FDCT.OIDFdctech, INC
10-Q/A: FDCTech Q1 2025: Profit Up, Revenue Down, Cash Strong
Sentiment:
Quarterly Report Amendment
FDCTech, Inc. reported a shift to operating income and increased gross profit in Q1 2025, despite a 6.26% decline in total revenue, driven by strong performance in technology and wealth management segments.
Delay expectedThe company terminated the letter of intent to acquire a community bank in Iowa in April 2024, citing the need to focus on core non-US foreign exchange business, implying a delay or abandonment of that strategic expansion.The company terminated the purchase agreement with CIM Securities on July 31, 2023, due to the belief that future events might cause further delays in the CMA application approval process.
Capital raiseManagement plans to raise additional capital through private placement offerings and debt financing.The company may seek external financing through private equity, public markets, or credit facilities to accelerate expansion and enhance technological offerings.The availability and terms of such financing cannot be guaranteed.
Worse than expectedNet income significantly decreased to $104,548 in Q1 2025 from $833,445 in Q1 2024.Total revenue decreased by 6.26% year-over-year.Brokerage (Trading) revenue experienced a substantial decline.Despite these declines, gross profit increased and operating income shifted from a loss to a profit, indicating some operational improvements.
Summary
- Total revenue for the three months ended March 31, 2025, was $5,976,948, a 6.26% decrease from $6,376,335 in the same period of 2024.
- Gross profit increased to $2,859,559 in Q1 2025 from $2,342,101 in Q1 2024.
- Operating income improved significantly to $404,253 in Q1 2025, compared to an operating loss of $44,246 in Q1 2024.
- Net income decreased to $104,548 in Q1 2025 from $833,445 in Q1 2024.
- Cash balance increased to $26,996,932 as of March 31, 2025, from $24,781,389 as of December 31, 2024.
- Working capital surplus grew to $10,082,745 as of March 31, 2025, from $9,097,591 as of December 31, 2024.
- The accumulated deficit improved to $2,480,382 as of March 31, 2025, from $2,563,620 as of December 31, 2024.
- Brokerage (Trading) revenue decreased to $3,628,349 from $4,606,966, but its gross margin improved to 56.36% from 42.00%.
- Technology & Software revenue significantly increased to $813,747 from $255,944, with a gross margin of 77.35%.
- Wealth Management revenue slightly increased to $1,534,852 from $1,513,425, with a gross margin of 12.05%.
- Sales and marketing expenses increased significantly to $276,204 in Q1 2025 from $46,925 in Q1 2024.
Sentiment
Score: 6
Explanation: While total revenue declined and net income significantly decreased, the company achieved a positive operating income and increased gross profit, indicating improved operational efficiency. The cash position and working capital also strengthened. However, the going concern warning, internal control weaknesses, and pending legal proceedings temper the positive aspects. The strategic focus on fintech acquisitions and product development is positive, but future capital raise uncertainty exists.
Positives
- Shift from operating loss to operating income ($404,253 in Q1 2025 vs. -$44,246 in Q1 2024).
- Overall gross profit increased to $2,859,559 in Q1 2025 from $2,342,101 in Q1 2024.
- Significant growth in Technology & Software revenue ($813,747 in Q1 2025 vs. $255,944 in Q1 2024).
- Improved gross margins in Brokerage (56.36% vs. 42.00%) and Wealth Management (12.05% vs. 9.99%).
- Strong cash position with $26,996,932 as of March 31, 2025.
- Increased working capital surplus to $10,082,745.
- Reduction in accumulated deficit to $2,480,382.
- Successful client acquisitions by Alchemy Markets Ltd., including approximately 2,631 clients from Next Markets with $5.6 million in client equity and 35 clients from a Cypriot brokerage with over $800,000 in client equity.
- Alchemy Markets Ltd. secured authorization to offer equities and money market securities, expanding its product portfolio.
Negatives
- Total revenue decreased by 6.26% ($5,976,948 in Q1 2025 vs. $6,376,335 in Q1 2024).
- Net income significantly decreased to $104,548 in Q1 2025 from $833,445 in Q1 2024.
- Brokerage (Trading) revenue experienced a substantial decline from $4,606,966 to $3,628,349.
- Sales and marketing expenses increased significantly by $229,279.
- Gross margin for Technology & Software decreased from 100.00% in Q1 2024 to 77.35% in Q1 2025 due to increased cost of sales.
- The filing is an amendment (10-Q/A) to correct errors, indicating issues with financial reporting controls.
