FDCTECH, INC. 10-K/A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Annual Report Form 10-K contains forward-looking statements. Our actual results could differ materially from those set forth due to general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events. Overview FDCTech, Inc. is a financial technology company that provides institutional liquidity, multi-asset trading solutions, wealth management services, and proprietary trading technology to clients globally. We operate through four business segments: Margin Brokerage, Wealth Management, Technology and Software Development, and Payment Intermediary Services. Our regulated subsidiaries hold licenses from the Malta Financial Services Authority (MFSA), the UK Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), and the Seychelles Financial Services Authority (FSA), among others. Fiscal year 2025 represented a year of substantial financial progress for the Company. Total revenues increased 29.8% to $34,959,399, driven by strong growth in Technology & Software revenues and continued expansion of our Brokerage segment, including the contribution of Alchemy International Ltd. (“AIL”), acquired in fiscal 2025. We achieved an operating income of $6,053,209 compared to an operating loss of ($901,763) in fiscal 2024 (restated), reflecting improved operational leverage across all three revenue-generating segments. Net income (loss) attributable to FDCTech shareholders was $5,783,223 in fiscal 2025, compared to a loss of $18,781 in fiscal 2024 (restated). The cash on hand at December 31, 2025, and 2024 was $17,669,749 from $25,376,957. The cash held at various liquidity providers was $15,258,896 and $12,658,241 as of December 31, 2025, and 2024. The working capital improved to $14,883,171 from $853,533 as of December 31, 2025, and 2024. Restatement of Fiscal Year 2024 Financial Statements On April 3, 2025, the Company’s Board of Directors dismissed Olayinka Oyebola & Co. (“Olayinka”) as its independent registered public accounting firm, following Olayinka’s designation as a Prohibited Service Provider by OTC Markets Group. The Company engaged LAO Professionals (PCAOB Firm ID: 7057) as its new independent auditor effective April 3, 2025. As part of the auditor transition, the fiscal year 2024 financial statements previously audited by Olayinka were reaudited by LAO Professionals. The reaudit resulted in certain reclassifications and adjustments to the previously reported December 31, 2024, consolidated balance sheet and related statements. All comparisons presented in this Item 7 between fiscal year 2025 and fiscal year 2024 are based on the LAO-reaudited 2024 figures. Investors should not rely upon the financial statements as presented in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2024 (filed March 3, 2025). See Note 4 — Restatement of Previously Issued Financial Statements for further detail. 22 Results of Operations The following table presents a summary of our consolidated results of operations for the fiscal years ended December 31, 2025, and December 31, 2024 (restated), together with the dollar and percentage change between periods. Year Ended Dec 31, 2025 (Audited) Year Ended Dec 31, 2024 (Restated, Audited) Change ($) Change (%) REVENUES Technology & software $ 5,099,187 $ 1,642,130 $ 3,457,057 $ 210.52 % Wealth management 6,430,897 6,498,404 (67,507 ) -1.04 % Brokerage 23,429,315 18,803,184 4,626,131 24.60 % Total revenues $ 34,959,399 $ 26,943,718 $ 8,015,681 $ 29.75 % COST OF SALES Technology & software $ - $ 173,708 $ (173,708 ) $ — Wealth management 5,755,675 5,925,652 (169,977 ) -2.87 % Brokerage 10,059,683 8,802,990 1,256,693 14.28 % Total cost of sales 15,815,358 14,902,350 913,008 6.13 % Gross profit 19,144,041 12,041,368 7,102,673 58.99 % Gross margin % 54.80 % 44.70 % 10.10 % — OPERATING EXPENSES General and administrative $ 11,575,393 $ 11,290,165 $ 285,228 $ 2.53 % Sales and marketing 1,336,685 1,466,616 (129,931 ) -8.86 % Depreciation 178,754 186,350 (7,596 ) -4.08 % Total operating expenses $ 13,090,832 $ 12,943,131 $ 147,701 $ 1.14 % Operating income (loss) $ 6,053,209 $ (901,763 ) $ 6,954,972 $ — Operating margin % 17.30 % -3.35 % — — OTHER INCOME (EXPENSE) Other interest income (expense) $ 16,157 $ (638,483 ) $ 654,640 $ — Other income (expense) (254,754 ) 1,510,507 (1,765,261 ) — Total other income (expense) $ (238,597 ) $ 872,024 $ (1,110,621 ) $ — Income (loss) before income taxes $ 5,814,612 $ (29,739 ) $ 5,844,351 $ — Provision for income taxes - - - — Net income (loss) $ 5,814,612 $ (29,739 ) $ 5,844,351 $ — % Net income (loss) attributable to FDCTech shareholders $ 5,783,223 $ (18,781 ) $ 5,802,004 $ — % EPS — basic and diluted 0.01 0.00 — — Weighted avg shares outstanding 423,084,729 390,377,880 — — 23 Revenues Total revenues for the fiscal year ended December 31, 2025, were $34,959,399, an increase of $8,015,681, or 29.8%, compared to $26,943,718 for the fiscal year ended December 31, 2024 (restated). Revenue growth was driven primarily by the Brokerage and Technology & Software segments and continued expansion of brokerage trading volumes, partially offset by a slight decline in Wealth Management revenues. Technology & Software Technology & software revenues for fiscal year 2025 were $5,099,187, an increase of $3,457,057, or 210.5%, compared to $1,642,130 in fiscal year 2024. This segment encompasses licensing and subscription revenues from our proprietary Condor Trading Technology suite, including the Condor Pro Multi-Asset Trading Platform and Condor Risk Management back-office system, as well as consulting and custom development services delivered through Alchemytech Ltd. (ATECH) in Cyprus. The increase reflects expanded adoption of the Condor platform by third-party brokerages and new licensing contracts executed during fiscal year 2025. During fiscal years 2025 and 2024, the Company had approximately fourteen to seventeen active technology and software development customers. Cost of sales for this segment was $nil in fiscal year 2025 (2024: $173,708), as development costs in 2025 were capitalized as software development costs. Technology & Software revenues represented 14.6% of total revenues in fiscal year 2025 compared to 6.1% in fiscal year 2024. Wealth Management Wealth management revenues for fiscal year 2025 were $6,430,897, a decrease of $67,507, or 1.0%, compared to $6,498,404 in fiscal year 2024. This segment is operated by AD Advisory Services Pty Ltd. (“ADS”), our 51%-owned Australian subsidiary regulated by ASIC, which provides licensing solutions and financial planning services to a network of approximately 28 financial advisers with more than $530 million in funds under advice. The slight revenue decline reflects normal variability in adviser activity levels and does not indicate a structural deterioration of the segment. Cost of sales in this segment — principally payments to advisers, compliance costs, and platform fees — decreased to $5,755,675 from $5,925,652, contributing to a segment gross margin improvement to 10.5% from 8.8% in fiscal year 2024. Wealth management represented 18.4% of total revenues in fiscal year 2025 compared to 24.1% in fiscal year 2024, reflecting the relative growth of the Brokerage and Technology segments. Brokerage Brokerage revenues for fiscal year 2025 were $23,429,315, an increase of $4,626,131, or 24.6%, compared to $18,803,184 in fiscal year 2024. This segment encompasses trading commissions, spreads, and related revenues from our regulated brokerage entities: Alchemy Markets Ltd. (Malta, MFSA-regulated), Alchemy Prime Limited (United Kingdom, FCA-regulated), and Alchemy International Ltd. (Seychelles, FSA-regulated). The latter was acquired in fiscal year 2025, contributing incremental brokerage revenues not present in the prior year. Brokerage revenues represented 67.0% of total revenues in fiscal year 2025 compared to 69.8% in fiscal year 2024. The segment gross margin decreased slightly to 42.9% from 46.8%, reflecting an increase in trading costs. Cost of sales in this segment principally consists of liquidity provider fees, introducing broker commissions, and direct trading infrastructure costs. 24 Gross Profit Gross profit for fiscal year 2025 was $19,144,041, an increase of $7,102,673, or 59.0%, from $12,041,368 in fiscal year 2024. Consolidated gross margin expanded to 54.8% in fiscal year 2025 from 44.7% in fiscal year 2024, an improvement of approximately 1,010 basis points. The margin expansion was driven by (i) elimination of technology cost of sales in fiscal year 2025 as development costs were fully capitalized, (ii) improved scale in the Brokerage segment as revenues grew faster than variable costs, and (iii) modest efficiency gains in the Wealth Management segment. Operating Expenses Total operating expenses for fiscal year 2025 were $13,090,832, an increase of $147,701, or 1.1%, compared to $12,943,131 in fiscal year 2024. Despite revenue growth of approximately 30%, total operating expenses grew only 1.1%, demonstrating meaningful operating leverage. As a percentage of total revenues, operating expenses declined to 37.4% in fiscal year 2025 from 47.8% in fiscal year 2024. General and Administrative Expenses. General and administrative expenses (“G&A”) for fiscal year 2025 were $11,575,393, an increase of $285,228, or 2.5%, compared to $11,290,165 in fiscal year 2024 (restated). G&A as a percentage of revenues declined to 33.1% from 41.9%, reflecting the benefit of operating leverage on a largely fixed cost base. G&A principally includes employee compensation, professional fees (legal, accounting, and audit), regulatory compliance costs across our multiple licensed subsidiaries, office