FDCTECH, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report Form 10-Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “forecast” and similar expressions (or the negative of such expressions). Forward-looking statements include, but are not limited to, financial and operational information, the volatility of our stock price, current competitive conditions, and the impact of U.S. tariffs, trade barriers, and restrictions. The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events. FDCTech, Inc. (“FDCTech,” “Company,” “we,” “us,” or “our”) is a financial technology company specializing in developing and delivering innovative software solutions and business services to the over-the-counter (OTC) brokerage and financial services industries. The Company provides a range of proprietary and third-party technology solutions, including its flagship Condor Trading Technology, which supports multi-asset trading, risk management, and pricing for forex, equities, commodities, and digital assets. FDCTech is a U.S.-based, fully reporting public company and currently trades under the symbol OTC: FDCT. Founded in January 2016 as a back-office technology solution provider, FDCTech has transformed into a diversified global fintech platform through strategic acquisitions. Our growth trajectory includes the acquisitions of AD Advisory Services Pty Ltd. (2021), Alchemy Markets Ltd. (2022-2023), Alchemy Prime Limited (2023), and, most recently, Alchemy International Ltd. (2025), expanding our global footprint across Australia, Malta, the United Kingdom, Cyprus, Seychelles, and Mauritius. FDCTech, Inc. is the parent holding company with the following wholly-owned and majority-owned subsidiaries: Subsidiary Ownership Jurisdiction Primary Business Markets Technology AD Advisory Services Ltd. (ADS) 51.00% Australia Wealth Management Australia Third-party software Alchemy Markets Ltd. (AML) 100.00% Malta FX, CFDs, Stocks, Bonds Europe (excl the United Kingdom) Condor Trading & Third-party Alchemy Prime Ltd. (APL) 100.00% United Kingdom FX, CFDs United Kingdom Condor Trading & Third-party Alchemytech Ltd. (ATECH) 100.00% Cyprus Technology Services Europe Condor Trading Alchemy International Ltd. (AIL) 100.00% Seychelles FX, CFDs Asia Condor Trading & Third-party Xoala Asia (XOA) 100.00% Mauritius Payment Intermediary Services Asia Third-party Prime Intermarket Group Eurasia (PIG) 100.00% Mauritius FX, CFDs Asia Condor Trading & Third-party 4 Our Business Segments We operate through four complementary business segments: Margin Brokerage: Through Alchemy Markets Ltd. (Malta, MFSA-regulated), Alchemy Prime Limited (UK, FCA-regulated), and Alchemy International Ltd. (Seychelles, FSA-regulated), we provide multi-asset trading services in forex, CFDs, equities, commodities, and digital assets to retail and institutional clients globally. Wealth Management: Through AD Advisory Services Pty Ltd. (Australia, ASIC-regulated), we operate a wealth management business with 28 financial advisors managing and advising over $530 million in funds under advice under the aegis of our license, where we provide licensing solutions and financial planning services to these financial advisors. Technology and Software Development: Through FDCTech and Alchemytech Ltd. (Cyprus), we develop and license our proprietary Condor Trading Technology suite, including the Condor Pro Multi-Asset Trading Platform and Condor Risk Management back-office system. Payment Intermediary Services: Through Xoala Asia (Mauritius, FSC-licensed), we are developing a payment gateway, merchant acquiring, and cross-border payment capabilities to complement our brokerage and wealth management operations. This segment is in the early stages of development. During the three months ended March 31, 2026, the Company generated total revenue of $15,214,492, an increase of $8,252,944 (140.9%) over total revenue of $5,976,948 for the three months ended March 31, 2025. The substantial growth in revenue was driven primarily by the full-quarter contribution of Alchemy International Ltd. (“AIL”) following the change of control approved by the Seychelles Financial Services Authority on October 29, 2025, and the closing of the acquisition on November 11, 2025. AIL, a Seychelles-licensed securities dealer (license SD136) regulated by the Financial Services Authority, broadened the Company’s regulated multi-asset brokerage footprint to include Seychelles in addition to Malta (AML, MFSA-regulated) and the United Kingdom (APL, FCA-regulated), and added a base of offshore brokerages, high-frequency traders, and institutional clients seeking regulated access to foreign exchange and multi-asset markets. The full-quarter contribution from AIL during the three months ended March 31, 2026 (compared with no contribution during the three months ended March 31, 2025) accounted for the substantial