of that share have been paid.
The Board may from time to time make calls upon the shareholders in respect of any money unpaid on their shares and each shareholder shall (subject to at least 14 clear days’ notice specifying the time or times and place of payment) pay at the time or times so specified the amount called on their shares.
Dividends
We may, subject to the provisions of the Companies Act and the Amended and Restated Articles of Association, by ordinary resolution of shareholders declare dividends out of profits available for distribution in accordance with the respective rights of shareholders, but no such dividend shall exceed the amount recommended by the Board.
The Board may from time to time pay shareholders such interim dividends as appears to the Board to be justified by the profits available for distribution (including any dividends at a fixed rate).
Unless and to the extent that the rights attached to any shares or the terms of issue of such shares otherwise provide, all dividends will be distributed among the holders of the preference shares and the ordinary shares, so that the holders of preference shares receive a total of one pound in aggregate (as a class), payment of which may be made to any holder of preference shares on behalf of the class, and the remainder shall be distributed to the holders of our ordinary shares pro rata to their respective holdings of ordinary shares.
The Board may deduct from any dividend or other money payable to any person on or in respect of a share all such sums as may be due from such shareholder to the Company on account of calls or otherwise in relation to the shares of the Company. Sums so deducted can be used to pay amounts owing to the Company in respect of the shares.
Subject to any special rights attaching to or the terms of issue of any share, no dividend or other moneys payable by us on or in respect of any share shall bear interest against us. Any dividend unclaimed after a period of 12 years from the date such dividend became due for payment shall be forfeited and shall revert to us.
Dividends may be declared or paid in any currency and the Board may decide the rate of exchange for any currency conversions that may be required, and how any costs involved are to be met.
The Board may, by ordinary resolution of the Company, direct (or in the case of an interim dividend may without the authority of an ordinary resolution direct) that payment of any dividend declared may be satisfied wholly or partly by the distribution of assets, and in particular of paid-up shares or debentures of any other company.
Change of Control
There is no specific provision in our Amended and Restated Articles of Association that would have the effect of delaying, deferring or preventing a change of control.
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Distribution of assets and on Winding Up
On a distribution of assets on a liquidation or a return of capital (other than a conversion, redemption or purchase of shares) the surplus assets of the Company remaining after payment of its liabilities shall be applied (to the extent that the Company is lawfully permitted to do so):
| ● | first in paying to the holders of the preference shares, in priority to any other classes of shares, an amount per share held equal to £49,999.999 (provided that if there are insufficient surplus assets to pay the amounts per share equal to this amount, the remaining surplus assets shall be distributed to the holders of the preference shares pro rata to their respective holdings of preference shares); and | |
| ● | second in distributing the balance among the holders of our ordinary shares pro rata to their respective holdings of ordinary shares. |
Variation of Rights
All or any of the rights and restrictions attached to any class of shares issued may be varied or abrogated with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or by special resolution passed at a separate general meeting of the holders of such shares, subject to the Companies Act and the terms of their issue. The Companies Act provides a right to object to the variation of the share capital by the shareholders who did not vote in favor of the variation. Should an aggregate of not less than 15% of the shareholders of the issued shares in question apply to the court to have the variation cancelled, the variation shall have no effect unless and until it is confirmed by the court.
Alteration to Share Capital
We may, by ordinary resolution of shareholders, consolidate all or any of our share capital into shares of larger amount than our existing shares, or sub-divide our shares or any of them into shares of a smaller amount. We may, by special resolution of shareholders, confirmed by the court, reduce our share capital or any capital redemption reserve or any share premium account in any manner authorized by the Companies Act. We may redeem or purchase all or any of our shares.
Allotment of Shares and Preemption Rights
Subject to the Companies Act and to any rights attached to existing shares, any share may be issued with or have attached to it such rights and restrictions as we may by ordinary resolution determine, or if no ordinary resolution has been passed or so far as the resolution does not make specific provision, as our Board may determine (including shares which are to be redeemed, or are liable to be redeemed at our option or the holder of such shares).
In accordance with section 551 of the Companies Act, the Board may be generally and unconditionally authorized to exercise for each prescribed period of up to five years all the powers of the Company to allot shares or grant rights to subscribe for or to convert any security into shares up to an aggregate nominal amount equal to the amount stated in the relevant ordinary resolution authorizing such allotment.
In certain circumstances, our shareholders may have statutory preemptive rights under the Companies Act in respect of the allotment of new shares.
Transfer of Shares
Any shareholder holding shares in certificated form may transfer all or any of his shares by an instrument of transfer in any usual or common form or in any other manner which is permitted by the Companies Act and approved by the Board. Any written instrument of transfer shall be signed by or on behalf of the transferor and (in the case of a share which is not fully paid up) the transferee.
All transfers of uncertificated shares shall be made in accordance with and subject to the provisions of the Uncertificated Securities Regulations 2001 and the facilities and requirements of its relevant system. The Uncertificated Securities Regulations 2001 permit shares to be issued and held in uncertificated form and transferred by means of a computer-based system.
The Board may, in its absolute discretion, decline to register any transfer of any share in certificated form which is not a fully paid share.
The Board may decline to recognize any instrument of transfer relating to certified shares unless:
| ● | it is only for one class of share; | |
| ● | it is in favor of a single transferee or no more than four joint transferees; | |
| ● | it is duly stamped (if this is required); and |
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| ● | it is delivered for registration to our registered office (or such other place as the Board may determine), accompanied by the certificate for the shares to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do). |
If the Board declines to register a transfer it shall, as soon as practicable and in any event within two months after the date on which the transfer is lodged with the Company, send to the transferee notice of the refusal.
Annual General Meetings
In accordance with the Companies Act, we are required in each year to hold an annual general meeting in addition to any other general meetings in that year and to specify the meeting as such in the notice convening it. The annual general meeting shall be convened whenever the Board sees fit, subject to the requirements of the Companies Act.
Notice of General Meetings
In accordance with the Companies Act, we are required to provide at least 21 clear days’ notice for an annual general meeting and any resolutions to be proposed at the meeting. At least 14 clear days’ notice is required for any other general meeting. In addition, certain matters, such as the removal of directors or auditors, require special notice, which is 28 clear days’ notice. The shareholders of a company may in all cases consent to a shorter notice period, the proportion of shareholders’ consent required being 100% of those entitled to attend and vote in the case of an annual general meeting and, in the case of any other general meeting, a majority in number of the shareholders having a right to attend and vote at the meeting, being a majority who together hold not less than 95% in nominal value of the shares giving a right to attend and vote at the meeting. The notice of a general meeting must state the place, date and time of the meeting and the general nature of the business to be dealt with at the meeting.
Quorum of General Meetings
No business shall be transacted at any general meeting unless a quorum is present. At least two shareholders present in person or by proxy and entitled to attend and vote shall be a quorum for all purposes.
Class Meetings
The provisions in our Amended and Restated Articles of Association relating to general meetings apply to every separate general meeting of the holders of a class of shares except that:
| ● | the quorum for such class meeting shall be two holders in person or by proxy representing not less than one-third in nominal value of the issued shares of the class (excluding any shares held in treasury); and | |
| ● | if at any adjourned meeting of such holders a quorum is not present at the meeting, one holder of shares of the class present in person or by proxy at an adjourned meeting constitutes a quorum. |
Number of Directors
We may not have less than two directors or more than ten directors on the Board. We may, by ordinary resolution of the shareholders, vary the minimum and/or maximum number of directors from time to time.
Appointment of Directors, Classification and Reappointment of Directors.
Subject to our Amended and Restated Articles of Association and the Companies Act, the Company may by ordinary resolution appoint a person who is willing to act as a director and the Board shall have power at any time to appoint any person who is willing to act as a director, in both cases either to fill a vacancy or as an addition to the existing Board, provided the total number of directors shall not exceed the maximum number of ten.
Directors’ Interests
The directors may authorize, to the fullest extent permitted by law, any matter or situation proposed to them which would or might otherwise result in a director infringing his duty to avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with our interests. A director shall not, save as otherwise agreed by him, be accountable to us for any remuneration, profit or other benefit which he derives from any matter authorized by the directors or by the shareholders in general meeting and no contract, arrangement or transaction shall be liable to be avoided on any such grounds.
Subject to the requirements under sections 175, 177 and 182 of the Companies Act, a director who is in any way, whether directly or indirectly, interested in a proposed or existing transaction or arrangement with us shall declare the nature of his interest at a meeting of the directors.
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A director shall not vote in respect of any transactions or, arrangement with the Company in which he has an interest, and which may reasonably be regarded as likely to give rise to a conflict of interest. A director shall not be counted in the quorum at a meeting in relation to any resolution on which he is debarred from voting.
A director shall be entitled to vote (and be counted in the quorum) in respect of any resolution concerning any of the following matters:
| ● | in which they have an interest of which they are not aware or which they cannot reasonably be regarded as likely to give rise to a conflict of interest; | |
| ● | in which they have an interest only by virtue of interests in shares or debentures or other securities of the Company, or by reason of any other interest in or through the Company; | |
| ● | which involves the giving of any security, guarantee or indemnity to the director or any other person in respect of: |
| ○ | money lent or obligations incurred by him or by any other person at the request of or for the benefit of the Company or any of its subsidiary undertakings; or | |
| ○ | a debt or obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or part under a guarantee or indemnity or by the giving of security; |
| ● | concerning an offer of shares or debentures or other securities of or by the Company or any of its subsidiary undertakings, in which offer the director is or may be entitled to participate as a holder of securities, or in the underwriting or sub-underwriting of which the director is to participate; | |
| ● | relating to any other body corporate in which he is interested, directly or indirectly and whether as a director or other officer, shareholder, creditor, employee or otherwise, provided that he (together with persons connected with him) does not hold an interest in shares (as that term is defined in sections 820 to 825 of the Companies Act) representing one per cent. or more of either any class of the equity share capital, or the voting rights in such body corporate; | |
| ● | relating to a pension, superannuation or similar scheme or retirement, death or disability benefits scheme or employees’ share scheme which has been approved by HMRC or is conditional upon such approval or does not award him any privilege or benefit not awarded to the employees to whom such scheme relates; | |
| ● | concerning the purchase or maintenance by the Company of insurance for any liability for the benefit of directors or for the benefit of persons including directors; | |
| ● | concerning the giving of indemnities in favor of directors; | |
| ● | concerning the funding of expenditure by any director or directors on (i) defending criminal, civil or regulatory proceedings or actions against him or them, (ii) in connection with an application to the court for relief under sections 661(3) or (4) or 1157 of the Companies Act or otherwise or (iii) defending him or them in any regulatory investigations, or the doing of anything to enable any director or directors to avoid incurring such expenditure; or | |
| ● | in respect of which their interest, or the interest of directors generally, has been authorized by ordinary resolution. |
If a question arises at a meeting of the Board or of a committee of the Board as to the right of a director to vote or be counted in the quorum, and such question is not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum, the question shall be determined by the Chairperson and his ruling in relation to any director other than himself shall be final and conclusive except in a case where the nature or extent of the interest of the director (so far as known to him) concerned has not been fairly disclosed. If the question arises about the Chairperson, the question must be directed to the directors or committee members (excluding the Chairperson). The Chairperson cannot vote on the question but can be counted in the quorum. The directors’ resolution about the Chairperson is final and conclusive, unless the nature and extent of the Chairperson’s interests have not been fairly disclosed to the directors.
Directors’ Fees and Remuneration
Each of the directors shall be paid a fee at such rate as may from time to time be determined by the Board (or for the avoidance of doubt any duly authorized committee of the Board) provided that the aggregate of all such fees so paid to directors shall not exceed £750,000 per annum (exclusive of value added tax, if applicable) in aggregate or such higher amount as may from time to time be determined by ordinary resolution of the shareholders.
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The Board may repay to any director all such reasonable expenses as they may properly incur in attending and returning from meetings of the Board or of any committee of the Board or shareholders’ meetings or otherwise in connection with the performance of his duties as a director of the Company.
Any director who is appointed to any executive office or who serves on any committee or who otherwise performs services which in the opinion of the directors are outside the scope of the ordinary duties of a director, may be paid such extra remuneration by way of salary, commission, or otherwise as the directors may determine.
Borrowing Powers
Subject to our Amended and Restated Articles of Association and the Companies Act, the Board may exercise all the powers of the Company to borrow money, to give guarantees and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital, and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.
Indemnity
Every director or other officer of our group may be indemnified by the Company against all costs, charges, expenses, losses and liabilities sustained or incurred by them in connection with that director’s or officer’s duties or powers in relation to the Company or other members of our group. See also “Indemnification of directors and officers” in Part II below.
Other United Kingdom Law Considerations
Mandatory Purchases and Acquisitions
Pursuant to Sections 979 to 991 of the Companies Act, where a takeover offer has been made for us and the offeror has acquired or unconditionally contracted to acquire not less than 90% in value of the shares to which the offer relates and not less than 90% of the voting rights carried by those shares, the offeror may give notice to the holder of any shares to which the offer relates which the offeror has not acquired or unconditionally contracted to acquire that he wishes to acquire, and is entitled to so acquire, those shares on the same terms as the general offer. The offeror would do so by sending a notice and statutory declaration stating that the conditions of the notice are satisfied to the outstanding minority shareholders telling them that it will compulsorily acquire their shares.
Such notice must be sent within three months of the last day on which the offer can be accepted in the prescribed manner or if earlier, and the offer is not one to which the City Code applies, within the period of six months beginning with the date of the offer. The squeeze-out of the minority shareholders can be completed at the end of six weeks from the date the notice has been given, following which the offeror can execute a transfer of the outstanding shares in its favor and pay the consideration to us, and we would hold the consideration on trust for the outstanding minority shareholders. The consideration offered to the outstanding minority shareholders whose shares are compulsorily acquired under the Companies Act must, in general, be the same as the consideration that was available under the takeover offer.
If a takeover is structured as a scheme of arrangement pursuant to Part 26 of the Companies Act, the scheme, and therefore takeover, would need to be approved by a majority in number representing 75% in value of the shareholders of each class of shareholders voting, whether in person or by proxy. If approved, the scheme, and therefore takeover, would be binding on 100% of the shareholders of the relevant class(es).
Sell Out
The Companies Act also gives our minority shareholders a right to be bought out in certain circumstances by an offeror who has made a takeover offer for all of our shares. The holder of shares to which the offer relates, and who has not otherwise accepted the offer, may require the offeror to acquire his shares if, prior to the expiry of the acceptance period for such offer, (i) the offeror has acquired or agreed to acquire not less than 90% in value of the voting shares, and (ii) not less than 90% of the voting rights carried by those shares. The offeror may impose a time limit on the rights of minority shareholders to be bought out that is not less than three months after the end of the acceptance period. If a shareholder exercises his rights to be bought out, the offeror is required to acquire those shares on the terms of this offer or on such other terms as may be agreed.
UK City Code on Takeovers and Mergers
The Company is a public limited company incorporated in, and with its registered office in, the United Kingdom but its securities are not admitted to trading on a regulated market or multilateral trading facility in the United Kingdom (or a stock exchange in the Channel Islands or the Isle of Man). The City Code shall only apply to the Company if it is considered by the Panel to have its place of central management and control in the United Kingdom (or the Channel Islands or the Isle of Man). This is known as the “residency test”. The way in which the test for central management and control is applied for the purposes of the City Code may be different from the way in which it is applied by the United Kingdom tax authorities, HMRC. For the purposes of determining where the Company has its place of central management and control, the Panel will consider, among other things, the structure of the Board, the functions of the directors of the Board and where they are resident.
