FDCTECH, INC. 10-K

ITEM 1. BUSINESS Overview Under Delaware laws, the founders incorporated the Company as Forex Development Corporation on January 21, 2016. On February 27, 2018, the Company changed its name to FDCTech, Inc. The name change reflects the Company’s commitment to expanding its products and services in the FX and financial markets for OTC brokers. The Company provides innovative and cost-efficient financial technology (‘fintech’) and business solutions to OTC Online Brokerages (“customers”). The Company 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 follows a strategic growth model centered on acquiring, integrating, and scaling legacy financial services firms. Through its recent acquisitions, the company has expanded its global footprint in wealth management, brokerage, and financial advisory services. Key subsidiaries include: ● AD Advisory Services Pty Ltd. (ADS) – An Australian-regulated wealth management firm managing over $530 million in client assets with a network of 28 financial advisors. ● Alchemy Markets Ltd. (AML) – A Malta-based investment firm regulated by the Malta Financial Services Authority (MFSA), offering trading services across multiple asset classes in various European markets. ● Alchemy Prime Limited (APL) – A UK-based investment firm regulated by the Financial Conduct Authority (FCA), providing investment advisory and brokerage services. ● AlchemyTech Ltd. (ATECH) – A Cyprus-based technology, sales, and marketing service provider supporting the Company’s subsidiaries and affiliated companies. FDCTech continues to drive innovation by developing next-generation trading platforms, such as the Condor Pro Multi-Asset Trading Platform , and expanding its market reach. The company remains committed to leveraging proprietary technology and regulatory expertise to enhance operational efficiencies and client engagement across global financial markets. Currently, we have three primary business segments: (1) Investment and Brokerage, (2) Wealth Management, and (3) Technology and Software Development. (1) Investment and Brokerage Margin Brokerage (Europe) – Alchemy Markets Ltd. On December 31, 2022, the Company announced the sales purchase agreement (“Agreement”) under which the Company acquired a 50.10% equity interest in New Star Capital Trading Ltd., a British Virgin Island company (“New Star”) and its operating subsidiary Alchemy Markets Ltd. (“AML”), formerly known as NSFX Ltd (“NSFX”). AML is an investment firm regulated by the Malta Financial Services Authority (MFSA). The Company assumed a business acquisition loan liability of $350,000 to purchase the controlling interest in AML. The Company amended the Agreement in June 30, 2023, to comply with the BVI Companies Act requirement for the change of ownership. The Company closed the acquisition as of June 30, 2023, and consolidated the fair value of AML’s assets and liabilities from June 30, 2023. 4 The Company completed the acquisition of the remaining 49.90% of the issued and outstanding shares of Alchemy Markets Holdings Ltd (Alchemy BVI), formerly known as New Star and its subsidiary AML on November 30, 2023 (“Acquisition Date”), from Alchemy Prime Holdings Ltd. (APHL), through an exchange for 833,621 Series B preferred convertible stocks (“Series B Preferred Stock”) valued at $1,175,406. The MFSA authorizes AML to deal with its account (market maker) as a Category 3 licensed entity by the MFSA, receive and transmit orders for retail and professional clients, and hold and control clients’ money and assets. AML trading platform services in the English, French, German, Italian, and Arabic-speaking markets, whereby customers can trade in currency, commodity, equity, and digital assets-linked derivatives in real time. AML is authorized countries to do business include Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Liechtenstein, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden. In May 2024, Mitchell M. Eaglstein, CEO, was appointed as the CEO and COO of Alchemy Markets Ltd. (AML) to oversee operations in Malta. During the third quarter of the fiscal year ending December 31, 2024, AML acquired approximately 2,631 clients from Next Markets, transferring €5.6 million in client equity. The newly acquired clients are primarily German retail investors trading Contracts for Difference (CFDs) and equities through the Gettex exchange. This acquisition marks the Company’s official entry into the German retail market. AML acquired 35 clients from a Cypriot-based brokerage, transferring over $800,000 in client equity. Most of these clients are French, helping the Company establish its foothold in the French market. AML has also secured authorization in terms of Article 6 of the Investment Services Act, Chapter 370 of the Laws of Malta, to offer equities and money market securities, enabling the Company to provide stocks and interest-yielding products. This authorization positions the Company to grow its asset base on deposits and expand its product portfolio. AML’s consolidated revenues for the fiscal