Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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.

FDCTech follows a strategic growth model centered on acquiring, integrating, and scaling legacy financial services firms. Through its acquisitions, the Company has expanded its global footprint in wealth management, brokerage, and financial advisory services.

Founded in January 2016 as a back-office technology solution provider, FDCTech has transformed into a comprehensive, end-to-end trading platform offering foreign exchange (FX), contracts for difference (CFDs), equities, bonds, and wealth management services. Our growth trajectory includes the acquisitions of AD Advisory Services Pty Ltd. (2021), Alchemy Markets Ltd. (2022-2023), Alchemy Prime Limited (2023), Alchemy International Ltd. (2025), and Alchemy Markets (Cayman) Ltd. (2026), together with the establishment of Alchemytech Ltd., now T.I.C.G. Integrated Solutions Ltd. (2024), and Xoala Asia (2025), expanding our global footprint across Australia, Malta, the United Kingdom, Cyprus, Seychelles, Mauritius, and the Cayman Islands.

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
T.I.C.G. Integrated Solutions Ltd. (ATECH)		100.00%		Cyprus		Technology Services		Europe		Condor Trading
Alchemy International Ltd. (AIL)		99.90%		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
Alchemy Markets (Cayman) Ltd. (AML Cayman)		100.00%		Cayman Islands		Securities Investment Business (Broker/Dealer)		International		Condor Trading & Third-party
Xoala AP Cyprus Ltd. (XOA, Cyprus)		100.00%		Cyprus		Intra-group Treasury and Payment Processing		Europe		Third-party

In June 2026, Alchemytech Ltd. changed its name to T.I.C.G. Integrated Solutions Ltd. ("ATECH"). Xoala Asia holds 100% of Xoala AP Cyprus Ltd. ("XOA, Cyprus"), a Cyprus-based subsidiary providing intra-group treasury and payment-processing services. In June 2026, the Company acquired 100% of Alchemy Markets (Cayman) Ltd. ("AML Cayman"), a Cayman Islands company licensed and regulated by the Cayman Islands Monetary Authority as a securities investment business licensee holding a Broker/Dealer license, which authorizes it to buy, sell, subscribe for, or underwrite securities. AML Cayman has been consolidated since June 19, 2026. Under the intra-group exemption in Section 3(3)(n) of the Cyprus Payment Services Law, no Central Bank of Cyprus payment institution or electronic money institution license is required for XOA, Cyprus.

The Company's operating subsidiaries are described below:

AD Advisory Services Pty Ltd. (ADS) - An Australian-regulated wealth management firm regulated by the Australian Securities and Investments Commission (ASIC), managing and advising on approximately $770 million in client funds under advice with a network of 26 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.

T.I.C.G. Integrated Solutions Ltd. (ATECH) - A Cyprus-based technology, sales, and marketing service provider supporting the Company's subsidiaries and affiliated companies.

Alchemy International Ltd. (AIL) - A Seychelles-licensed securities dealer regulated under license number SD136 by the Financial Services Authority (FSA).

Xoala Asia (XOA) - A Mauritian-based payment provider regulated by the Financial Services Commission of Mauritius (the "FSC") to operate as a payment intermediary in Mauritius.

Prime Intermarket Group Eurasia (PIG) - A Mauritian-based company structured as a private company limited by shares and regulated by the Financial Services Commission.

Alchemy Markets (Cayman) Ltd. (AML Cayman) - A Cayman Islands company licensed and regulated by the Cayman Islands Monetary Authority (CIMA) as a securities investment business licensee. AML Cayman holds a Broker/Dealer license, which authorizes it to buy, sell, subscribe for, or underwrite securities.

Xoala AP Cyprus Ltd. (XOA, Cyprus) - A Cyprus-based subsidiary of Xoala Asia providing intra-group treasury and payment-processing services.

Corporate History and Transformation

In 2021, the Company's revenues came solely from technology licensing. By fiscal year 2024 and during fiscal year 2025, the Company had transformed into a diversified global fintech with revenues from technology, financial planning, and brokerage trading operations. The Company has undergone a significant transformation since its inception to the present:

In December 2021, the Company acquired 51% of AD Advisory Services Pty Ltd. (ADS), an Australian wealth management firm. For fiscal year 2021, the Company reported revenue of $0.46 million and net assets of $1.41 million.

