10-Q: FDCTech Q3 2025: Profitability Rises Amid Strategic Acquisitions

FDCTech, Inc. reported a significant shift to net income in Q3 2025, driven by strong technology and wealth management growth, alongside strategic acquisitions and plans for further expansion.

Summary

• Shifted from a net loss of $861,395 in the nine months ended September 30, 2024, to a net income of $436,159 for the same period in 2025.
• Total revenue for the nine months ended September 30, 2025, was $17,315,723, a 4.75% decrease from $18,178,864 in 2024.
• Technology & Software Development revenue surged by 212.8% to $3,400,210 in 2025 from $1,086,844 in 2024.
• Wealth Management revenue increased slightly to $4,976,601 in 2025 from $4,922,551 in 2024.
• Brokerage (Trading) revenue decreased to $8,938,912 in 2025 from $12,169,469 in 2024.
• Gross margins improved across all segments: Investment and Brokerage (61.31% from 47.71%), Wealth Management (11.37% from 9.36%), and Technology & Software Development (100.00% from 88.99%).
• Cash balance as of September 30, 2025, was $24,777,611, with a working capital surplus of $9,426,209.
• Accumulated deficit reduced from $2,563,620 at December 31, 2024, to $2,241,003 at September 30, 2025.
• Acquired Alchemy International Ltd., a Seychelles-licensed securities dealer, on November 11, 2025, reporting $7.56 million in revenue and $3.91 million net profit year-to-date September 30, 2025.
• Xoala Asia, a new subsidiary, was granted a Payment Intermediary Services (PIS) license in Mauritius on November 6, 2025.

Sentiment

Score: 7

Explanation: The company demonstrated a significant turnaround to profitability and strong growth in its technology segment, coupled with strategic acquisitions and new licenses that promise future expansion. However, the overall revenue decline, internal control weaknesses, and ongoing legal challenges temper the positive outlook, indicating a moderately positive but cautious sentiment.

Positives

• Achieved net income of $436,159 for the nine months ended September 30, 2025, a significant improvement from a net loss of $861,395 in the prior year.
• Technology & Software Development revenue more than tripled, growing 212.8% to $3,400,210.
• Gross margins improved across all three business segments, notably reaching 100% in Technology & Software Development.
• Successful acquisition of Alchemy International Ltd., a profitable Seychelles-licensed securities dealer, expected to significantly boost future revenue and net profit.
• Expansion into new markets and services with the granting of a Payment Intermediary Services (PIS) license to Xoala Asia in Mauritius.
• Reduction in accumulated deficit from $2,563,620 to $2,241,003.
• Working capital surplus increased to $9,426,209 from $9,097,591.

Negatives

• Overall consolidated revenue decreased by 4.75% for the nine months ended September 30, 2025, primarily due to a significant decline in Brokerage (Trading) revenue.
• Brokerage (Trading) revenue decreased by 26.55% to $8,938,912 from $12,169,469 in the prior year.
• Disclosure controls and procedures were deemed "not effective" as of September 30, 2025, due to inadequate segregation of duties, limited personnel, and insufficient written policies.
• Ongoing legal proceedings, including a $1.02 million claim against the company and a €419,997 administrative penalty against a subsidiary, create financial uncertainty.
• The company's independent auditors previously included an explanatory paragraph regarding concerns about its ability to continue as a going concern.

Risks

• Litigation Uncertainty: The company is involved in multiple legal proceedings, including a $1.02 million claim from former Alchemy Markets Ltd. shareholders and an appeal against a €419,997 FIAU penalty, with uncertain outcomes that could materially affect financial condition.
• Internal Control Weaknesses: Inadequate segregation of duties, limited personnel, and insufficient written policies and procedures for accounting, IT, and financial reporting pose a risk to the reliability of financial reporting.
• Going Concern Risk: Despite improved financial results, independent auditors previously raised concerns about the company's ability to continue as a going concern, and future strategic growth initiatives may require additional capital that cannot be guaranteed.
• Foreign Currency Translation Risk: Operations in multiple foreign currencies (AUD, EUR, GBP) expose the company to foreign currency translation adjustments, which can impact comprehensive income.
• Reliance on Acquisitions: The strategic growth model is centered on acquiring, integrating, and scaling legacy financial services firms, which carries inherent risks related to integration, regulatory compliance, and achieving expected synergies.
• Regulatory Scrutiny: Subsidiaries like AD Advisory Services (ADS), Alchemy Markets Ltd. (AML), and Alchemy Prime Ltd. (APL) are subject to enhanced regulatory scrutiny by ASIC, MFSA, and FCA, respectively, increasing compliance costs and potential for penalties.
• Geopolitical Risks: The Ukraine-Russia conflict led to the relocation of technical support and development office from Russia to Turkey, with potential for further relocation if military activities worsen, which could impact software development capabilities.
• Concentration of Cash in Foreign Institutions: A majority of the cash balance is held with non-FDIC financial institutions in Malta, the UK, and other countries, potentially exposing the company to higher risk compared to FDIC-insured accounts.
• Related Party Transactions: Extensive related party transactions, including stock issuances and advances, could raise questions about corporate governance and potential conflicts of interest.

