10-Q: AtlasClear Holdings Reports Q2 Net Income, Secures $20M Financing

AtlasClear Holdings reported a significant net income for Q2 2026, driven by fair value adjustments and successful capital raises, while also announcing a new agreement to acquire Commercial Bancorp.

Summary

• Reported net income of $6.78 million for the three months ended December 31, 2025, a substantial improvement from a net loss of $0.42 million in the prior year period.
• Total revenues increased by 84% to $5.06 million for the three months ended December 31, 2025, primarily due to new stock locate fees and participation in an at-the-market offering.
• For the six months ended December 31, 2025, total revenues grew by 68% to $9.31 million, driven by similar factors.
• Successfully completed financing transactions totaling approximately $15.85 million gross proceeds, including a $10.0 million secured convertible promissory note and a $10.0 million equity offering.
• Alleviated substantial doubt about the company's ability to continue as a going concern, with management expecting sufficient liquidity for at least the next twelve months.
• Entered into a new Share Purchase Agreement to acquire Commercial Bancorp, a Wyoming corporation, and its Farmers State Bank subsidiary, after the previous merger agreement expired.
• The fair value of the earnout liability significantly decreased by $10.51 million for the six months ended December 31, 2025, primarily due to delays in the Commercial Bancorp acquisition and revised revenue projections.
• Total stockholders' equity improved significantly from a deficit of $(6.80) million at June 30, 2025, to positive $21.68 million at December 31, 2025.
• Cash and cash equivalents increased to $23.08 million at December 31, 2025, from $7.53 million at June 30, 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive step towards financial stability, primarily driven by successful capital raises and favorable non-cash accounting adjustments. While revenue growth is strong, the continued operational losses and internal control deficiencies warrant caution.

Positives

• Significant improvement in net income to $6.78 million for the three months ended December 31, 2025, from a loss of $0.42 million in the prior year.
• Strong revenue growth of 84% for the three-month period and 68% for the six-month period, driven by new revenue streams like stock locate fees and acting as a selling agent.
• Successful completion of $20 million in financing ($10 million secured convertible note and $10 million equity offering), alleviating prior going concern doubts.
• Substantial increase in cash and cash equivalents to $23.08 million at December 31, 2025, from $7.53 million at June 30, 2025.
• Conversion or repayment of a significant portion of debt (Convertible Notes, Secured Convertible Note, Long-Term Notes, Merger Financing Note, Chardan Note, Promissory Notes), reducing overall liabilities.
• Reversal of $2.61 million excise tax accrual due to new IRS regulations, positively impacting the balance sheet.
• Improvement in total stockholders' equity from a deficit to a positive $21.68 million.
• Reduction in FINRA fines for Wilson-Davis to $490,000 from $1.265 million, though still under appeal.

Negatives

• Operating loss increased to $(2.46) million for the three months ended December 31, 2025, from $(1.15) million in the prior year, and to $(3.33) million for the six months, from $(2.09) million.
• Total expenses increased by 93% for the three-month period and 65% for the six-month period, largely due to increased variable compensation and new stock compensation expense.
• Net income for the six months ended December 31, 2025, decreased to $6.34 million from $10.33 million in the prior year, primarily due to lower gains from fair value changes of financial instruments in the current period.
• Diluted net income per share for the six months decreased to $0.06 from $0.12 in the prior year.
• Disclosure controls and procedures were deemed not effective as of December 31, 2025.
• Wilson-Davis failed to make a timely deposit for its customer cash reserve, resulting in a $1.31 million deficit as of December 31, 2025, though it was in compliance by January 2, 2026.
• The significant gain in net income for the quarter was largely driven by a non-cash fair value adjustment of the earnout liability, rather than core operational profitability.