In June 2023, the Company acquired 51% of Alchemy Markets Ltd. (AML), a Malta-based financial services firm regulated by the Malta Financial Services Authority. For fiscal year 2022, the Company reported revenue of $6.4 million and net assets of $1.60 million.

In November 2023, the Company acquired 100% of AML and Alchemy Prime Ltd. (APL), a UK-based prime-of-prime brokerage regulated by the Financial Conduct Authority. For fiscal year 2023, the Company reported revenue of $12.8 million and net assets of $13.05 million.

In March 2024, the Company established Alchemytech Ltd. (ATECH) in Cyprus as a technology, sales, and marketing service provider supporting the Company's subsidiaries and affiliated companies.

Fiscal year 2024 represented the first full year of integration of ADS, AML, and APL. For fiscal year 2024, the Company reported revenue of $26.9 million and net assets of $14.45 million.

In October 2025, the Company acquired AIL, a key operational subsidiary within the Company's expanding global architecture, enabling the Company to serve a broader base of offshore brokerages, high-frequency traders, and institutional clients seeking regulated access to foreign exchange and multi-asset markets.

In November 2025, the Company established Xoala Asia, which was granted a Payment Intermediary Services ("PIS") license by the Financial Services Commission of Mauritius (the "FSC") to operate as a payment intermediary in Mauritius. Xoala Asia holds 100% of Xoala AP Cyprus Ltd., a Cyprus company providing intra-group treasury and payment-processing services.

In June 2026, Alchemytech Ltd. changed its name to T.I.C.G. Integrated Solutions Ltd., and the Company acquired 100% of Alchemy Markets (Cayman) Ltd. (AML Cayman), a Cayman Islands company licensed by the Cayman Islands Monetary Authority to conduct securities investment business under a Broker/Dealer license. The acquisition extends the Company's regulated brokerage footprint to the Cayman Islands.

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 26 financial advisors managing and advising over $770 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 T.I.C.G. Integrated Solutions Ltd. (formerly 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 June 30, 2026, the Company generated total revenue of $17,472,536, an increase of $12,052,745 (222.4%) over total revenue of $5,419,791 for the three months ended June 30, 2025. During the six months ended June 30, 2026, the Company generated total revenue of $32,687,028, an increase of $21,290,289 (186.8%) over total revenue of $11,396,739 for the six months ended June 30, 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 and six months ended June 30, 2026 (compared with no contribution during the three and six months ended June 30, 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.

Financial Condition as of June 30, 2026

As of June 30, 2026, the Company had total assets of $55,089,794, compared to $64,051,886 as of December 31, 2025, representing a decrease of $8,962,092, or approximately 14.0%. Total assets at June 30, 2026, were comprised primarily of cash and cash equivalents of $18,184,787 and restricted cash (client funds, segregated) of $7,699,708, related party receivables of $21,783,493, accounts receivable (net of allowance for doubtful accounts) of $177,775, prepaid expenses (current and non-current) of $541,225, capitalized software (net) of $1,879,461, acquired intangible assets (net) of $1,280,522, right-of-use lease assets of $766,338, property and equipment (net) of $180,424, and other current and non-current assets aggregating $2,596,061.

The $8,962,092 decrease in total assets during the six months ended June 30, 2026 was primarily attributable to: (i) a decrease in related party receivables of $18,306,558, 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; (ii) a decrease in the fair value of trading positions for the firm of $1,094,757, reflecting the closing-out and transfer of certain trading positions in the ordinary course; and (iii) net decreases in acquired intangible assets, right-of-use lease assets, prepaid expenses, and other non-current assets in the ordinary course; partially offset by (iv) an increase in cash, cash equivalents, and restricted cash of $8,214,746, 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, (v) an increase in accrued income of $2,017,206, and (vi) an increase in capitalized software (net) of $399,215.