rent and occupancy, and other corporate overhead. The modest absolute increase reflects incremental compliance and operational costs associated with the addition of Alchemy International Ltd. and related regulatory obligations. Sales and Marketing Expenses. Sales and marketing expenses for fiscal year 2025 were $1,336,685, a decrease of $129,931, or 8.9%, compared to $1,466,616 in fiscal year 2024. As a percentage of revenues, sales and marketing costs declined to 3.8% from 5.4%. These expenses primarily consist of trade show participation, client entertainment, online marketing, public relations, and related activities across our brokerage and technology businesses. Depreciation. Depreciation expense for fiscal year 2025 was $178,754, a decrease of $7,596, or 4.1%, compared to $186,350 in fiscal year 2024, primarily reflecting the aging of the fixed asset base, partially offset by additions during the year. Operating Income (Loss) Operating income for fiscal year 2025 was $6,053,209, compared to an operating loss of ($901,763) in fiscal year 2024 (restated). The turnaround of $6,954,972 reflects the combination of significant revenue growth, gross margin expansion, and strong operating leverage on the expense base. The operating margin improved to 17.3% in fiscal year 2025 from a negative of 3.1% in fiscal year 2024. Other Income (Expense) Total other expense for fiscal year 2025 was $238,597, compared to other income of $872,024 in fiscal year 2024. The change of ($1,110,621) is primarily attributable to two items: Other interest income (expense). Net interest income was $16,157 in fiscal year 2025, compared to net interest expense of $638,483 in fiscal year 2024. The improvement reflects significantly reduced reliance on interest-bearing debt and improved cash management during fiscal year 2025. Other income (expense). Other expense was ($254,754) in fiscal year 2025, compared to other income of $1,510,507 in fiscal year 2024. Fiscal year 2024 included a significant one-time other income item that did not recur in fiscal year 2025. The fiscal year 2025 amount reflects net foreign exchange transaction losses and other miscellaneous items arising from the Company’s multi-currency operations. Provision for Income Taxes The provision for income taxes was $nil for both fiscal years 2025 and 2024. The Company’s U.S. parent entity has historically generated operating losses and maintains a full valuation allowance against its domestic deferred tax assets. The Company’s foreign subsidiaries are subject to income taxes in their respective jurisdictions; however, taxable income has been offset by available deductions or existing tax attributes. See Note 15 to the consolidated financial statements for further discussion of income taxes. Net income (loss) attributable to FDCTech Shareholders Net income (loss) attributable to FDCTech shareholders for fiscal year 2025 was $5,783,223, or $0.01 per basic and diluted share based on weighted average shares outstanding of 423,084,729, compared to net loss of $18,781, or $0.0001 per share, in fiscal year 2024 (restated). The improvement reflects the factors described above: strong revenue growth, gross margin expansion, operating leverage, and the absence of significant non-recurring expenses in fiscal year 2025. The noncontrolling interest in fiscal year 2025 represents the 49% minority interest held by third parties in AD Advisory Services Pty Ltd. Net income (loss) attributable to noncontrolling interest was $31,389 in fiscal year 2025 (2024: net loss attributable to NCI of $10,958). 25 Liquidity and Capital Resources Our primary sources of liquidity are cash generated from operations, proceeds from financing activities, including related party advances and equity issuances, and cash held at our regulated brokerage subsidiaries. As of December 31, 2025, we had cash and cash equivalents of $17,669,749, out of which $15,258,896 was held at various liquidity providers. We have a positive working capital of $14,883,171, and total stockholders’ equity of $22,377,274. We believe our current liquidity position is sufficient to fund our operating and capital requirements for at least twelve months from the date of this Annual Report. While the Company achieved profitability in fiscal year 2025, we note that operating cash flows were negative $41.0 million due to a substantial increase in related party receivables of approximately $35.8 million, which represents intercompany funding arrangements expected to be settled during fiscal year 2026. Excluding this item, adjusted operating cash generation reflects the improved profitability of the business. Management continues to monitor working capital carefully, given the scale of related party balances. Cash Flows The following table summarizes our cash flows for the fiscal years ended December 