year ending December 31, 2024, and 2023 were $4,874,820 and $4,351,474, respectively. For the fiscal year ending December 31, 2023, the Company consolidated revenue of AML from December 1, 2023, to December 31, 2023, compared to the full year for fiscal 2024. Margin Brokerage (UK) – Alchemy Prime Ltd. The Company”) completed the acquisition of 100.00% of the issued and outstanding shares of Alchemy Prime Limited (“APL”) on November 30, 2023 (“Acquisition Date”) from APHL, through an exchange for 966,379 Series B Preferred Stock valued at $1,362,594. APL is an investment firm regulated by the Financial Conduct Authority (FCA). It provides investment advice, acts as an agent and principal, safeguards and administers assets in forex, equity, commodities, spread bets, and other financial assets, and is authorized to do business in several countries, including England, Scotland, Wales, and Northern Ireland. APL’s consolidated revenues for the fiscal year ending December 31, 2024, and 2023 were $13,928,364 and $664,579, respectively. For the fiscal year ending December 31, 2023, the Company consolidated revenue of APL from December 1, 2023, to December 31, 2023, compared to the full year for fiscal 2024. Control Person Mr. Gope S. Kundnani (“Kundnani”) is the sole controlling shareholder, holding one hundred percent (100%) shareholding in APHL. 5 (2) Wealth Management – AD Advisory Services Pty Ltd. On December 22, 2021, the Company entered into a Share Exchange Agreement (the “Agreement”) with AD Financial Services Pty Ltd ACN 628 331 117 of Level 38/71 Eagle St, Brisbane, Queensland, Australia, 4000 (“ADFP” or “Target”). According to the Agreement, the Company acquired a controlling interest of fifty-one percent (51.00%) of ADFP’s issued and outstanding shares of capital stock in exchange for 45,000,000 (the “Consideration”) newly issued “restricted” common shares. The operating and licensed entity of ADFP is AD Advisory Services Pty Ltd. (“ADS”). ADFP owns one hundred percent (100.00%) equity interest in ADS. As a result, the Company owns 51.00% of ADS. The Company closed the acquisition on December 22, 2021, and combined the financial statements of ADS in its annual report, 10-K, filed with the SEC on March 28, 2022. AD Advisory Services Pty Ltd. (ADS) is an Australian-regulated wealth management company with 28 financial advisors and $530+ million in funds under advice. ADS provides licensing solutions for financial advisers and accountants in Australia and offers financial planners different licensing, compliance, and education solutions to meet their practice’s specific needs. ADS’ consolidated revenues for the fiscal year ending December 31, 2024, and 2023 were $6,498,404 and $5,927,424, respectively. (3) Technology & Software Development – Condor Trading Technology The Company provides technology and software development for digital assets. In the retail foreign exchange trading space, where individuals speculate on the exchange rate between different currencies, our customers are forex brokerages, prime of prime brokers, prime brokers, and banks. The Company generates revenues by licensing its trading technology infrastructure, including but not limited to trading platforms (desktop, web, mobile), back office, and CRM and banking integration technology. The Company has three sources of revenue. ● Technology Solutions – The Company licenses its proprietary and sometimes resells third-party technologies to customers. Our proprietary technology includes but is not limited to Condor Risk Management Back Office (“Condor Risk Management”), Condor Pro Multi-Asset Trading Platform (previously known as Condor FX Pro Trading Terminal), Condor Pricing Engine, Digital Assets Web Trader Platform, and other digital assets-related solutions. ● Customized Software Development – The Company develops software for Customers with unique requirements outlined in the Software Development Agreement (“Agreement”). ● Consulting Services— The Company’s turnkey business solutions include Start-Your-Own brokerage (“SYOB”), Start-Your-Own Prime Brokerage (“SYOPB”), and FX/OTC liquidity solutions. The Company’s Condor Pro Multi-Asset Trading Platform is a regulatory-grade trading platform targeted at day traders and retail investors. The industry characterized such platforms by their ease of use and helpful features, such as the simplified front-end (user interface/user experience), back-end (reporting system), news feeds, and charting system. The Condor Pro Multi-Asset Trading Platform includes risk management (dealing desk, alert system, margin calls, etc.), a pricing engine (best bid/ask), and connectivity to multiple liquidity providers or market makers. We have tailored the Condor Pro Multi-Asset Trading Platform to markets such as forex, stocks, commodities, digital assets, and other financial products. The Company released, marketed, and distributed its Condor Pro Multi-Asset Trading Platform in the second quarter of the fiscal year ending December 31, 2019. The Company has also developed the Condor Back Office API to integrate third-party CRM and banking systems into Condor Back Office. The Company’s upgraded Condor Back Office (Risk Management) meets various jurisdictions’ regulatory requirements. Condor Back Office meets the directives under the Markets in Financial Instruments Directive (MiFID II/MiFIR), legislation by the European Securities and Market Authority (ESMA) implemented across the European Union on January 3, 2018. 