Total Liabilities

As of June 30, 2026, the Company had total liabilities of $15,779,315, compared to $41,360,598 as of December 31, 2025, representing a decrease of $25,581,283, or approximately 61.9%. Total liabilities at June 30, 2026 were comprised primarily of client funds payable of $7,699,708, business acquisition loan of $2,350,000, related party advances payable of $1,931,797, accrued expenses to related parties of $1,152,784, other current liabilities of $831,415, operating lease liabilities (current and non-current) of $482,055, accounts payable of $357,840, line of credit of $297,862, deferred tax liabilities of $191,469, financial liabilities at fair value through profit and loss of $172,968, income tax payable of $170,382, and the SBA loan and accrued non-current interest aggregating $141,035.

The $25,581,283 net decrease in total liabilities during the six months ended June 30, 2026 was primarily attributable to: (i) a decrease in related party advances payable of $27,265,673, 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; (ii) a decrease in other current liabilities of $1,301,578; and (iii) a decrease in deferred tax liabilities of $186,506; partially offset by (iv) an increase in client funds payable of $1,885,820, reflecting growth in customer trading activity and customer deposits held by AIL in connection with the expansion of its brokerage operations; (v) an increase in accrued expenses to related parties of $620,497, primarily representing accrued executive compensation; (vi) an increase in accounts payable and line of credit of $378,138 in the aggregate, reflecting normal operating activity; and (vii) the recognition of financial liabilities at fair value through profit and loss of $172,968 and income tax payable of $170,382.

Stockholders' Equity and Working Capital

As of June 30, 2026, total stockholders' equity attributable to FDCTech, Inc. stockholders was $39,313,273, compared to $22,657,965 as of December 31, 2025, representing an increase of $16,655,308, or approximately 73.5%. Total stockholders' equity, including noncontrolling interests, was $39,310,479 as of June 30, 2026, compared to $22,691,288 as of December 31, 2025. The components of stockholders' equity as of June 30, 2026 consisted of preferred stock and common stock at par value, additional paid-in capital of $25,910,095, additional paid-in capital relating to Series B Preferred Stock of $3,344,063, subscription receivable of $(8,000,000), accumulated other comprehensive income of $78,321, and accumulated surplus of $17,979,684.

The $16,655,308 increase in stockholders' equity attributable to FDCTech, Inc. stockholders during the six months ended June 30, 2026 was primarily attributable to: (i) net income attributable to FDCTech, Inc. shareholders of $14,578,197 for the period; and (ii) an increase in additional paid-in capital of $2,295,047 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 and six months ended June 30, 2026.

Working capital, defined as total current assets less total current liabilities, was $33,063,252 as of June 30, 2026, compared to $17,831,410 as of December 31, 2025, representing an increase of $15,231,842, or approximately 85.4%. 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 and six months ended June 30, 2026, the Company recorded a net increase to additional paid-in capital of $2,295,047 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 and six months ended June 30, 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 and six months ended June 30, 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 acquired intangible assets, including goodwill (carrying value of $1,280,522 at June 30, 2026), were 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 $64,051,886, comprised primarily of cash, cash equivalents, and restricted cash of $17,669,749, related party receivables of $40,090,051, accounts receivable, net of $188,415, 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 $41,360,598, comprised primarily of related party advances payable of $29,197,470 (of which $27,265,673 was settled during the three and six months ended June 30, 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 $22,691,288, including an accumulated surplus of $3,401,487. Working capital at December 31, 2025, was $17,831,410.