majority of the year-over-year increase in the Margin Brokerage segment. The Technology and Software Development segment also contributed to the increase, while the Wealth Management segment was substantially flat compared with the prior-year period. The Company also benefited from continued operating leverage on a substantially fixed cost base. The Company is also pursuing a potential listing of its common stock on a national securities exchange (the New York Stock Exchange or the Nasdaq Stock Market) in connection with a proposed public offering of equity securities. In connection with these initiatives, the Company has engaged Lucosky Brookman LLP as legal counsel and is in discussions with E.F. Hutton and ThinkEquity LLC as financial advisors. The completion of any such offering or listing is subject to market conditions and customary regulatory and exchange approvals, and no assurance can be given that any such transaction will be completed. 5 Financial Condition as of March 31, 2026 As of March 31, 2026, the Company had total assets of $72,195,266, compared to $63,771,196 as of December 31, 2025, representing an increase of $8,424,070, or approximately 13.2%. Total assets at March 31, 2026, were comprised primarily of cash and cash equivalents of $36,891,541, related party receivables of $30,154,645, accounts receivable (net of allowance for doubtful accounts) of $358,932, prepaid expenses (current and non-current) of $535,408, capitalized software (net) of $1,578,353, acquired intangible assets (net) of $1,250,397, right-of-use lease assets of $668,214, property and equipment (net) of $187,657, and other current and non-current assets aggregating $570,019. The $8,424,070 increase in total assets during the three months ended March 31, 2026 was primarily attributable to: (i) an increase in cash and cash equivalents of $19,221,792, reflecting cash generated from operations and the receipt by Alchemy International Ltd. (“AIL”) of customer funds in connection with the expansion of its brokerage operations; partially offset by (ii) a decrease in related party receivables of $7,322,711, as further described in Note 5, principally reflecting the net effect of cash collections and non-cash netting arrangements with Alchemy DMCC during the period; (iii) a decrease in the fair value of trading positions for the firm of $1,111,487, reflecting the closing-out and transfer of certain trading positions in the ordinary course; and (iv) a decrease in other trade and tax receivables of $2,615,533, principally reflecting collections of receivables outstanding at year-end. Total Liabilities As of March 31, 2026, the Company had total liabilities of $38,582,773, compared to $41,360,599 as of December 31, 2025, representing a decrease of $2,777,826, or approximately 6.7%. Total liabilities at March 31, 2026 were comprised primarily of customer funds payable of $28,339,255, related party advances payable of $3,296,890, accrued expenses to related parties of $997,259, business acquisition loan of $2,350,000, accounts payable of $502,087, operating lease liabilities (current and non-current) of $668,214, the SBA loan and accrued non-current interest aggregating $147,202, deferred tax liabilities of $372,339, and other current liabilities of $1,909,527. The $2,777,826 net decrease in total liabilities during the three months ended March 31, 2026 was primarily attributable to: (i) a decrease in related party advances payable of $25,900,580, principally reflecting the settlement of AIL’s net advances payable to Alchemy DMCC through a combination of cash repayments and non-cash netting arrangements as further described in Note 5; partially offset by (ii) an increase in customer funds payable of $22,525,367, reflecting growth in customer trading activity and customer deposits held by AIL in connection with the expansion of its brokerage operations; (iii) an increase in accrued expenses to related parties of $464,972, primarily representing accrued executive compensation; and (iv) an increase in accounts payable and line of credit of $491,449 in the aggregate, reflecting normal operating activity. Stockholders’ Equity and Working Capital As of March 31, 2026, total stockholders’ equity attributable to FDCTech, Inc. stockholders was $33,568,694, compared to $22,377,274 as of December 31, 2025, representing an increase of $11,191,420, or approximately 50.0%. Total stockholders’ equity, including noncontrolling interests, was $33,612,493 as of March 31, 2026, compared to $22,410,597 as of December 31, 2025. The components of stockholders’ equity as of March 31, 2026 consisted of preferred stock and common stock at par value, additional paid-in capital of $28,199,590, additional paid-in capital relating to Series B Preferred Stock of $3,344,063, subscription receivable of $(8,000,000), accumulated other comprehensive loss of $(2,427), and accumulated surplus of $9,984,473. 