6 The Company is developing the Condor Investing & Trading App, a simplified trading platform for traders with varied experiences in trading stocks, ETFs, and other financial markets from their mobile phones. The Company expects to commercialize the Condor Investing & Trading App by the end of the fourth quarter of the fiscal year ending December 31, 2025. The Company has no patents or trademarks on its proprietary technology solutions. IT, Sales & Marketing Service Provider (Cyprus) On March 19, 2024, the Company established Alchemytech Ltd. (ATECH), a Cypriot company. ATECH provides the Company’s subsidiaries and affiliate companies with information technology, sales, and marketing services. The Company has mandated ATECH to develop, market, and distribute the Condor Pro Multi-Asset Trading Platform to qualified market participants, including brokers, professional traders, hedge funds, and other financial institutions. The Company acts as an adviser/strategic consultant and reseller of its proprietary technologies in the digital assets and blockchain space. The Company expects to generate additional revenue from its digital asset-related solutions. Such solutions include revenues from the development of a custom digital assets exchange platform for customers, the sale of the non-exclusive source code of the digital assets exchange platform to third parties, white-label fees of digital assets exchange platforms, and the sale of aggregated digital assets data price feed from various digital assets exchanges to OTC brokers. The Company initially plans to develop the technology architecture of the digital assets exchange platform for its customers. The initial capital required to produce such technologies comes from our customers as the Company takes on design-build software development projects for customers. The Company develops these projects to meet the customer’s design criteria and performance requirements. The Company does not mine any digital assets or trade or act as a counterparty in digital assets in the United States. Consequently, the Company does not intend to register as a custodian with state or federal regulators, including but not limited to obtaining a money service business or money transmitter license with the Financial Crimes Enforcement Network (FinCEN) and respective State’s money transmission laws. The Company also does not need to register under the Securities Exchange Act of 1934, as amended, as a national securities exchange, an alternative trading system, or a broker-dealer since the Company is not a broker-dealer, nor does it intend to become a broker-dealer. Customers sometimes compensate us in Bitcoin through our custodian, Gemini Trust Company, LLC (“Gemini”). Gemini is a licensed New York trust company that undergoes regular bank exams and is subject to cybersecurity audits conducted by the New York Department of Financial Services. The Company has fourteen (14) licensing agreements for its Condor Pro Multi-Asset Trading Platform during the fiscal year ending December 31, 2024. The Company continuously negotiates additional licensing agreements with several retail online brokers to use the Condor Pro Multi-Asset Trading Platform. Condor Pro Multi-Asset Trading Platform is available in desktop, web, and mobile versions. The consolidated revenues for Technology and Software Development for the fiscal year ending December 31, 2024, and 2023 were $1,642,130 and $1,811,423, respectively. 7 Termination of CIM Acquisition On July 19, 2022, the Company signed a non-binding letter of intent to acquire fifty-one percent (51.00%) equity interest in CIM Securities, LLC (“CIM Securities”), a FINRA and SIPC member firm. On September 30, 2022, the Company signed a definitive agreement pending regulatory approval, paid a $20,000 non-refundable deposit, and transferred $180,000 to the escrow account to complete the transaction. The Company filed the CMA form with FINRA in February 2023. Once the Company receives approval from FINRA and pays the balance of $180,000, it will start consolidating income statements and balance sheets as it holds the controlling interest in CIM Securities. On July 31, 2023, the Company sent the notice of termination of the purchase agreement to CIM Securities, as future events may result in a change of ownership in the CMA application. The Company believes that this would cause further delays in the approval process. Our board has mandated the management team to concentrate on expanding and developing our core non-US forex business to maximize shareholder value. Governmental Regulation FDCTech is a publicly traded company subject