RESULTS OF OPERATIONS

three and six months ended June 30, 2026, compared with three and six months ended June 30, 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 June 30,								Change
		2026				2025				$				%
Revenues:
Technology & software		$	1,393,442				1,178,215				215,227				18.3	%
Wealth management			1,814,104				1,653,670				160,434				9.7	%
Brokerage			14,264,990				2,587,906				11,677,084				451.2	%
Total revenue		$	17,472,536				5,419,791				12,052,745				222.4	%
Cost of sales:
Technology & software			115,610				-				115,610				n/a
Wealth management			1,654,803				1,483,771				171,032				11.5	%
Brokerage			3,827,894				1,630,322				2,197,572				134.8	%
Total cost of sales		$	5,598,307				3,114,093				2,484,214				79.8	%
Gross profit		$	11,874,229				2,305,698				9,568,531				415.0	%
Operating expenses:
General and administrative			4,230,569				2,135,030				2,095,539				98.2	%
Sales and marketing			214,085				293,937				(79,852	)			(27.2	)%
Depreciation			45,695				43,276				2,419				5.6	%
Total operating expenses		$	4,490,349				2,472,243				2,018,106				81.6	%
Operating income		$	7,383,880				(166,545	)			7,550,425				(4,533.6	)%
Total other income (expense), net			292,125				(258,911	)			551,036				(212.8	)%
Income before provision for income taxes			7,676,005				(425,456	)			8,101,461				(1,904.2	)%
Provision for income taxes			-				-				-				-
Net income		$	7,676,005				(425,456	)			8,101,461				(1,904.2	)%
Less: Net income attributable to noncontrolling interest			(34,926	)			12,467				(47,393	)			(380.1	)%
Net income attributable to FDCTech, Inc.		$	7,710,931				(437,923	)			8,148,854				(1,860.8	)%
Six Months Ended June 30,
			2026				2025				$				%
Revenues:
Technology & software			3,032,664				1,991,962				1,040,702				52.2	%
Wealth management			3,379,956				3,188,522				191,434				6.0	%
Brokerage			26,274,408				6,216,255				20,058,153				322.7	%
Total revenue			32,687,028				11,396,739				21,290,289				186.8	%
Cost of sales:
Technology & software			115,610				-				115,610				n/a
Wealth management			3,090,053				2,833,598				256,455				9.1	%
Brokerage			5,975,982				3,397,884				2,578,098				75.9	%
Total cost of sales			9,181,645				6,231,482				2,950,163				47.3	%
Gross profit			23,505,383				5,165,257				18,340,126				355.1	%
Operating expenses:
General and administrative			8,551,882				4,271,708				4,280,174				100.2	%
Sales and marketing			618,387				570,141				48,246				8.5	%
Depreciation			92,338				82,108				10,230				12.5	%
Total operating expenses			9,262,607				4,923,957				4,338,650				88.1	%
Operating income			14,242,776				241,300				14,001,476				5,802.5	%
Total other income (expense), net			306,736				(352,634	)			659,370				(187.0	)%
Income before provision for income taxes			14,549,512				(111,334	)			14,660,846				(13,168.3	)%
Provision for income taxes			-				-				-				-
Net income			14,549,512				(111,334	)			14,660,846				(13,168.3	)%
Less: Net income attributable to noncontrolling interest			(28,685	)			33,777				(62,462	)			(184.9	)%
Net income attributable to FDCTech, Inc.			14,578,197				(145,111	)			14,723,308				(10,146.2	)%

Revenue

Total revenue increased to $17,472,536 for the three months ended June 30, 2026, compared to $5,419,791 for the three months ended June 30, 2025, an increase of $12,052,745, or approximately 222.4%. For the six months ended June 30, 2026, total revenue was $32,687,028, compared to $11,396,739 for the six months ended June 30, 2025, an increase of $21,290,289, or approximately 186.8%. The growth was driven primarily by the Margin Brokerage segment, which contributed $14,264,990 of total revenue for the three months ended June 30, 2026, compared to $2,587,906 for the comparable prior-year period, representing an increase of $11,677,084, or approximately 451.2%, and $26,274,408 for the six months ended June 30, 2026, compared to $6,216,255 for the comparable prior-year period, representing an increase of $20,058,153, or approximately 322.7%. 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 $1,393,442 for the three months ended June 30, 2026, compared to $1,178,215 for the comparable prior-year period, representing an increase of $215,227, or approximately 18.3%, and $3,032,664 for the six months ended June 30, 2026, compared to $1,991,962 for the comparable prior-year period, representing an increase of $1,040,702, or approximately 52.2%, in each case reflecting the expansion of the Company's technology and platform services to its expanded broker-dealer client base. Wealth Management revenue was $1,814,104 for the three months ended June 30, 2026, compared to $1,653,670 for the comparable prior-year period, representing an increase of $160,434, or approximately 9.7%, and $3,379,956 for the six months ended June 30, 2026, compared to $3,188,522 for the comparable prior-year period, representing an increase of $191,434, or approximately 6.0%.