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The majority of the Board currently resides outside of the United Kingdom, the Channel Islands and the Isle of Man. Based upon the structure of the Board and management structure and the Company’s intended plans for directors and management, for the purposes of the City Code, the Company is considered to have its place of central management and control outside the United Kingdom, the Channel Islands or the Isle of Man. Accordingly, the City Code is not expected to apply to the Company. It is possible that in the future circumstances, and in particular the Board composition, could change which may cause the City Code to apply to the Company. The City Code provides a framework within which takeovers of companies subject to it are conducted. In particular, the City Code contains certain rules in respect of mandatory offers. Under Rule 9 of the City Code, if a person:
| (a) | acquires, whether by a series of transactions over a period of time or not, an interest in our shares which, when taken together with shares in which he or persons acting in concert with him are interested, carries 30% or more of the voting rights of our shares (which percentage is treated by the City Code as the level at which effective control is obtained); or | |
| (b) | who, together with persons acting in concert with him, is interested in shares that in the aggregate carry not less than 30% and not more than 50% of the voting rights in us, acquires additional interests in shares that increase the percentage of shares carrying voting rights in which that person is interested |
the acquirer, and depending on the circumstances, its concert parties would be required (except with the consent of the Panel) to make a cash offer to all other shareholders for all of their shares in our capital at a price not less than the highest price paid for any interests in the shares by the acquirer or its concert parties during the 12 months before the offer was announced.
Disclosure of Interests in Shares
Pursuant to Part 22 of the Companies Act, we are empowered by notice in writing to any person whom we know or have reasonable cause to believe to be interested in our shares, or at any time during the three years immediately preceding the date on which the notice is issued has been so interested, requiring such person within a reasonable time to disclose to us particulars of that person’s interest and (so far as is within his knowledge) particulars of any other interest that subsists or subsisted in those shares.
Purchase of Own Shares
Under English law, a limited company may only purchase or redeem its own shares out of the distributable profits of the Company or the proceeds of a fresh issue of shares made for the purpose of financing the purchase, provided that they are not restricted from doing so by their articles. A limited company may not purchase or redeem its own shares if, as a result of the purchase, there would no longer be any issued shares of the Company other than redeemable shares or shares held as treasury shares. Shares must be fully paid in order to be repurchased.
Subject to the foregoing, because the Nasdaq is not a “recognized investment exchange” under the Companies Act, the Company may purchase its fully paid shares only pursuant to a purchase contract authorized by ordinary resolution of the holders of Shares before the purchase takes place. Any authority will not be effective if any shareholder from whom the Company proposes to purchase shares votes on the resolution and the resolution would not have been passed if such shareholder had not done so. The resolution authorizing the purchase must:
| ● | specify the maximum number of shares authorized to be acquired; | |
| ● | determine the maximum and minimum prices that may be paid for the shares; and | |
| ● | specify a date, not being later than five years after the passing of the resolution, on which the authority to purchase is to expire. |
Distributions and Dividends
Under the Companies Act, before a company can lawfully make a distribution or dividend, it must ensure that it has sufficient distributable reserves (on a non-consolidated basis). The basic rule is that a company’s profits available for the purpose of making a distribution are its accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made. The requirement to have sufficient distributable reserves before a distribution or dividend can be paid applies to us and to each of our subsidiaries that has been incorporated under English law.
It is not sufficient that we, as a public company, have made a distributable profit for the purpose of making a distribution. An additional capital maintenance requirement is imposed on us to ensure that the net worth of the Company is at least equal to the amount of its capital. A public company can only make a distribution:
| ● | if, at the time that the distribution is made, the amount of its net assets (that is, the total excess of assets over liabilities) is not less than the total of its called up share capital and undistributable reserves; and | |
| ● | if, and to the extent that, the distribution itself, at the time that it is made, does not reduce the amount of the net assets to less than that total. |
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C. Material Contracts
Not Applicable.
D. Exchange Controls
There are no governmental laws, decrees, regulations or other legislation in the United Kingdom that may affect the import or export of capital, including the availability of cash and cash equivalents for use by us, or that may affect the remittance of dividends, interest, or other payments by us to non-resident holders of our ordinary shares, other than withholding tax requirements. There is no limitation imposed by English law or in the Amended and Restated Articles of Association on the right of non-residents to hold or vote shares.
E. Taxation
The following discussion is based on U.S. and United Kingdom tax law, statutes, treaties, regulations, rulings and decisions all as of the date of this annual report. Taxation laws are subject to change, from time to time, and no representation is or can be made as to whether such laws will change, or what impact, if any, such changes would have on the statements contained in this summary. No assurance can be given that proposed amendments will be enacted as proposed, or that legislative or judicial changes, or changes in administrative practice, will not modify or change the law as described herein.
This summary is of a general nature only. It does not constitute legal or tax advice nor does it discuss all aspects of United Kingdom taxation that may be relevant to any particular UK Holder (as defined below) or U.S. Holder of ordinary shares.
This summary does not discuss all aspects of United Kingdom and U.S. federal income taxation that may be relevant to a particular holder of our ordinary shares in light of the holder’s own circumstances or to certain types of investors subject to special treatment under applicable tax laws (for example, financial institutions, life insurance companies, tax-exempt organizations, and non-U.S. taxpayers) and it does not discuss any tax consequences arising under the laws of taxing jurisdictions other than the United Kingdom and the U.S. federal government. The tax treatment of holders of our ordinary shares may vary depending upon each holder’s own particular situation.
Certain United States Taxation Matters
The following is a discussion of certain material United States federal income tax considerations relating to the acquisition, ownership, and disposition of our ordinary shares by a U.S. Holder, as defined below, that acquires our ordinary shares and holds our ordinary shares as “capital assets” (generally, property held for investment) under the Code. This discussion is based on existing United States federal income tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the IRS with respect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (such as, for example, certain financial institutions, insurance companies, regulated investment companies, real estate investment trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships (or other entities treated as partnerships for United States federal income tax purposes) and their partners, tax-exempt organizations (including private foundations)), investors who are not U.S. Holders, investors that own (directly, indirectly, or constructively) 5% or more of our voting shares, investors that hold their ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction), investors that are subject to the applicable financial statement accounting rules under Section 451(b) of the Code, or investors that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not address any tax laws other than the United States federal income tax laws, including any state, local, alternative minimum tax or non-United States tax considerations, or the Medicare tax on unearned income. Each potential investor is urged to consult its tax advisor regarding the United States federal, state, local and non-United States income and other tax considerations of an investment in our ordinary shares.
General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ordinary shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise elected to be treated as a United States person under the Code.
If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our ordinary shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding our ordinary shares are urged to consult their tax advisors regarding an investment in our ordinary shares.
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The discussion set forth below is addressed only to U.S. Holders of our ordinary shares. Prospective purchasers are urged to consult their own tax advisors about the application of U.S. federal income tax law to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our ordinary shares.
Taxation of Dividends and Other Distributions on our Ordinary Shares
Subject to the passive foreign investment company rules discussed below, distributions of cash or other property made by us to you with respect to the ordinary shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the ordinary shares are readily tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our ordinary shares, including the effects of any change in law after the date of this annual report.
To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your ordinary shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
Taxation of Dispositions of Ordinary Shares
Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of ordinary shares equal to the difference between the amount realized (in U.S. dollars) for the ordinary shares and your tax basis (in U.S. dollars) in the ordinary shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the ordinary shares for more than one year, you may be eligible for reduced tax rates on any such capital gains. The deductibility of capital losses is subject to limitations.
Passive Foreign Investment Company
A non-U.S. corporation is considered a PFIC for any taxable year if either:
| ● | at least 75% of its gross income for such taxable year is passive income; or | |
| ● | at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). |
The determination of PFIC status is inherently factual and may depend on the composition of the Company’s income and assets in future periods, which may not be within the Company’s control. Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the shares. In determining the value and composition of our assets for purposes of the PFIC asset test, (1) the cash we raised in the IPO will generally be considered to be held for the production of passive income and (2) the value of our assets must be determined based on the market value of our ordinary shares from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets (including the cash raised in the IPO) on any particular quarterly testing date for purposes of the asset test.
We must make a separate determination each year as to whether we are a PFIC. Taking into account the cash we raised in the IPO, together with any other assets held for the production of passive income, it is possible that, for our current taxable year or for any subsequent taxable year, more than 50% of our assets may be assets held for the production of passive income. We will make this determination following the end of any particular tax year. Because the value of our assets for purposes of the asset test will generally be determined based on the market price of our ordinary shares and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our ordinary shares and the amount of cash we raise in this offering. Accordingly, fluctuations in the market price of the ordinary shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raised in the IPO. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our ordinary shares from time to time) that may not be within our control. If we are a PFIC for any year during which you hold ordinary shares, we will continue to be treated as a PFIC for all succeeding years during which you hold ordinary shares. However, if we cease to be a PFIC and you did not previously make a timely “mark-to-market” election as described below, you may avoid some of the adverse effects of the PFIC regime by making a “purging election” (as described below) with respect to the ordinary shares.
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If we are a PFIC for your taxable year(s) during which you hold ordinary shares, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the ordinary shares, unless you make a “mark-to-market” election or a “qualified electing fund” election (as discussed below). Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the ordinary shares will be treated as an excess distribution. In addition, any gain recognized on a taxable disposition of the ordinary shares will be treated in the same manner as if such gain were an excess distribution. Under these special tax rules:
| ● | the excess distribution or gain will be allocated ratably over your holding period for the ordinary shares; | |
| ● | the amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and | |
| ● | the amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the ordinary shares cannot be treated as capital, even if you hold the ordinary shares as capital assets.
A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for the first taxable year during which you hold (or are deemed to hold) ordinary shares and for which we are determined to be a PFIC, you will include in your income each year an amount equal to the excess, if any, of the fair market value of the ordinary shares as of the close of such taxable year over your adjusted basis in such ordinary shares, which excess will be treated as ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the ordinary shares over their fair market value as of the close of the taxable year. However, such ordinary loss is allowable only to the extent of any net mark-to-market gains on the ordinary shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the ordinary shares, are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of the ordinary shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such ordinary shares. Your basis in the ordinary shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under “— Taxation of Dividends and Other Distributions on our ordinary shares” generally would not apply.
The mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including Nasdaq. If the ordinary shares are regularly traded on Nasdaq and if you are a holder of ordinary shares, the mark-to-market election would be available to you were we to be or become a PFIC.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold ordinary shares in any taxable year in which we are a PFIC, you will be required to file IRS Form 8621 in each such year and provide certain annual information regarding such ordinary shares, including regarding distributions received on the ordinary shares and any gain realized on the disposition of the ordinary shares.
If you do not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during the period you hold our ordinary shares, then such ordinary shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election” creates a deemed sale of such ordinary shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the ordinary shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your ordinary shares for tax purposes.
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You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our ordinary shares and the elections discussed above.
Global Minimum Tax (Pillar Two)
The Company operates in multiple jurisdictions and may be subject to evolving global tax frameworks, including the OECD’s Pillar Two global minimum tax rules. The impact of these rules will depend on the implementation of local legislation in the jurisdictions in which the Company operates. The Company continues to monitor these developments and does not currently expect a material impact, although this assessment may change as further guidance becomes available.
Information Reporting and Backup Withholding
Dividend payments with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares may be subject to information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on IRS Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any required information. We do not intend to withhold taxes for individual shareholders. However, transactions effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.
Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our ordinary shares, subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain financial institutions), by attaching a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold ordinary shares.
THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE TO YOU DEPENDING UPON YOUR PARTICULAR SITUATION. YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO YOU OF THE OWNERSHIP AND DISPOSITION OF ORDINARY SHARES AND WARRANTS, AS APPLICABLE, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND TAX TREATIES AND THE POSSIBLE EFFECTS OF CHANGES IN U.S. OR OTHER TAX LAWS.
Certain United Kingdom Tax Considerations
The following is a general summary of certain United Kingdom tax considerations relating to the ownership and disposal of our ordinary shares and does not address all possible tax consequences relating to an investment in our ordinary shares. It is based on United Kingdom tax law and the generally published HMRC practice as of the date of this annual report, both of which are subject to change, possibly with retrospective effect. A United Kingdom tax year runs from April 6th in any year to April 5th in the following year for individuals and from April 1st to March 31st for corporation taxpayers.
Save as provided otherwise, this summary applies only to a person who is the absolute beneficial owner of our ordinary shares and who is resident (and, in the case of an individual, domiciled) in the United Kingdom for tax purposes and who is not resident for tax purposes in any other jurisdiction and does not have a permanent establishment or fixed base in any other jurisdiction with which the holding of our ordinary shares is connected (a “UK Holder”). A person who is not a UK Holder, including a person (a) who is not resident (or, if resident, is not domiciled) in the United Kingdom for tax purposes, including an individual and company who trades in the United Kingdom through a branch, agency or permanent establishment in the United Kingdom to which an ordinary share is attributable, or (b) who is resident or otherwise subject to tax in a jurisdiction outside the United Kingdom, is recommended to seek the advice of professional advisors in relation to their taxation obligations.
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This summary is for general information only and is not intended to be, nor should it be considered to be, legal or tax advice to any particular investor. It does not address all of the tax considerations that may be relevant to specific investors in light of their particular circumstances or to investors subject to special treatment under United Kingdom tax law. In particular this summary:
| ● | only applies to an absolute beneficial owner of our ordinary shares and any dividend paid in respect of that ordinary share where the dividend is regarded for United Kingdom tax purposes as that person’s own income (and not the income of some other person); and | |
| ● | (a) only addresses the principal United Kingdom tax consequences for an investor who holds our ordinary shares as a capital asset, (b) does not address the tax consequences that may be relevant to certain special classes of investor such as a dealer, broker or trader in shares or securities and any other person who holds our ordinary shares otherwise than as an investment, (c) does not address the tax consequences for a holder that is a financial institution, insurance company, collective investment scheme, pension scheme, charity or tax-exempt organization, (d) assumes that a holder is not an officer or employee of the Company (nor of any related company) and has not (and is not deemed to have) acquired the ordinary shares by virtue of an office or employment, and (e) assumes that a holder does not control or hold (and is not deemed to control or hold), either alone or together with one or more associated or connected persons, directly or indirectly, an interest of 10% or more in the issued share capital (or in any class thereof), voting power, rights to profits or capital of the Company, and is not otherwise connected with the Company. |
Taxation of Dividends
Income Tax. An individual holder of our ordinary shares who is not a UK Holder will not be chargeable to United Kingdom income tax on a dividend paid by the Company, unless such holder carries on (whether solely or in partnership) a trade, profession or vocation in the United Kingdom through a branch or agency in the United Kingdom to which the ordinary shares are attributable. In these circumstances, such holder may, depending on his or her individual circumstances, be chargeable to United Kingdom income tax on a dividend received from the Company.
A dividend received by individual UK Holders will be subject to United Kingdom income tax. The rate of United Kingdom income tax that is chargeable on dividends received in the tax year 2024/2025 by an individual UK Holder who is (i) an additional rate taxpayer is 39.35%, (ii) a higher rate taxpayer is 33.75%, and (iii) a basic rate taxpayer is 8.75%. An individual UK Holder may be entitled to a tax-free dividend allowance (in addition to their personal allowance) of £500 for the tax year 2024/2025, being the amount of dividend income that the relevant individual can receive before United Kingdom income tax is payable. Dividends within the dividend allowance will still count towards the relevant individual’s basic, higher or additional rate bands, however. An individual’s dividend income is treated as the top slice of their total income that is chargeable to United Kingdom income tax. Dividends which are covered by an individual’s personal income tax allowance do not count towards and are ignored for the dividend allowance. The dividend allowance and applicable rates are subject to change in future tax years.
Corporation Tax. A UK Holder within the charge to United Kingdom corporation tax may be entitled to exemption from United Kingdom corporation tax in respect of dividend payments in respect of an ordinary share. If the conditions for the exemption are not satisfied or such UK Holder elects for an otherwise exempt dividend to be taxable, United Kingdom corporation tax will be chargeable on the dividend. The main rate of corporation tax of 25% applies to companies with profits in excess of £250,000. A lower rate of corporation tax of 19% applies to companies with profits of up to £50,000, and a marginal scaled rate between 19% and 25% will apply to companies with profits between £50,000 and £250,000. If potential investors are in any doubt as to their position, they should consult their own professional advisers.