Future Outlook

The company expects to commercialize its Condor Investing & Trading App by the end of fiscal year 2025. Management intends to continue efforts to enhance revenue from its diversified portfolio of technological solutions, achieve positive cash flow, and raise funds through private placement offerings and debt financing. The company plans to invest in long-lived assets to drive economic benefits beyond fiscal year 2025 and continue its acquisition strategy to build a diversified global financial services company.

Management Comments

• "We are building a diversified global financial services company driven by proprietary Condor trading technologies, complementary regulatory licenses, and a proven executive team."
• "We plan to acquire, integrate, transform, and scale legacy financial service companies."
• "We believe our proprietary technology and software development capabilities allow legacy financial services companies immediate exposure to forex, stocks, ETFs, commodities, digital assets, social/copy trading, and other high-growth fintech markets."
• "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."
• "Mitchell M. Eaglstein, CEO, was appointed as the CEO and COO of Alchemy Markets Ltd. (AML) to oversee operations in Malta."

Industry Context

FDCTech operates in the highly competitive and regulated fintech and financial services industries. Its strategy of acquiring and integrating legacy financial services firms, coupled with proprietary technology development, positions it to capitalize on the demand for multi-asset trading platforms and wealth management solutions. The expansion into Mauritius with a Payment Intermediary Services license reflects a broader industry trend towards diversified financial offerings and global reach, particularly in emerging markets. The company's focus on regulatory-grade technology and compliance is crucial in an environment of increasing regulatory scrutiny across global financial markets.

Comparison to Industry Standards

• The company's strategy of acquiring and integrating small to mid-sized legacy financial services companies is a common approach in the fragmented fintech and brokerage sectors, aiming for market consolidation and technology upgrades.
• The development of the Condor Pro Multi-Asset Trading Platform and the upcoming Condor Investing & Trading App aligns with the industry trend of providing comprehensive, user-friendly trading solutions across various asset classes (forex, equities, commodities, digital assets) to cater to both professional and retail investors.
• The acquisition of Alchemy International Ltd. (AIL), a Seychelles-licensed securities dealer, and the PIS license for Xoala Asia in Mauritius, indicate a strategic move to expand into offshore and emerging markets, similar to how larger global brokers establish regulated entities in various jurisdictions to serve a broader client base.
• The reported gross margin of 100% for Technology & Software Development in 2025 is exceptionally high, suggesting a highly scalable software licensing model with minimal direct costs, which is a strong competitive advantage compared to traditional service-based models.
• The company's ongoing legal challenges, particularly the FIAU penalty related to pre-acquisition compliance issues, highlight the significant regulatory risks inherent in acquiring financial services firms, a common due diligence challenge in the industry.
• The disclosure of "not effective" internal controls due to limited personnel and inadequate segregation of duties is a significant concern, often seen in smaller reporting companies, and contrasts with the robust control environments expected of larger, more mature financial institutions.

Management Changes

Corporate Governance

Legal Proceedings

• Asher Alkoby, et al. v. FDCTech: Claim for approximately $1.02 million by former shareholders of Alchemy Markets Ltd. (AML) in London Circuit Commercial Court, alleging amounts owing under a Share Sale Agreement. FDCTech counterclaims for $915,000 due to undisclosed anti-money laundering deficiencies and misrepresentations regarding net capital. A case management conference is scheduled for November 17, 2025.
• FDCTech, Inc. v. Intelligenceline.com, Fintelegram.com, et al.: Defamation suit filed in Superior Court of California, County of Orange, alleging false and defamatory statements accusing the Company of fraud, illegal conduct, and regulatory violations, seeking damages and injunctive relief. A hearing is scheduled for December 15, 2025.
• Alchemy Markets Ltd. v. Il-Korp gall-Analizi ta Informazzjoni Finanzjarja (FIAU Matters): Two pending proceedings in Malta challenging an administrative penalty of €419,997 imposed by the FIAU based on a 2019 compliance examination (pre-acquisition). These include an administrative appeal and a constitutional challenge, both in the evidentiary phase. A hearing was held on October 24, 2025.