Risks

• Ability to realize the benefits expected from the Business Combination.
• Ability to complete and successfully integrate the acquisition of Commercial Bancorp.
• Ability to successfully implement the AtlasClear Platform.
• Significant indebtedness and ability to service such indebtedness.
• Volatility of the Common Stock price and the possibility that stockholders could incur substantial losses.
• Potential dilution of stockholder interests resulting from equity security issuances.
• Ability to maintain the listing of Common Stock on the NYSE American LLC.
• Ability to grow and manage growth profitably.
• Ability to raise financing in the future, if and when needed.
• Success in retaining or recruiting, or adapting to changes in, officers, key employees, or directors.
• Ability to achieve or maintain profitability.
• Cybersecurity attacks or breaches, ransomware attacks, and other disruptions to information technology structure.
• Ability to successfully compete against other companies.
• Estimates regarding expenses, future revenue, and needs for additional financing.
• Effect of economic downturns and political and market conditions beyond control.
• Ongoing FINRA legal proceedings and potential fines for Wilson-Davis.
• Failure to meet certain conditions in the Registration Rights Agreement could lead to liquidated damages.
• The earnout liability's fair value is subject to significant changes based on revenue targets and acquisition delays.

Future Outlook

Management expects the proceeds from recent financings, combined with projected cash flows, to provide sufficient liquidity for at least the next twelve months. The company is pursuing the acquisition of Commercial Bancorp, which is anticipated to enable specialized clearing and banking services, leading to lower capital costs, higher net interest margins, expanded product development, and greater credit extension once integrated with Wilson-Davis. The implementation of the AtlasClear Platform is also a key strategic initiative.

Management Comments

• Management believes that the reverse stock split was necessary to regain compliance with stock exchange listing requirements and improve marketability of the stock.
• Management expects that these proceeds [from recent financings], together with projected cash flows from operations, will provide sufficient liquidity to fund the Companys operations and satisfy its obligations as they become due for at least twelve months following the issuance of these condensed consolidated financial statements.
• Management continues to evaluate its operating plan, monitor cash flow requirements, and assess potential financing alternatives to support the Companys long-term growth initiatives and capital requirements.
• We are building a cutting-edge technology enabled financial services firm that would create a more efficient platform for trading, clearing, settlement and banking, with evolving and innovative financial products that focus on financial services firms.
• We believe we are positioned to provide a modern, mission-critical suite of solutions to our clients, enabling them to reduce their transactions costs and compete more effectively in their businesses.
• Once properly integrated, anticipated synergies between Commercial Bancorp, if acquired, and Wilson-Davis are expected to allow for lower cost of capital, higher net interest margins, expanded product development and greater credit extension.
• We believe that our proprietary trading platform with clearing and settlement capabilities along with the software products and intellectual property assets, are cutting-edge, flexible and scalable.

Industry Context

StockSavvy.ai notes that AtlasClear Holdings is positioning itself as a fintech-driven business-to-business platform, aiming to disrupt traditional trading, clearing, settlement, and banking services. The anticipated acquisition of Commercial Bancorp highlights a strategy to integrate banking capabilities with its broker-dealer operations (Wilson-Davis), a trend seen in the broader financial services industry where firms seek to offer more comprehensive, vertically integrated solutions to reduce costs and expand service offerings. The focus on microcap securities and underserviced global markets suggests a niche strategy, potentially allowing for higher margins but also exposing the company to specific market volatilities. The development of a proprietary trading platform (AtlasClear Platform) is consistent with the industry's push towards technology-driven efficiency and innovation.

Management Changes

Corporate Governance

Legal Proceedings

• Wilson-Davis is appealing a FINRA decision to the SEC regarding fines for short sales and anti-money laundering rules violations. The fines were reduced from $1.265 million to $490,000 on July 10, 2025. The company has booked a contingent liability of $100,000, representing the estimated low end of possible fines, believing the final amount is not reasonably estimable due to disparity in similar cases.