Cost of Sales and Gross Profit

Cost of sales was $5,598,307 for the three months ended June 30, 2026, compared to $3,114,093 for the three months ended June 30, 2025, an increase of $2,484,214, or approximately 79.8%. For the six months ended June 30, 2026, cost of sales was $9,181,645, compared to $6,231,482 for the six months ended June 30, 2025, an increase of $2,950,163, or approximately 47.3%. 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 reclassification, in the restated comparative period, of Alchemytech Ltd. cost of sales from the Technology & Software segment to the Brokerage segment, which reduced technology cost of sales in both periods presented.

Gross profit was $11,874,229 for the three months ended June 30, 2026, compared to $2,305,698 for the three months ended June 30, 2025, an increase of $9,568,531, or approximately 415.0%. For the six months ended June 30, 2026, gross profit was $23,505,383, compared to $5,165,257 for the six months ended June 30, 2025, an increase of $18,340,126, or approximately 355.1%. Consolidated gross margin was approximately 68.0% and 42.5% for the three months ended June 30, 2026, and 2025, respectively, and approximately 71.9% and 45.3% for the six months ended June 30, 2026, and 2025, respectively, principally reflecting the change in revenue mix toward the higher-margin Margin Brokerage segment.

Operating Expenses

Total operating expenses were $4,490,349 for the three months ended June 30, 2026, compared to $2,472,243 for the three months ended June 30, 2025, an increase of $2,018,106, or approximately 81.6%. For the six months ended June 30, 2026, total operating expenses were $9,262,607, compared to $4,923,957 for the six months ended June 30, 2025, an increase of $4,338,650, or approximately 88.1%. For the three months ended June 30, 2026, the increase reflects higher general and administrative expense of $4,230,569 (compared to $2,135,030, an increase of $2,095,539, or approximately 98.2%) and higher depreciation expense of $45,695 (compared to $43,276, an increase of $2,419, or approximately 5.6%), partially offset by lower sales and marketing expense of $214,085 (compared to $293,937, a decrease of $79,852, or approximately 27.2%). For the six months ended June 30, 2026, general and administrative expense was $8,551,882 (compared to $4,271,708, an increase of $4,280,174, or approximately 100.2%), sales and marketing expense was $618,387 (compared to $570,141, an increase of $48,246, or approximately 8.5%), and depreciation expense was $92,338 (compared to $82,108, an increase of $10,230, or approximately 12.5%).

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 for the six-month period 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 $7,383,880 for the three months ended June 30, 2026, compared to an operating loss of $(166,545) for the three months ended June 30, 2025, representing an improvement of $7,550,425. For the six months ended June 30, 2026, operating income was $14,242,776, compared to operating income of $241,300 for the six months ended June 30, 2025, representing an increase of $14,001,476. 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 $292,125 for the three months ended June 30, 2026, compared to net other expense of $(258,911) for the three months ended June 30, 2025, an improvement of $551,036. For the six months ended June 30, 2026, total other income (expense), net, was net other income of $306,736, compared to net other expense of $(352,634) for the six months ended June 30, 2025, an improvement of $659,370. For the three months ended June 30, 2026, total other income (expense), net, consisted of other interest income of $72,848 (compared to $10,986 for the comparable prior-year period) and other income of $219,277 (compared to $(269,897) for the comparable prior-year period). For the six months ended June 30, 2026, it consisted of other interest income of $205,296 (compared to $15,469) and other income of $101,440 (compared to $(368,103)). 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 $7,676,005 for the three months ended June 30, 2026, compared to a net loss of $(425,456) for the three months ended June 30, 2025, an improvement of $8,101,461. For the six months ended June 30, 2026, net income was $14,549,512, compared to a net loss of $(111,334) for the six months ended June 30, 2025, an improvement of $14,660,846. No provision for income taxes was recorded for any period presented; as described in Note 14, the Company had not received complete income tax information from its foreign subsidiaries as of the date of this Report, and management currently estimates the consolidated provision for the six months ended June 30, 2026, once determined, in the range of approximately $83,000 to $177,000. Investors should not regard the absence of a recorded tax provision as an indication that the Company's foreign operations bear no income tax. Net income attributable to FDCTech, Inc. stockholders was $7,710,931 for the three months ended June 30, 2026 ($1.82 per share basic and $0.03 per share diluted), compared to a net loss attributable to FDCTech, Inc. stockholders of $(437,923) for the three months ended June 30, 2025 ($(0.10) per share, basic and diluted), and $14,578,197 for the six months ended June 30, 2026 ($3.45 per share basic and $0.06 per share diluted), compared to a net loss of $(145,111) for the six months ended June 30, 2025 ($(0.03) per share, basic and diluted).