6 The $11,191,420 increase in stockholders’ equity attributable to FDCTech, Inc. stockholders during the three months ended March 31, 2026 was primarily attributable to: (i) net income attributable to FDCTech, Inc. shareholders of $6,863,678 for the period; and (ii) an increase in additional paid-in capital of $4,643,653 arising from a transaction between entities under common control accounted for in accordance with ASC 805-50, Transactions Between Entities Under Common Control, with the residual change reflecting movement in accumulated other comprehensive loss during the period. No new shares of the Company’s common stock or preferred stock were issued during the three months ended March 31, 2026. Working capital, defined as total current assets less total current liabilities, was $30,169,554 as of March 31, 2026, compared to $14,883,171 as of December 31, 2025, representing an increase of $15,286,383, or approximately 102.7%. The increase in working capital reflects the combined effect of the increase in cash and cash equivalents and the settlement of the December 31, 2025, related party advances payable balance described above, partially offset by the increase in customer funds payable during the period. The Company’s improved working capital position, together with cash generated from operations, is expected to support the Company’s ongoing operations and growth initiatives for at least the next twelve months. Note on Common Control Transactions Affecting Additional Paid-in Capital The Company’s acquisitions of Alchemy Markets Ltd. (“AML”), Alchemy Prime Ltd. (“APL”), and Alchemy International Ltd. (“AIL”) were transactions between entities under common control, as each of AML, APL, and AIL was, at the date of the respective acquisition, controlled by Mr. Gope S. Kundnani, who is also a Director and the principal beneficial owner of the voting securities of the Company. Accordingly, the Company has accounted for these acquisitions in accordance with ASC 805-50, Transactions Between Entities Under Common Control. Under this guidance, the assets and liabilities of AML, APL, and AIL were recognized in the Company’s consolidated financial statements at the historical carrying values of the transferor on the respective dates of transfer, and no goodwill or intangible assets were recognized in connection with these common-control combinations. The difference between the consideration transferred by the Company and the historical carrying value of the net assets received was recorded as an adjustment to additional paid-in capital. During the three months ended March 31, 2026, the Company recorded a net increase to additional paid-in capital of $4,643,653 in connection with the finalization of the consolidation entries relating to the acquisition of AIL, which was completed on November 11, 2025. The adjustment reflects the difference between the consideration transferred by the Company in connection with the AIL acquisition and AIL’s historical carrying value of net assets as of the acquisition date, the determination of which was finalized during the three months ended March 31, 2026. No new shares of the Company’s common stock or preferred stock were issued in connection with this adjustment, and the adjustment had no effect on the Company’s results of operations, cash flows, or total stockholders’ equity in the aggregate during the three months ended March 31, 2026, other than as reflected within the components of stockholders’ equity. The Company’s acquisition of AD Advisory Services Pty Ltd. (“ADS”), an Australia-incorporated subsidiary, in which the Company acquired a 51% controlling interest, was not a transaction between entities under common control. The ADS acquisition was effected at arm’s length with an unrelated counterparty and was accounted for as a business combination under ASC 805-10, Business Combinations, using the acquisition method. Accordingly, the assets and liabilities of ADS were recognized at their estimated fair values as of the acquisition date, and goodwill of $1,250,397 was recognized in connection with the ADS acquisition, representing the excess of the consideration transferred over the fair value of the identifiable net assets acquired. The noncontrolling interest in ADS was measured at the proportionate share of the fair value of the identifiable net assets at the acquisition date. No adjustment to additional paid-in capital was recognized in connection with the ADS acquisition. Financial Condition at December 31, 2025 As of December 31, 2025, the Company had total assets of $63,771,196, comprised primarily of cash and cash equivalents of $17,669,749, related party receivables of $37,477,356, accounts receivable, net of $3,902,316, capitalized software (net) of $1,480,246, and other balance-sheet items as further described in the Company’s Annual. Report on Form 10-K/A for the fiscal year ended December 31, 2025. Total liabilities at December 31, 2025, were $41,360,599, comprised primarily of related party advances payable of $25,900,580 (which were settled during the three months ended March 31, 2026 — see Note 5 to the unaudited condensed consolidated financial statements); accounts payable, accrued expenses, and other current liabilities; the SBA loan; the business acquisition loan; and lease and other obligations. Total stockholders’ equity at December 31, 2025, was $22,377,274, including an accumulated surplus of $3,120,795. Working capital at December 31, 2025, was $14,883,171. 