31, 2025, and December 31, 2024 (restated): Year Ended Dec 31, 2025 (Audited) Year Ended Dec 31, 2024 (Restated, Audited) Net cash used in operating activities $ (40,984,998 ) (13,621,417 ) Net cash provided by investing activities 2,069,328 444,732 Net cash provided by financing activities 31,208,462 7,237,181 Net increase (decrease) in cash $ (7,707,208 ) (5,939,504 ) Cash at beginning of period 25,376,957 31,316,461 Cash at end of period $ 17,669,749 25,376,957 Operating Activities Net cash used in operating activities for fiscal year 2025 was ($40,984,998), compared to net cash used in operating activities of ($13,621,417) in fiscal year 2024. While fiscal year 2025 net income was $5,783,223, the primary driver of negative operating cash flow was a net increase in related party receivables of approximately $35.8 million, reflecting advances to affiliated entities as part of the Company’s intercompany funding structure. This is expected to be substantially settled during fiscal year 2026. Other notable working capital changes in fiscal year 2025 included: (i) a decrease in customer funds of $5,712,901, held by our regulated brokerage entities; (ii) a decrease in other current liabilities of ($3,195,117); and (iii) recovery of accrued income of $1,793,304. Non-cash items included depreciation of $178,754. Cash paid for interest and income taxes was $nil in each year. In fiscal year 2024, net cash used in operating activities was ($13,621,417), reflecting a net decrease in customer funds of ($18,693,481), partially offset by increases in other current liabilities of $4,557,126 and collections of accounts receivable of $981,618. Investing Activities Net cash provided by investing activities for fiscal year 2025 was $2,069,328, compared to $444,732 in fiscal year 2024. In fiscal year 2025, the Company received a credit of $2,000,000 in seller financing for the business acquisition seller’s note and capitalized $316,937 of software development costs. Foreign currency translation effects contributed $386,265. In fiscal year 2024, investing activities primarily reflected changes in paid-in capital attributable to common control transactions of $1,338,592, partially offset by capitalized software development costs of $75,766 and foreign currency effects of ($298,009). Financing Activities Net cash provided by financing activities for fiscal year 2025 was $31,208,462, compared to $7,237,181 in fiscal year 2024. The fiscal year 2025 amount was primarily composed of: (i) related party advances received of $21,204,630, (ii) changes in additional paid-in capital of $9,969,735 related to equity transactions and intercompany adjustments, and (iii) common stock issued for cash of $35,200. These were partially offset by repayments of the Cares Act PPP advance of ($5,661) and SBA loan repayments of ($8,506). In fiscal year 2024, financing activities consisted primarily of related party advances of $7,199,501 and common stock issued for cash of $20,000, partially offset by repayments of government-assistance loans. 26 Sources of Liquidity Cash and Cash Equivalents. As of December 31, 2025, we had cash and cash equivalents of $17,669,749, out of which $15,258,896 was held at various liquidity providers. Our cash is held primarily in operating accounts of our subsidiaries across multiple jurisdictions and in segregated client money accounts at our regulated brokerage entities. Of the total cash balance, a portion is subject to regulatory minimum requirements and is not freely available for general corporate purposes. Related Party Receivables and Advances. As of December 31, 2025, related party receivables totaled $37,477,356, representing amounts due from affiliated entities and related parties under intercompany funding arrangements. These are expected to be settled in the ordinary course of business during fiscal year 2026. Related party advances payable of $29,197,470 represent amounts received from related parties to support the Company’s operations, and these are expected to be repaid or converted during fiscal year 2026. The net related party position (receivable less payable) was approximately $8,279,886 as of December 31, 2025. Customer Funds. Our regulated brokerage subsidiaries hold customer funds of $5,813,888 as of December 31, 2025 (2024: $11,526,789). These amounts are maintained in segregated client accounts pursuant to applicable regulatory requirements and are not available for general corporate purposes. Customer funds are recognized as both an asset (segregated cash) and a corresponding liability in our consolidated balance sheet. Lines of Credit and Debt. As of December 31, 2025, our total outstanding debt obligations were approximately $2,567,030, consisting primarily of a business acquisition loan of $2,350,000, a line of credit balance of $111,352, and an SBA Economic