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Item 1A. Risk Factors

2025-09-29 compared with 2024-04-16 · 148 added, 91 removed, 622 unchanged (28% of the section changed)

Investing in our Common Stock involves risk.

You should carefully consider the risks described below as well as all the other information in this Annual Report on Form 10-K, including the consolidated financial statements and the related notes included in this report.

You should carefully consider the risks described below as well as all the other information in this Annual Report, including the consolidated financial statements and the related notes included in this report.

The risks and uncertainties described below are not the only risks and uncertainties we face.

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Our business is subject to numerous risks and uncertainties, including those highlighted in this Item 1A, that represent challenges that we face in connection with the successful implementation of our strategy and the growth of our business.

In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of shares of our Common Stock or warrants and result in a loss of all or a portion of your investment:

● We are a new company with no prior operating history, which makes it difficult to evaluate our business and prospects.

In particular, the following

risks, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of our Common Stock or warrants and result in a loss of all or a portion of your investment:

● We are a new company with a short operating history, which makes it difficult to evaluate our business and prospects.

● We may require substantial funding to finance our operations, but adequate financing may not be available when we need it, on acceptable terms or at all.

● Uncertain global macro-economic and political conditions could materially and adversely affect our results of operations and financial condition.

● The loss of Robert McBey, Our Chief Executive Officer and Chairman of the Board, or other key personnel, or failure to attract and retain other highly qualified personnel, could harm our business.

● The requirement that we repay the Funicular Note, the Seller Notes and the Chardan Note could adversely affect our business plan, liquidity, financial condition, and results of operations.

● The loss of key personnel, or failure to attract and retain other highly qualified personnel, could harm our business.

● The requirement that we repay the Funicular Note.

● Restrictive covenants under the Convertible Notes could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests.

● If the proposed CB Merger is completed, we may experience difficulties in integrating the operations of Wilson-Davis and Commercial Bancorp and in realizing the expected benefits of these transactions.

● Wilson-Davis and Commercial Bancorp may have liabilities that are not known to AtlasClear and the indemnities negotiated in the Broker-Dealer Acquisition Agreement and the Bank Acquisition Agreement may not offer adequate protection.

● If the proposed CB Merger (as defined below) is completed, we may experience difficulties in integrating the operations of Wilson-Davis and Commercial Bancorp and in realizing the expected benefits of these transactions.

● Commercial Bancorp, if acquired, may have liabilities that are not known to AtlasClear and the indemnities negotiated in the Bank Acquisition Agreement may not offer adequate protection.

● We may in the future make acquisitions, and such acquisitions could disrupt our operations, and may have an adverse effect on our operating results.

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● The misconduct of Wilson-Davis’ employees could expose the firm to significant legal liability and reputational harm.

● If the Pacsquare Assets are not successfully implemented or integrated into the Company’s business, or do not perform adequately, this could adversely affect the Company’s business, financial condition and results of operations, and could damage its reputation.

● The proposed acquisition of Commercial Bancorp (the “CB Merger”) may not be completed on the terms or timeline currently contemplated, or at all, as the parties may be unable to satisfy the conditions or obtain the approvals required to complete the CB Merger.

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● An active market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

● Issuances of shares of Common Stock pursuant to the Pacsquare Purchase Agreement, or to settle accrued expenses and obligations, and conversion of any amounts under the Seller Notes, Funicular Note and the Chardan Note, each as defined herein, would result in substantial dilution of our stockholders and may have a negative impact on the market price of our Common Stock.

● Issuances of shares of Common Stock pursuant to the Pacsquare Purchase Agreement, or to settle accrued expenses and obligations, and conversion of any amounts under the Seller Notes, Funicular Note and the Chardan Note, each as defined herein, and to Winston & Strawn LLP (“Winston & Strawn”), pursuant to a subscription agreement, dated as of February 9, 2024, between Winston & Strawn and the Company (the “Winston & Strawn Agreement”), or to Tau Investment Partners LLC (“Tau”), pursuant to the ELOC Agreement or the Second ELOC Agreement (each as defined herein), have resulted, and would result in substantial dilution of our stockholders and have, and may continue to have, a negative impact on the market price of our Common Stock.

● If we are not able to raise sufficient capital to satisfy our payment obligations under the Convertible Notes, or otherwise restructure the Convertible Notes, and payment of principal and accrued and unpaid interest thereon is demanded by the holders thereof, we will be in default, and may not be able to continue as a going concern.

● We cannot assure you that we will continue to be able to comply with the continued listing standards of the NYSE American.

● Terms of our promissory notes may result in likely non-compliance and default.

Risks Related to AtlasClear Holdings’ Business

Unless the context otherwise requires, all references in this section to “we,” “us” or “AtlasClear Holdings” refer to the business of AtlasClear Holdings following the consummation of the Business Combination.

We are a new company with no prior operating history, which makes it difficult to evaluate our business and prospects.

We are a new company with no prior operating history, which makes it difficult to evaluate our business and prospects or forecast our future results.

In addition, our subsidiary, AtlasClear is a new company that was formed in March 2022.

We have a short operating history, which makes it difficult to evaluate our business and prospects.

We have a short operating history, which makes it difficult to evaluate our business and prospects or forecast our future results.

In addition, our subsidiary, AtlasClear was formed in March 2022.

Prior to such time, AtlasClear had no operations or assets.

Upon Closing, AtlasClear received certain intellectual property from Atlas FinTech and Atlas Financial Technologies Corp., acquired the Pacsquare Assets and completed the acquisition of Wilson-Davis.

Upon Closing, AtlasClear received certain intellectual property from Atlas FinTech and Atlas Financial Technologies Corp., acquired the Pacsquare Assets and completed the acquisitions of Wilson-Davis.

AtlasClear expects to complete CB Merger or a similar acquisition, however, we cannot assure you that the CB Merger will be completed as anticipated.

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If we are not able to complete the CB Merger, or if the combined company does not achieve the anticipated operational and financial results, the value of your investment would be materially and adversely affected.

In addition, we are subject to the same risks and uncertainties frequently encountered by new companies in rapidly evolving markets.

Our financial results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:

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We may require substantial funding to finance our operations, but adequate financing may not be available when we need it, on acceptable terms or at all.