Related Party Transactions

• Between February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder, via Convertible Promissory Notes.
• Between March 15 and 21, 2017, the Company issued 1,000,000 shares to Susan Eaglstein and 400,000 shares to Brent Eaglstein (mother and brother of CEO Mitchell Eaglstein) for a cumulative cash amount of $70,000.
• On February 22, 2021, the Company eliminated FRH Group convertible notes, including interest, of $1,256,908, in return for issuing 12,569,080 unregistered common stock to FRH, which then assigned them to FRH Group Corporation (also owned by Mr. Hong).
• In September 2022, the Company issued 5,000,000 restricted common shares to Gope S. Kundnani (director) as directors compensation valued at $60,000.
• In January 2023, the Company issued 115,000,000 restricted common shares for cash valued at $550,000 to Kundnani.
• In January 2023, Eaglstein and Firoz transferred 1,100,000 and 400,000 shares, respectively, to Kundnani.
• As of September 30, 2023, Eaglstein, Kundnani, and Hong held 1,500,000, 1,500,000, and 1,000,000 preferred shares, respectively.
• On November 30, 2023, the Company purchased 499 shares of Alchemy Markets Holdings Ltd. and 100% of Alchemy Prime Limited from Alchemy Prime Holdings Ltd. (APHL), a related party solely owned by Kundnani, in exchange for 833,621 and 966,379 Series B Preferred Stock, respectively.
• On November 30, 2023, Kundnani purchased 2,500,000 Series A Preferred stock for $2.5 million and 50,000,000 common stock for $5.5 million.
• In December 2023, Susan Eaglstein provided $20,000 as a related party advance for working capital, receiving 10,000 Series B Preferred Convertible Shares in January 2024.
• On January 4, 2024, the Company issued 141,844 Series B preferred stock to Gope S. Kundnani for cash valued at $1.41 per share.
• On January 4, 2024, the Company issued 150,000 Series B preferred stock each to Mitchell M. Eaglstein (CEO and Director) and Imran Firoz (CFO and Director) for services valued at $1.41 per share.
• On January 4, 2024, the Company issued 50,000 Series B preferred stock to FRH Group for services valued at $1.41 per share.
• On January 4, 2024, the Company issued 10,000 Series B preferred stock to William B. Barnett, Esq., for services valued at $1.41 per share.
• On January 4, 2024, the Company issued 10,000 Series B preferred stock to Susan E. Eaglstein for services valued at $1.41 per share.
• On January 4, 2024, the Company issued 50,000 Series B preferred stock to Gope S. Kundnani for services valued at $1.41 per share.
• On January 30, 2024, the Board approved the rescission and cancellation of 1,000,000 Series A Preferred Stock each issued to Mitchell M. Eaglstein and Felix R Hong.
• On February 07, 2025, the Company issued 10,000 Series B preferred stock to Nick G. Kundnani for cash valued at $1.41 per share.
• The acquisition of Alchemy International Ltd. on November 11, 2025, was a related party transaction as Mr. Gope Shyamdas Kundnani is a member of the Company's board of directors and the sole beneficial owner of Alchemy International Ltd.

Stakeholder Impact

• Shareholders: Potential for dilution from increased authorized shares and future capital raises. Positive impact from improved profitability and strategic acquisitions, but uncertainty from legal proceedings and internal control weaknesses.
• Employees: Issuance of shares to employees of subsidiaries indicates potential for incentive alignment. Relocation of personnel from Russia to Turkey due to geopolitical conflict impacts employees.
• Customers: Expansion of services (e.g., Condor Investing & Trading App, PIS license) and broader market reach through acquisitions aim to enhance customer offerings and engagement.
• Regulatory Authorities: Ongoing legal challenges with FIAU and the "not effective" internal controls highlight areas of concern and require significant attention to maintain compliance and avoid further penalties.
• Creditors: Improved net income and working capital surplus may enhance the company's creditworthiness, but outstanding loans and potential future debt financing will be closely monitored.

Next Steps

• Commercialize the Condor Investing & Trading App by the end of fiscal year 2025.
• Implement compliance, technology, and operating framework for Xoala Asia's PIS license in Mauritius, followed by onboarding merchants and partners.
• Continue efforts to enhance revenue from diversified technological solutions.
• Work towards achieving positive cash flow.
• Explore and execute private placement offerings and debt financing to raise additional capital.
• Invest in long-lived assets to provide future economic benefits beyond fiscal year 2025.
• Implement remediation steps to enhance internal controls, addressing segregation of duties, personnel resources, and written policies.
• Defend vigorously against ongoing legal proceedings, including the $1.02 million claim and the €419,997 FIAU penalty.
• The Board may effect a Reverse Stock Split (1-for-10 to 1-for-100) by June 30, 2026.
• Complete preliminary purchase price allocation for Alchemy International Ltd. acquisition within one year.

Key Dates

Recommendation

FDCTech's shift to profitability and strong growth in its technology segment are positive indicators. Strategic acquisitions like Alchemy International Ltd. and new licenses in Mauritius offer significant growth potential and market expansion. However, the overall revenue decline, particularly in brokerage, coupled with persistent internal control weaknesses and multiple ongoing legal proceedings, introduce considerable uncertainty and risk. The authorization for a reverse stock split, while potentially aimed at improving share price, can also be viewed cautiously. Given the mixed financial performance, the promising strategic moves, and the notable operational and legal risks, a 'hold' recommendation is appropriate. Investors should monitor the resolution of legal issues, the effectiveness of internal control remediation, and the successful integration and performance of new acquisitions before considering further investment.

Keywords

Fintech, Financial Technology, Brokerage, Wealth Management, Trading Platform, SEC Filing, 10-Q, Quarterly Report, Acquisition, Alchemy International, Condor Trading Technology, Regulatory Compliance, Forex, CFD, Digital Assets, Seychelles FSA, Mauritius FSC, Internal Controls, Legal Proceedings, Related Party Transactions