Related Party Transactions

• Quantum Ventures LLC and AtlasFinTech transferred 42,510 shares (valued at $2,412,930) to various debt holders in July 2024 to settle company obligations.
• Atlas FinTech received 68,763 shares of Common Stock on August 9, 2024, in satisfaction of $803,860 in accounts payable and as reimbursement for shares transferred to cover company obligations.
• Quantum Ventures, a related party, transferred 935 shares of Common Stock on May 9, 2024, to pay for $47,750 of interest on Short-Term Notes, creating a $55,087 payable to Quantum Ventures.
• Executive Chairman advanced $5,000 to the company during the six months ended December 31, 2025, with $20,000 due as of December 31, 2025.
• President advanced $7,300 to the company during the six months ended December 31, 2025, with $27,300 due as of December 31, 2025.
• Sandip I. Patel, P.A. (wholly owned by Sandip I. Patel, General Counsel, CFO, and director) received 800,000 shares of Common Stock (valued at $169,920) on July 17, 2025, for legal and consulting services.
• Sixth Borough Capital Fund, LP (controlled by Robert D. Keyser, Jr., a director and CEO of Placement Agent) and Sandip Patel purchased $1,050,000 and $1,000,000, respectively, of Convertible Notes in September 2025. These were repaid on October 8, 2025, with Sandip Patel receiving $1,200,000 cash and Sixth Borough Capital Funds, LP receiving $640,000 cash and $500,000 in Units.
• Sixth Borough Capital Fund, LP purchased $500,000 of Units under the Equity SPA.

Stakeholder Impact

• Shareholders: Significant dilution from numerous share issuances for debt conversion, compensation, and capital raises (e.g., 144.58 million shares outstanding at Dec 31, 2025, up from 40.17 million at June 30, 2025). However, the successful capital raise and alleviation of going concern risk are positive for shareholder confidence. The stock price volatility and potential for further dilution remain concerns.
• Employees: New employment agreements for key executives (Schaible, Ridenhour, Patel) include substantial base salaries, cash bonuses, and stock awards, potentially boosting morale and retention among leadership.
• Customers: The planned acquisition of Commercial Bancorp and the development of the AtlasClear Platform aim to provide more efficient and comprehensive trading, clearing, settlement, and banking services, potentially benefiting financial services firm clients.
• Creditors: Recent financing activities, including the $10 million secured convertible note, have improved the company's liquidity and ability to meet obligations, reducing immediate credit risk. Many previous notes have been settled or converted.
• Regulatory Authorities: Wilson-Davis's failure to make a timely cash reserve deposit and the ongoing FINRA appeal highlight regulatory scrutiny. The company's commitment to enhancing internal controls is a positive step.

Next Steps

• Complete the acquisition of Commercial Bancorp, including obtaining all required regulatory approvals (Federal Reserve Board and Wyoming Division of Banking).
• File a resale registration statement with the SEC for shares issuable under the Commercial Bancorp Purchase Agreement within 90 days of the Purchase Agreement date or 10 business days after the seller election deadline.
• Continue to integrate Wilson-Davis operations and implement the AtlasClear Platform.
• Address the identified ineffective disclosure controls and procedures, incorporating additional controls and engaging consultants.
• Continue to appeal the FINRA decision regarding reduced fines to the SEC.
• Negotiate an amendment to the Hanire Purchase Agreement or refund the good faith deposit.
• Monitor and manage the covenants and obligations related to the Restated Note and other financing agreements.
• Seek stockholder approval for the issuance of Common Stock upon conversion of the Restated Note in excess of 19.9% of outstanding shares, if required by NYSE American rules.

Key Dates

Recommendation

AtlasClear Holdings has made significant strides in improving its liquidity and balance sheet through recent capital raises and debt conversions, moving from a stockholders' deficit to positive equity. The reported net income for the quarter is a positive headline, though it's largely driven by non-cash fair value adjustments. While revenue growth is strong, operational losses persist, and the company faces challenges with internal control effectiveness and the integration of its strategic acquisitions, particularly Commercial Bancorp. The stock has experienced significant volatility and dilution. A "hold" recommendation is appropriate as the company navigates these complex integration and operational improvements, with potential upside if strategic initiatives materialize and operational profitability improves, but also considerable risks given the historical losses and control deficiencies. Investors should monitor progress on the Commercial Bancorp acquisition, platform implementation, and the effectiveness of internal control remediation.

Keywords

Fintech, Broker-Dealer, SEC Filing, Q2 2026, AtlasClear Holdings, Financial Services, Acquisition, Commercial Bancorp, Capital Raise, Convertible Notes, Warrants, Liquidity, Corporate Governance, Risk Management, Wilson-Davis, Trading Platform, Clearing Services, Stock Locate Fees, Earnings Report