We expect to raise capital through public or private financing or other arrangements.

We expect to raise capital through public or private financing or other arrangements, including through the sale of common stock pursuant to the Second ELOC Agreement (as defined herein), pursuant to which we have the right from time to time to direct Tau to purchase up to an aggregate of $12.25 million of shares of our common stock over a 24-month period, upon the terms thereof and subject to the satisfaction of certain conditions, at a discount to the VWAP of the common stock during the applicable pricing period.

Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business.

In particular, our ability to sell shares to Tau and obtain funds under the Second ELOC Agreement is limited by the terms and conditions in the Second ELOC Agreement, including restrictions on the amounts we may sell to Tau at any one time.

The extent we rely on the Second ELOC Agreement as a source of funding will depend on a number of factors including the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources.

If obtaining sufficient funding from Tau were to prove unavailable or prohibitively dilutive, we will need to secure another source of funding in order to satisfy our working capital needs.

Even if we sell all $12,250,000 in shares of our Common Stock under the Second ELOC Agreement to Tau, we may still need additional capital to finance our future plans and working capital needs, and we may have to raise funds through the issuance of equity or debt securities, which we may not be able to obtain on favorable terms, if at all.

If we raise additional equity financing, our shareholders may experience significant dilution of their ownership interests and the per share value of our common stock could decline.

We have in the past and expect to continue to raise capital through public or private financing or other arrangements.

Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business.

In addition, inflation rates in the U.S.

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Our results of operations could be materially affected by economic and political conditions in the United States and internationally, including inflation, deflation, interest rates, availability of capital, war, terrorism, aging infrastructure, pandemics, energy and commodity prices, trade laws, election cycles and the effects of governmental initiatives to manage economic conditions.

The loss of Robert McBey, Our Chief Executive Officer and Chairman of the Board, or other key personnel, or failure to attract and retain other highly qualified personnel, could harm our business.

The loss of our Chief Executive Officer, Chief Financial Officer, or other key personnel, or failure to attract and retain other highly qualified personnel, could harm our business.

Our future success depends in large part on the continued services of senior management and other key personnel.

In particular, we are dependent on the services of Robert McBey, our Chief Executive Officer and Chairman of the Board, who is critical to the future vision and strategic direction of our business.

In particular, we are dependent on the services of our Chief Executive Officer, who is critical to the future vision and strategic direction of our business.

In December 2024, we removed Robert McBey from his role as Chief Executive Officer of AtlasClear Holdings and Wilson-Davis.

In addition, in December 2024, Mr.

Barber resigned from his role as Chief Financial Officer of AtlasClear Holdings, and in January 2025, Mr.

McBey resigned from his role as Director.

Although we have since hired a Chief Executive Officer for Wilson-Davis, and we have hired a new Chief Financial Officer for AtlasClear Holdings,we have not yet hired a new Chief Executive Officer.

Our senior management and other key personnel are all employed on an at-will basis, which means that their employment could be terminated by us at any time, for any reason, and without notice.

Conversely, employees may voluntarily terminate their employment at any time, for any reason, and without notice, and the risk of forfeiting equity incentives and/or losing other employee benefits might not be sufficient incentive for them to remain employed with us.

If we lose the services of our senior management or other key personnel, or if we are unable to attract, train, assimilate, and retain the highly skilled personnel that we need, our business, operating results, and financial condition could be adversely affected.

Our future success depends on our continuing ability to attract, train, assimilate, and retain highly skilled personnel.

If we lose the services of our senior management, as was the case with Mr.

McBey and Mr.

Barber, or other key personnel, or if we are unable to attract, train, assimilate, and retain the highly skilled personnel that we need, our business, operating results, and financial condition could be adversely affected.

Our future success depends on our continuing ability to attract, train, assimilate, and retain highly skilled personnel, including a new Chief Executive Officer.

We face intense competition for qualified individuals from numerous software and other technology companies.

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We may incur significant costs to attract and retain highly skilled personnel, and we may lose new employees to our competitors before we realize the benefit of our investment in recruiting and training them.

If we are unable to attract and retain suitably qualified individuals who are capable of meeting our growing technical, operational, and managerial requirements, on a timely basis or at all, our business, operating results, and financial condition may be adversely affected.

If we are unable to attract and retain suitably qualified individuals, including a new Chief Executive Officer, who are capable of meeting our growing technical, operational, and managerial requirements, on a timely basis or at all, our business, operating results, and financial condition may be adversely affected.

Changes in tax rates or the adoption of new tax legislation may adversely impact our financial results.

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In the United States, the rules dealing with federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the United States Treasury Department.

Changes to tax laws (which changes may have retroactive application) could adversely affect us.

In recent years, many such changes have been made and changes are likely to continue to occur in the future.

Changes in the various tax laws can and do occur.

For example, in July 2025, the U.S.

government enacted the One Big Beautiful Bill Act (the 2025 U.S.

The 2025 U.S.

Tax Act extended or made permanent many of the corporate tax changes arising under the Tax Cuts and Jobs Act passed in 2017 (the 2017 U.S.

We do not anticipate the 2025 U.S.

Tax Act to have a material impact to our financial condition, results of operations, cash flows or effective tax rate.

Additional changes to tax laws (which changes may have retroactive application) could adversely affect us.

It cannot be predicted whether, when, in what form, or with what effective dates, new tax laws may be enacted, or regulations and rulings may be promulgated or issued under existing or new tax laws, which could result in an increase in our tax liability or require changes in the manner in which we operates in order to minimize or mitigate any adverse effects of changes in tax law or in the interpretation thereof.

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Any difficulties in implementing these pronouncements could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us.

The requirement that we repay the Funicular Note, the Seller Notes and the Chardan Note could adversely affect our business plan, liquidity, financial condition, and results of operations.

As discussed below, the Company sold and issued the Funicular Note, the Seller Notes and the Chardan Note (collectively, the Convertible Notes”).

The requirement that we repay all outstanding notes, including the Funicular Note, could adversely affect our business plan, liquidity, financial condition, and results of operations.

As discussed below, the Company sold and issued promissory notes including the Funicular Note and convertible notes under the Securities Purchase Agreement(collectively, the Convertible Notes”).