Injury Disaster Loan of $105,678 (non-current). The SBA loan bears interest at 3.75% per annum. Regulatory Capital Requirements Our regulated subsidiaries are subject to minimum capital requirements imposed by their respective regulatory authorities. Alchemy Markets Ltd. (MFSA, Malta) and Alchemy Prime Limited (FCA, United Kingdom) are subject to European Union and UK capital adequacy requirements applicable to investment firms. Alchemy International Ltd. is subject to capital requirements under the laws of Seychelles. AD Advisory Services Pty Ltd. is subject to ASIC’s financial requirements for Australian financial services licensees. As of December 31, 2025, management believes that all regulated subsidiaries were in compliance with their respective minimum regulatory capital requirements. Regulatory capital requirements may limit the ability of subsidiaries to distribute cash upstream to the parent company. Working Capital As of December 31, 2025, working capital was $14,883,171, compared to working capital of $853,533 as of December 31, 2024 (restated). The improvement of approximately $14.0 million reflects primarily the growth in the related party receivable (classified as current), which increased by approximately $37.5 million, comprising primarily AIL’s current account receivable from Alchemy Capital Markets Ltd. (ACM) and related affiliates, which is partially offset by an increase in related party advances payable of approximately $36.9 million, primarily owed to Alchemy DMCC ($25.5M), a Kundnani-affiliated entity. Excluding related party receivables and advances, the Company’s underlying working capital remains modestly positive. Contractual Obligations and Commitments Our principal contractual obligations as of December 31, 2025, consist of operating lease commitments, amounts outstanding under government-assistance loan programs, and the business acquisition loan. We have no material off-balance sheet arrangements. Operating Leases. We lease office space for our corporate headquarters in Irvine, California, and for our subsidiary offices in Malta, the United Kingdom, Australia, Cyprus, and Seychelles. As of December 31, 2025, right-of-use assets were $530,348, current operating lease liabilities were $501,236, and non-current operating lease liabilities were $29,112. The weighted-average remaining lease term for operating leases was approximately 1.1 years, and the weighted-average discount rate was approximately 5.5%. SBA Loan. We have an outstanding Economic Injury Disaster Loan from the U.S. Small Business Administration with a non-current balance of $105,678 as of December 31, 2025. The loan bears interest at 3.75% per annum with monthly principal and interest payments. Business Acquisition Loan. We have a business acquisition loan with a current balance of $2,350,000 as of December 31, 2025, an increase of $2,000,000 from the prior year’s balance of $350,000, reflecting additional amounts drawn to fund the acquisition of Alchemy International Ltd. during fiscal year 2025. Future Capital Requirements Our future capital requirements will depend on a number of factors, including the growth rate of our revenue, our technology development investments, regulatory capital requirements at our subsidiaries, the timing and extent of any strategic acquisitions, and general economic and market conditions. We believe our existing cash, anticipated cash generation from operations, and available financing sources will be adequate to fund our operations and planned capital expenditures for at least the next twelve months. If additional capital is required, we may seek equity or debt financing; however, there can be no assurance that financing will be available on acceptable terms or at all. Any equity financing may result in dilution to existing stockholders. We are also pursuing a potential listing of our common stock on a national securities exchange in connection with a proposed public offering of common stock (see Note 17 — Subsequent Events). Proceeds from such an offering, if completed, would significantly enhance our liquidity position and capital resources. Off-Balance Sheet Arrangements As of December 31, 2025, we did not have any relationships with unconsolidated organizations, special purpose entities, or other arrangements that would constitute off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. 