7 RESULTS OF OPERATIONS Three Months Ended March 31, 2026, compared with Three Months Ended March 31, 2025 The following table sets forth, for the periods indicated, the principal components of the Company’s consolidated results of operations and the change between the comparative periods (dollar amounts in U.S. dollars): Three Months Ended March 31, Change 2026 2025 $ % Revenues: Technology & software $ 1,639,222 813,747 825,475 101.4 % Wealth management 1,565,852 1,534,852 31,000 2.0 % Brokerage 12,009,418 3,628,349 8,381,069 231.0 % Total revenue $ 15,214,492 5,976,948 9,237,544 154.6 % Cost of sales: Technology & software - 184,284 (184,284 ) (100.0 )% Wealth management 1,435,250 1,349,827 85,423 6.3 % Brokerage 2,148,088 1,583,278 564,810 35.7 % Total cost of sales $ 3,583,338 3,117,389 465,949 14.9 % Gross profit $ 11,631,154 2,859,559 8,771,595 306.7 % Operating expenses: General and administrative 4,324,900 2,140,270 2,184,630 102.1 % Sales and marketing 404,302 276,204 128,098 46.4 % Depreciation 46,643 38,832 7,811 20.1 % Total operating expenses $ 4,775,845 2,455,306 2,320,539 94.5 % Operating income $ 6,855,309 404,253 6,451,056 1595.8 % Total other income (expense), net 14,611 (299,705 ) 314,316 (104.9 )% Income before provision for income taxes 6,869,920 104,548 6,765,372 6471.1 % Provision for income taxes - - - - Net income $ 6,869,920 104,548 6,765,372 6471.1 % Revenue Total revenue increased to $15,214,492 for the three months ended March 31, 2026, compared to $5,976,948 for the three months ended March 31, 2025, an increase of $9,237,544, or approximately 154.6%. The growth was driven primarily by the Margin Brokerage segment, which contributed $12,009,418 total revenue for the three months ended March 31, 2026, compared to $3,628,349 for the comparable prior-year period, representing an increase of $8,381,069, or approximately 231.0%. The increase in Margin Brokerage revenue reflects the full-quarter contribution of Alchemy International Ltd. (“AIL”) following the closing of the AIL acquisition on November 11, 2025 (with the change of control approved by the Seychelles Financial Services Authority on October 29, 2025), together with the continuing operations of the Company’s other regulated brokerage subsidiaries, Alchemy Markets Ltd. (“AML”) in Malta and Alchemy Prime Ltd. (“APL”) in the United Kingdom. Technology and software revenue was $1,639,222 for the three months ended March 31, 2026, compared to $813,747 for the comparable prior-year period, representing an increase of $825,475, or approximately 101.4%, reflecting the expansion of the Company’s technology and platform services to its expanded broker-dealer client base. Wealth Management revenue was $1,565,852 for the three months ended March 31, 2026, compared to $1,534,852 for the comparable prior-year period, representing an increase of $31,000, or approximately 2.0%, and was substantially consistent with the prior-year period. Cost of Sales and Gross Profit Cost of sales was $3,583,338 for the three months ended March 31, 2026, compared to $3,117,389 for the three months ended March 31, 2025, an increase of $465,949, or approximately 14.9%. The increase in cost of sales principally reflects higher liquidity-provider, payment-processing, and clearing costs incurred in support of the Margin Brokerage and Wealth Management segments. The rate of increase in cost of sales was substantially lower than the rate of increase in revenue, principally as a result of (i) operating leverage on the Margin Brokerage segment’s fixed-cost base relative to substantially higher transaction volumes, and (ii) the run-off during the period of certain technology cost of sales recognized in the comparable prior-year period. 