If not converted, we are required to repay principal amounts outstanding under the Convertible Notes, as well as interest thereon.

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The integration process could take longer than anticipated and could result in the loss of key employees from either company, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to continue relationships with Wilson-Davis’ and Commercial Bancorp’s customers, employees or other third parties, or our ability to achieve the anticipated benefits of the transactions or the Business Combination, and could harm the Company’s financial performance.

If we are unable to successfully integrate the operations of Wilson-Davis and Commercial Bancorp with our business, we may incur unanticipated liabilities and be unable to realize the revenue growth, operating efficiencies, synergies and other anticipated benefits resulting from such transactions and the Business Combination, and the Company’s business, results of operations and financial condition could be materially and adversely affected.

Wilson-Davis and Commercial Bancorp may have liabilities that are not known to AtlasClear and the indemnities negotiated in the Broker-Dealer Acquisition Agreement and the Bank Acquisition Agreement may not offer adequate protection.

As part of the Broker-Dealer Acquisition Agreement AtlasClear assumed certain liabilities of Wilson-Davis and as part of the Bank Acquisition Agreement, AtlasClear will assume certain liabilities of Commercial Bancorp.

such transactions and the Business Combination, and the Company’s business, results of operations and financial condition could be materially and adversely affected.

Commercial Bancorp may have liabilities that are not known to AtlasClear and the indemnities negotiated in the Broker-Dealer Acquisition Agreement and the Bank Acquisition Agreement may not offer adequate protection.

As part of the Broker-Dealer Acquisition Agreement, AtlasClear assumed certain liabilities of Wilson-Davis and as part of the Bank Acquisition Agreement, AtlasClear expects to assume certain liabilities of Commercial Bancorp if the transaction is consummated.

There may be liabilities that AtlasClear failed or was unable to discover in the course of performing due diligence investigations into these companies.

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Acquisitions involve many complexities, including, but not limited to, risks associated with the acquired business’ past activities, difficulties in integrating personnel and human resource programs, integrating technology systems and other infrastructures under our control, unanticipated expenses and liabilities, and the impact on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).

There is no guarantee that our acquisitions will increase our profitability or cash flow, and our efforts could cause unforeseen complexities and additional cash outflows, including financial losses.

There is no guarantee that our acquisitions will increase our

profitability or cash flow, and our efforts could cause unforeseen complexities and additional cash outflows, including financial losses.

As a result, the realization of anticipated synergies or benefits from acquisitions may be delayed or substantially reduced.

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Wilson-Davis is subject to amendments of rules adopted by NSCC that require Wilson-Davis to have excess net capital of at least $10.0 million as of October 26, 2023 if Wilson-Davis clears for an introducing broker.

As of December 31, 2023, Wilson-Davis had net capital of approximately $10.8 million.

As of June 30, 2025 and 2024, Wilson-Davis had net capital of approximately $11.2 million and $10.4 million, respectively.

Investors, including the owners of Wilson-Davis and Mr.

Schaible, provided an aggregate of $1,300,000 in subordinated demand notes which were funded on October 13, 2023 and FINRA approved the demand notes.

The notes are expected to mature on October 13, 2024 and to have an interest rate of 5% per annum, payable quarterly.

During the fiscal year ended December 31, 2023, Glendale, the sole introducing broker at Wilson, provided $244,192 or approximately 7% of Wilson-Davis’ revenues.

The notes were renewed to mature on October 13, 2025 and to have an interest rate of 5% per annum, payable quarterly.

During the year ended June 30, 2025, Glendale, the sole introducing broker at Wilson-Davis, provided $840,000 or approximately 6.5% of Wilson-Davis revenues.

During the six months transition period ended June 30, 2024, Glendale, the sole introducing broker at Wilson-Davis, provided $164,000 or approximately 3% of Wilson-Davis’ revenues.

However, the growth of clearing services for introducing broker customers is expected to be a key driver to meet the Company’s future revenue goals.

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Wilson-Davis is substantially dependent on one principal customer.

During the six months ended December 31, 2023 and 2022, Wilson-Davis received 10.3% and 15.8% of its revenue, respectively, from securities liquidations of Canadian traded securities for customers of Canaccord Genuity.

The termination or material reduction in the securities liquidation for customers of Canaccord Genuity would have a material adverse effect on the revenues and results of operation of Wilson-Davis.

During the year ended June 30, 2025 and six months transition period ended June 30, 2024, Wilson-Davis received 6% and 10% of its revenue, respectively, from securities liquidations of Canadian traded securities for customers of Canaccord Genuity.

The termination or material reduction in the securities liquidation for customers of Canaccord Genuity would have a material adverse effect on the revenues and results of operations of Wilson-Davis.

Wilson-Davis customers liquidate securities of smaller reporting companies that have relaxed disclosure obligations.

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Wilson-Davis cannot predict the outcome of its appeal or when a decision will be rendered.

On July 10, 2025 the National Adjudicatory Council reduced the fines to an aggregate of $490,000.

The Company made a timely appeal to the SEC to hear the case.

Pursuant to FINRA Rules, the Company’s timely appeal of the decision to the SEC deferred the effectiveness of the findings and sanctions.

Wilson-Davis established a $100,000 contingency reserve in the year ended June 30, 2021, for this litigation contingence, but cannot assure that this amount is adequate to cover any penalty determined on appeal.

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Wilson-Davis and certain of its personnel are subject to various regulatory disciplinary orders that could be the basis of future regulatory action.

Wilson-Davis and certain of its personnel are subject to previous disciplinary orders by FINRA and the SEC which, by their terms, do not expire.

Wilson-Davis is subject to previous disciplinary orders by FINRA and the SEC which, by their terms, do not expire.

FINRA and the SEC can impose special supervision and compliance measures and may increase future regulatory scrutiny.

In July 2019, FINRA initiated an enforcement proceeding against Wilson-Davis, certain principals of Wilson-Davis, and a registered representative/trader alleging that the firm and the registered representative manipulated the market of a designated security, responsible supervisory personnel failed to establish and maintain appropriate supervisory procedures, the firm and a principal failed to implement and maintain appropriate anti-money laundering procedures, and provided inaccurate documents to FINRA staff (the “2019 FINRA Action”).