Diluted per-share amounts for the 2026 periods reflect the assumed conversion of the 2,371,844 outstanding shares of Series B Convertible Preferred Stock at 100 shares of Common Stock per preferred share, being the most dilutive rate available under the Certificate of Designation. Because the applicable conversion rate had not been fixed as of June 30, 2026, that rate has been used for the periods presented. On July 13, 2026 the Board fixed the conversion rate at 50 shares of Common Stock per preferred share, as described in Note 16.

LIQUIDITY AND CAPITAL RESOURCES

Cash, Working Capital and Overview

As of June 30, 2026, the Company had cash, cash equivalents, and restricted cash of $25,884,495, compared to $17,669,749 as of December 31, 2025, representing an increase of $8,214,746, or approximately 46.5%. Working capital, defined as total current assets less total current liabilities, was $33,063,252 as of June 30, 2026, compared to $17,831,410 as of December 31, 2025, representing an increase of $15,231,842, or approximately 85.4%. The increase in working capital principally reflects the settlement of $27,265,673 of related party advances payable during the six months ended June 30, 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 used in operating activities was $(21,138,011) for the six months ended June 30, 2026, compared to net cash used in operating activities of $(2,819,517) for the six months ended June 30, 2025. Net cash used in operating activities for the six months ended June 30, 2026 principally reflects (i) net income of $14,549,512 for the six months ended June 30, 2026 (compared to a net loss of $(111,334) for the comparable prior-year period), which included non-cash related party income; (ii) an increase in related party receivables of $(36,532,537), presented excluding the non-cash settlement arrangements described in Note 5; (iii) an increase in client funds payable of $1,885,820, reflecting the expansion of the Company's brokerage operations and customer trading activity at Alchemy International Ltd.; (iv) a decrease in the fair value of trading positions for the firm, net of financial liabilities at fair value, of $1,267,725, reflecting the closing-out of certain trading positions in the ordinary course; (v) an increase in accrued expenses to related parties of $620,497; (vi) a net decrease in trade and tax receivables and income tax payable of $275,609; and (vii) an increase in accounts payable of $191,628; partially offset by (viii) an increase in accrued income of $2,017,206 and a decrease in other current liabilities of $1,301,578.

Cash Flows from Investing Activities

Net cash used in investing activities was $(472,602) for the six months ended June 30, 2026, compared to net cash used in investing activities of $(202,708) for the six months ended June 30, 2025. Net cash used in investing activities for the six months ended June 30, 2026 principally consisted of (i) capitalized software development costs, net, of $464,777 and (ii) purchases of fixed assets of $8,142, partially offset by (iii) $317 of net investment activity in private entities. Capital expenditure of $73,704 that was previously reported within operating activities as "Fixed assets, net" has been reclassified to investing activities, comprising $65,562 of capitalized software development costs and $8,142 of purchases of fixed assets. The $2,295,047 common-control adjustment to additional paid-in capital previously reported within investing activities has been reclassified to financing activities. The comparable prior-year period has been conformed to this presentation, reclassifying $74,721 of fixed asset purchases from operating activities and $1,529,884 of common-control paid-in capital movements from investing to financing activities.