Risks
- Independent auditors included an explanatory paragraph in their reports for fiscal years ending December 31, 2024, and 2023, regarding concerns about the ability to continue as a going concern.
- Management identified material weaknesses in internal controls over financial reporting as of March 31, 2024, due to inadequate segregation of duties, limited personnel, and insufficient written policies and procedures.
- The Ukraine-Russia conflict could negatively impact software development capabilities if technical and development operations cannot be relocated from Turkey to a safer zone.
- Unspecified legal claims or disputes were received on December 23, 2023, against APSI Holdings Limited (formerly Alchemy Prime Holdings Limited) and FDCTech, Inc., with potential material impact on business, financial condition, and results of operations.
- The majority of cash balances are held with non-FDIC financial institutions in Malta, the UK, and other countries, posing a concentration risk.
- While management plans to raise additional capital, the availability and terms of such financing cannot be guaranteed.
Future Outlook
The company expects to commercialize the Condor Investing & Trading App by the end of the 2025 fiscal year. Management intends to continue efforts to enhance revenue from its diversified portfolio of technological solutions and work toward achieving positive cash flow. The company plans to acquire long-lived assets to provide future economic benefits beyond fiscal year 2025. Management may explore revolving loan agreements with financial institutions or other funding options to complement its organic growth strategy. Existing cash reserves, short-term investments, and cash flows from operations are anticipated to be sufficient to fund domestic operating activities and fulfill cash commitments for at least the next 12 months. Capital expenditures are expected to rise to $1,000,000 over the next 12 months, covering working capital, software development, sales and marketing initiatives, and infrastructure enhancements.
Management Comments
- Management remains focused on strengthening the company's financial position by expanding its global customer base, increasing revenue from its diversified portfolio of technological solutions, and working toward achieving a positive cash flow.
- The company expects that its existing cash reserves, cash equivalents, operational cash flows, and access to private equity and capital markets will be sufficient to fund operations for at least the next 12 months.
- Management has reviewed and enhanced its consolidation and reporting controls to prevent similar errors in the future.
- Management intends to implement remediation steps to enhance our internal controls, addressing inadequate segregation of duties within account processes, limited personnel resources, and insufficient written policies and procedures for accounting, IT, financial reporting, and record-keeping.
Industry Context
FDCTech operates in the competitive fintech and financial services industries, specializing in OTC brokerage and wealth management. Its strategic model of acquiring and integrating small to mid-sized legacy financial services firms, coupled with proprietary technology development (Condor Trading Technology), positions it to enhance operational efficiencies and client engagement. The expansion into European markets through regulated subsidiaries (Malta, UK) and wealth management in Australia reflects a global diversification strategy. The focus on multi-asset trading platforms and mobile applications aligns with broader industry trends towards digital transformation and accessible trading solutions for both retail and professional clients. The termination of the bank acquisition and focus on non-US foreign exchange business indicates a strategic pivot towards core strengths and higher-growth areas within its existing segments.
Comparison to Industry Standards
- The filing does not provide specific comparable companies, projects, or detailed industry benchmarks with numerical results for a direct, specific comparison of FDCTech's performance against industry standards.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| CEO and COO of Alchemy Markets Ltd. | NA | Mitchell M. Eaglstein | 2024-05-27 | Appointment to oversee operations in Malta. |
| Independent Registered Public Accounting Firm | Olayinka Oyebola & Co. | Lao Professionals (LAO) | 2025-04-03 | Dismissal due to Olayinka's status as a Prohibited Service Provider by OTC Markets Group. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Auditor Change | Dismissal of Olayinka Oyebola & Co. as independent registered public accounting firm due to their status as a Prohibited Service Provider by OTC Markets Group, and engagement of Lao Professionals (LAO). | 2025-04-03 | Aims to ensure compliance and maintain audit integrity, addressing concerns raised by OTC Markets Group. |
| Internal Control Weakness | Identified material weakness in internal controls over financial reporting as of March 31, 2024, due to inadequate segregation of duties, limited personnel, and insufficient written policies and procedures. | 2024-03-31 | Requires remediation to improve financial reporting reliability and prevent errors or misstatements. |
| Financial Statement Restatement | Filed a 10-Q/A to correct errors in the previously issued condensed consolidated financial statements for the three months ended March 31, 2025, specifically due to erroneously including results of a subsidiary for a prior period. | 2025-08-05 | Highlights a need for enhanced consolidation and reporting controls to prevent similar errors in the future. |
Legal Proceedings
- Received legal correspondence on December 23, 2023, regarding unspecified legal claims or disputes addressed to APSI Holdings Limited (formerly Alchemy Prime Holdings Limited) and FDCTech, Inc. The company is assessing the situation and intends to defend its interests vigorously.