A corporate holder of our ordinary shares that is not a UK Holder will not be subject to United Kingdom corporation tax on a dividend received from the Company, unless it carries on a trade in the United Kingdom through a permanent establishment to which the ordinary shares are attributable. In these circumstances, such holder may, depending on its individual circumstances and if the exemption from United Kingdom corporation tax discussed above does not apply, be chargeable to United Kingdom corporation tax on dividends received from the Company.
Taxation of Disposals
UK Holders. A disposal or deemed disposal of our ordinary shares by an individual UK Holder may, depending on his or her individual circumstances, give rise to a chargeable gain or to an allowable loss for the purpose of United Kingdom capital gains tax. The principal factors that will determine the capital gains tax position on a disposal of our ordinary shares are the extent to which the holder realizes any other capital gains in the tax year in which the disposal is made, the extent to which the holder has incurred capital losses in that or any earlier tax year and the level at which the annual exempt amount for United Kingdom capital gains tax (the “annual exempt amount”) is set by the United Kingdom government for that tax year. The annual exempt amount for the 2024/2025 tax year is £3,000. If, after all allowable deductions, an individual UK Holder’s total taxable income for the relevant tax year exceeds the basic rate income tax limit, a taxable capital gain accruing on a disposal of an ordinary share is taxed at the rate of 24%. In other cases, a taxable capital gain accruing on a disposal of our ordinary shares for individual UK Holders may be taxed. Capital gains tax rates and thresholds are subject to change, and investors should consult current legislation applicable at the time of disposal.
An individual UK Holder who ceases to be resident in the United Kingdom (or who fails to be regarded as resident in a territory outside the United Kingdom for the purposes of double taxation relief) for a period of less than five calendar years and who disposes of our ordinary shares during that period of temporary non-United Kingdom residence may be liable to United Kingdom capital gains tax on a chargeable gain accruing on such disposal on his or her return to the United Kingdom (or upon ceasing to be regarded as resident outside the United Kingdom for the purposes of double taxation relief) (subject to available exemptions or reliefs).
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A disposal (or deemed disposal) of ordinary shares by a corporate UK Holder may give rise to a chargeable gain or an allowable loss for such holder for the purpose of United Kingdom corporation tax. The main rate of corporation tax of 25% applies to companies with profits in excess of £250,000. A lower rate of corporation tax of 19% applies to companies with profits of up to £50,000, and a marginal scaled rate between 19% and 25% will apply to companies with profits between £50,000 and £250,000. If potential investors are in any doubt as to their position, they should consult their own professional advisers.
Any gain or loss in respect of currency fluctuations over the period of holding ordinary shares is also brought into account on a disposal.
Non-UK Holders. An individual holder who is not a UK Holder will not be liable to United Kingdom capital gains tax on capital gains realized on the disposal of ordinary shares unless such holder carries on (whether solely or in partnership) a trade, profession or vocation in the UK through a branch or agency in the United Kingdom to which the ordinary shares are attributable. In these circumstances, such holder may, depending on his or her individual circumstances, be chargeable to United Kingdom capital gains tax on chargeable gains arising from a disposal of his or her ordinary shares.
A corporate holder of ordinary shares that is not a UK Holder will not be liable for United Kingdom corporation tax on chargeable gains realized on the disposal of ordinary shares unless it carries on a trade in the United Kingdom through a permanent establishment to which the ordinary shares are attributable. In these circumstances, a disposal (or deemed disposal) of ordinary shares by such holder may give rise to a chargeable gain or an allowable loss for the purposes of United Kingdom corporation tax.
Inheritance Tax
The ordinary shares will be assets situated in the United Kingdom for the purposes of United Kingdom inheritance tax. A gift of such assets by, or the death of, an individual holder of such assets may (subject to certain exemptions and reliefs) give rise to a liability to United Kingdom inheritance tax, even if the holder is neither domiciled in the United Kingdom nor deemed to be domiciled there (under certain rules relating to long residence or previous domicile).
Stamp Duty and Stamp Duty Reserve Tax
The United Kingdom stamp duty, and stamp duty reserve tax, (“SDRT”), treatment of the issue and transfer of, and the agreement to transfer, an ordinary share outside a depositary receipt system or a clearance service is discussed in the paragraphs under “General” below. The stamp duty and SDRT treatment of such transactions in relation to such systems is discussed in the paragraphs under “Depositary Receipt Systems and Clearance Services” below.
General
An agreement to transfer an ordinary share will normally give rise to a charge to SDRT at the rate of 0.5% of the amount or value of the consideration payable for the transfer. SDRT is, in general, payable by the purchaser.
The transfer of an ordinary share would be subject to stamp duty at the rate of 0.5% of the consideration given for the transfer (rounded up to the next £5). The purchaser is liable to HMRC for the payment of the stamp duty (if any). No stamp duty would arise on the issue of ordinary shares.
If a duly stamped transfer completing an agreement to transfer is produced within six years of the date on which the agreement is made (or, if the agreement is conditional, the date on which the agreement becomes unconditional), any SDRT already paid is generally repayable, normally with interest, and any SDRT charge yet to be paid is canceled to avoid a double charge as the stamp duty has been paid.
Depositary Receipt Systems and Clearance Services
With effect from January 1, 2024, the 1.5% stamp duty and SDRT charge on the issue of securities (which was previously disapplied by European Union case law and Council Directive) was removed from the UK statute books by the way of a provisional resolution by the UK Parliament giving temporary effect to draft legislation which was subsequently passed into law by the Finance Act 2024 on February 22, 2024.
Where an ordinary share is transferred (i) to, or to a nominee for, a person whose business is or includes the provision of clearance services or (ii) to, or to a nominee for, a person whose business is or includes issuing depositary receipts and that transfer is not integral to the raising of new capital by the Company, stamp duty or SDRT would generally be chargeable at the rate of 1.5% of the amount or value of the consideration given or, in certain circumstances, the value of the shares. However, with effect from January 1, 2024, transfers of securities which are an “exempt capital-raising” transfer (broadly being transfers in the course of arrangements pursuant to which securities are issued by a company for the purpose of raising new capital), transfers of securities which are an “exempt listing” transfer (broadly being transfers in the course of qualifying listing arrangements (i.e., a first listing on certain recognized stock exchanges) where the beneficial ownership of the securities does not change), and transfers of shares out of treasury are all excluded from the 1.5% stamp duty or SDRT charge.
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Any liability for stamp duty or SDRT in respect of a transfer into a clearance service or depositary receipt system, or in respect of a transfer within such a service, which does arise, will strictly be accountable to HMRC by the clearance service or depositary receipt system operator or their nominee, as the case may be, but will, in practice, be payable by the participants in the clearance service or depositary receipt system.
F. Dividends and Paying Agents
Not Applicable.
G. Statement by Experts
Not Applicable.
H. Documents on Display
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and will file reports, registration statements and other information with the SEC. Our reports, registration statements and other information can be inspected on the SEC’s website at www.sec.gov and such information can also be inspected and copies ordered at the public reference facilities maintained by the SEC at the following location: 100 F Street NE, Washington, D.C. 20549. You may also visit our website at https://www.redcloudtechnology.com. Information contained on, or that can be accessed through, our website or any other website is expressly not incorporated by reference into and is not a part of this annual report.
I. Subsidiary Information
Not Applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risks, which may result in potential losses arising from adverse changes in market rates, such as interest rates, foreign exchange rates and inflation and supply line factors. The effect of inflation and supply line factors and interest rates are described in Item 5. Operating and Financial Review and Prospects.
Interest Rate Risk
As of December 31, 2025, we had $478,983 in cash and cash equivalents. Our primary exposure to interest rate sensitivity affects the interest income we receive and is affected by changes in the general level of the Bank of England and the United States Fed Funds rate, affects bank interest rates. Due to the short-term nature and the low-risk profile of our interest-bearing accounts, an immediate change in interest rates would not have a material effect on the fair market value of our cash and cash equivalents and short-term restricted bank deposits or on our financial position or results of operations.
Foreign Currency Exchange Risk
Owing to the international scope of our operations, with our principal trading territories at present being in Nigeria, South Africa, Brazil and Argentina, fluctuations in exchange rates, particularly between the pound sterling and the U.S. dollar, as well as between the pound sterling and the Nigerian Naira, South African rand, Brazilian real and the Argentinean peso, may adversely affect us. As a result, our business and the price of our ordinary shares may be affected by fluctuations in foreign exchange rates, which may have a significant impact on the results of our operations and cash flows from period to period.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not Applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not Applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not Applicable
ITEM 15. CONTROLS AND PROCEDURES
Not Applicable.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Board has determined that David Chung-Hua Bolocan is an “audit committee financial expert,” as that term is defined by the SEC rules.
ITEM 16B. CODE OF ETHICS
We have adopted a Code of Ethics that applies to our principal executive and financial officers, and that also applies to all of our employees. The Code of Ethics is publicly available on our website at www.redcloudtechnology.com and is filed as an exhibit to this annual report. We will disclose on our website any amendment to, or waiver from, a provision of our Code of Ethics that applies to our directors or executive officers to the extent required under the rules of the SEC.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Turner, Stone & Company, L.L.P., located in Dallas, Texas, served as RedCloud Holdings plc’s independent auditor for the fiscal year ended December 31, 2024, and through September 23, 2025.
PKF Littlejohn LLP, Chartered Accountants, located in London, United Kingdom, has served as RedCloud Holdings plc’s independent auditor since September 24, 2025, and audited the Company’s consolidated financial statements for the fiscal year ended December 31, 2025.
The following table sets forth the aggregate fees billed by our independent registered public accounting firms for professional services rendered for the fiscal years indicated:
Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Audit fees (1) | $ | 306,500 | $ | 443,500 | ||||
| Tax fees (2) | - | - | ||||||
| Total | 306,500 | 443,500 | ||||||
| (1) | “Audit fees” include fees for professional services rendered by our independent registered public accounting firms in connection with the audit of our annual consolidated financial statements for the applicable fiscal year, procedures related to the preparation and filing of our annual report on Form 20-F, fees for consent procedures performed related to our Form F-1 filings and consultation concerning financial accounting and reporting standards. Audit fees for the year ended December 31, 2025 relate to services provided by PKF Littlejohn LLP and Turner, Stone & Company, L.L.P., while audit fees for 2024 relate to services provided by Turner, Stone & Company, L.L.P. |
| Audit fees for 2025 include $215,000 related to services provided by PKF Littlejohn LLP and $91,500 related to services provided by Turner, Stone & Company, L.L.P. | |
| Audit fees for 2024 of $443,500 relate entirely to services provided by Turner, Stone & Company, L.L.P. | |
| (2) | “Tax fees” include fees for professional services rendered and performed during the period by our independent registered public accounting firm for tax compliance and tax advice and tax planning services on actual or contemplated transactions. |
Audit Committee’s Pre-Approval Policies and Procedures
Our Audit Committee has adopted a pre-approval policy for the engagement of our independent accountant to perform certain audit and non-audit services. Pursuant to this policy, which is designed to assure that such engagements do not impair the independence of our auditors, the audit committee pre-approves a maximum amount for certain potential services and approval is provided prior to any service performed by the independent accountant. Prior to any engagement of the independent accountant by the Company or its subsidiaries to render audit or non-audit services, a detailed description of the particular service to be performed as well as the fee structure are pre-approved by the Company’s audit committee.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable.
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ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
None.
ITEM 16G. CORPORATE GOVERNANCE
As a foreign private issuer whose shares are listed on Nasdaq, we have the option to follow certain UK corporate governance practices rather than those of Nasdaq, except to the extent that such laws would be contrary to U.S. securities laws and provided that we disclose the practices we are not following and describe the home country practices we are following. We intend to rely on this “foreign private issuer exemption” with respect to the following requirements:
| ● | We do not intend to follow Nasdaq Rule 5605(b) pursuant to which a majority of the board of directors of the Company must be comprised of independent directors as defined in Rule 5605(a)(2). Such independence requirement is not required under our Articles or the Companies Act. In accordance with generally accepted business practice, the composition of the board of directors of the Company will be governed by the Articles, which do not impose independence requirements. | |
| ● | We do not intend to follow Nasdaq Rule 5620(c) regarding quorum requirements applicable to meetings of shareholders. Such quorum requirements are not required under English law. In accordance with generally accepted business practice, our Amended and Restated Articles of Association and the Companies Act provide alternative quorum requirements that are generally applicable to meetings of shareholders. | |
| ● | We do not intend to follow Nasdaq Rule 5635(c) regarding shareholder approval requirements for the issuance of securities in connection with a share option or purchase plan that is established or materially amended or other equity compensation arrangement is made or materially amended. Pursuant to the Companies Act, we cannot allot shares or grant rights to subscribe for or to convert any security into shares in the Company without an ordinary resolution of the shareholders. | |
| ● | We do not intend to follow Nasdaq Rule 5635(d) regarding shareholder approval requirements for the issuance of more than 20% of the outstanding ordinary shares of the issuer. Pursuant to the Companies Act, we cannot allot shares or grant rights to subscribe for or to convert any security into shares in the Company without an ordinary resolution of the shareholders. |
Except as stated above, we intend to comply with the rules generally applicable to U.S. domestic companies listed on Nasdaq. We may in the future decide to use other foreign private issuer exemptions with respect to some or all of the other Nasdaq listing requirements. Following our home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on Nasdaq, may provide less protection than is accorded to investors under Nasdaq listing requirements applicable to domestic issuers.
We expect to maintain our status as a foreign private issuer under the applicable corporate governance requirements of the rules and regulations adopted by the SEC and other existing rules. Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable
ITEM 16J. INSIDER TRADING POLICIES
We
have an
| 73 |
ITEM 16K. CYBERSECURITY
We
understand the importance of preventing, assessing, identifying, and managing material risks associated with cybersecurity threats. Processes
to manage risks from cybersecurity threats have been
Matters determined to present potential material impacts to our financial results, operations, and/or reputation would immediately be reported by our cybersecurity team and escalated, as appropriate. In relation to security incident levels P0 - P4, the following escalation framework will be evoked, as outlined in the table below:
We manage significant and persistent cybersecurity risks due to the need to protect our business, including our intellectual property and intellectual property of others that is licensed for our use, our confidential information and information concerning our personnel and others with whom we conduct business. As other technology companies we occasionally face threats from actors who seek to disrupt our business as well as others who are engaging in malicious activities or for reputation damage. Disclose of certain information as a result of a cybersecurity breach may result in a breach of privacy laws. The substantial level of harm that could occur to us and our suppliers and customers were we to suffer impacts of a material cybersecurity incident; and our use of third-party products, services and components requires us to maintain robust governance and oversight of these risks and to implement mechanisms, technologies and processes designed to help us assess, identify, and eliminate these risks.
While
we have
Governance
We aim to incorporate industry best practices throughout our cybersecurity program. Our cybersecurity strategy focuses on implementing effective and efficient controls, technologies, and other processes to assess, identify, and manage material cybersecurity risks.
Our cybersecurity program is designed to be aligned with applicable industry standards, and we have engaged outside sources to assist in this effort. We have processes in place to assess, identify, manage, and address material cybersecurity threats and incidents.
We monitor issues that are internally discovered or externally reported that may affect our products and have processes to assess those issues for potential cybersecurity impact or risk. We also have a process in place to manage cybersecurity risks associated with third-party service providers. We are in the process of implementing additional technical and organizational security measures to follow our information security program.
Under our cybersecurity governance framework, the Audit Committee, in its charter, is empowered to implement and oversee our cybersecurity and information security policies and periodically review their compliance and mitigate potential cybersecurity threats.