8 Gross profit was $11,631,154 for the three months ended March 31, 2026, compared to $2,859,559 for the three months ended March 31, 2025, an increase of $8,771,595, or approximately 306.7%. Consolidated gross margin was approximately 76.4% for the three months ended March 31, 2026, compared to approximately 47.8% for the three months ended March 31, 2025, principally reflecting the change in revenue mix toward the higher-margin Margin Brokerage segment. Operating Expenses Total operating expenses were $4,775,845 for the three months ended March 31, 2026, compared to $2,455,306 for the three months ended March 31, 2025, an increase of $2,320,539, or approximately 94.5%. The increase in total operating expenses reflects higher general and administrative expense of $4,324,900 (compared to $2,140,270 for the comparable prior-year period, representing an increase of $2,184,630, or approximately 102.1%), higher sales and marketing expense of $404,302 (compared to $276,204 for the comparable prior-year period, representing an increase of $128,098, or approximately 46.4%), and higher depreciation expense of $46,643 (compared to $38,832 for the comparable prior-year period, representing an increase of $7,811, or approximately 20.1%). The increase in general and administrative expense principally reflects additional compliance, audit, legal, and personnel-related expenses to support the Company’s expanded operating footprint following the AIL acquisition, together with professional fees and other costs incurred in connection with the Company’s contemplated listing of its common stock on a national securities exchange and the related proposed public offering. The increase in sales and marketing expense reflects expanded promotional and marketing activities in support of the Company’s broader brokerage and technology client base, as further described in Note 2. Operating Income Operating income was $6,855,309 for the three months ended March 31, 2026, compared to operating income of $404,253 for the three months ended March 31, 2025, representing an increase of $6,451,056. The increase in operating income reflects the increase in gross profit described above, partially offset by the increase in total operating expenses described above. Other Income (Expense), Net Total other income (expense), net, was net other income of $14,611 for the three months ended March 31, 2026, compared to net other expense of $(299,705) for the three months ended March 31, 2025, an improvement of $314,316. Total other income (expense), net, for the three months ended March 31, 2026, consisted of other interest income (expense) of $132,492 (compared to $4,483 for the comparable prior-year period) and other income (expense) of $(117,881) (compared to $(304,188) for the comparable prior-year period). The change principally reflects foreign exchange gains and losses on transactions denominated in currencies other than the functional currency of the applicable subsidiary, interest income on operating cash balances, and other miscellaneous items. Net Income and Earnings per Share Net income was $6,869,920 for the three months ended March 31, 2026, compared to net income of $104,548 for the three months ended March 31, 2025, an increase of $6,765,372. No provision for income taxes was recorded for either period. Net income attributable to FDCTech, Inc. stockholders was $6,863,678 for the three months ended March 31, 2026 ($0.016 per share, basic and diluted), compared to net income attributable to FDCTech, Inc. stockholders of $118,046 for the three months ended March 31, 2025 ($0.000 per share, basic and diluted). 9 LIQUIDITY AND CAPITAL RESOURCES Cash, Working Capital and Overview As of March 31, 2026, the Company had cash and cash equivalents of $36,891,541, compared to $17,669,749 as of December 31, 2025, representing an increase of $19,221,792, or approximately 108.8%. Working capital, defined as total current assets less total current liabilities, was $30,169,554 as of March 31, 2026, compared to $14,883,171 as of December 31, 2025, representing an increase of $15,286,383, or approximately 102.7%. The increase in working capital principally reflects the settlement of $25,900,580 of related party advances payable during the three months ended March 31, 2026, together with the continued generation of operating cash flow, partially offset by an increase in customer funds payable in connection with the expansion of the Company’s brokerage operations. Cash Flows from Operating Activities Net cash provided by operating activities was $40,727,261 for the three months ended March 31, 2026, compared to net cash provided by operating activities of $166,036 for the three months ended March 31, 2025. The increase in net cash provided by operating activities principally reflects (i) net income of $6,869,920 for the three months ended March 31, 2026 (compared to $104,548 for the comparable prior-year period); (ii) an increase in customer funds payable of $22,525,367, reflecting the expansion of the Company’s brokerage operations and customer trading activity at Alchemy International Ltd.; (iii) a decrease in related party receivables of $7,322,711, principally reflecting the net effect of cash collections and non-cash netting arrangements with related parties as further described in Note 5; (iv) a decrease in the fair value of