27 Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. We consider the following policies to be critical because they involve the most significant judgments and estimates used in the preparation of our financial statements. Revenue Recognition. We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when, or as, control of promised goods or services is transferred to a customer in an amount that reflects the consideration we expect to receive. For technology and software licensing, revenue is generally recognized over the contract term on a straight-line basis. For brokerage commissions and spreads, revenue is recognized on a trade-date basis. For wealth management services, revenue is generally recognized as services are rendered. Management exercises judgment in determining the appropriate contract term, transaction price, and timing of revenue recognition for arrangements with variable consideration or multiple performance obligations. Capitalized Software Development Costs. We capitalize internal and external costs incurred during the application development stage of internal-use software in accordance with ASC 350-40, Intangibles — Goodwill and Other — Internal-Use Software. Preliminary project stage and post-implementation costs are expensed as incurred. Management exercises judgment in determining the appropriate stage of development at which capitalization begins and ceases. Capitalized costs are amortized on a straight-line basis over the estimated useful life of the software, which we have generally estimated to be three to five years. Impairment of capitalized software is assessed whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Foreign Currency Translation. The functional currency of each of our foreign subsidiaries is the respective local currency. Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while revenues and expenses are translated at average exchange rates for the reporting period. Resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity and are not included in determining net income. Transaction gains and losses arising from transactions denominated in currencies other than the functional currency are recognized in other income (expense) in our consolidated statements of operations. Fair Value of Financial Instruments. The Company’s brokerage subsidiaries carry trading positions at fair value, based on quoted market prices (Level 1) or observable inputs (Level 2 in the fair value hierarchy). As of December 31, 2025, the net fair value of trading positions held by the firm was $1,183,873 (asset). Management exercises judgment in classifying assets and liabilities within the fair value hierarchy and in determining whether observable inputs are available for valuation purposes. Goodwill and Intangible Assets. Acquired intangible assets are recognized at fair value at the acquisition date and amortized over their estimated useful lives. Management exercises judgment in identifying and measuring intangible assets at acquisition, estimating their useful lives, and assessing them for impairment. As of December 31, 2025, acquired intangible assets, net, were $1,326,062. There were no impairment charges recognized in fiscal year 2025. Income Taxes. We account for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the financial reporting and tax bases of assets and liabilities. We assess the likelihood that deferred tax assets will be realized and establish valuation allowances when, in management’s judgment, it is more likely than not that some or all of a deferred tax asset will not be realized. Our U.S. operations carry a full valuation allowance. The assessment of valuation allowances requires significant judgment regarding expected future taxable income, tax planning strategies, and the reversal of temporary differences. Recently Issued Accounting Standards The Company evaluates accounting standards issued by the Financial Accounting Standards Board (FASB) and the SEC on an ongoing basis. There were no recently issued accounting standards that had or are expected to have a material impact on the Company’s consolidated financial statements for fiscal year 2025. As an emerging growth company, the Company has elected to use the extended transition period provided by the JOBS Act for complying with new or revised financial accounting standards. JOBS Act and Emerging Growth Company Status We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As an emerging growth company, we are permitted to, and do, rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies, including exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation in our periodic reports. Under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until those standards apply to private companies. We have elected to avail ourselves of this extended transition period. As a result, our financial statements may not be comparable to those of companies that comply with such new or revised accounting standards on a non-delayed basis. 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 completion of our initial public offering; (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period; and (iv) the last day of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the prior June 30. 28 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS. Not Applicable.