Cash Flows from Financing Activities

Net cash provided by financing activities was $35,308,397 for the six months ended June 30, 2026, compared to net cash used in financing activities of $(3,619,920) for the six months ended June 30, 2025. Net cash provided by financing activities for the six months ended June 30, 2026 principally consisted of (i) $32,831,092 of related party advances, presented excluding the non-cash settlement arrangements described in Note 5; (ii) the $2,295,047 common-control adjustment to additional 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, of which $2,151,066 is disclosed as a non-cash item; and (iii) net draws of $186,510 on the Company's lines of credit, partially offset by (iv) net repayments of $4,252 on the Company's SBA loan.

Net Change in Cash

The Company's cash, cash equivalents, and restricted cash increased by $8,214,746 during the six months ended June 30, 2026, comprising net cash used in operating activities of $(21,138,011), net cash used in investing activities of $(472,602), net cash provided by financing activities of $35,308,397, the effect of exchange rate changes on cash of $(217,936), a $(7,432) change in the noncontrolling interest share of subsidiary net assets, and the $(5,257,670) non-cash assignment of the Company's liquidity-provider balance previously included within cash and cash equivalents. Cash, cash equivalents, and restricted cash were $25,884,495 as of June 30, 2026, compared to $17,669,749 as of December 31, 2025.

Long-Term Obligations and Capital Adequacy

As of June 30, 2026, the Company's principal long-term contractual obligations consisted of (i) the SBA loan in the non-current principal amount of $101,426, 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 matures on September 30, 2026 and 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 $482,055 in the aggregate, principally relating to the Company's office facilities (see Note 8); and (iv) deferred tax liabilities of $191,469 and accrued non-current interest of $39,609.

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.

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 June 30, 2026, the Company had cash, cash equivalents, and restricted cash of $25,884,495, working capital of $33,063,252, total stockholders' equity of $39,310,479, and an accumulated surplus of $17,979,684, compared to cash, cash equivalents, and restricted cash of $17,669,749, working capital of $17,831,410, total stockholders' equity of $22,691,288, and an accumulated surplus of $3,401,487 as of December 31, 2025. During the six months ended June 30, 2026, the Company generated revenues of $32,687,028 (compared to $11,396,739 for the six months ended June 30, 2025), net income of $14,549,512 (of which $14,578,197 was attributable to the stockholders of FDCTech, Inc. and $(28,685) was attributable to noncontrolling interests, compared to a consolidated net loss of $(111,334) for the six months ended June 30, 2025), and net cash used in operating activities of $(21,138,011) (compared to net cash used in operating activities of $(2,819,517) for the six months ended June 30, 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 Form 10-K for the fiscal year ended December 31, 2025, as most recently amended by Amendment No. 4 on Form 10-K/A filed with the SEC on July 1, 2026. We continually evaluate our critical accounting estimates and judgments, as required by our policies, and update them as necessary based on changing conditions.

JOBS Act Accounting Election

Prior to December 31, 2022, the Company qualified as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and, as permitted under the JOBS Act, elected to delay the adoption of new or revised financial accounting standards until those standards would otherwise apply to private companies. The Company ceased to qualify as an emerging growth company effective December 31, 2022. Accordingly, the extended transition period for complying with new or revised financial accounting standards is no longer available to the Company, and the Company applies the effective dates applicable to public business entities for all periods presented in this Report.

Off-Balance Sheet Arrangements and Contractual Obligations

We have not engaged in any off-balance sheet arrangements as defined in Item 303 of the SEC's Regulation S-K. 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. The Company adopted ASU 2023-09 effective January 1, 2025, on a prospective basis; the adoption expanded the Company's annual income tax disclosures and did not affect its consolidated financial position, results of operations, or cash flows.

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 complete description of accounting pronouncements recently adopted and issued but not yet adopted, see Note 2, Summary of Significant Accounting Policies - Recent Accounting Pronouncements, to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report.

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 for the year ended December 31, 2025, as most recently amended by Amendment No. 4 on Form 10-K/A filed with the SEC on July 1, 2026.