Wilson-Davis and its principals agreed to settle the matter, without admitting or denying the allegations respecting supervision, anti-money laundering, and documentation in July 2021 by consenting to an order under which the firm was censured and paid a $500,000 monetary penalty, one principal was suspended in all capacities for 90 days, that principal and two others were suspended as principals for two years, and the firm was required to undertake certain compliance and remediation efforts.

In July 2019, FINRA initiated an enforcement proceeding against Wilson-Davis, certain former principals of Wilson-Davis, and a former registered representative/trader alleging that the firm and the registered representative manipulated the market of a designated security, responsible supervisory personnel failed to establish and maintain appropriate supervisory procedures, the firm and a former principal failed to implement and maintain appropriate anti-money laundering procedures, and provided inaccurate documents to FINRA staff (the “2019 FINRA Action”).

Wilson-Davis and its former principals agreed to settle the matter, without admitting or denying the allegations respecting supervision, anti-money laundering, and documentation in July 2021 by consenting to an order under which the firm was censured and paid a $500,000 monetary penalty, one former principal was suspended in all capacities for 90 days, that principal and two other former principals were suspended for two years, and the firm was required to undertake certain compliance and remediation efforts.

The firm promptly paid the fine and timely completed the required compliance and remediation efforts.

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Wilson-Davis believes it has fully complied with all sanctions related to the July 2019 complaint.

However, specific employees remained subject to sanctions and restrictions on activities, particularly Wilson-Davis stockholders Lyle Davis, Byron Barkley, and James Snow, who agreed to a suspension from being associated with the firm in a principal capacity for two years, which expired in August 2023.

Previously, in December 2016, FINRA filed a complaint against Wilson-Davis asserting potential violations of several securities laws and regulations, regarding supervision, anti-money-laundering, and Regulation SHO speculation prohibitions (the “2016 FINRA Action”).

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Any such penalties could significantly harm the financial condition and results of operations of Wilson-Davis.

Wilson-Davis cannot predict the duration or severity of current economic conditions that have adversely affected its results of operations.

Wilson-Davis’ recent revenue and profitability have been adversely affected by the general downturn in the securities markets since early 2022, resulting from rising inflation, increasing interest rates, the lingering economic effects of the COVID pandemic, supply chain disruptions, the military conflict in Ukraine and Israel, Hamas’ attack on Israel and the ensuing war and other factors.

These effects are reflected in Wilson-Davis’ financial results for the fiscal years ended December 31, 2023 and 2022.

Wilson-Davis cannot predict the duration or severity of the downturn of the current securities markets or the economic and other factors that are contributing to these market conditions.

Wilson-Davis cannot predict the duration or severity of economic conditions that may adversely affect its results of operations.

Wilson-Davis’ revenue and profitability had been adversely affected by general downturns in the securities markets since early 2022, resulting from rising inflation, increased interest rates, the lingering economic effects of the COVID-19 pandemic, the military conflict in Ukraine and Israel, Hamas’ attack on Israel and the ensuing war and other factors.

Wilson-Davis cannot predict the duration or severity of downturns of the securities markets or the economic and other factors that contribute to these market conditions.

General, long-term financial and economic conditions and unforeseen events may adversely affect Wilson-Davis’ financial condition and results of operations.

In addition to the current securities markets and economic challenges, previous long-term market downturns, economic depressions and unforeseen events, such as the COVID-19 pandemic, have had an adverse impact on Wilson-Davis’ business.

In addition to the previous and current securities markets and economic challenges, previous long-term market downturns, economic depressions and unforeseen events, such as the COVID-19 pandemic, have had an adverse impact on Wilson-Davis’ business.

Although Wilson-Davis has established a disaster recovery plan, there is no guarantee that it could operate without disruption in the event a disaster were to occur.

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The broker-dealer and clearing firm industries are dominated by a small number of very large broker-dealers and clearing firms and a number of smaller self-clearing firms and clearing firms that clear for small introducing brokers clearing microcap securities transactions.

Wilson-Davis continues to compete with larger firms that have greater financial resources, vast customer networks, diverse business lines, household name recognition, large-scale marketing campaigns, and established relationships with regulatory and legislative institutions.

Wilson-Davis continues to compete with larger firms that have greater financial resources, vast customer networks, diverse

business lines, household name recognition, large-scale marketing campaigns, and established relationships with regulatory and legislative institutions.

Further, the firm’s competitors are comparatively less impacted by adverse regulatory actions and rulemaking than Wilson-Davis as a smaller firm, including impacts of net capital and margin calls imposed by NSCC.

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The regulations relating to market making are complex and subject to a significant breadth of regulatory interpretation, resulting in inconsistent and unpredictable enforcement of applicable law.

If the firm acts in a manner that a regulator perceives to be inconsistent with applicable law, the firm may be subject to costly penalties and

If the firm acts in a manner that a regulator perceives to be inconsistent with applicable law, the firm may be subject to costly penalties and sanctions.

Regulatory scrutiny of Wilson-Davis’ market making activities may have increased because of Wilson-Davis’ previous sanctions for short sale compliance deficiencies.

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Although we endeavor to comply with our published privacy policies and related documentation, and all applicable privacy and security laws and regulations, we may at times fail to do so or may be perceived to have failed to do so.

Even if we have not violated these laws and regulations, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

business, financial condition, results of operations and prospects.

Additionally, if we are unable to properly protect the privacy and security of personal information, including sensitive personal information (e.g., financial information), we could be found to have breached our contracts with certain third parties.

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Wilson-Davis’ compliance measures to detect and prevent employee misconduct may not be effective or deemed adequate by regulatory authorities.

If the Pacsquare Assets are not successfully implemented or integrated into the Company’s business, or do not perform adequately, this could adversely affect the Company’s business, financial condition and results of operations, and could damage its reputation.

Although AtlasClear expects that the AtlasClear Platform, source code and other technology assets it acquired, or will acquire, from Pacsquare would be properly implemented and integrated into the Company’s systems, we cannot assure you that a successful implementation or integration would occur, or that the AtlasClear Platform, source code, software and other technology assets would perform adequately due to among other things, errors, viruses and defects.

Prior to its implementation, AtlasClear expects that all software will be fully tested and representatives from FINRA would be provided demonstrations before they are put into production.