trading positions for the firm of $1,111,487, reflecting the closing-out of certain trading positions in the ordinary course; (v) a decrease in tax receivables from subsidiaries of $2,615,533; and (vi) an increase in accrued expenses to related parties of $464,972 and an increase in accounts payable of $335,875; partially offset by (vii) a decrease in other current liabilities of $490,392 and an increase in gross accounts receivable of $170,517. Cash Flows from Investing Activities Net cash provided by investing activities was $4,547,098 for the three months ended March 31, 2026, compared to net cash provided by investing activities of $828,537 for the three months ended March 31, 2025. Net cash provided by investing activities for the three months ended March 31, 2026 principally consisted of (i) $4,643,653 representing changes in paid-in capital arising from a transaction between entities under common control accounted for in accordance with ASC 805-50, Transactions Between Entities Under Common Control, in connection with the Company’s prior acquisitions of subsidiaries under common control, as further described elsewhere in this Report; and (ii) $1,552 of net investment activity through a subsidiary, partially offset by (iii) capitalized software development costs of $98,107. Cash Flows from Financing Activities Net cash used in financing activities was $25,736,656 for the three months ended March 31, 2026, compared to net cash provided by financing activities of $1,027,563 for the three months ended March 31, 2025. Net cash used in financing activities for the three months ended March 31, 2026 principally consisted of (i) the $25,900,580 settlement of related party advances payable as further described in Note 5, and (ii) net repayments of $2,126 on the Company’s SBA loan, partially offset by (iii) net draws of $155,574 on the Company’s lines of credit and (iv) $10,476 of net activity attributable to noncontrolling interest. Net Change in Cash The Company’s cash and cash equivalents increased by $19,221,792 during the three months ended March 31, 2026, comprising net cash provided by operating activities of $40,727,261, net cash provided by investing activities of $4,547,098, net cash used in financing activities of $(25,736,656), and the effect of exchange rate changes on cash of $(315,911). Cash and cash equivalents were $36,891,541 as of March 31, 2026, compared to $17,669,749 as of December 31, 2025. Long-Term Obligations and Capital Adequacy As of March 31, 2026, the Company’s principal long-term contractual obligations consisted of (i) the SBA loan in the non-current principal amount of $103,552, which bears interest at a rate of 3.75% per annum and is scheduled to mature thirty (30) years from the date of the underlying promissory note; (ii) the Business acquisition loan of $2,350,000, comprising the $350,000 withheld portion of the purchase consideration owed to the former shareholders of Alchemy Markets Ltd. (which is currently the subject of litigation as further described in Note 7) and the $2,000,000 non-interest bearing seller financing obligation owed to Sync Capital Limited, an entity controlled and owned by Mr. Gope S. Kundnani, a Director and majority shareholder of the Company, which obligation is repayable from the proceeds of the Company’s contemplated listing of its common stock on a national securities exchange; (iii) operating lease liabilities (current and non-current) of $668,214 in the aggregate, principally relating to the Company’s office facilities (see Note 8); and (iv) deferred tax liabilities of $372,339 and accrued non-current interest of $43,650. Management believes that the Company’s existing cash and cash equivalents, anticipated cash flows generated from operations, and available borrowings under its existing credit lines will be sufficient to fund the Company’s operations and meet its known contractual obligations and capital commitments for at least the twelve (12) months following the date of this Report. The Company may from time to time raise additional capital through private or public offerings of equity or debt securities, or through additional credit facilities, to support its strategic growth initiatives, including in connection with the Company’s contemplated listing of its common stock on a national securities exchange and any related underwritten public offering. There can be no assurance that additional capital, if needed, will be available on terms acceptable to the Company or at all. 10 GOING CONCERN CONSIDERATION The Company has prepared its accompanying consolidated financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and other commitments in the ordinary course of business. In accordance with Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements — Going Concern, management has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. As