Related Party Transactions
- Issuance of 115,000,000 restricted common shares for $550,000 cash to Gope S. Kundnani (director) on January 25, 2023.
- Gope S. Kundnani purchased 2,500,000 Series A Preferred stock for $2.5 million on November 30, 2023.
- Gope S. Kundnani purchased 50,000,000 common stock for $5.5 million on November 30, 2023.
- Susan Eaglstein (mother of CEO) provided a $20,000 related party advance in December 2023, receiving 10,000 Series B Preferred Convertible Shares in January 2024.
- Issuance of 141,844 Series B preferred stock to Gope S. Kundnani for cash ($1.41 per share) on January 30, 2024.
- Issuance of 150,000 Series B preferred stock to Mitchell M. Eaglstein (CEO) for services ($1.41 per share) on January 4, 2024.
- Issuance of 150,000 Series B preferred stock to Imran Firoz (CFO) for services ($1.41 per share) on January 4, 2024.
- Issuance of 50,000 Series B preferred stock to FRH Group (founder and principal shareholder) for services ($1.41 per share) on January 4, 2024.
- Issuance of 10,000 Series B preferred stock to William B. Barnett, Esq., for services ($1.41 per share) on January 4, 2024.
- Issuance of 10,000 Series B preferred stock to Susan E. Eaglstein for services ($1.41 per share) on January 4, 2024.
- Issuance of 50,000 Series B preferred stock to Gope S. Kundnani for services ($1.41 per share) on January 4, 2024.
- Rescission and cancellation of 1,000,000 Series A Preferred Stock each for Mitchell M. Eaglstein and Felix R Hong on January 30, 2024.
- Issuance of 10,000 Series B preferred stock to Nick G. Kundnani for cash ($1.41 per share) on February 7, 2025.
Stakeholder Impact
- Shareholders face potential dilution from future capital raises and impact from legal proceedings, but may benefit from improved operational efficiency and strategic growth initiatives.
- Employees experienced relocation of personnel from Russia to Turkey due to geopolitical conflict, and some received shares from the company.
- Customers benefit from continued development of trading platforms (Condor Pro, Condor Investing & Trading App) and expanded services through acquisitions (AML client transfers, new authorizations).
- Creditors are impacted by the ongoing repayment of PPP and SBA loans and the potential for new debt financing.
- Regulatory authorities continue to oversee the company, which is subject to SEC, FINRA, ASIC, MFSA, and FCA regulations, and has undergone auditor changes due to regulatory status.
Next Steps
- Commercialize the Condor Investing & Trading App by the end of the 2025 fiscal year.
- Continue efforts to enhance revenue from diversified technological solutions.
- Work toward achieving positive cash flow.
- Raise funds through private placement offerings and debt financing.
- Acquire long-lived assets to provide future economic benefits beyond fiscal year 2025.
- Implement remediation steps to enhance internal controls, addressing inadequate segregation of duties, limited personnel, and insufficient written policies and procedures.
- Defend interests vigorously in the pending legal proceedings.