Nevertheless, the inability to easily integrate with the Company’s system, or any defects in or nonperformance of Pacsquare’s software could result in increased costs, customer loss and customer dissatisfaction, and could negatively impact the Company’s ability to accomplish its business goals, which could adversely affect its business, financial condition and results of operations, and could damage the Company’s reputation.

If the Pacsquare Assets do not successfully scale, as the Company’s business grows, or do not perform adequately, this could adversely affect the Company’s business, financial condition and results of operations, and could damage its reputation.

Although AtlasClear expects that the AtlasClear Platform, source code and other technology assets it acquired, from Pacsquare would be properly implemented and integrated into the Company’s systems, we cannot assure you that the code will successfully scale, or that the AtlasClear Platform, source code, software and other technology assets would perform adequately due to among other things, errors, viruses and defects.

AtlasClear Holdings relies on the third-party services of Pacsquare which may expose it to additional risks and could have an adverse impact on its business.

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Risks Relating to the Proposed Acquisition of Commercial Bancorp

The proposed acquisition of Commercial Bancorp (the “CB Merger”) may not be completed on the terms or timeline currently contemplated, or at all, as the parties may be unable to satisfy the conditions or obtain the approvals required to complete the CB Merger.

The proposed CB Merger may not be completed on the terms or timeline currently contemplated, or at all, as the parties may be unable to satisfy the conditions or obtain the approvals required to complete the CB Merger.

Completion of the CB Merger is subject to certain customary conditions, including, among other things, (i) approval by the stockholders of Commercial Bancorp, Commercial Bancorp’s wholly-owned subsidiary Farmers State Bank (“FSB”), AtlasClear and the Company, (ii) receipt of certain regulatory approvals, and (iii) the prior completion of the Business Combination.

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In addition, some costs related to the CB Merger, such as legal, accounting and financial advisory fees, must be paid by AtlasClear, and, following the Business Combination, the Company, even if the CB Merger is not completed.

Furthermore, AtlasClear has expended, and the Company’s management will have expended, valuable time and resources to matters relating to the CB Merger that could otherwise have been devoted to other beneficial activities for the Company.

Furthermore, AtlasClear has expended, and the Company’s management will

have expended, valuable time and resources to matters relating to the CB Merger that could otherwise have been devoted to other beneficial activities for the Company.

As a result of all the foregoing, failure to complete the CB Merger may negatively impact the Company and its business, prospects, financial condition and results of operations.

The terms of our promissory notes make non-compliance or default likely, and this can result in additional legal and other fees as well as impact the Company’s share price and its business, prospects, financial condition and results of operations.

As part of our recent acquisition and ongoing efforts to acquire another company, we have entered into several promissory notes with terms that are more onerous than usual.

These promissory notes contain covenants and obligations that, if not met, could result in default.

Given the significant changes and integration efforts currently underway, there is an increased risk that we may not be able to comply with these terms.

In the event of non-compliance or default, we could face severe financial penalties, acceleration of debt repayment obligations, and potential legal actions.

Such outcomes could materially and adversely affect our financial condition, liquidity, and overall business operations.

Additionally, a default could damage our reputation and hinder our ability to secure future financing on favorable terms, thereby impacting our long-term growth and strategic objectives.

Risks Related to Our Operations as a New Public Company

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Directors’ and officers’ liability insurance is expensive and difficult to obtain.

The SEC and NYSE have also imposed higher independence standards and certain special requirements on directors of public companies.

The SEC and NYSE have also imposed higher independence standards and certain special

requirements on directors of public companies.

Accordingly, it may become increasingly difficult to attract and retain qualified outside directors to serve on our Board.

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We may be exposed to risk if we cannot enhance, maintain, and adhere to our internal controls and procedures.

As a public company trading on the NYSE, we have significant requirements for enhanced financial reporting and internal controls.

As a public company trading on the NYSE American, we have significant requirements for enhanced financial reporting and internal controls.

The process of designing and implementing effective internal controls is a continuous effort that will require us to anticipate and react to changes in our business accounting, auditing and regulatory requirements and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company, and we are still early in the process of generating a mature system of internal controls and integration across business systems.

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This could materially adversely affect us and lead to a decline in the market price of our Common Stock.

Quantum has identified material weaknesses in its internal control over financial reporting.

If Quantum is unable to develop and maintain an effective system of internal control over financial reporting, Quantum may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in Quantum and materially and adversely affect Quantum’s business and operating results.

In connection with the restatement described in Quantum’s Form 10-K/A for the year ended on December 31, 2021, Quantum’s management reassessed the effectiveness of Quantum’s disclosure controls and procedures for the periods affected by the restatement.

As a result of that reassessment, Quantum’s management determined that its disclosure controls and procedures were not effective as of December 31, 2021, March 31, 2022, June 30, 2022, September 30, 2022, December 31, 2022, March 31, 2023 and June 30, 2023 due to the material weaknesses with respect to compiling information to prepare Quantum’s financial statements in accordance with U.S.

The material weaknesses are due to the previously omitted subsequent event disclosure of an advance from Quantum Ventures LLC (“Quantum Ventures” or the “Sponsor”), the analysis and full disclosure of the Merger Agreement, the impact of the Merger Agreement on Quantum’s going concern assessment and the impact of the Business Combination Agreement as it relates to the classification of Quantum’s complex accounting instruments, as well as the related determination of the fair value of the PIPE derivative liability, accumulated deficit, net loss and related financial disclosures.

Previously, in connection with Quantum’s IPO, Quantum accounted for a portion of the proceeds received from the offering as stockholders’ equity.

Following the SEC’s guidance on this issue, management identified errors in its historical financial statements and performed a quantitative assessment under SEC Staff Accounting Bulletin No.

99, “Materiality.” Based on this assessment, after consultation with Quantum’s independent registered public accounting firm, Quantum’s management and audit committee concluded that a restatement of Quantum’s financial statements for periods prior to September 30, 2021 was required to reclassify such amounts as common stock subject to possible redemption and that a material weakness in Quantum’s internal controls over financial reporting exists as a result of the identified errors that led to such restatement.

