Item 1. Legal Proceedings
ITEM 1.
LEGAL PROCEEDINGS.
From
time to time, the Company is involved in legal proceedings in the ordinary course of business. The Company believes that the ultimate
resolution of these matters will not have a material adverse effect on its financial condition, results of operations, or cash flows.
The following proceedings are disclosed pursuant to Item 103 of Regulation S-K:
Asher
Alkoby, et al. v. FDCTech
This action is pending in the London Circuit Commercial
Court under Claim Number LM-2024-000330 as of December 9, 2024. The claimants are former shareholders of a Malta-incorporated broker,
Alchemy Markets Ltd. (“AML”), that the Company acquired in June 2023, pursuant to a share sale agreement (the “Share
Sale Agreement”). Following the acquisition, the Company discovered undisclosed anti-money laundering deficiencies from 2019 and
misrepresentations regarding AML’s net capital. The claimants are seeking approximately $1.02 million under in connection with
the Share Sale Agreement. The Company has counterclaimed for a declaration that the Share Sale Agreement is ineffective and unenforceable
and seeks repayment of $915,000 paid to the sellers. A case management conference is scheduled for November 17, 2025.
Alchemy Markets Ltd. FIAU Proceedings
Alchemy Markets Ltd. (formerly NSFX Limited), a subsidiary of the Company, is involved in two related proceedings in Malta challenging an
administrative penalty of €419,997 imposed by the Financial Intelligence Analysis Unit (FIAU) based on a 2019 compliance examination
that occurred prior to the Company’s ownership. The first proceeding is an appeal before the Court of Appeal (Inferior Jurisdiction)
challenging the penalty on administrative law grounds. The second is a constitutional challenge before the First Hall Civil Court, arguing
the FIAU’s decision-making process violated the subsidiary’s constitutional rights. Both proceedings are in the evidentiary
phase.
The
Company believes it has meritorious defenses and counterclaims in the above matters and intends to defend them vigorously. However, litigation
is inherently uncertain, and the Company cannot predict the outcome of these proceedings with certainty.
Item 1A.
Risk Factors.
In
accordance with the requirements of Form 10-Q, the Company, as a smaller reporting company, is not required to disclose this item.
Item 2.
Unregistered Sales of Equity Securities and Use
of Proceeds.
None.
Item 3.
Defaults Upon Senior Securities.
None
Item 4.
Mine Safety Disclosures.
None
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.