of March 31, 2026, the Company had cash and cash equivalents of $36,891,541, working capital of $30,169,554, total stockholders’ equity of $33,612,493, and an accumulated surplus of $9,984,473, compared to cash and cash equivalents of $17,669,749, working capital of $14,883,171, total stockholders’ equity of $22,410,597, and an accumulated surplus of $3,120,795 as of December 31, 2025. During the three months ended March 31, 2026, the Company generated revenues of $15,214,492 (compared to $5,976,948 for the three months ended March 31, 2025), net income of $6,869,920 (of which $6,863,678 was attributable to the stockholders of FDCTech, Inc. and $6,242 was attributable to noncontrolling interests, compared to consolidated net income of $104,548 for the three months ended March 31, 2025), and net cash provided by operating activities of $40,727,261 (compared to $166,036 for the three months ended March 31, 2025). Based on management’s evaluation of the Company’s historical and projected operating cash flows, existing cash and cash equivalents, working capital position, accumulated surplus, available borrowing capacity under existing credit facilities, and known contractual obligations and capital commitments, management has concluded that the Company’s existing cash and cash equivalents and anticipated cash flows from operations are sufficient to fund the Company’s operations and meet its known obligations as they become due for at least the twelve months following the date of issuance of these consolidated financial statements. Accordingly, management has concluded that there is no substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. Critical Accounting Policies and Significant Judgments and Estimates We have based our management’s discussion and analysis of our financial condition and results of operations on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. In preparing our financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses for the reporting periods. In more detail, we have described significant accounting policies in Note 2 of our annual financial statements included in our 10-K/A for the fiscal year ended December 31, 2025, filed with the SEC on April 22, 2026. We continually evaluate our critical accounting estimates and judgments, as required by our policies, and update them as necessary based on changing conditions. 11 JOBS Act Accounting Election We are an “ emerging growth company ,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies. As an emerging growth company, we have applied for an exemption; as a result, the Company may delay the adoption of certain accounting standards until the standards apply to private companies. Off-Balance Sheet Arrangements and Contractual Obligations We have not engaged in any off-balance sheet arrangements as defined in Item 303(c) of the SEC’s Regulation S-B. We had no relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Recent Accounting Pronouncements The Company evaluates all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”) for applicability and impact on its consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires public entities to disclose significant segment expenses regularly provided to the chief operating decision maker, an amount and description of other segment items, and additional segment information. The Company adopted ASU 2023-07 effective January 1, 2024, on a retrospective basis. The adoption did not have a material impact on the Company’s consolidated financial statements but expanded segment disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires public business entities to disclose, on an annual basis, specific categories in the rate reconciliation and information about income taxes paid by jurisdiction. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted. The Company will adopt ASU 2023-09 in its Annual Report on Form 10-K for the fiscal year ending December 31, 2026, and is currently evaluating the impact on its consolidated financial statement disclosures. In November 2024, the FASB issued ASU 2024-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40),” which requires public business entities to disclose disaggregated information about specific income statement expense categories. ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact on its consolidated financial statement disclosures. Other recently issued ASUs not yet adopted by the Company are not expected to have a material impact on the Company’s consolidated financial statements when adopted. For a more detailed description of our significant and critical accounting policies, please refer to Note 2 in the consolidated financial statements included in our Annual Report on Form 10-K/A for the year ended December 31, 2025, filed with the SEC on April 22, 2026. 12 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS. Not Applicable.