to SEC and FINRA’s rules and regulations regarding public disclosure, financial reporting, internal controls, and corporate governance. Our wealth management business, AD Advisory Services (ADS), is subject to enhanced regulatory scrutiny and is regulated by multiple regulators in Australia. The Australian Securities and Investments Commission (ASIC) administers a licensing regime for ‘financial services’ providers where ADS holds an Australian Financial Services License (AFSL) and meets various compliance, conduct, and disclosure obligations. AML is an investment firm regulated by the Malta Financial Services Authority (MFSA). APL is an investment firm regulated by the Financial Conduct Authority (FCA). Board of Directors Micthell M. Eaglstein and Imran Firoz have been Executive Directors of the Company since January 21, 2016. Effective January 1, 2021, Naim Abdullah resigned as the Director of the Company. On June 9, 2021, and in connection with the previous description of the Genesis Agreement, dated June 2, 2021, the Company appointed Warwick Kerridge as Chairman of the Company’s Board of Directors. Effective August 24, 2021, the Company terminated the appointment of Warwick Kerridge from the Board of Directors. Upon the termination of Mr. Kerridge, the Company currently had four members on its Board of Directors. Mitchell M. Eaglstein shall be the acting Executive Chairman of the Company. On June 15, 2021, the Board of Directors of the Company increased the size of the Board from three to four directors and appointed Jonathan Baumgart, age 39, as the Director. Mr. Baumgart is independent under the Company’s independence criteria for members of its Board of Directors. On July 6, 2021, the Board of Directors of FDCTech, Inc. (the “Company”) increased from four to five directors and appointed Charles R. Provini, age 74, to the vacancy. Mr. Provini was considered independent under NYSE and NASDAQ listing standards. On November 30, 2021, Charles R. Provini, a member of the Board of Directors of FDCTech, Inc. (the “Company”), notified the Company of his intention to voluntarily resign from the Company’s Board of Directors effective November 30, 2021. Mr. Provini did not advise the Company of any disagreement with the Company on any matter relating to its operations, policies, or practices. Upon the resignation of Mr. Provini, the Company currently has three members of the Board of Directors. On September 30, 2022, the Company appointed Gope S. Kundnani as the Director of the Company. Upon the appointment of Mr. Kundnani, the Company currently has four members on its Board of Directors. Mr. Kundnani is a seasoned entrepreneur with several decades of experience building successful businesses in the United States, the Middle East, and the United Kingdom. From May 2018 to the present, Mr. Kundnani was the founder and current Director of Alchemy Prime Markets, a financial brokerage services company regulated by the Financial Conduct Authority (FCA). From December 2018 to the present, Mr. Kundnani founded and is the Director of Blackthorn Finance Limited, an authorized payments financial services company regulated by the FCA. From May 2004 to April 2008, Mr. Kundnani was the Director of Tristar Group, responsible for investing and acquiring small retail businesses in the Texas region. From February 1999 to the present, Mr. Kundnani has been a partner and CEO of Flexo Pack, a polyethylene product manufacturer with a global customer base. Mr. Kundnani holds an undergraduate business degree from Mulund College of Commerce, Mumbai, India. At present, the Company has four members of the Board of Directors. Mitchell M. Eaglstein is the acting Chairman of the Company. Mitchell M. Eaglstein and Imran Firoz are the company’s executive directors and officers. Gope S. Kundnani is considered an executive director by owning at least 10% of the Company’s stock. Jonathan Baumgart is an independent director under NYSE and NASDAQ listing standards. Ukraine-Russia Conflict The geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia’s invasion of Ukraine. The war between the two countries continues to evolve as military activity continues. The United States and certain European countries have imposed additional sanctions on Russia and specific individuals. By the end of August 2022, the Company closed its technical support and development office in Russia. We relocated our personnel to Turkey, which is currently considered a neutral zone. No individual associated with the Company is banned or under the Special Designated Nationals and Blocked Person list. If the military activities worsen and expand in Europe, we may relocate our office from Turkey to other neutral zones in Asia. If we cannot relocate our technical and development operations to a safer zone, it may impact our software development capabilities and negatively impact the Company’s business plans. As of the date of this report, there has been no disruption in our operations. ITEM 1A. RISK FACTORS Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.