In addition, in connection with the restatement of Quantum’s financial statements as of and for the three months ended March 31, 2021, management and Quantum’s audit committee concluded that a material weakness also exists as it relates to the accounting for the Public Warrants.

We have identified material weaknesses in its internal control over financial reporting.

If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in our Company and materially and adversely affect our business and operating results.

In connection with the preparation of our Form 10-KT for the transition period ended June 30, 2024, and our Form 10-K for the year ended June 30, 2025, management reassessed the effectiveness of our disclosure controls and procedures for the periods affected.

As a result of that reassessment, management determined that our disclosure controls and procedures were not effective as of June 30, 2025, and June 30, 2024 due to the material weaknesses with respect to compiling information to prepare financial statements in accordance with U.S.

The material weaknesses are due to the analysis and full disclosure of the Merger Agreement, the impact of the Merger Agreement on and the impact of the Business Combination Agreement as it relates to the classification of complex accounting instruments, and related financial disclosures.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented, or detected and corrected, on a timely basis.

Effective internal controls are necessary for Quantum to provide reliable financial reports and prevent fraud.

Quantum continues to evaluate steps to remediate the material weakness.

Effective internal controls are necessary for the Company to provide reliable financial reports and prevent fraud.

We continue to evaluate steps to remediate the material weakness.

These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

If Quantum identifies any new material weaknesses in the future, any such newly identified material weakness could limit Quantum’s ability to prevent or detect a misstatement of Quantum’s accounts or disclosures that could result in a material misstatement of Quantum’s annual or interim financial statements.

In such case, Quantum may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in Quantum’s financial reporting and Quantum’s stock price may decline as a result.

Quantum cannot assure you that the measures Quantum has taken to date, or any measures Quantum may take in the future, will be sufficient to avoid potential future material weaknesses.

If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of accounts or disclosures that could result in a material misstatement of annual or interim financial statements.

In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result.

We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

As a public company, we have incurred and expect to continue to incur increased expenses associated with the costs of being a public company.

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Risks Related to Ownership of Our Common Stock

Future sales of our Common Stock could cause the market price for our Common Stock to decline.

Future sales or resales of our Common Stock could cause the market price for our Common Stock to decline significantly, even if the Company’s business is doing well.

We had 126,819,145 shares of Class A common stock outstanding as of September 25, 2025.

We filed two resale registration statements which became effective on August 14, 2024 and March 6, 2025, which registered the offer and sale from time to time by certain selling stockholders of up to 35,825,689 shares of our common stock.

The Company’s stockholders may sell our common stock in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in the trading price of our common stock or putting significant downward pressure on the price of our common stock.

Until such time that the registration statements are no longer effective or all securities thereunder are sold, the registration statements will permit the resale of these securities.

The resale, or expected or potential resale, of a substantial number of our Common Stock in the public market could adversely affect the market price for our Common Stock and make it more difficult for our stockholders to sell their Common Stock at times and prices that they feel are appropriate.

Furthermore, we expect that, because there was a large number of shares registered pursuant to the registration statement, the selling stockholders will continue to offer the securities covered by the registration statement for a significant period of time, the precise duration of which cannot be predicted.

Accordingly, the adverse market and price pressures resulting from an offering pursuant to a registration statement may continue for an extended period of time.

Further, sales of our Common Stock upon expected expiration of resale restrictions could encourage short sales by market participants.

Generally, short selling means selling a security, contract or commodity not owned by the seller.

The seller is committed to eventually purchase the financial instrument previously sold.

Short sales are used to capitalize on an expected decline in the security’s price.

As such, short sales of our Common Stock could have a tendency to depress the price of our Common Stock, which could further increase the potential for short sales.

We cannot predict the effect, if any, that market sales of shares of our Common Stock or the availability of shares of our Common Stock for sale will have on the market price of our Common Stock prevailing from time to time.

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Any perceived excess in the supply of our shares in the market could negatively impact our share price and any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.

In addition, registration rights we may grant in the future, including in the ordinary course of the Company’s business, may further depress market prices if these registration rights are exercised or shares of our Common Stock are sold under the registration statements, the presence of additional shares trading in the public market may also adversely affect the market price of our Common Stock.

An active market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

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You may be unable to sell your securities unless a market can be established and sustained.

Issuances of shares of Common Stock pursuant to the Pacsquare Purchase Agreement, or to settle accrued expenses and obligations, and conversion of any amounts under the Seller Notes, Funicular Note and the Chardan Note, each as defined herein, would result in substantial dilution of our stockholders and may have a negative impact on the market price of our Common Stock.

In connection with the Closing, AtlasClear Holdings entered into the Funicular Purchase Agreement, the Pacsquare Purchase Agreement, the Chardan Note, amendments to the Broker-Dealer Acquisition Agreement and other notes to settle accrued expenses and obligations.

As of the date of this filing, Pacsquare has received an aggregate of 336,000 shares of Common Stock, and we expect to issue additional shares in the future, pursuant to the Pacsquare Purchase Agreement.

Issuances of shares of Common Stock pursuant to the Pacsquare Purchase Agreement, or to settle accrued expenses and obligations, and conversion of any amounts under the Funicular Note, the Winston & Strawn Agreement, the Company’s securities purchase agreements or pursuant to the ELOC Agreement or the Second ELOC Agreement, have resulted and would continue to result in substantial dilution of our stockholders and have had and may continue to have a negative impact on the market price of our Common Stock.

In connection with the Closing, AtlasClear Holdings entered into the Funicular Purchase Agreement amendments to the Broker-Dealer Acquisition Agreement and other notes to settle accrued expenses and obligations.

As of the date of this filing, Pacsquare has received an aggregate of 13,933 shares of Common Stock.

The notes, including the Convertible Notes are convertible into shares of our Common Stock, at various conversion prices (which may be reduced under certain circumstances).

The issuance of any of these shares will dilute our other equity holders, which could cause the price of our Common Stock to decline.

Interest on the Chardan Note in the aggregate principal amount of $4,150,000 may, at the election of AtlasClear Holdings, be either paid in cash or, subject to the satisfaction of certain conditions, in shares of Common Stock, at a rate equal to 85% of the VWAP for the trading day immediately prior to the applicable interest payment date.