Key Dates
| Date | Description |
|---|---|
| 2016-01-21 | Company incorporated as Forex Development Corporation; Mitchell Eaglstein and Imran Firoz issued common shares as founders. |
| 2016-02-22 | Company borrowed $1,000,000 from FRH Group. |
| 2016-06-30 | Company obtained an unsecured revolving line of credit of $40,000 from Bank of America. |
| 2016-12-12 | Company issued 28,600,000 common shares to two founding members; Board agreed to issue preferred stock to Mitchell Eaglstein, Imran Firoz, and Felix R. Hong. |
| 2017-03-15 | Company issued 1,000,000 restricted common shares for platform development and 1,500,000 restricted common shares for professional services to three individuals. |
| 2017-03-16 | Stock Purchase Agreement with Susan Eaglstein and Brent Eaglstein. |
| 2017-03-17 | Company issued 1,000,000 shares to Susan Eaglstein for $50,000. |
| 2017-03-21 | Company issued 400,000 shares to Bret Eaglstein for $20,000. |
| 2017-04-24 | Convertible Promissory Notes due from FRH Group. |
| 2017-07-01 | Company issued 653,332 units for $98,000 under its offering Memorandum. |
| 2017-10-31 | Company issued 70,000 restricted common shares to management consultants. |
| 2018-02-27 | Company changed its name to FDCTech, Inc. |
| 2018-02-28 | Technical feasibility of Digital Assets Web Trader Platform established. |
| 2018-09-01 | Monthly compensation of $5,000 to CEO and CFO began. |
| 2019-01-15 | Company issued 60,000 restricted common shares for professional services to eight consultants. |
| 2019-01-29 | Company issued 33,000 registered shares under the Securities Act of 1933. |
| 2019-02-01 | Company leased office space in Limassol District, Cyprus. |
| 2019-02-15 | End of period for issuing 33,000 registered shares. |
| 2019-10-29 | Company leased office space at 200 Spectrum Center Drive, Irvine, CA. |
| 2020-05-01 | Company received proceeds of $50,632 from the Promissory Note (PPP Note) under the Paycheck Protection Program. |
| 2020-05-14 | Company received $4,000 in Economic Injury Disaster Loan (EIDL) grants. |
| 2020-05-22 | Company received $144,900 from an SBA loan. |
| 2020-06-03 | Company issued 2,745,053 shares of common stock to Benchmark Investments, Inc. |
| 2020-08-25 | Company and Broker-Dealers terminated all obligations, except for maintaining confidentiality. |
| 2020-10-01 | Company issued 250,000 restricted common shares to a digital marketing consultant; monthly compensation of $12,000 to CEO and CFO began. |
| 2021-01-31 | Company issued 2,300,000 restricted common shares in exchange for professional services to two consultants. |
| 2021-02-22 | Company entered into an Assignment of Debt Agreement with FRH and FRH Group Corporation, eliminating all four FRH Group convertible notes. |
| 2021-05-19 | Company issued 1,750,000 restricted common shares in exchange for professional services to a consultant. |
| 2021-06-02 | Company issued 1,750,000 restricted common shares under the Genesis Agreement to a consultant. |
| 2021-06-15 | Company appointed Jonathan Baumgart as Director; Company issued 100,000 restricted common shares to a board member. |
| 2021-07-02 | Board approved the dismissal of Farber Hass Hurley LLP (FHH) and appointed BF Borgers CPA PC (BFB) as the new independent registered public accounting firm. |
| 2021-07-06 | Company issued 100,000 restricted common shares to a board member. |
| 2021-07-20 | Company issued 545,852 restricted common shares in exchange for professional services to a consultant. |
| 2021-09-03 | Effective date for the Company's description of its common stock in the Registration Statement on Form S-1. |
| 2021-10-04 | Company filed a prospectus related to the resale of shares to White Lion and AD Securities America, LLC; issued 2,000,000 shares to AD Securities America, LLC and 670,000 shares to White Lion. |
| 2021-10-05 | Company issued 1,500,000 restricted common shares in exchange for professional services to a consultant. |
| 2021-11-01 | Company issued 750,000 registered shares to White Lion. |
| 2021-12-01 | Company issued 5,650,000 restricted common shares to two board members, a consultant, and two officers. |
| 2021-12-22 | Company acquired 51% of AD Financial Services Pty Ltd (ADFP). |
| 2022-01-04 | Company issued 1,500,000 restricted common shares in exchange for professional services to a consultant; Company issued 2,500,000 registered shares to White Lion. |
| 2022-01-27 | Company issued a $550,000 promissory note to AJB Capital Investments, LLC. |
| 2022-02-10 | Board approved Corporate Actions to increase authorized shares and approve the 2022 Equity Plan. |
| 2022-02-17 | Company filed Information Statement regarding Corporate Actions. |
| 2022-02-24 | The geopolitical situation in Eastern Europe intensified with Russia's invasion of Ukraine. |
| 2022-07-31 | Company issued 250,000 restricted common shares in exchange for professional services to a consultant. |
| 2022-08-31 | Company closed its technical support and development office in Russia. |
| 2022-09-30 | Company appointed Gope S. Kundnani as Director; Company issued 30,000,000 restricted common shares for cash and 5,000,000 restricted common shares to Gope S. Kundnani. |
| 2022-12-12 | Company issued 20,000,000 restricted common shares to two officers. |
| 2022-12-15 | Company issued 8,000,000 restricted common shares to two officers. |
| 2022-12-31 | Company acquired a 50.10% equity interest in New Star Capital Trading Ltd. and its operating subsidiary Alchemy Markets Ltd. (AML). |
| 2023-01-01 | Monthly compensation of $15,000 to CEO and CFO began. |
| 2023-01-25 | Company issued 5,309,179 restricted common shares to AJB as compensation; Company issued 115,000,000 restricted common shares for cash to Kundnani. |
| 2023-03-28 | Company issued 2,000,000 restricted common shares for cash. |
| 2023-06-30 | Company closed the acquisition of AML. |
| 2023-07-01 | Company leased a larger office space in the Limassol District, Cyprus; AML entered into a service agreement with Mindspace Ltd. |
| 2023-07-31 | Company sent notice of termination of the purchase agreement to CIM Securities. |
| 2023-09-30 | Company signed a definitive agreement with Alchemy Group. |
| 2023-10-31 | Company terminated the acquisition of Alchemy UAE. |
| 2023-11-30 | Company completed the acquisition of the remaining 49.90% of Alchemy Markets Holdings Ltd. and 100.00% of Alchemy Prime Limited (APL); Kundnani purchased 2,500,000 Series A Preferred stock and 50,000,000 common stock. |
| 2023-12-23 | Company received legal correspondence and supporting documents addressed to APSI Holdings Limited and FDCTech, Inc. |
| 2023-12-27 | Company redeemed AJB Warrants. |
| 2024-01-01 | Company leased office space at Level 38, 71 Eagle Street, Brisbane City, QLD, Australia. |
| 2024-01-04 | Company issued Series B preferred stock to Gope S. Kundnani, Mitchell M. Eaglstein, Imran Firoz, FRH Group, William B. Barnett, Esq., and Susan E. Eaglstein for services or cash. |
| 2024-01-26 | Second repayment of $100,000 to AJB Capital due. |
| 2024-01-30 | Board adopted and approved the rescission and cancellation of Series A Preferred Stock for Mitchell M. Eaglstein and Felix R Hong; Company issued 141,844 Series B preferred stock to Gope S. Kundnani. |
| 2024-03-04 | Board terminated relationship with Bolko & Company and approved engagement of Fortune CPA Inc. |
| 2024-03-19 | Company established Alchemytech Ltd. (ATECH), a Cypriot company. |
| 2024-04-01 | ATECH sublease agreement for office premises in Limassol, Cyprus, commences. |
| 2024-04-30 | Company terminated the letter of intent to acquire a community bank in Iowa and began paying a $100,000 termination sum. |
| 2024-05-09 | Company issued 2,000,000 shares for a cash value of $20,000. |
| 2024-05-27 | Mitchell M. Eaglstein appointed as the CEO and COO of Alchemy Markets Ltd. (AML). |
| 2024-07-02 | Board approved the engagement of Olayinka Oyebola & Co. as the new independent registered public accounting firm. |
| 2024-07-11 | AML leased office space with Regus Malta. |
| 2024-10-01 | ATECH sublease agreement for office premises in Limassol, Cyprus, commences. |
| 2024-11-30 | Final payment of $10,000 for the bank acquisition termination due. |
| 2024-12-20 | APL entered into a lease agreement for office space in London, United Kingdom. |
| 2025-01-01 | Company issued 32,000,000 shares to various employees of its subsidiaries. |
| 2025-02-07 | Company issued 10,000 Series B preferred stock to Nick G. Kundnani for cash. |
| 2025-03-31 | End of the current quarterly reporting period. |
| 2025-04-03 | Board approved the dismissal of Olayinka Oyebola & Co. and the engagement of Lao Professionals (LAO) as the new independent registered public accounting firm. |
| 2025-05-27 | Company formed a new wholly owned subsidiary, Prime Intermarket Group Eurasia (PIG Eurasia), in the Republic of Mauritius. |
| 2025-08-11 | Filing date of the Form 10-Q/A. |
| 2025-12-31 | Expected commercialization of the Condor Investing & Trading App. |
Recommendation
holdWhile the company shows improved operational efficiency (gross profit and operating income increase) and a stronger cash position, the significant drop in net income, the ongoing 'going concern' warning from auditors, and identified material weaknesses in internal controls present considerable risks. The strategic acquisitions and product development are positive, but the unspecified legal proceedings and reliance on future capital raises add uncertainty. A 'Hold' recommendation reflects the mixed signals, suggesting investors monitor the company's ability to address its internal control issues, resolve legal matters, and execute its growth strategy effectively before making further investment decisions.
Keywords
fintech, financial technology, wealth management, brokerage, trading platform, Condor Trading Technology, SEC filing, quarterly report, financial services, investment, risk management, corporate governance, Australia, Malta, UK, forex, equities, commodities, digital assets
Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.