Our CISO, who is a third party engaged by us, leads the strategy and guidelines, and works with senior management and IT engineering, to operate and implement cybersecurity of the Company. The CISO is responsible for handling the risk management by assessment, analysis, reporting, managing the cyber protection following the relevant requirements, the work with the Information Technology team, implementing information security awareness among the employees, and updating the company’s security policies. Our CISO provides annual analysis and updates to the management on our cybersecurity and information security policies and programs, as well as ad hoc updates on information security and cybersecurity matters.
| 74 |
PART III
ITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
See Index to Financial Statements on Page F-1
ITEM 19. EXHIBITS
| 75 |
| * | Filed herewith. |
| ** | Furnished herewith. |
| † | Certain portions of this exhibit (indicated by “[*]”) have been omitted pursuant to Item 601(b)(10)(iv). The Company hereby agrees to furnish supplementally an unredacted copy of the exhibit to the SEC upon its request. |
| + | Denotes management contract or compensatory plan or arrangement. |
| 76 |
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| May 15, 2026 | REDCLOUD HOLDINGS PLC | |
| By: | /s/ Justin Floyd | |
| Justin Floyd | ||
| Chief Executive Officer | ||
| 77 |
REDCLOUD HOLDINGS PLC
TABLE OF CONTENTS
| REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS | F-1 | |
| CONSOLIDATED FINANCIAL STATEMENTS | ||
| Consolidated Balance Sheets | F-3 | |
| Consolidated Statements of Operations | F-4 | |
| Consolidated Statements of Comprehensive Loss | F-5 | |
| Consolidated Statements of Stockholders’ Deficit | F-6 | |
| Consolidated Statements of Flows | F-7 | |
| Notes to the Consolidated Financial Statements | F-8 - F-43 |
| 78 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of RedCloud Holdings PLC
Opinion on the Consolidated Financial Statements
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2 to the consolidated financial statements, the Company currently is loss making, has not yet achieved profitability, continues to operate with limited liquidity and has a working capital deficiency and needs to raise additional funds to meet its obligations.
Sources of liquidity have been provided from the issuance of senior convertible notes, the Equity Line of Credit (ELOC) and shareholder loans. There is no assurance the sources of funding will be available in the future or under similar terms. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
PKF Littlejohn LLP
PCAOB Registration Number 2814
London, England
We have served as the Company’s auditor since 2025.
| F-1 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
RedCloud Holdings plc
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of RedCloud Holdings plc (the “Company”) as of December 31, 2024 and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ deficit and cash flows for the year then ended, and the related notes to the financial statements (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company´s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
Turner, Stone & Company, L.L.P.
PCAOB
ID:
May 16, 2025
We have served as the Company’s auditor from 2023 through September 24, 2025.
| F-2 |
REDCLOUD HOLDINGS PLC
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2025 AND 2024
| December 31, | December 31, | |||||||||
| (In United States dollars, except shares and par value) | Notes | 2025 | 2024 | |||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | $ | ||||||||
| Restricted Cash | ||||||||||
| Accounts receivables and other receivables, net | 3 | |||||||||
| Income taxes receivable | ||||||||||
| Prepayments | 4 | |||||||||
| Other current assets | 4 | |||||||||
| Total Current Assets | ||||||||||
| Non Current Assets: | ||||||||||
| Property and equipment, net | 5 | |||||||||
| Intangible assets, net | 6 | |||||||||
| Investment in Joint Venture | ||||||||||
| Total Non Current Assets | ||||||||||
| Total Assets | $ | $ | ||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts payable | $ | $ | ||||||||
| Vouchers payable | ||||||||||
| Accrued expenses | 7 | |||||||||
| Value-added tax payable | ||||||||||
| Other current liabilities | 8 | |||||||||
| Shareholder loans payable | ||||||||||
| Short-term borrowings | ||||||||||
| Total Current Liabilities | ||||||||||
| Non Current Liabilities: | ||||||||||
| Convertible Shareholder loans, at fair value | 9 | |||||||||
| Total Non current Liabilities | ||||||||||
| Total Liabilities | ||||||||||
| Commitments and Contingencies (Note 15) | ||||||||||
| Stockholders’ Deficit: | ||||||||||
| Common stock £ par value; [] shares authorized; and shares issued and outstanding as of December 31, 2025 and 2024, respectively | 11 | |||||||||
| Additional paid-in capital | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive income | ||||||||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
REDCLOUD HOLDINGS PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
| For the years ended | ||||||||||
| December 31, | December 31, | |||||||||
| Notes | 2025 | 2024 | ||||||||
| Revenue | $ | $ | ||||||||
| Operating expenses: | ||||||||||
| General and administrative | ||||||||||
| Salaries, benefits, contractor costs | ||||||||||
| Marketing and commissions | ||||||||||
| Travel | ||||||||||
| Professional fees | ||||||||||
| Product and technology development | ||||||||||
| Depreciation and amortization | ||||||||||
| Total operating expenses | ||||||||||
| Net loss from operations | ( | ) | ( | ) | ||||||
| Other expense: | ||||||||||
| Interest (income)/expense | ||||||||||
| Other Income | 13 | ( | ) | |||||||
| Gain on Debt Extinguishment | ||||||||||
| Loss from change in fair-value of convertible shareholder loans | ||||||||||
| Foreign currency loss | ||||||||||
| Net loss before income taxes | ( | ) | ( | ) | ||||||
| Income tax benefit | 13 | |||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||||
| Loss per Share | ||||||||||
| Loss per Share, basic and diluted | $ | ) | $ | ) | ||||||
| Weighted-average common shares outstanding, basic and diluted | ||||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
REDCLOUD HOLDINGS PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
| ` | For the years ended | |||||||
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation adjustment net of tax | ( | ) | ||||||
| Other comprehensive income, net of tax | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these financial statements.
| F-5 |
REDCLOUD HOLDINGS PLC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
| Common Stock | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Deficit | |||||||||||||||||||
| Balances, January 1, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| Common stock issued | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency Translation adjustment, net of tax | - | ( | ) | |||||||||||||||||||||
| Balances, December 31, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Deficit | |||||||||||||||||||
| Balances, January 1, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| Common stock issued through IPO | ||||||||||||||||||||||||
| Conversion of shareholder loan into common shares | ||||||||||||||||||||||||
| Preference shares - redeemed | - | |||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Extinguishment of Debt | - | ( | ) | ( | ) | |||||||||||||||||||
| IPO and share issuance direct costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Share issue | ||||||||||||||||||||||||
| Warrants issued | ||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency Translation adjustment, | - | ( | ) | ( | ) | |||||||||||||||||||
| Balances, December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
REDCLOUD HOLDINGS PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
| For the year-ended | ||||||||
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Bad debt expense | ||||||||
| Loss from change in fair-value of convertible shareholder loan | ||||||||
| Non-cash gain on debt extinguishment | ||||||||
| Accrued interest expense on shareholder loans | ||||||||
| Shareholder loan debt discounts | ||||||||
| Unrealised loss/(gains) | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and other receivables | ( | ) | ||||||
| Prepayments and Other current assets | ( | ) | ||||||
| Accounts payable and vouchers payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ||||||
| Value-added tax payable | ( | ) | ||||||
| Income taxes receivable | ( | ) | ||||||
| Other current liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Purchases of intangible assets | ( | ) | ( | ) | ||||
| Acquisition of investment in joint venture | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Proceed from issuance of debt (convertible loans) | ||||||||
| Proceed from shareholder loan | ||||||||
| Proceeds from short-term borrowings | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||
| Change in cash, cash equivalents and restricted cash during the year | ( | ) | ||||||
| Cash, cash equivalents and restricted cash, beginning of year | ||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||
| *Non-cash transactions in the year related to the folowing: | ||||||||
| Conversion of Shareholders loans to equity on IPO | $ | |||||||
| Convertible loans to equity | $ |
| F-7 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 1 - Nature of business
RedCloud Holdings plc (“RedCloud Holdings” or the “Parent Company”), together with its wholly-owned subsidiaries (collectively, the “Company” or “RedCloud Group”), operates a business-to-business intelligent infrastructure for global trade, RedAI. The Company’s intelligent infrastructure facilitates digital trade in Nigeria, South Africa, Brazil, Peru, and Argentina, with supporting operations and cost centers located in the United Kingdom and Portugal.
RedCloud Technologies Ltd (“RedCloud Technologies”) was incorporated in the United Kingdom on February 3, 2014, and historically served as the operating and holding entity of the RedCloud Group. On October 23, 2024, a corporate restructuring was completed pursuant to which RedCloud Holdings PLC, a private company limited by shares incorporated under the laws of England and Wales, was formed as the new ultimate parent of the RedCloud Group. RedCloud Holdings PLC was established to facilitate future strategic and capital market initiatives, including potential public listing activities. This restructuring had no impact on the underlying operations of the business.
The Company provides services through the RedAI infrastructure, enabling commerce between registered users. Buyers (typically small-to-medium merchants) can purchase fast-moving consumer goods (“FMCG”) from Sellers (brands and distributors) connected by trading networks, Red101 and TradeX. RedInsights provides data analytics and insights drawn from over 50,000 individual market data points in real-time. The Company continues to offer payments and finance capabilities through leading payments providers in each operating country.
Today, the Company generates revenue primarily through transaction-based commissions calculated as a percentage of the value of goods sold across RedAI’s trading networks.
Note 2 - Summary of significant accounting policies
Basis of presentation
These consolidated financial statements (“financial statements”) have been presented in United States dollars (“$” or “USD”) unless otherwise indicated and are prepared in accordance with United States generally accepted accounting principles (“US GAAP”) and in accordance with the requirements of the Companies Act 2006.
The transition to US GAAP is in line with the provisions of The Accounting Standards (Prescribed Bodies) (United States of America and Japan) (Amended) Regulations 2023, which permit UK-incorporated companies with securities listed on a US stock exchange to prepare their group financial statements in accordance with US GAAP for a transitional period of up to four years. This transitional relief is intended to facilitate redomiciliation and reduce the administrative burden of immediate conversion to UK GAAP or IFRS as adopted in the UK. Accordingly, these financial statements represent the Group’s first annual financial statements prepared under US GAAP.
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the periods presented, unless otherwise stated.
The
Company was incorporated on 14 April 2024 and on 23 October 2024, the Company (“RCH”) acquired
Whilst a separate legal entity, the consolidated financial statements are a continuation of that of RCT. As there were no changes in the rights or proportion of control exercised as a result of the share-for-share exchange, the financial statements were prepared applying the principles of predecessor accounting ownership. This transaction is considered a combination of entities under common control and therefore falls outside the scope of ASC 805 “Business Combinations” under U.S. GAAP. U.S. GAAP provides specific guidance for common control transactions, which are accounted for using the carryover basis. Under the carryover basis, the assets and liabilities of the combining entities are recognized at their existing book values, and no fair value adjustments or goodwill are recorded.
| F-8 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
The financial statements reflect the historical carrying amounts of the entities involved, consistent with the principles applicable to common control transactions under U.S. GAAP. Under this method, the financial statements of the parties to the combination are aggregated and presented as though the combining entities had always been part of the same group, rather than from the restructuring date.
As a result, the comparatives presented in these financial statements represent the audited consolidated results of the Group for the year ended December 31, 2024 (as filed with the U.S. Securities and Exchange Commission), presented on a predecessor basis and updated to reflect the share capital structure of RedCloud Holdings PLC The 2024 comparative information is audited; earlier periods are not presented in these financial statements.
The current period consolidated statement of financial position reflects the legal change in ownership of the Group, including the share capital of the Company. The opening consolidated statement of changes in equity as at January 1, 2024 has been restated to reflect the Company’s share capital structure as if it existed on that date.
The investment by the Company in RCT is eliminated and the difference between the fair value and nominal value of the shares was adjusted through the merger reserve in the Group statement of financial position, along with any existing share capital and share premium in Redcloud Technology Limited.
Going concern
The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to realise its assets and discharge its liabilities in the normal course of business.
The
Group generated revenue of $
As
of December 31, 2025, the Company had a stockholders’ deficit of $
Accordingly, the Group remains dependent on its ability to generate sufficient cash flows from operations and/or raise additional capital to meet its obligations as they fall due and to fund ongoing operations and growth initiatives.
These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern and therefore its ability to realise its assets and settle its liabilities in the normal course of business.
Notwithstanding this material uncertainty, the Directors consider it appropriate to prepare the consolidated financial statements on a going concern basis, taking into account the following factors:
| ● | The Group entered into an Equity Line of Credit (ELOC) providing access to up to $ |
| ● | The Group issued senior convertible notes, raising approximately $ |
| ● | The Group executed ELOC
drawdowns in April and May 2026, generating approximately $ |
| ● | Previously issued warrants were exercised, generating approximately $ |
| ● | The Group obtained a GBP |
In
aggregate, the Group raised approximately $
Management believes the Company will be able to continue to develop new opportunities and will be able to obtain additional funds through debt and / or equity financing to facilitate its business strategy. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail or be unable to continue operations.
| F-9 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
Basis of consolidation
These consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions were eliminated in consolidation. Subsidiaries are entities the Company controls when it is exposed, or has rights, to variable returns from its involvement in the entity and can affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are included in the consolidated financial results of the Company from the date of acquisition up to the date of disposition or loss of control.
At December 31, 2025, and 2024, the Company had the following subsidiaries:
| Subsidiaries | Country of Incorporation | Ownership % 2025 | Ownership % 2024 | Functional Currency | ||||||||
| Marketplace Technologies Nigeria Limited | ||||||||||||
| RedCloud Peru S.A.C | ||||||||||||
| RedCloud Technology Argentina SA | ||||||||||||
| RedCloud IP Limited | ||||||||||||
| RedCloud Technologies Brazil Servicos Digitais Ltda | ||||||||||||
| RedCloud Technologies (Pty) Ltd | ||||||||||||
| RedCloud Technologies (Portugal) Unipessoal Lda | ||||||||||||
| RedCloud Technologies, Inc. | ||||||||||||
| RedCloud Technologies UK Ltd | ||||||||||||
Audit Exemption for Subsidiaries
Under Section 479A of the Companies Act 2006, exemption from an audit of individual accounts will be taken by the following subsidiary undertakings:
| ● | RedCloud IP Limited |
| ● | RedCloud Technologies Ltd |
The Parent Company, RedCloud Holdings Plc, has provided a guarantee for all outstanding debts and liabilities to which the subsidiary companies listed above are subject at the end of the financial year, in accordance with Section 479C of the Companies Act 2006.
Basis of measurement –
The consolidated financial statements have been prepared on the historical cost basis, except for financial instruments measured at fair value when required as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When the Company is required to calculate the estimated fair value of financial instruments or other financial statement items, it uses quoted market prices when available. When quoted market prices are not available, fair value is determined based on valuation techniques using the best information available and may include quoted market prices, market comparable, and discounted cash flow projections.
| F-10 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
Fair Value Measurements
Financial Accounting Standards Board (“FASB”) / Accounting Standards Codification (“ASC”) 820 – Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements. In accordance with ASC 820, we have categorized our financial assets and liabilities based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Financial assets and liabilities recorded in the accompanying consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:
Level 1 – Financial instruments whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which we have the ability to access at the measurement date.
Level 2 – Financial instruments whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.
Level 3 – Financial instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the instrument.
As of December 31, 2025, and 2024, the carrying value of the Company’s financial assets and liabilities not measured at fair value approximated their fair value mainly because of their short-term maturity. These assets and liabilities included cash and equivalents, accounts receivable, accounts payable, and salaries and benefits payable, and taxes payable. The Company’s shareholder loans are stated at amortized cost, consistent with the terms of the agreement.
The Company elected the fair value option to record its convertible shareholder loan balances at fair value. The elections were held at the inception date of each loan. Changes in fair value of these loans are recorded each reporting period on a recurring basis in the consolidated statement of operations, which includes contractual interest in the loan agreements as well as fair value changes. See additional fair value discussion in Note 9 for these loans.
Use of Estimates –
The preparation of the consolidated financial statements are prepared in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to, accounting for allowance for credit losses, share-based compensation, convertible shareholder loans, at fair value, and capitalized development costs. Actual results could differ from those estimates.
Allowance for Credit Losses:
Accounts receivables are recognized initially at fair value and subsequently measured at amortized cost, less any provisions. Provisions are estimated using the allowance for current expected credit losses (“CECL”) where any expected future credit losses are provided for, irrespective of whether a loss event has occurred at the reporting date. Estimates of expected credit losses consider the Company’s collection history by country and customer, deterioration of collection rates during the average credit period, as well as observable changes in and forecasts of future economic conditions that affect default risk. The Company utilizes a provision matrix by country to estimate lifetime CECL’s for accounts receivables, supplemented by specific allowance based on customer-specific data.
Share-Based Compensation:
Share-based compensation to employees, contractors and the Company’s Board of Directors (the “Board”) are measured at the fair value of the instruments issued and amortized over the vesting periods. Share based compensation to non-employees is measured at the fair value of goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The Company operates an employee stock option plan. The corresponding amount is recorded to the additional paid-in capital caption within shareholders’ deficit, and the expense to the consolidated statements of operations and consolidated statements of comprehensive loss caption General and Administrative over the vesting period. The fair value of options is determined using the Black–Scholes pricing model which incorporates all market vesting conditions.
| F-11 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
Useful Life of Intangible Assets
Intangible assets consist of software development costs, which are valued at historical cost. Intangible assets with definite useful life are amortized over the period of estimated benefit to be generated by those assets and using the straight-line method; their estimated useful life is five years.
Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairments whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The impairment evaluation is performed at the lowest level of identifiable cash flows independent of other assets. The recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If such asset is considered to be impaired on this basis, the impairment loss to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of such asset.
Convertible Shareholder Loans at Fair Value:
Convertible instruments are measured at fair value using valuation techniques that incorporate observable and unobservable inputs, including market interest rates, credit risk, and conversion features. Changes in fair value are recognized in the income statement.
Capitalized Development Costs:
The Company capitalizes eligible development expenditures when technical feasibility is established and it is probable that the asset will generate future economic benefits. Estimates are required to assess the stage of development, expected future cash flows, and useful life of the asset
Off Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such financing arrangements.
| F-12 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
Fair Value of Equity Instruments Issued in Non-Cash Transactions
In connection with our IPO and the conversion of shareholder loans into equity, we issued ordinary shares and other equity instruments in transactions that involved significant non-cash components. The determination of the fair value of these equity instruments requires management to apply valuation techniques that incorporate unobservable inputs, including estimates of the expected IPO valuation, discount rates, timing of conversion events, and market participant assumptions. These estimates involve significant judgment and changes in such assumptions could materially impact the amount recorded in additional paid-in capital, the classification of the transaction as a modification or extinguishment, and the recognition of gains or losses in the consolidated statements of operations.
Debt Extinguishment and Modification Accounting
During the year ended December 31, 2025, the Company completed several financing transactions, including the conversion of shareholder and convertible loans into equity. Determining whether such transactions should be accounted for as debt extinguishments or modifications under ASC 470 requires significant judgment. Management evaluates the economic substance of the revised terms, changes in contractual cash flows, the fair value of equity issued, and whether the transaction represents a substantive change from the original debt arrangement. These assessments require complex valuation inputs and considerations of market terms for instruments with similar credit risk profiles. Different judgments or the use of alternative valuation methodologies could result in materially different outcomes in the consolidated financial statements.
Estimation of Voucher Redemption Liabilities (ASC 606 Consideration Payable)
The Company utilizes marketing voucher programs that provide incentives to Red101 customers. Under ASC 606, these vouchers represent consideration payable to customers and therefore reduce revenue. Management is required to estimate the expected redemption rate, breakage, and timing of voucher usage based on historical redemption behaviors, current customer activity levels, and expected future platform usage. These estimates involve significant judgment due to the variability of customer behavior, macroeconomic conditions, and promotional intensity. Changes in redemption patterns or updates to historical data may result in material adjustments to revenue, marketing and commissions expense, and voucher liabilities.
Foreign Currency Translation and Functional Currency Determination
The Company operates in multiple countries with differing regulatory environments and volatile currency regimes, including Nigeria, Argentina, and other emerging markets. Determining the appropriate functional currency for each subsidiary requires management to assess the primary economic environment in which each entity generates and expends cash. In addition, translating foreign operations into U.S. dollars requires evaluating exchange rates, remeasurement methods, and the impact of significant currency devaluations. These assessments involve substantial judgment, particularly in jurisdictions subject to high inflation, price controls, or rapid currency fluctuations. Changes in functional currency determinations or translation assumptions could materially impact foreign currency gains and losses recorded in the consolidated statements of operations and accumulated other comprehensive income.
In economies determined to be highly inflationary (generally where cumulative three-year inflation approximates or exceeds 100%), the Company applies the provisions of ASC 830 applicable to such environments. In these circumstances, the functional currency of the relevant subsidiary is deemed to be the Company’s reporting currency (U.S. dollar), and the financial statements are remeasured rather than translated. Monetary assets and liabilities are remeasured at period-end exchange rates, while non-monetary items and equity are remeasured at historical rates. Resulting remeasurement gains and losses are recognized in the consolidated statements of operations.
As of December 31, 2025, the Company has concluded that Argentina is a highly inflationary economy and has applied remeasurement accounting for its Argentine operations. Nigeria, while subject to significant currency volatility and inflationary pressures, did not meet the threshold for highly inflationary accounting at period end; however, it remains subject to ongoing monitoring given the potential for rapid changes in economic conditions.
For entities operating in non-highly inflationary economies, assets and liabilities are translated into U.S. dollars at period-end exchange rates, while income and expense items are translated at average exchange rates for the period. Resulting translation adjustments are recorded in accumulated other comprehensive income.
These assessments, including functional currency determinations, evaluation of highly inflationary status, and selection of appropriate exchange rates, require significant judgment. Changes in these assumptions or in economic conditions could materially impact foreign currency gains and losses recognized in the consolidated statements of operations and accumulated other comprehensive income, and may increase volatility in reported earnings.
| F-13 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
Going Concern Assessment and Forecasting Assumptions
In evaluating the Company’s ability to continue as a going concern, management must estimate future cash flows, operating performance, working capital needs, and the availability of external financing. These estimates require significant judgment, particularly given the Company’s historical operating losses, the timing and magnitude of expected revenue growth, and assumptions regarding future capital-raising activities. Management also incorporates uncertainty related to macroeconomic conditions, foreign market risks, and the performance of newly launched business lines. Changes in these assumptions or unforeseen adverse developments could materially affect the outcome of the going concern assessment and related disclosures.
Capitalization of Software Development Costs and Useful Life Estimation
The Company capitalizes certain software development costs associated with enhancements to its RedAI infrastructure and related products. Determining which expenditures meet the capitalization criteria under ASC 350-40 involves significant judgment regarding the technological feasibility of the platform, the nature of development activities, and the expected future economic benefits. In addition, the estimated useful life of capitalized software requires management to assess the speed of technological change, anticipated product roadmap, and the expected period of customer utility. A change in the estimated useful life or the determination of which development efforts qualify for capitalization could materially impact amortization expense and the carrying value of intangible assets.
Cash, cash equivalents and restricted cash
The Company considers all highly liquid investments with an original maturity of three months or less when purchased, consisting primarily of deposits held at call with banks and other short-term liquid investments, to be cash equivalents.
The Company’s management assesses balances for credit losses included in cash and cash equivalents, except for those recorded at fair value with impact on the statement of operations, based on a review of the average period for which the financial asset is held, credit ratings of the financial institutions and probability of default and loss given default models. The Company did not recognize any credit loss on the cash and cash equivalents for the years ended December 31, 2025, and 2024.
The
balance of restricted cash on December 31, 2025, and 2024, was $
and $
Allowance for credit losses
Accounts receivable is recognized initially at fair value and subsequently measured at amortized cost, less any provisions. Provisions are estimated using the allowance for current expected credit losses (“CECL”) where any expected future credit losses are provided for, irrespective of whether a loss event has occurred at the reporting date. Estimates of expected credit losses consider the Company’s collection history by country and customer, deterioration of collection rates during the average credit period, as well as observable changes in and forecasts of future economic conditions that affect default risk. The Company utilizes a provision matrix by country to estimate lifetime CECL’s for accounts receivables.
Changes in the allowance are recognized as bad debt expense in the consolidated statements of operations. When the Company determines that no recovery of the amount owed is possible, the amount is deemed irrecoverable, and the financial asset is written off. The write-off policy varies by country, which could be a statutory period of time, while in other countries this is determined by judgment or otherwise when discharged by bankruptcy or other legal proceedings.
Concentration of credit risk
Cash
and cash equivalents, and accounts receivable are potentially subject to credit risk. A substantial portion of the Company’s cash
balance is held with a single financial institution in the United Kingdom on December 31, 2025, and 2024, and at least
Property and equipment, net
Property and equipment are recorded at their acquisition cost and depreciated over their estimated useful lives using the straight-line method. Repair and maintenance costs are expensed as incurred.
| F-14 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
Leases
The Company determines if an arrangement is a lease at inception. For the years ended December 31, 2025 and 2024, the Company determined its arrangements for office space are service agreements, and outside the scope of lease accounting and FASB ASC 842. As such, there are no amounts recorded for the right of use assets or lease liabilities. Costs associated with these arrangements are included in general and administrative expenses on the consolidated statements of operations.
Intangible assets
Intangible assets consist of software development costs, which are valued at historical cost. Intangible assets with definite useful life are amortized over the period of estimated benefit to be generated by those assets and using the straight-line method; their estimated useful life is five years. Development expenditure is capitalized during the application development stage, which includes costs such as design, coding, hardware installation and testing. See disclosure of the Company’s intangible assets subject to amortization in Note 6, Intangible Assets.
The Company’s “Product and technology development” costs on the consolidated statements of operations include costs to operate and maintain the ecommerce site, as well as costs that are not eligible for capitalization and are expensed as incurred.
Impairment of long-lived assets –
The Company reviews long-lived assets for impairments whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The impairment evaluation is performed at the lowest level of identifiable cash flows independent of other assets. The recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If such asset is considered to be impaired on this basis, the impairment loss to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of such asset. As of December 31, 2025, and 2024, there were no events or changes in circumstances that indicate that the carrying value of an asset may not be recoverable.
Share-based compensation to employees, contractors and the Company’s Board are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based compensation to non- employees is measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received.
The Company operates an employee stock option plan. The corresponding shared-based compensation is recorded as an increase in additional paid-in capital, and the expense is recorded in the consolidated statements of operations within general and administrative expense over the vesting period. The fair value of options is determined using the Black–Scholes pricing model which incorporates all market vesting conditions.
Accruals of compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Compensation cost is accrued if it is probable that the performance condition will be achieved and is not accrued if it is not probable that the performance condition will be achieved. Performance conditions that restrict the ability of the award holder to exercise the option unless stated events occur (such as a change in control, public offering of the Company’s common shares, or other exit event) are deemed not probable to occur until they occur. Such conditions also affect the vesting period and expected life of the options for accounting purposes, which is calculated with respect to the passage of time from the grant date until the date the awards is exercisable by the award holder.
For awards with graded vesting schedules, the Company has elected to calculate the fair value as a single award and recognize expense over the total expected vesting period rather than in tranches. The Company has elected to recognize forfeitures as they occur. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.
| F-15 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award and is recognized as an expense over the vesting period on a straight-line basis. The Company recognizes compensation expense for all stock-based awards with graded or cliff vesting, net of estimated forfeitures if applicable.
Upon exercise of a stock option, the proceeds received are credited to common stock and additional paid-in capital (APIC). The Company issues new shares upon exercise; there have historically been no treasury shares.
Forfeitures and expirations of stock options do not result in reversal of previously recognized compensation expense. Any previously recognized amounts remain in APIC.
Income Taxes
Deferred Income Taxes - Overall
The Company is subject to income taxes in the United Kingdom (“UK”), where the Parent Company is domiciled and the foreign jurisdictions of the Company’s subsidiaries. The Company accounts for income taxes under the asset and liability method. Deferred income taxes are recognized for temporary differences between financial statement carrying amounts and the tax basis assets, liabilities, and loss carryforwards at income tax rates expected to be in effect when such amounts are realized or settled. The effect on deferred income taxes from a change in tax rates is recognized in income tax (expense) benefit in the period that includes the enactment date.
The Company’s income tax (expense) benefit consists of income taxes that are currently payable or refundable, and the change during the reporting of the Company’s deferred income tax assets and liabilities.
Deferred Income Taxes – Valuation Allowance
Management evaluates the realizability of net deferred income tax assets to determine if a valuation allowance is required. We assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more-likely-than-not” standard, with significant weight being given to evidence that can be objectively verified. Since we operate in multiple jurisdictions, we assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, considering the effects of local tax law. In connection with Management’s assessment, factors such as the nature, frequency, and magnitude of current and cumulative losses on an individual subsidiary basis, projections of future taxable income, the duration of statutory carryforward periods, as well as feasible tax planning strategies that would be employed by the Company to prevent tax loss carryforwards from expiring.
Deferred Income Taxes – Undistributed Earnings from Foreign Subsidiaries
Management assesses whether undistributed earnings from its foreign subsidiaries will be reinvested indefinitely or eventually distributed to the UK Parent. The Company is required to record a deferred tax liability for undistributed earnings from foreign subsidiaries that will not be reinvested indefinitely and will be eventually repatriated to the UK Parent.
Deferred Income Taxes – Uncertain Income Tax Positions
The Company recognizes an income tax benefit for an income tax position taken or expected to be taken on an income tax return if the more-likely-than-not recognition threshold is met by the end of the reporting period, or is effectively settled through examination, litigation, or negotiation, or if the statute of limitations for the relevant taxing authority to examine and challenge the tax position has expired. The income tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.
| F-16 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
Penalties and interest related to uncertain income tax positions are recorded as an expense. Significant judgment is required in the identification of uncertain income tax positions and in the estimation of penalties and interest on uncertain income tax positions.
Comprehensive loss
Comprehensive loss is comprised of two components, net income (loss) and other comprehensive income (loss). This last component is defined as all other changes in the equity of the Company that result from transactions other than with shareholders. Other comprehensive income (loss) includes the cumulative foreign currency translation adjustments relating to the translation of the consolidated financial statements of the Company’s foreign subsidiaries outside of the United Kingdom.
Reporting and foreign currency
The Parent Company entity’s functional currency is the Great British Pound, however as an anticipated foreign private issuer with the SEC, the Company elects to report in US dollars as permitted by SEC Regulation S-X 210.3. All the Company’s foreign operations have determined the local currency to be their functional currency, except for Argentina, which is discussed in more detail below. Accordingly, the foreign subsidiaries with local currency as functional currency translate assets and liabilities from their local currencies into US dollars by using year-end exchange rates while income and expense accounts are translated at the average monthly rates in effect during the year, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as a component of other comprehensive income (loss). Gains and losses resulting from transactions denominated in non-functional currencies are recognized in earnings in the consolidated statements of operations as foreign currency loss (gain).
Argentine currency status
The
Company reports its Argentine operations as highly inflationary status in accordance with US GAAP for the years ended December 31, 2025,
and 2024, and changed the functional currency for its Argentine subsidiary from Argentine Pesos to the United States Dollar, which is
the appropriate functional currency of the entity based on the highly inflationary status. Transactions are then converted to the US
Dollar, which is the reporting currency of its Parent Company. Argentina’s three-year cumulative inflation rate for the years ended
December 31, 2025, and 2024 was
Argentine exchange regulations
In the second half of 2019, the Argentine government instituted exchange controls restricting the ability of companies and individuals to exchange Argentine Pesos for foreign currencies and their ability to remit foreign currency out of Argentina. An entity’s authorization request to the Central Bank of Argentina (“CBA”) to access the official exchange market to make foreign currency payments may be denied depending on the circumstances. As a result of these exchange controls, markets in Argentina developed trading mechanisms, in which an entity or individual buys US dollar denominated securities in Argentina (i.e. shares, sovereign debt) using Argentine peso, and subsequently sells the securities for US dollars, in Argentina, to access
US dollars locally, or outside Argentina, by transferring the securities abroad, prior to being sold (the latter commonly known as Blue-Chip Swap Rate). The Blue-Chip Swap Rate has diverged significantly from Argentina’s official exchange rate (commonly known as exchange spread).
The
Company uses Argentina’s official exchange rate to account for transactions in its Argentine business, which as of December 31,
2024, reflected a devaluation of approximately
| F-17 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
Revenue recognition
The Company’s revenue comes from a single product offering – the final value fees of sales that occurs on its ecommerce platform. See disaggregation of the Company’s revenue in Note 10, Reportable Segments.
The Company enters written contracts with platform sellers entitling the Company to a stated percentage of the platform seller’s sales on the Company’s ecommerce platform (“final value fees”). The Company has one performance obligation to its Sellers on the Marketplace platform and this performance obligation is to connect buyers and sellers on the Company’s ecommerce platform.
The Company recognizes revenue when it transfers control of promised goods or services to customers. The Company’s compensation of final value fees is recognized at the point in time when an item is sold on the platform, satisfying this performance obligation.
Revenue is recognized in an amount that reflects the consideration to which the Company expects to be entitled. Revenue is recognized net of any taxes collected, which the Company subsequently remits to governmental authorities. The Company invoices the platform sellers monthly based on the contracted percentage based final value fee of transaction activity occurring on the Company’s ecommerce platform. Payments are due from customers within 30 to 90 days.
The Company provides incentives to buyers and sellers in various forms including discounts on fees, discounts on items sold, coupons and rewards. Evaluating whether a promotion or incentive is a payment to a customer may require significant judgment. Promotions and incentives that are consideration payable to a customer (platform seller) are recognized as a reduction of revenue at the later date of when revenue is recognized or when the Company pays or promises to pay the incentive. Promotions and incentives to platform buyers on our platform, to whom the Company has no performance obligation, are recognized as marketing and commissions expense and are recorded on the consolidated statements of operations under the “Marketing and commissions” caption.
The Company determined it is an agent regarding sales transactions on its ecommerce platform and not a principal. As such, the Company’s revenue reflects only the final value fees and not the gross transaction value of products and services sold on the platform.
The Company elected as a permitted practical expedient to not adjust the customer contract consideration for significant financing components when the period between the transfer of the Company’s services and customer payment is one year or less.
The Company elected as a permitted practical expedient to expense, as incurred, the costs of obtaining a customer contract such as sales commissions and other selling transaction costs when the amortization period of the assets otherwise would be one year or less. Accordingly, the Company has no assets recorded for costs to obtain a customer contract as there are no contracts where the underlying asset would have a life exceeding one year.
Segment Information
Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding resource allocation and assessing performance. The Company’s Chief Executive Officer is its CODM. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources, and evaluating financial performance. See “Note 10 - Reportable Segments” for the Company’s revenue segment disclosures.
Marketing and commissions costs
The
Company expenses the costs of advertisements in the period during which the advertising space or airtime is used within Marketing and
commissions costs on the consolidated statements of operations. Internet advertising expenses are recognized based on the terms of the
individual agreements, which is generally over the greater of the ratio of the number of clicks delivered over the total number of contracted
clicks, on a pay-per-click basis, or on a straight-line basis over the term of the contract. Marketing and commissions costs for the
years ended December 31, 2025, and 2024 amounted to $
| F-18 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 2 - Summary of significant accounting policies (continued)
Offering Costs
Offering costs include the legal, accounting, printing, mailing and filing fees, charges of our escrow holder and transfer agent, the reimbursement of bona fide due diligence expenses of broker dealers and commissions of selling broker dealers. These offering costs will be accounted for as a deferred charge until the Company begins selling the respective shares from the Initial Public Offering (“IPO”) (see Note 17), after which the offering costs will be offset against proceeds received from the Offering in the consolidated statement of changes in stockholders’ equity (deficit).
Supplemental cash flow disclosures -
There
was $nil and $nil cash paid for income taxes in the years ended December 31, 2025 and 2024, respectively. Non-cash investing and financing
activities: for the year ended December 31, 2025, the Company converted $
Recently adopted accounting standards
During the year ended December 31, 2025, the Company did not adopt any new accounting standards issued by the Financial Accounting Standards Board (“FASB”) that had a material impact on its consolidated financial statements.
Recent accounting pronouncements not yet adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures. The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, as well as new disclosure requirements for entities with a single reportable segment. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted this guidance effective January 1, 2024. The adoption did not have a material impact on the consolidated financial statements but resulted in enhanced segment disclosures, which are reflected in the consolidated financial statements for the year ended December 31, 2025.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update enhance transparency in income tax disclosures, including more detailed rate reconciliation categories, disaggregation of income taxes paid by jurisdiction, and disclosure of pretax income (or loss) and income tax expense (or benefit) by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024. The Company adopted this guidance effective January 1, 2025. The adoption did not have a material impact on the consolidated financial statements but resulted in enhanced income tax disclosures, which are reflected in the consolidated financial statements for the year ended December 31, 2025.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income – Expense Disaggregation Disclosures. The amendments in this update require public business entities to provide more detailed disclosures about the nature of certain income statement expenses, enhancing the transparency and usefulness of financial reporting. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The standard may be applied either prospectively or retrospectively to all prior periods presented. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In September 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). The amendments in this update modernize the accounting for internal-use software costs to better reflect current software development practices, including iterative and agile development methodologies. The guidance removes the requirement to apply a project-stage model in determining when to capitalize software development costs and instead requires capitalization to begin when management has authorized and committed to funding the project and it is probable that the software will be completed and used for its intended purpose (the “probable-to-complete” threshold). The amendments do not change the types of costs that may be capitalized, and costs such as training, maintenance and data conversion will continue to be expensed as incurred. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The standard may be applied prospectively, retrospectively or using a modified transition approach. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
| F-19 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 3 - Accounts receivables and other receivables (continued)
The Company’s accounts and other receivable are recorded at amortized cost. The accounts and other receivables balance at December 31, 2025 and 2024, consists of the following:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accounts receivable | $ | $ | ||||||
| Other receivables | ||||||||
| Total | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Total accounts and other receivables, net | $ | $ | ||||||
Changes in allowance for doubtful accounts in the year ended December 31, 2024, relate to establishing an additional allowance for expected credit losses. The Company has no amounts written-off that are still subject to collection enforcement activity at December 31, 2025.
The Company’s December 31, 2025, aging of accounts receivable is as follows:
| 1-30 Days | $ | |||
| 31-60 Days | ||||
| 61-90 Days | ||||
| 91+ Days | ||||
| Total accounts receivables | $ |
The Company’s December 31, 2024 aging of accounts receivable is as follows:
| 1-30 Days | $ | |||
| 31-60 Days | ||||
| 61-90 Days | ||||
| 91+ Days | ||||
| Total accounts receivables | $ |
| F-20 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 3 - Accounts receivables and other receivables (continued)
A continuity schedule of the allowance for expected credit losses for the years ended December 31, 2025, and 2024 is as follows:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Balance at January 1 | $ | ( | ) | $ | ||||
| Current period additions for expected credit losses | ( | ) | ( | ) | ||||
| Write-offs charges against allowance | ||||||||
| Balance at December 31 | $ | ( | ) | $ | ( | ) | ||
Trade receivables are stated at amortized cost, net of an allowance for expected credit losses. The Company estimates this allowance using a matrix-based aging model in accordance with ASC 326, which applies predefined loss rates to receivables grouped by aging buckets. These rates are derived from historical loss experience and adjusted for management’s expectations of future conditions.
Receivables are aged by invoice date and netted against any customer payables where contractual offset rights exist. The aging buckets and corresponding estimated credit loss percentages are as follows:
| Aging Bucket | Estimated Credit Loss % | |||
| Current (0–29 days) | % | |||
| 30–59 days | % | |||
| 60–89 days | % | |||
| 90–119 days | % | |||
| 120+ days | % | |||
The allowance is calculated by applying these rates to the net aged receivable balances across each operating entity. No additional quantitative overlays were applied, and management has determined that the current model sufficiently captures expected losses.
Note 4 - Prepayments and other current assets
Prepayments
Prepayments consisted of the following at December 31:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Prepayments | $ | $ | ||||||
| Deferred Offering Costs | ||||||||
| Total prepayments | $ | $ | ||||||
Other current assets
Other current assets consisted of the following at December 31:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Sales tax receivable | $ | $ | ||||||
| Deposits | ||||||||
| Total current assets | $ | $ | ||||||
| F-21 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 5 - Property and equipment, net
The following table presents the changes in property and equipment for the year ended December 31
| Opening | Accumulated | |||||||||||||||||
| 2025 | Useful Lives | balance | Additions | Depreciation | Net | |||||||||||||
| Computer equipment | $ | $ | $ | $ | ||||||||||||||
| Office equipment | ||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
| Opening | Accumulated | |||||||||||||||||
| 2024 | Useful Lives | balance | Additions | Depreciation | Net | |||||||||||||
| Computer equipment | $ | $ | $ | $ | ||||||||||||||
| Office equipment | ||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
Depreciation
expense for the years ended December 31, 2025 and 2024 was $
At December 31, 2025, and 2024, the Company’s property, plant and equipment had no significant restrictions on title or pledges as security for liabilities, there are no significant commitments for future purchases, and there were no significant disposals during the years ended December 31, 2025, and 2024.
Note 6 - Intangible assets, net
A continuity schedule of intangible assets at December 31, 2025, and 2024 is as follows:
| December | ||||||||
| Capitalized Software Development | ||||||||
| 2025 | 2024 | |||||||
| Cost | ||||||||
| Balance at January 1 | $ | $ | ||||||
| Additions | ||||||||
| Foreign exchange impact | ( | ) | ||||||
| Balance at December 31, 2025, 2024 | ||||||||
| Accumulated Amortization | ||||||||
| Balance at January 1 | ||||||||
| Additions | ||||||||
| Foreign exchange impact | ( | ) | ||||||
| Balance at December 31, 2025, 2024 | ||||||||
| Net Book Value at December 31, 2025, 2024 | $ | $ | ||||||
| F-22 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 6 - Intangible assets, net (Continued)
The Company’s intangible assets consist of capitalized software development costs for its hosted ecommerce platform with related ongoing functionality and enhancements. The gross cost of the intangible assets is amortized over their estimated useful lives of five years, as the Company does not expect the assets to have significant residual value.
Amortization
expense for the years ended December 31, 2025 and 2024 was $
At December 31, 2025, the estimated aggregate amortization expense for each of the next five years is as follows:
| 31 December 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
Note 7 - Accrued expenses
Accrued expenses consisted of the following at
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accrued payables | $ | $ | ||||||
| Employment taxes payable | ||||||||
| Other accrued expenses | ( | ) | ||||||
| Total accrued expenses | $ | $ | ||||||
Certain
employees of the Company’s United Kingdom legal entities participate in defined contribution pension plans. The Company recorded
$
| F-23 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 8 – Other current liabilities
Other current liabilities consisted of the following at:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Withholding tax payable | $ | |||||||
| Total other current liabilities | $ | $ | ||||||
Note 9 – Borrowings
Indebtedness
and other financial liabilities at December 31, 2025 comprise (i) unsecured shareholder term loans (current) of $
Unsecured Shareholder Term Loans
During 2024, the Group consolidated multiple historic shareholder term loans into a restated consolidated facility executed in September 2024. In March 2025, immediately prior to the IPO, a substantial portion of these borrowings—including the October and December 2024 loans and the January 2025 loan—was capitalized and converted into equity as part of the pre-IPO capital structure actions (see Note 17).
The
remaining balances presented as current borrowings at December 31, 2025 and December 31, 2024 totaled $
In September 2024, following expiry of the December 2023 restated consolidated loan agreement, the Company executed a new unsecured term loan agreement in September 2024. This new facility consolidated the November 2023, December 2023, January 2024, May 2024, June 2024, July 2024, and August 2024 unsecured term loans, including rolled-up interest.
Key terms:
| ● | Commencement date: September 1, 2024 |
| ● | Interest rate: % per annum |
| ● | Up to £ ($ million) repayable upon IPO completion |
| ● | Remaining balance due on the earlier of: |
| ○ | September 1, 2029, or |
| ○ | Within 15 business days following written notice on set dates tied to the IPO anniversary or, if no IPO occurred, rolling monthly dates after 18 months from agreement execution. |
In accordance with ASC 470-50, the Company assessed whether the refinancing represented a modification or extinguishment. The present value of future cash flows under the new terms was £ ($), a % increase from the carrying value of the original debt. As this exceeded the % threshold, the transaction was accounted for as a debt extinguishment.
| F-24 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 9 - Borrowings (continued)
The
Company recognized a loss on extinguishment of £ ($
On January 23, 2025, the Company entered into an unsecured term loan with a shareholder for £, bearing % interest per annum. This loan was executed on identical terms to the September 2024 restated facility.
This loan was converted to equity immediately prior to the IPO (see Note 17).
The Company entered into two additional unsecured loans with a shareholder during Q4 2025:
| ● | November 26, 2025: Loan of CHF at % per annum |
| ● | December 17, 2025: Loan of CHF at % per annum |
Both loans were provided by C. Byland (shareholder) and remained outstanding as at December 31, 2025.
Short-term borrowings
During 2025, the Company obtained two external bank facilities from Lienhardt & Partner Privatbank Zürich AG, each fully guaranteed by related-party shareholders.
| ● | September
22, 2025 – £ |
| ● | On
October 27, 2025, the Company drew an additional £ |
The
total outstanding balance under this facility at December 31, 2025 was £
Convertible shareholder loans — fair value option (eliminated in 2025)
The Company had previously elected the fair value option for certain convertible shareholder loans, with fair value changes recognized in other expense until conversion. Immediately prior to the March 2025 IPO, all outstanding convertible shareholder loans were converted into ordinary shares, resulting in no outstanding balance at December 31, 2025 (see Note 17). Until conversion, these instruments were measured using observable inputs (Level 2), including market-based discount rates and instrument-specific conversion features.
Roll-forward — Shareholder convertible loans (at fair value)
Prior to conversion, fair value changes on the convertible loans were recorded in “Loss from change in fair-value of convertible shareholder loans” within other expense in the consolidated statements of operations. Following conversion, no convertible loan balances remain outstanding.
Maturities and classification
At
December 31, 2025, interest-bearing liabilities consist of current unsecured shareholder term loans of $
| F-25 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 9 - Borrowings (continued)
Convertible Shareholder Loans at Fair Value
The changes in fair value appear in the caption “Loss from change in fair-value of convertible shareholder loans” on the consolidated statement of operations. A continuity schedule of the convertible shareholder loans, including changes in fair value, for the years ended December 31, 2025, and 2024 is as follows:
| Shareholder convertible loans, at fair value | ||||||||
| 2025 | 2024 | |||||||
| Balance at January 1 | $ | $ | ||||||
| Changes in fair value | ||||||||
| Conversion to common shares | ( | |||||||
| Borrowings | ||||||||
| Foreign exchange impacts | ( | |||||||
| Balance at reporting period end | $ | $ | ||||||
Debt Maturities
The long-term Shareholders loan was converted to equity [see note 17].
The following table summarized the stated debt maturities and scheduled amortization payments, excluding debt premiums and discounts, for each of the five years subsequent to December 31, 2025, and thereafter:
| 31 December 2025 | ||||||||||||
| Shareholder loans payable- current and long-term | Short-term borrowings | Shareholder convertible loans at fair value | ||||||||||
| Remaining 2025 | $ | $ | $ | |||||||||
| 2026 | ||||||||||||
| 2027 | ||||||||||||
| 2028 | ||||||||||||
| 2029 | ||||||||||||
| Thereafter | ||||||||||||
| Less: debt discount | ||||||||||||
| Total borrowings | $ | $ | $ | |||||||||
Reconciliation of liabilities arising from financing activities
The following table provides a reconciliation of the Company’s liabilities arising from financing activities for the year ended December 31, 2025, including both cash and non-cash movements:
| Dec-25 | ||||||||||||||||
| Shareholder loans | Short-term borrowings | Convertible loans | Total | |||||||||||||
| Balance at January 1, 2025 | ||||||||||||||||
| Cash flows - Proceeds from borrowings | ||||||||||||||||
| Cash flows - Repayments | ( | ) | ( | ) | ||||||||||||
| Non-cash - Conversion to equity | ( | ) | ( | ) | ( | ) | ||||||||||
| Non-cash - Accrued interest | ||||||||||||||||
| Non-cash - FX and other | ( | ) | ( | ) | ||||||||||||
| Balance at December 31, 2025 | ||||||||||||||||
The significant non-cash movement during the year primarily relates to the conversion of shareholder and convertible loans into equity in connection with the Company’s initial public offering and capital restructuring.
Note 10 - Reportable segments
Segments reflect how the Company’s operations are managed, how the Company Chief Executive Officer, who is the chief operating decision maker, allocates resources and evaluates performance, and how the Company’s internal management financial reporting is structured. For the years ended December 31, 2025, and 2024, the Company’s reporting segments are based on its significant countries of operation (Nigeria), aggregate of operating segments representing all other countries of operation (Argentina, Brazil, South Africa, Portugal and Peru), plus its corporate and software development operations in the United Kingdom.
The Company develops and manages the global ecommerce platform in the United Kingdom, with its revenue seeking operations in the foreign countries. The Company’s segments reported by country are consistent with its views of regulatory, economic and currency risks for the businesses as well. Statements of operations for the Company’s reporting segments for the years ending December 31, 2025, and 2024 are as follows:
| F-26 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 10 - Reportable segments (continued)
| Year Ended December 31, 2025 | Nigeria | South Africa | Argentina | United Kingdom | Other | Total | ||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||
| Salaries, benefits, contractor costs | ||||||||||||||||||||||||
| Marketing and commissions | ||||||||||||||||||||||||
| Travel | ( | ) | ||||||||||||||||||||||
| Professional fees | ||||||||||||||||||||||||
| Product and technology development | ||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||
| Net loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other expense: | ||||||||||||||||||||||||
| Interest expense | ( | ) | ||||||||||||||||||||||
| Loss on Debt Extinguishment | ||||||||||||||||||||||||
| Loss from change in fair-value of convertible Shareholder loans | ||||||||||||||||||||||||
| Stock based Compensation | ||||||||||||||||||||||||
| Other Income | ( | ) | ( | ) | ||||||||||||||||||||
| Gain/Loss of investment in subsidiaries | ||||||||||||||||||||||||
| Foreign currency loss/(gain) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Income tax benefit (expense) | $ | |||||||||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| F-27 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 10 - Reportable segments (continued)
| Year Ended December 31, 2024 | Nigeria | South Africa | Argentina | United Kingdom | Other | Total | ||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||
| Salaries, benefits, contractor costs | ||||||||||||||||||||||||
| Marketing and commissions | ||||||||||||||||||||||||
| Travel | ||||||||||||||||||||||||
| Professional fees | ||||||||||||||||||||||||
| Product and technology development | ||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||
| Net loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other expense: | ||||||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||||||||||
| Loss from change in fair-value of convertible Shareholder loans | ||||||||||||||||||||||||
| (Gain) loss from changes in fair value | ||||||||||||||||||||||||
| Foreign currency loss | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Income tax benefit (expense) | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| F-28 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 10 - Reportable segments (continued)
The majority of the Company’s revenue for the years ended December 31, 2025, and 2024 relates to sales activity on its ecommerce platform. In 2025 and 2024, the Company did not have sales to a single customer exceeding 10% of its consolidated revenue.
The Company has a significant portion of its operations and net assets outside its home country of the United Kingdom. See the table below for the geographic concentration of the Company’s assets for the years ended December 31, 2025, and 2024.
| 2025 | 2024 | |||||||
| United Kingdom | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivables and other receivables, net | ||||||||
| Income taxes receivable | ||||||||
| Other current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Investment on Joint Venture | ||||||||
| Total United Kingdom | $ | $ | ||||||
| Nigeria | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivables and other receivables, net | ||||||||
| Other current assets | ||||||||
| Total Nigeria | $ | $ | ||||||
| Argentina | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivables and other receivables, net | ||||||||
| Other current assets | ||||||||
| Total Argentina | $ | $ | ||||||
| South Africa | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivables and other receivables, net | ||||||||
| Other current assets | ||||||||
| Total South Africa | $ | $ | ||||||
| Other | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivables and other receivables, net | ||||||||
| Income taxes receivable | ||||||||
| Other current assets | ||||||||
| Total Other | $ | $ | ||||||
| Total Assets | $ | $ | ||||||
| F-29 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 11 - Common stock
Issued, outstanding and authorized shares
On October 23, 2024, in connection with the corporate reorganization (the “Formation Transaction”), all existing security holders of RTL, a private limited company incorporated in England and Wales, exchanged the securities held in RTL for an equivalent class and number of securities in RedCloud Holdings plc, a public limited company organized under the laws of England and Wales.
As
a result of the Formation Transaction, RTL ordinary shares (par £ per share), redeemable preference share (par
£; translated at historical rates to $), options to purchase ordinary shares, and £
Initial public offering and other 2025 equity activities
| ● | In 2025, the Company completed an initial public offering (“IPO”) and other equity transactions: |
| ● | Issued
common shares in the IPO, increasing Common Stock by $ |
| ● | Converted
shareholder loans into common shares, increasing Common Stock by $ |
| ● | Issued
an additional common shares (non-IPO), increasing Common Stock by $ |
| ● | Issued
equity-classified warrants, increasing Common Stock by $ |
The United Kingdom Companies Act 2006 abolished the requirement for a company incorporated under the laws of England and Wales to have an authorized share capital. In accordance with the articles of association of RedCloud and the United Kingdom Companies Act 2006, shareholders resolve to grant the directors of the company the authority to allot a specified number of shares as and when required for a specific equity issuance by way of shareholder resolution. This authority can then be increased or replaced from time to time by any subsequent shareholder resolution. There is no prescribed maximum authorized share capital in the articles of association of RedCloud.
Voting rights
Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of holders of common stock. Decisions of the shareholders are determined by a simple majority of the votes cast unless such higher approval threshold is required under Companies Act 2006.
The Company adopted the 2021 Enterprise Management Incentive Plan (the “2021 Plan”) to retain and motivate independent directors, executives, the employees and consultants. The 2021 Plan was approved by the Company’s Board on December 20, 2021, and reserves an aggregate of of the Company’s common shares for issuance in connection with Awards (as defined in the 2022 Plan) granted under the 2021 Plan. Under the 2021 Plan, the Board may grant several types of stock options with varying vesting and performance conditions, and exercise prices. Common shares are newly issued from available authorized shares upon exercise of awards.
| F-30 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 12 - Share-based payments (continued)
The stock options in the 2021 Plan included performance and future service conditions. The future service conditions vary from zero to three years. When the Company updated the Plan rules in 2024 and granted options under the new 2024 Plan, the Company dropped the future service conditions and the differential between legacy, basic and bonus options. The options are not exercisable unless one or more of the following conditions are met: (1) the Company has a public listing of its common shares, (2) for 30 days following a change in control of the Company, (3) if the Board serves notice to the option holder that a change in control, asset sale, or voluntary wind-up is occurring, (4) an arrangement by the court between the Company and its members under Part 26 of the Companies Act of 2006 in the United Kingdom, (5) 30 days following an asset sale, (6) on the day immediately prior to the tenth anniversary of the option grant. For accounting purposes, the only exercise condition considered probable at December 31, 2024, is condition (6), and as such, the Company used an expected term in the stock option valuation models of ten years.
The 2021 Plan was amended by the Board on or about 1 July 2024 to take into account recent changes and some minor updating alterations. Also, on 1 July 2024, the Board approved a new Enterprise Management Incentive Plan (the 2024 Plan). The rules of the 2021 Plan and the 2024 Plan are identical. In relation to the 2024 Plan, the Board and the Company’s shareholders approved the grant and exercise of options over ordinary shares of £ each in the capital of the Company.
A number of the 2021 Plan participants proved ineligible to participate in the 2021 Plan and those participants agreed to release their respective options and were regranted options in the 2024 Plan. The transfer affected legacy options.
Under the 2024 Plan the Company awarded options; options were issued from the surplus options remaining unallocated under the 2021 Plan, with being awarded from the new option pool created under the 2024 Plan.
In October 2024 the Company completed the Reorganization and as a consequence the options granted in RedCloud Technologies Ltd transferred up to RedCloud Holdings PLC,
Following the Reorganization, the Company granted options in RedCloud Holdings PLC (“the 2024 Plc Plan”) The exercise price of each option was the IPO strike price, which turned out to be $.
As at December 31, 2024, the options granted and outstanding under each Plan were as follows:
| The 2021 Plan | ||||
| The 2024 Plan | ||||
| The 2024 Plc Plan |
On February 25, 2025 the Company undertook a capital consolidation with every two options granted under each Plan being consolidated into one option, the value of which and the amount payable at vesting doubled. The Company had the ability in the Plan rules to vary the options as appropriate following a variation in share capital. The general rule for options (and market practice) is that the total exercise price payable by the option holders should remain the same following the variation of the share capital. This means that where there is a one for two consolidation (doubling the value of each share) the number of shares under option would be halved and the exercise price would be doubled.
Following capital consolidation, as at the effective date of the Company’s IPO (March 20, 2025) the number of shares under option was as follows:
| The 2021 Plan | ||||
| The 2024 Plan | ||||
| The 2024 Plc Plan |
On the effective date of the IPO, March 20, 2025, all options vested.
During the years ended December 31, 2025, and 2024, there were no unexercised stock options that expired. There also were no recognized income tax benefits associated with stock options, and no amounts capitalized as part of the cost of an asset. As of December 31, 2025, the total remaining stock option cost for nonvested awards is expected to be $.
| F-31 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 12 - Share-based payments (continued)
The total stock-based compensation expense recorded for the years ended December 31, 2025, and 2024 was
$ and $, which related to stock options granted in December 2021. This expense is included in the “General and administrative” caption on the consolidated statements of operations.
Valuation Methodology
The fair value of the Company’s Ordinary Shares and options was determined using the Probability-Weighted Expected Return Method (PWERM), as outlined in the Scalar 409A valuation report dated September 17, 2024. This method incorporates multiple exit scenarios, including a low IPO, high IPO, and remain private scenario, each weighted by management’s estimated probability of occurrence.
Black-Scholes Assumptions
For option valuation purposes, the Black-Scholes model was used with the following assumptions derived from guideline public companies and market data:
| - | Risk-free rate: % |
| - | Expected volatility: % |
| - | Dividend yield: % |
| - | Expected term: years for remain private scenario; years for IPO scenarios |
Discount for Lack of Marketability (DLOM)
A Discount for Lack of Marketability (DLOM) was applied using the Finnerty model. The DLOM was calculated as % for IPO scenarios and % for the remain private scenario, reflecting the reduced liquidity of the Company’s shares prior to a public offering.
Fair Value Determination
Based on the PWERM and Black-Scholes model, the probability-weighted fair value per Ordinary Share on a non- marketable, minority basis was determined to be $ as of September 17, 2024.
The fair values of the outstanding option classes were as follows:
| - | $ Options: $ per option (net of DLOM) |
| - | $ Options: $ per option (net of DLOM) |
| F-32 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 12 - Share-based payments (continued)
| Activity | Number of Options | Weighted Avg. Exercise Price | Grant Date Fair Value | Aggregate grant-date fair value | Weighted Avg. Remaining Life | |||||||||||||||
| Outstanding options at Dec 31, 2023 | ||||||||||||||||||||
| Granted | ||||||||||||||||||||
| Forfeited | ( | ( | ( | |||||||||||||||||
| Regranted | ||||||||||||||||||||
| Cancelled | ( | ( | ( | |||||||||||||||||
| Options outstanding and exercisable at Dec 31, 2024 | $ | $ | ||||||||||||||||||
| Granted | - | - | ||||||||||||||||||
| Forfeited | - | - | ||||||||||||||||||
| Regranted | - | - | ||||||||||||||||||
| Cancelled | - | - | ||||||||||||||||||
| Options outstanding and exercisable at Dec 31, 2025 | $ | $ | ||||||||||||||||||
The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2025 and 2024 was approximately:
| 2025 | 2024 | |||
| Intrinsic value of options outstanding | $ million | $ million | ||
| Intrinsic value of options exercisable | $ million | $ million |
The intrinsic value represents the difference between the Company’s share price at the reporting date and the exercise price of the options, multiplied by the number of options that were in-the-money.
Substantially all options outstanding as of December 31, 2025 and 2024 had exercise prices significantly below the Company’s share price and were therefore considered in-the-money.
| F-33 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 13 - Income taxes
Income Tax Benefit (Expense) and Effective Income Tax Rate
The
entire income tax benefit of $
Income tax benefit consists of the following:
| December 31, 2025 | December 31, 2024 | |||||||
| Current foreign | ||||||||
| United Kingdom (“UK”) | $ | $ | ||||||
| Deferred foreign | ||||||||
| Loss carryforwards | ||||||||
| Income tax provision to return adjustments | ||||||||
| Other | ( | ) | ||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Deferred foreign - other comprehensive Income (loss) | ||||||||
| Foreign currency translation adjustments | ( | ) | ||||||
| Valuation allowance | ( | ) | ||||||
| - | - | |||||||
| Total income tax benefit | $ | $ | ||||||
Loss before income taxes related to our operations consists of:
| December 31, 2025 | December 31, 2024 | |||||||
| Foreign | ||||||||
| Corporate - UK | $ | ( | ) | $ | ( | ) | ||
| Nigeria | ( | ) | ( | ) | ||||
| Portugal | ( | ) | ( | ) | ||||
| Argentina | ( | ) | ( | ) | ||||
| South Africa | ( | ) | ( | ) | ||||
| Other foreign entities | ( | ) | ( | ) | ||||
| Total loss before income taxes | $ | ( | ) | $ | ( | ) | ||
The table below provides the updated requirements of ASU 2023-09 for the year ended December 31, 2025. See Note 2 “Significant Accounting Policies - Recent Accounting Pronouncements” for additional details on the adoption of ASU 2023-09. A reconciliation of our income tax provision computed by applying the UK statutory income tax rate of 25% to income (loss) before taxes is as follows for the year ended December 31:
| F-34 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 13 - Income taxes (continued)
| December 31, 2025 | December 31, 2025 | |||||||
| UK Federal income tax rate | ( | ) | % | |||||
| Foreign tax effects | ||||||||
| Portugal | ( | )% | ||||||
| Nigeria | ||||||||
| Changes in valuation allowance | ( | )% | ||||||
| Other | ( | ) | % | |||||
| Argentina | ||||||||
| Changes in valuation allowance | ( | )% | ||||||
| Other | ( | ) | % | |||||
| South Africa | ( | )% | ||||||
| Other Foreign | ( | )% | ||||||
| Change in valuation allowance | ( | )% | ||||||
| Nontaxable or nondeductible items | ||||||||
| Equity compensation | ( | )% | ||||||
| Interest expense | ( | ) | % | |||||
| Other | ( | )% | ||||||
| Other | ( | )% | ||||||
| Effective income tax rate | ) | % | ||||||
As previously disclosed prior to the adoption of ASU 2023-09, the reconciliation of our income tax provision computed by applying the UK statutory income tax rate of 25% to (loss) income before income taxes is as follows for the year ended December 31:
| December 31, 2024 | December 31, 2024 | |||||||
| UK Federal income tax rate | ( | ) | % | |||||
| Valuation allowance | ( | )% | ||||||
| Change in UK statutory income tax rate | % | |||||||
| Change in fair value | ( | )% | ||||||
| Loss on Debt Extinguishment | ( | )% | ||||||
| Nondeductible expense | ( | )% | ||||||
| R&D expenditures | % | |||||||
| Foreign income tax rate differential | ( | )% | ||||||
| Other true ups | ( | ) | % | |||||
| ( | ) | % | ||||||
The
reconciliation of the consolidated effective income tax rate is based on the UK statutory income tax rates of
| F-35 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 13 - Income taxes (continued)
Deferred Income Taxes - Overall
The income tax affects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities consist of the following:
| December 31, 2025 | December 31, 2024 | |||||||
| Deferred income tax assets: | ||||||||
| Loss carryforwards | ||||||||
| UK | $ | $ | ||||||
| Argentina | ||||||||
| Nigeria | ||||||||
| Portugal | ||||||||
| Other foreign entities | ||||||||
| Total loss carryforwards | ||||||||
| Compensation (2) | ||||||||
| Interest expense carryover (2) | ||||||||
| Accruals & Reserves (3) | ||||||||
| Other, Net | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred income tax assets | ||||||||
| Deferred income tax liabilities | ||||||||
| Intangible assets - R&D (2) | ( | ) | ( | ) | ||||
| Property, plant, and equipment (2) | ( | ) | ( | ) | ||||
| Other (1) | ( | ) | ( | ) | ||||
| Total deferred income tax liabilities | ( | ) | ( | ) | ||||
| Net deferred income tax assets (liabilities) | $ | $ | ||||||
| (1) |
| (2) |
| (3) |
At
December 31, 2025, the Company’s gross loss carryforwards totaled $
At
December 31, 2025, the Company also had a UK R&D credit carryforward totaling $
Deferred Income Taxes – Valuation Allowance
Management evaluates the realizability of its net deferred income tax assets to determine if a valuation allowance is required. Management assesses whether a valuation allowance should be established based on the consideration of all available evidence using a “more-likely-than-not” standard, with significant weight being given to evidence that can be objectively verified. Since the company operates in multiple jurisdictions, we assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, considering the effects of local tax law.
At December 31, 2025, and 2024, Management evaluated the realizability of its net deferred income tax assets to determine if a full valuation allowance was required. Based on Management’s assessment, Management determined that the UK Parent and each of its foreign subsidiaries, have a recent history of significant cumulative pre-tax losses, that were experienced from the UK Parent and each foreign subsidiaries’ commencement of operations through December 31, 2025. As a result of the significant weight of this negative evidence, we believe it is more likely than not that the Company’s net deferred income tax assets will not be fully realizable, and therefore Management provided for a full valuation allowance against all its net deferred income tax assets.
| F-36 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 13 - Income taxes (continued)
A summary of the change in the valuation allowances against the Company’s net deferred income tax assets for calendar years 2025 and 2024, follows:
| 2025 | 2024 | |||||||
| Beginning balance, January 1 | $ | $ | ||||||
| Change in valuation allowance associated with foreign | ||||||||
| currency translation adjustments during the current year | ( | ) | ||||||
| Change in valuation allowance associated with | ||||||||
| current year earnings | ||||||||
| Change in estimate during current year | ||||||||
| Ending balance, December 31 | $ | $ | ||||||
Deferred Income Taxes – Undistributed Earnings
At
December 31, 2025, and 2024, the Company asserted that earnings and profits from its foreign subsidiaries will be indefinitely reinvested
and not repatriated to the UK Parent due to liquidity constraints for each of its foreign subsidiaries. As of December 31, 2025, and
2024, cash and cash equivalents and restricted cash related to the Company’s foreign subsidiaries outside the United Kingdom totaled
$
Cash Taxes
Incomes taxes paid, net of refunds, exceeds 5 percent of total income taxes paid, net of refunds, in the following jurisdictions for the year ended December 31, 2025:
| 2025 | ||||
| UK | $ | |||
| Total income taxes refunded | $ | |||
Uncertain Tax Positions
At December 31, 2025, and 2024, the Company did not record any unrecognized income tax positions related to uncertain tax positions. The Company’s policy is to record interest and penalties from unrecognized tax benefits as interest expense and other expense, respectively.
The
Company’s UK Parent and foreign subsidiaries’ income tax returns that have been filed by the Company, are subject to statute
of limitation periods ranging from
Accordingly, (i) UK income tax returns filed by the Company remain subject to examination for income tax year 2022 and subsequent; (ii) Nigerian income tax returns filed by the Company remain subject to examination for income tax year 2024 and subsequent; Portuguese income tax returns filed by the Company remain subject to examination for tax year 2025 and subsequent, (iv) Argentinian income tax returns filed by the Company remain subject to examination for tax year 2021 and subsequent; and (v) all other foreign entity returns filed by the Company remain subject to examination for tax years ranging from 2023 to 2025 and subsequent. However, to the extent allowed by law, the taxing authorities may have the right to examine tax years where NOLs were generated and carried forward, and to make adjustments to the NOL carryforward amounts. The Company is not currently under examination by any jurisdiction.
| F-37 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Basic net loss per share is computed by dividing net loss for the period by the weighted average number of common stock outstanding during the year. Diluted net loss per share is computed by dividing net loss for the year by the weighted average number of shares of common stock and potentially dilutive instruments outstanding during the year. The dilutive effect of outstanding options and equity incentive awards is reflected in diluted net loss per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive instruments.
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Numerator: | ||||||||
| Net loss - basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted average shares outstanding - basic and diluted | ||||||||
See Note 17 - Subsequent events that discusses the Company’s issuance of a convertible loan debt agreement in March 2024 that the holder has the option of converting the loan into common shares of the Company, as well as discussion of common shares issued pro rata from additional paid-in capital to existing shareholders in March 2024.
| F-38 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 15 - Commitments and contingencies and other legal matters
The Company is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings. The Company accrues liabilities when it considers probable that future costs will be incurred and such costs can be reasonably estimated. Expected legal costs related to claims are accrued when the legal service is provided. Proceeding-related liabilities are based on developments to date and historical information related to actions claimed against the Company.
The Company is subject to various legal proceedings, claims and disputes arising in the ordinary course of business. Provisions are recognized when the Company determines that a loss is probable and the amount of the loss can be reasonably estimated. Where a loss is reasonably possible but not probable, no provision is recorded and the matter is disclosed as a contingency.
United Kingdom
| ● | In the year ended December 31, 2025, the Company had a number of employment-related and commercial matters in the United Kingdom. |
| ● | The
Company recorded provisions totaling $ |
| ● | Management believes it is reasonably possible that the ultimate resolution of these matters could differ from the amounts recorded; however, based on information currently available, the Company believes the recorded provisions appropriately reflect its estimated exposure as of December 31, 2025. |
| ● | During
the year ended December 31, 2024, the Company had recognized a provision of £ |
Brazil
| ● | In the year ended December 31, 2025, the Company was involved in several employment-related legal proceedings in Brazil, primarily relating to former employees and governed by Brazilian labor law. |
| ● | The
Company recorded provisions totaling $ |
| ● | While
these matters remain subject to judicial proceedings and ongoing assessment, management believes
that it is reasonably possible that the ultimate outcome could differ from the amount recorded.
As of December 31, 2025, management believes that the provision of $ |
Argentina
| ● | In
the year ended December 31, 2025, the Company recorded provisions totaling $ |
| ● | These provisions relate to matters that were initiated in prior periods and continue to be assessed by management. The Company believes it is reasonably possible that the estimate of loss could change; however, as of December 31, 2025, management believes the recorded amount appropriately reflects its estimated exposure. |
| ● | In
addition, during 2025 the Company received a claim from a former contractor seeking £ |
As
of December 31, 2025, total provisions recognized in other current liabilities in respect of legal and regulatory matters amounted to
$
Except as described above, the Company is not involved in any other material legal proceedings, and management does not believe that the outcome of any other known matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.
| F-39 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 16 - Related Party Transactions
Executive Directors’ Service Agreements
On March 24, 2025, the Company entered into Executive Directors’ Service Agreements with Justin Floyd (Chief Executive Officer) and Soumaya Hamzaoui (Chief Operating Officer). Both agreements outline compensation, benefits, equity awards, and participation in standard employee benefit plans, and constitute related-party transactions due to their roles as directors and executive officers.
Justin Floyd (CEO)
Under the terms of the agreement, Mr. Floyd is entitled to:
| ● | $ |
| ● | A
$ |
| ● | A
target annual bonus equal to |
| ● | A target annual equity compensation award of at least $, subject to a four-year vesting period and other terms set by the Board; |
| ● | Eligibility for customary health, welfare, and fringe benefit plans. |
In connection with the Company’s initial public offering, the Board agreed to consider granting Mr. Floyd a one-time equity award valued at $, subject to a four-year vesting period under a separate grant agreement.
Soumaya Hamzaoui (COO)
Under the terms of the agreement, Ms. Hamzaoui is entitled to:
| ● | $ |
| ● | A
target annual bonus equal to |
| ● | A target annual equity compensation award of at least $, subject to a four-year vesting period and other terms set by the Board; |
| ● | Eligibility for customary health, welfare, and fringe benefit plans. |
In connection with the initial public offering, the Board agreed to consider granting Ms. Hamzaoui a one-time equity award valued at $, subject to a four-year vesting period under a separate grant agreement.
| F-40 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 16 - Related Party Transactions (continued)
Non-Executive Director Letters of Appointment
On March 24, 2025, the Company entered into Non-Executive Director (NED) appointment agreements with Hans Kunz and Nikolaus Senn, both of whom qualify as related parties.
Hans Kunz (Chairperson of the Board)
Under the agreement, Mr. Kunz is entitled to:
| ● | An
annual director fee of $ |
| ● | An
additional $ |
| ● | Options
to acquire $ |
Nikolaus Senn (Non-Executive Director)
Under the agreement, Mr. Senn is entitled to:
| ● | An
annual director fee of $ |
| ● | Options
to acquire $ |
Shareholder Loan and Convertible Shareholder Loan Agreements
The Company’s shareholder loans and convertible shareholder loans discussed in Note 9 – Borrowings are transactions with certain common stock shareholders and therefore constitute related-party transactions.
During the year ended December 31, 2025, the Company also entered into additional related-party financing transactions, including the £ shareholder loan (converted to equity pre-IPO), the shareholder-guaranteed £ bank facility, and two CHF unsecured shareholder loans, all of which are described in Note 9.
| F-41 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 17 - Subsequent Events
The Company evaluated subsequent events occurring after 31 December 2025 through the date these financial statements were authorized for issuance. The following material non-recognized subsequent events were identified. These events did not provide evidence of conditions that existed as of 31 December 2025 and therefore no adjustments have been made to the financial statements.
Changes in Executive Leadership
Appointment of Chief Financial Officer (effective 5 January 2026)
Following the expiry of the term of Neil Woodman on 31 December 2025, the Board appointed Maria Magdalena Gonzalez as Chief Financial Officer, effective 5 January 2026, replacing Mr. Woodman.
Subsequent CFO Transition
After her appointment, Ms. Gonzalez stepped down from the CFO role for personal reasons. The Company announced that Mr. Raju Datla, a senior finance executive with over 20 years’ experience in corporate finance, capital markets and strategic transactions, assumed the role of Chief Financial Officer. This leadership transition aligns the finance function with the Company’s capital-raising strategy and long-term operational plans.
Equity Line of Credit (“ELOC”) and Convertible Note Financing
On 5 February 2026, the Company entered into a Term Sheet with 3i Management LLC and its investor affiliates for (i) an Equity Line of Credit (“ELOC”) and (ii) Senior Convertible Notes. These agreements were executed after the reporting date and did not exist as of 31 December 2025. Key terms include the following:
Equity Line of Credit (ELOC)
| ● | Aggregate
commitment of up to $ |
| ● | Forward
purchase price: |
| ● | Backward
purchase price: |
| ● | Beneficial
ownership limit of |
| ● | Requirement to file and maintain an effective registration statement for resale of ELOC shares. |
Senior Convertible Notes
| ● | Principal
amount of $ |
| ● | Aggregate
cash proceeds of approximately $ |
| ● | Interest:
|
| ● | Conversion
price: |
| ● | Maturity: 12 months from closing; monthly instalments begin two months after closing. |
| ● | Change-of-control
redemption at |
| ● | Obligation
to maintain share reserve of |
These arrangements provide additional financing flexibility but had no financial impact on the 2025 results, as they were executed after year-end.
Subsequent
to December 31, 2025, the Company issued senior convertible notes to certain investor affiliates, resulting in aggregate gross cash proceeds
of approximately $
In
addition, during April and May 2026, the Company completed multiple drawdowns under the Equity Line of Credit, resulting in the
issuance of ordinary shares to existing financing partners. These drawdowns generated aggregate gross cash proceeds of approximately
$
The ELOC drawdowns executed during April and May 2026 involved multiple existing financing partners, including Tumim Stone Capital LLC (“Tumim”) and Amiens Technology Investment LLC (“Amiens”).
Subsequent
to year end, warrants previously issued to Alto Opportunity Master Fund SPC were exercised, resulting in the issuance of
| F-42 |
REDCLOUD HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025, AND 2024
Note 17 - Subsequent Events (continued)
No additional warrants were issued to Alto Opportunity Master Fund SPC subsequent to December 31, 2025. The activity described above relates solely to the exercise of warrants that had been issued in prior periods.
As
a result of these financing activities, the Company received aggregate cash proceeds of approximately $
Filing of Form F-1 Registration Statement
In early 2026, the Company prepared and filed a Form F-1 registration statement to register up to ordinary shares for resale by existing financing partners Tumim, Amiens, 3i, LP, and Alto Opportunity Master Fund SPC. These shares comprise issuances under the ELOC purchase agreements and shares issuable upon conversion of senior convertible notes.
The Company will not receive proceeds from the resale of these shares, although it may receive future proceeds from discretionary drawdowns under the ELOC.
The registered shares include ordinary shares issued subsequent to year end pursuant to the ELOC, as well as shares issuable upon conversion of the senior convertible notes issued in February 2026.
The registered shares also include ordinary shares issued upon the exercise of warrants, including warrants exercised by Alto Opportunity Master Fund SPC subsequent to year end
New loan from major shareholder – Subsequent Event
Loan from Major Shareholder
Subsequent to December 31, 2025, the Company entered into additional unsecured term loan arrangements with existing shareholders, as provided below:
| ● | On
March 25, 2026, the Company received an unsecured loan of GBP | |
| ● | On
March 26, 2026, the Company received a further unsecured loan of GBP | |
| ● | On
May 7, 2026, the Company received a further unsecured loan of $ |
These
loans are unsecured and interest-bearing, and mature on
The loan provides short-term liquidity to support the Company’s ongoing operations and strategic initiatives. Further details of the loan terms will be disclosed in the period in which the arrangement is outstanding.
This transaction represents a non-recognized subsequent event (Type II) under ASC 855, as it reflects conditions that did not exist as of December 31, 2025. Accordingly, no adjustments have been made to the accompanying consolidated financial statements.
All subsequent events described above occurred prior to the date the financial statements were authorized for issuance.
All of the events described above:
| ● | occurred after December 31, 2025, and |
| ● | relate to new financing, governance, and market activities, and therefore are classified as non-recognized subsequent events. The financial statements for the year ended December 31, 2025 have not been adjusted for these items. |
| F-43 |