The Chardan Note is convertible, in whole or in part, into shares of Common Stock at the election of the holder at any time at a conversion price equal to 90% of the VWAP of the Common Stock for the trading day immediately preceding the applicable conversion date.

The Funicular Note is convertible, in whole or in part, into shares of Common Stock at the election of the holder at any time at an initial conversion price of $10.00 per share, (the “Conversion Price”).

The Conversion Price is subject to adjustment monthly to a price equal to the trailing five-day VWAP, subject to a floor of $2.00 per share (provided that if the Company sells stock at an effective price below $2.00 per share, such floor would be reduced to such effective price).

The Short-Term Notes (as defined below) accrue interest at a rate of 9% per annum, payable quarterly in arrears, in shares of Common Stock at a rate equal to 90% of the trailing seven-trading day volume weighted average price of the Common Stock (“VWAP”) prior to payment (or, at the Company’s option, cash), and are convertible at the option of the holder at any time during the continuance of an event of default, at a rate equal to 90% of the trailing seven-trading day VWAP prior to conversion.

The Long-Term Notes (as defined below) accrue interest at a rate of 13% per annum, payable quarterly in arrears, in shares of Common Stock at a rate equal to 90% of the trailing seven-trading day VWAP prior to payment (or, at the Company’s option, in cash), and are convertible at the option of the holder at any time commencing six months after the Closing Date, at a rate equal to 90% of the trailing seven-trading day VWAP prior to conversion (or 85% if an event of default occurs and is continuing.

Under the terms of the Pacsquare Purchase Agreement $850,000 of the purchase price is payable in shares of common stock at a price of $6.00 per share, and $950,000 is payable in shares of common stock in four equal monthly installments.

The shares of Common Stock issuable pursuant to the Pacsquare Purchase Agreement and the conversion of any amounts under the notes, including the Funicular Note, the Seller Notes and the Chardan Note, to the extent exercised, converted and issued, would impose significant dilution on our stockholders.

Also in connection with the Closing, AtlasClear Holdings agreed to settle certain accrued expenses and other obligations to certain parties through the issuance of an aggregate of 2,201,010 shares of Common Stock and intends to, in the future, issue additional shares of Common Stock, to settle other accrued expenses and obligations.

The shares of Common Stock issuable pursuant to the Pacsquare Purchase Agreement and the conversion of any amounts under the notes, including the Funicular Note and the convertible notes under the securities purchase agreements, to the extent exercised, converted and issued, would impose significant dilution on our stockholders.

Also in connection with the Closing, AtlasClear Holdings agreed to settle certain accrued expenses and other obligations to certain parties through the issuance shares of Common Stock and intends to, in the future, issue additional shares of Common Stock, to settle other accrued expenses and obligations.

Pursuant to the Winston & Strawn Agreement, the Company may issue up to $2,500,000 worth of shares of Common Stock as payment for legal services, in three equal installments of $833,333 beginning on August 9, 2024.

The Company has not issued any shares in connection with the Winston & Strawn Agreement and the amounts payable remain due.

Additionally, pursuant to the ELOC Agreement, Tau has committed to purchase, upon the terms thereof and subject to the satisfaction of certain conditions, up to $12.5 million of Common Stock of the Company, at a price per share equal to 97% of the lowest VWAP of the Common Stock during a pricing period of three consecutive trading days following Tau’s receipt of the applicable advance notice sent by the Company from time to time, over the course of 24 months from the date of the ELOC Agreement.

As of June 30, 2025, the Company has issued and settled 1,566,885 shares in connection with the ELOC agreement.

Each advance may be up to the greater of 100,000 shares or 50% of the average daily volume traded of the shares during the 30 trading days immediately prior to the date the Company requests each advance.

All of the foregoing issuances would result in substantial dilution of our stockholders and may have a negative impact on the market price of our Common Stock.

On August 4, 2025, the Company entered into a securities purchase agreement ( “August Securities Purchase Agreement”) with an institutional investor under which the Company agreed to issue and sell, in a private placement, Series A convertible debentures (a “Debenture”) for an aggregate principal amount of $500,000, for a gross purchase price of $490,000, net of legal fees.

The Debenture

bears a 10% interest and matures on August 3, 2026.

The holder is entitled to convert the unpaid face amount of this Debenture, plus accrued interest and penalties, any time following a closing date, at $0.15 per share.

If, at any time after closing, the Company receives financing from a third party (excluding the holder), the Company is required to pay to the holder, in the form of cash, equity, or a combination of the two, solely at the discretion of the holder, 100% of the proceeds raised from the third party in excess of an aggregate amount of $10,000,000 until such time as the face amount of the Debenture has been paid in full.

The Company agreed that, within sixty (60) calendar days after the closing date, the company will file a registration statement registering the resale of the conversion shares underlying the Debenture.

On September 16, 2025, September 19, 2025 and September 23, 2025, the Company entered into separate securities purchase agreements (each, a “Securities Purchase Agreement”) with certain institutional investors (each, an “Investor”) under which the Company agreed to issue and sell, in a private placement, convertible promissory notes (each, a “Note” and collectively, the “Notes”) for an aggregate principal amount of $6,000,000, for a gross purchase price of $5,000,000, reflecting a 20% original issue discount, before fees and other expenses.

The Notes do not bear interest, and mature on the earlier of six months from issuance or the date that the Company completes a Qualified Financing (meaning an issuance and sale of capital stock raising gross proceeds of at least $10 million, as defined in the Notes).

The Notes may be converted into equity, at each holder’s option, at the closing of a Qualified Financing, at the same per share price as the securities sold in the Qualified Financing.

The Company intends to use the proceeds from the sale of the Notes for general corporate purposes and working capital.

The Notes are subject to customary events of default and related remedies.

Our issuance of additional capital stock in connection with future financings, acquisitions, investments, the AtlasClear 2024 Equity Incentive Plan (the “Incentive Plan”) or otherwise will dilute all other stockholders.

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If we are not able to raise sufficient capital to satisfy our payment obligations under the Convertible Notes, or otherwise restructure the Convertible Notes, and payment of principal and accrued and unpaid interest thereon is demanded by the holders thereof, we will be in default, and may not be able to continue as a going concern.

We have not timely satisfied certain payment obligations under the Funicular Note, the Sellers Notes and the Chardan Note.

We have not timely satisfied certain payment obligations under the Funicular Note and the convertible notes under the Securities Purchase Agreement.

In the event we are not able to raise sufficient capital to pay such notes, or otherwise restructure the same, and payment of principal and accrued interest thereon is demanded by the holders thereof, we will be in default, and may not be able to continue as a going concern.

Although none of the holders of such promissory notes have elected to pursue remedies against us, we cannot assure you that they will not do so in the future.

The institution of collection actions cuould have a material adverse effect on our business and could force us to seek relief through insolvency or other proceedings.

The Long-Term Notes accrue interest at a rate of 13% per annum, payable quarterly in arrears, in shares of Common Stock at a rate equal to 90% of the trailing seven-trading day VWAP prior to payment (or, at the Company’s option, in cash), and are convertible at the option of the holder at any time commencing six months after the Closing Date, at a rate equal to 90% of the trailing seven-trading day VWAP prior to conversion (or 85% if an event of default occurs and is continuing).

The institution of collection actions could have a material adverse effect on our business and could force us to seek relief through insolvency or other proceedings.

On each interest payment date, the accrued and unpaid interest shall, at the election of the Company in its sole discretion, be either paid in cash or paid in-kind by increasing the principal amount of the Funicular Note.

In the event of an Event of Default (as defined in the Funicular Note), in addition to Funicular’s other rights and remedies, the interest rate would increase to 20% per annum.

If the registration statement for the issued shares is not filed within 30 days after the Closing or is not declared effective by the applicable deadline set forth in the Registration Rights Agreement, or under certain other circumstances described in the Registration Rights Agreement, then the Company shall be obligated to pay to the Furnicular an amount in cash equal to 5% of the original principal amount of the Note on a monthly basis until the applicable event giving rise to such payments is cured.

The Chardan Note is subject to a demand for immediate repayment in cash upon the occurrence of certain events of default specified therein.

In addition, if the registration statement for the issued shares is not filed within 45 days after the Closing or is not effective within a specified period after the Closing (or if effectiveness is subsequently suspended or terminated for at least 15 days, subject to certain exceptions), then the interest rate of the Chardan Note will increase by 2% for each week that such event continues.

The Company is not currently in compliance with the foregoing registration obligations, which have resulted in increased interest rates under the terms of the applicable Convertible Notes.

We cannot assure you that we will continue to be able to comply with the continued listing standards of the NYSE American.

The convertible notes under the September 2025 Securities Purchase Agreement mature on the earlier of six months from issuance or the date that the Company completes a Qualified Financing (meaning an issuance and sale of capital stock raising gross proceeds of at least $10 million, as defined in the Notes).

The Notes may be converted into equity, at each holder’s option, at the closing of a Qualified Financing, at the same per share price as the securities sold in the Qualified Financing.

We cannot assure you that we will continue to be able to comply with the continued listing standards of the NYSE American, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

Our continued eligibility to maintain the listing of our Common Stock on the NYSE American depends on a number of factors, including the price of our Common Stock and the number of persons that hold our Common Stock.

Our Common Stock has traded below the $1.00 minimum share price requirement since March 25, 2025.

If the NYSE American delists our securities from trading on its exchange for failure to meet its listing standards, and we are not able to list such securities on another national securities exchange, then our Common Stock could be quoted on an over-the-counter market.

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If the price of our Common Stock is less than $690 per share, we believe it is much less likely that such holders will exercise their warrants.

On April 12, 2024, the closing price of the Common Stock as reported by the NYSE American was $1.43 per share, which price was less than the $11.50 per share exercise price of the Private Warrants.

On September 24, 2025, the closing price of the Common Stock as reported by the NYSE American was $0.67 per share, which price was less than the $690 per share exercise price of the Private Warrants.

We cannot assure you that our Warrants will be in the money after the date of this report and prior to their expiration.

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These sales, or the possibility that these sales may occur, also might make it more difficult for the us to sell equity securities in the future at a time and at a price that it deems appropriate.

As of the date of this report we have a total of 11,781,759 shares of Common Stock outstanding (i) without giving effect to any awards that may be issued under the Incentive Plan or any Earnout Shares that may be issued in the future, and (iii) assuming no exercise of the outstanding Warrants.

All shares currently held by Public Stockholders and all of the shares issued in the Business Combination to former AtlasClear’s stockholders are freely tradable without registration under the Securities Act, and without restriction by persons other than our “affiliates” (as defined under Rule 144 under the Securities Act, (“Rule 144”)), including our directors, executive officers and other affiliates.

As of September 25, 2025, we had a total of 126,819,145 shares of Common Stock outstanding (i) without giving effect to any awards that may be issued under the Incentive Plan or any earnout shares that may be issued in the future, and (ii) assuming no exercise of the outstanding Warrants.

All shares currently held by public stockholders and all of the shares issued in the Business Combination to former AtlasClear’s stockholders are freely tradable without registration under the Securities Act, and without restriction by persons other than our “affiliates” (as defined under Rule 144), including our directors, executive officers and other affiliates.

In the future, we may also issue our securities in connection with investments or acquisitions.

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We will remain an emerging growth company until the earliest of:

(i) the last day of the fiscal year following the fifth anniversary of the closing of Quantum’s initial public offering (“IPO”), (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion;

(i) June 30, 2026, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion;

(iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Common Stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year;

or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Our operating results may be negatively impacted by unfavorable economic and market conditions and the uncertain geopolitical environment.

Our operating results may be negatively impacted by unfavorable economic and market conditions and the uncertain geopolitical environment, including tariffs or other trade barriers, rising inflation, and other macroeconomic shifts.

These factors may materially affect investor confidence and the success of a potential business combination, including one involving a special purpose acquisition company (SPAC).

The global macroeconomic environment remains challenging and uncertain.

For example, uncertainty regarding global central bank monetary policy, instability in the geopolitical environment in many parts of the world, including the ongoing Russia-Ukraine war, conflicts in the Middle East, and tensions surrounding China-Taiwan relations, may continue to pressure global economic conditions.

If these conditions were to deteriorate further, we could experience material harm to our business, operating results, and financial condition, which may in turn affect the attractiveness and valuation of any proposed business combination.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors