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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended June 30, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission File No. 000-56338

 

FDCTECH, INC.

(Exact name of the small business issuer as specified in its charter)

 

Delaware   81-1265459

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

200 Spectrum Center Drive, Suite 300

Irvine, CA 92618

(Address of principal executive offices)

 

(877) 445-6047

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.0001   FDCT   OTC Markets

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No

 

The number of shares of Common Stock, $0.0001 par value, of the registrant outstanding on August 11, 2023, was 333,584,729.

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page No.
PART I.
     
  Item 1. Financial Statements. F-1
     
  Consolidated Balance Sheets as of June 30, 2023 (Unaudited), and December 31, 2022 (Audited) F-2
     
  Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited) F-3
     
  Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited) F-4
     
  Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (Unaudited) F-6
     
  Notes to Unaudited Consolidated Financial Statements F-7
     
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
     
  Item 3. Quantitative and Qualitative Disclosures About Market Risks. 11
     
  Item 4. Controls and Procedures 11
     
PART II.
     
  Item 1. Legal Proceedings. 12
     
  Item 1A. Risk Factors. 12
     
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 12
     
  Item 3. Defaults Upon Senior Securities. 12
     
  Item 4. Mine Safety Disclosures. 12
     
  Item 5. Other Information. 12
     
  Item 6. Exhibits. 12
     
SIGNATURES 13
     
EXHIBIT INDEX 14

 

2

 

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (“Form 10-Q”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue, or other financial items; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.

 

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “desire,” “goal,” “should,” “objective,” “seek,” “plan,” “strive” or “anticipate,” as well as variations of such words or similar expressions, or the negatives of these words. These forward-looking statements present our estimates and assumptions only as of the date of this Form 10-Q. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend and undertake no obligation to update any forward-looking statement. We caution readers not to place undue reliance on any such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes will likely vary materially from those indicated.

 

3

 

 

PART I.

 

Item 1. Financial Statements.

 

FDCTECH, INC.

 

Index to Consolidated Financial Statements

 

  Pages
   
Consolidated Balance Sheets as of June 30, 2023 (Unaudited), and December 31, 2022 (Audited) F-2
   
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited) F-3
   
Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited) F-4
   
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (Unaudited) F-6
   
Notes to the Consolidated Financial Statements F-7

 

F-1

 

 

FDCTECH, INC.

 

CONSOLIDATED BALANCE SHEETS

 

  

June 30,

2023
(Unaudited)

  

December 31,

2022
(Audited)

 
Assets          
Current assets:          
Cash  $127,057   $264,829 
Accounts receivable, net of allowance for doubtful accounts of $136,487 and $123,987, respectively   2,857,581    65,583 
Other current assets   1,142,499    435,814 
OID promissory note   -    55,000 
Total Current assets   4,127,137    821,226 
Fixed assets, net   3,096    - 
Capitalized software, net   895,748    761,642 
Acquired tangible assets   35,953    38,059 
Acquired intangible assets   2,600,800    2,646,615 
           
Total assets  $7,662,734   $4,267,542 
Liabilities and Stockholders’ Deficit          
Current liabilities:          
Accounts payable  $519,450   $429,500 
Line of credit   50,310    47,369 
Payroll tax payable   226,779    204,828 
Business acquisition loan   350,000    - 
Promissory note   -    550,000 
Cares act- paycheck protection program advance   32,644    40,139 
Other current liabilities   640,632    99,488 
Total Current liabilities   1,819,815    1,371,324 
SBA loan – non-current   126,941    131,194 
Deferred tax liabilities   349,326    - 
Accrued interest – non-current   17,386    14,704 
Total liabilities   2,313,468    1,517,222 
Commitments and Contingencies (Note 9)   -    - 
Stockholders’ Deficit:          
Preferred stock, par value $0.0001, 10,000,000 shares authorized, 4,000,000 issued and outstanding, as of June 30, 2023, and December 31, 2022   400    400 
Common stock, par value $0.0001, 500,000,000 shares authorized; 333,584,729 and 211,275,550 shares issued and outstanding, as of June 30, 2023 and December 31, 2022   33,358    21,127 
Additional paid-in capital   6,349,824    5,725,530 
Accumulated other comprehensive income   (8,933)   (6,169)
Accumulated deficit   (3,649,885)   (4,335,053)
Total FDCTech, Inc. stockholders’ equity (deficit)   2,724,764    1,405,835 
Noncontrolling interest   2,624,502    1,344,485 
Total liabilities and stockholders’ deficit  $7,662,734   $4,267,542 

 

See accompanying notes to the financial statements.

 

F-2

 

 

FDCTECH, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

   June 30,
2023
   June 30,
2022
   June 30,
2023
   June 30,
2022
 
   Three Months Ended   Six Months Ended 
   June 30,
2023
   June 30,
2022
   June 30,
2023
   June 30,
2022
 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Revenues                    
Technology & software  $301,315   $89,000   $474,565   $156,500 
Wealth management   1,463,834    1,436,849    2,836,271    2,910,471 
Total revenue   1,765,149    1,525,849    3,310,836    3,066,971 
Cost of sales                    
Technology & software   3,471    60,494    22,503    120,988 
Wealth management   1,319,021    1,310,234    2,549,135    2,625,190 
Total cost of sales   1,322,492    1,370,728    2,571,638    2,746,178 
Gross Profit   442,657    155,121    739,198    320,793 
Operating expenses:                    
General and administrative   485,020    456,000    979,709    845,053 
Sales and marketing   11,818    70,055    41,823    239,448 
Total operating expenses   496,838    526,055    1,021,532    1,084,501 
Operating income (loss)   (54,181)   (370,934)   (282,334)   (763,708)
Other income (expense):                    
Gain on purchase   979,342    -    979,342    - 
Other interest expense   (1,454)   (10,546)   (10,852)   (21,726)
Other income (expense)   (1,363)   7    (988)   17 
Total other income (expense)   976,525    (10,539)   967,502    (21,709)
Income (loss) before provision for income taxes   922,343    (381,473)   685,168    (785,417)
Provision (benefit) for income taxes   -    -    -    - 
Net income (loss)   922,343    (381,473)   685,168    (785,417)
Less: Net income attributable to noncontrolling interest   (43,525)   (51,246)   (43,525)   (36,499)
Net income attributable to FDCTech’s shareholders  $965,868   $(330,227)  $728,693   $(748,918)
Net income (loss) per common share, basic and diluted  $(0.00)  $(0.00)  $(0.01)  $(0.01)
Weighted average number of common shares outstanding basic and diluted   333,584,729    148,025,550    316,587,950    147,369,598 

 

See accompanying notes to the financial statements

 

F-3

 

 

FDCTECH, INC.

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

   Shares   Amount   Shares   Amount   Capital   Income   Deficit   (Deficit) 
   Preferred stock   Common stock   Additional Paid-in   Accumulated Other Comprehensive   Accumulated   Total Stockholders’
Equity
 
   Shares   Amount   Shares   Amount   Capital   Income   Deficit   (Deficit) 
Three months ended June 30, 2022                                        
                                         
Balance, March 31, 2022   4,000,000   $400    148,025,550   $14,802   $5,120,380   $-   $(3,619,875)  $1,515,708 
Net loss adjustment for previous period ended March 31, 2022   -    -    -    -    -    -    (29,496)   (29,496)
Forex gain (loss) on consolidation   -    -    -    -    -    (6,169)   -    (6,169)
Net loss   -    -    -    -    -    -    (330,227)   (330,227)
Balance, June 30, 2022  $4,000,000   $400   $148,025,550   $14,802   $5,120,380   $(6,169)  $(3,979,597)  $1,149,816 
Three months ended June 30, 2023                                        
Balance, March 31, 2023   4,000,000   $400   $333,584,729   $33,358   $6,349,824   $(7,176)  $(4,572,228)  $1,804,178 
                                         
Forex gain (loss) on consolidation   -    -    -    -    -    (1,757)   -    (1,757)
Net Income (loss)   -    -    -    -    -    -    922,343    922,343 
Balance, June 30, 2023  $4,000,000   $400   $333,584,729   $33,358   $6,349,824   $(8,993)  $(3,649,885)  $2,724,764 

 

See accompanying notes to the financial statements

 

F-4

 

 

FDCTECH, INC.

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

   Preferred stock   Common stock   Additional Paid-in   Accumulated Other Comprehensive   Accumulated   Total Stockholders’ 
   Shares   Amount   Shares   Amount   Capital   Income   Deficit   Deficit 
Six months ended June 30, 2022                                        
                                         
Balance, December 31, 2021   4,000,000   $400    141,811,264   $14,181   $4,841,545   $-   $(3,230,679)  $1,625,448 
Common shares issued for cash valued at $0.0625 per share   -    -    500,000    50    31,200    -    -    31,250 
Common shares issued for services valued at $0.0625 per share   -    -    1,500,000    150    93,600    -    -    93,750 
                                         
Common shares issued for cash valued at $0.05 per share   -    -    500,000    50    24,950    -    -    25,000 
Common shares issued for cash valued at $0.0408 per share   -    -    500,000    50    20,335    -    -    20,385 
Common shares issued for financing cost valued at $0.0323 per share   -    -    2,214,286    221    71,300    -    -    71,521 
Common shares issued for cash valued at $0.0356 per share   -    -    500,000    50    17,750    -    -    17,800 
Common shares issued for cash valued at $0.0395 per share   -    -    500,000    50    19,700    -    -    19,750 
Forex gain (loss) on consolidation   -    -    -    -    -    (6,169)   -    (6,169)
Net loss   -    -    -         -         (748,918)   (748,918)
Balance, June 30, 2022   4,000,000   $400    148,025,550   $14,802   $5,120,380   $(6,169)  $(3,979,597)  $1,149,816 
Six Months Ended June 30, 2023                                        
Balance, December 31, 2022   4,000,000   $400    211,275,550   $21,127   $5,725,530   $(6,169)  $(4,335,053)  $1,405,835 
Common shares issued for cash valued at $0.0114 per share   -    -    5,309,179    531    59,994    -    -    60,525 
Common shares issued for services valued at $0.0048 per share   -    -    115,000,000    11,500    538,500    -    -    550,000 
Common shares issued for cash valued at $0.013 per share   -    -    2,000,000    200    25,800    -    -    26,000 
FX gain (loss) on consolidation   -    -    -    -    -    (2,764)   -    2,764)
Net loss   -    -    -    -    -    -    685,168    685,168 
Balance, June 30, 2023  $4,000,000   $400   $333,584,729   $33,358   $6,349,824   $(8,993)  $(3,649,885)  $2,724,764 

 

F-5

 

 

FDCTECH, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

  

June 30,

2023

  

June 30,

2022

 
   Six Months Ended 
  

June 30,

2023

  

June 30,

2022

 
Net Income (loss)  $685,168   $(748,918)
Adjustments to reconcile net loss to net cash used in operating activities:          
Software depreciation and amortization   22,503    120,988 
Common stock issued for services   60,525    165,271 
Acquired tangible assets   2,106    6,067 
Acquired intangible assets   45,815    (47,472)
Change in assets and liabilities:          
Gross accounts receivable   (2,791,998)   (16,000)
Fixed assets, net   (3,096)     
Accounts payable   89,950    (44,715)
Other current liabilities   541,144    137,107 
Debt issuance cost   -    (20,719)
OID of promissory note   55,000    (55,000)
Other current assets   (706,685)   120,043 
Accrued interest   2,682    2,781 
Increase in accrued payroll tax   21,951    19,937 
Deferred tax liabilities   349,326      
Net cash used in operating activities  $(1,625,609)  $(360,630)
Investing Activities:          
Capitalized software   (156,609)   (129,025)
Net cash used in investing activities  $(156,609)  $(129,025)
Financing Activities:          
Borrowing from (payments to) line of credit   2,941    (5,268)
Proceeds from promissory note   (550,000)   550,000 
Net proceeds (payment to) from SBA loan   (11,748)   (4,253)
Business acquisition loan   350,000    - 
Net proceeds from common stock   576,000    114,185 
Related party advances   -    (81,000)
Increase (decrease) in non-controlling interest   1,277,253    (36,499)
Forex gain (loss) on consolidation   -    (6,169)
Net cash provided by financing activities  $1,644,446   $530,997 
Net increase (decrease) in cash   (137,772)   41,342 
Cash at beginning of the period   264,829    93,546 
Cash at end of the period  $127,057   $134,888 
Cash paid for income taxes  $-   $- 
Cash paid for interest  $-   $- 
Common stock issued for note conversion   -    - 

 

See accompanying notes to the financial statements

 

F-6

 

 

NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS

 

Under Delaware laws, the founders incorporated the Company as Forex Development Corporation on January 21, 2016. On February 27, 2018, the Company changed its name to FDCTech, Inc. The name change reflects the Company’s commitment to expanding its products and services in the FX and financial markets for OTC brokers. The Company provides innovative and cost-efficient financial technology (‘fintech’) and business solutions to OTC Online Brokerages (“customers”).

 

The Company intends to build a diversified global financial services company driven by proprietary Condor trading technologies, complementary regulatory licenses, and a proven executive team. The Company plans to acquire, integrate, transform, and scale legacy financial service companies. The Company believes its proprietary technology and software development capabilities allow legacy financial services companies immediate exposure to –forex, stocks, ETFs, commodities, social/copy trading, and other high-growth fintech markets.

 

From December 2021 onwards, the Company expects to grow from its acquisition strategy, specializing in buying and integrating small to mid-size legacy financial services companies. The Company intends to build a diversified global software-driven financial services company. The Company plans to acquire, integrate, transform, and scale legacy financial service companies. The Company replaces conventional legacy software infrastructure with its regulatory-grade proprietary Condor trading technologies, intending to improve end-user experience, increase client retention, and realize cost synergies.

 

Currently, we have three primary business segments, (1) Wealth Management, (2) Technology and Software Development, and (3) Margin Brokerage Business. The Company has signed a definitive agreement to acquire a controlling interest in the US Brokerage business pending regulatory approval.

 

Wealth Management – AD Advisory Services Pty Ltd.

 

On December 22, 2021, the Company entered into a Share Exchange Agreement (the “Agreement”) with AD Financial Services Pty Ltd ACN 628 331 117 of Level 38/71 Eagle St, Brisbane, Queensland, Australia, 4000 (“ADFP” or “Target”). According to the Agreement, the Company acquired 51% of ADFP’s issued and outstanding shares of capital stock in exchange for 45,000,000 (the “Consideration”) newly issued “restricted” common shares. The operating and licensed entity of ADFP is AD Advisory Services Pty Ltd. ADFP owns one hundred percent (100%) equity interest in AD Advisory Services Pty Ltd (“ADS”). As a result, the Company is the 51.00% owner of ADS. The Company closed the acquisition on December 22, 2021, and combined the financial statements of ADS in its annual report, 10-K, filed with the SEC on March 28, 2022.

 

AD Advisory Services Pty Ltd. (ADS) is an Australian-regulated wealth management company with 20 offices, 28 advisors, and $530+ million in funds under advice. ADS provides licensing solutions for financial advisers & accountants in Australia. ADS offers financial planners different licensing, compliance, and education solutions to meet their practice’s specific needs. ADS’ revenues, cost of sales, and gross profits for the six months ending June 30, 2023, were $2,836,271, $2,549,135, and $287,136, respectively.

 

Margin Brokerage – Alchemy Markets Ltd. (formerly known as NSFX Ltd.) Acquisition

 

On December 31, 2022, the Company announced the sales purchase agreement (“Agreement”) under which the Company acquired a 50.10% equity interest in New Star Capital Trading Ltd., a British Virgin Island company (“New Star”) and its operating subsidiary Alchemy Markets Ltd. formerly known as NSFX Ltd., [(Alchemy (Malta)]. Alchemy (Malta) is an online trading brokerage firm regulated by the Malta Financial Services Authority (MFSA). The Company will assume a business acquisition loan liability of $350,000 to purchase the controlling interest in Alchemy (Malta). The Company amended the Agreement to February 28, 2023, to comply with the BVI Companies Act requirement for the change of ownership. The Company expects to consolidate the fair value of Alchemy (Malta)’s assets and liabilities on or after February 28, 2023, but no later than June 30, 2023. The Company closed Alchemy (Malta) transactions as of June 30, 2023.

 

F-7

 

 

NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)

 

Alchemy (Malta) is authorized to deal with its account (market maker) as a Category 3 licensed entity by the MFSA, receive and transmit orders for retail and professional clients, and hold and control clients’ money and assets. Alchemy (Malta) services its customers in the English, French, German, Italian, and Arabic-speaking markets. The customers can trade in currency, commodity, equity, and other derivatives in real time.

 

Alchemy (Malta)’s Balance Sheet as of June 30, 2023 (Acquisition Date):

 

 SCHEDULE OF BUSINESS ACQUISITIONS

Description  Fair Value, $ 
Cash and cash equivalents (1)   24,510 
Financial assets at fair value through profit and loss (2)   741,231 
Receivables (3)   2,715,888 
Fixed assets (4)   3,096 
- Current liabilities (5)   (482,022)
- Deferred tax liabilities (6)   (349,326)
Net assets (A)   2,653,377 
Purchase Price 50.10% (B)   350,000 
Non-controlling interest (C), 49.90%   1,324,035 
FDCTech gain on bargain purchase (A) – (B) – (C)   979,342 

 

According to the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 805, “Business Combinations,” the accounting acquirer is the entity that obtains control of the acquiree. We have determined that the Company is the accounting acquirer based on the following factors:

 

The relative voting rights. The Company holds the majority of Alchemy (Malta)’s voting rights; therefore, we are the accounting acquirer.
The composition of the governing body. The Company is the governing body of Alchemy (Malta), and we are the accounting acquirer.
The composition of the senior management. If the senior management comprises primarily the management personnel from one of the combining entities, that entity is likely the accounting acquirer.

 

We have determined the method of accounting for the business combination. The accounting acquirer applies the acquisition method and recognizes the acquiree’s identifiable assets, liabilities, and any noncontrolling interest in the acquiree at their fair values as of the acquisition date. The fair values of Alchemy (Malta)’s assets and liabilities equal their carrying amounts. Therefore, we did not need any adjustments to the carrying amounts of these assets and liabilities on the Company’s balance sheet.

 

(1)We recognize cash and cash equivalents held by Alchemy (Malta) and deposits in bank accounts that can be accessed on demand or within 90 days. They are included in our cash and cash equivalents in the consolidated balance sheet as of June 30, 2023. We hold client funds held by Alchemy (Malta) in the normal course of business in a fiduciary capacity; we do not include such funds in these financial statements.
   
(2)Financial assets at fair values for Alchemy (Malta)’s through profit and loss are derivative contracts in favor of Alchemy (Malta). They are included in our other current assets in the consolidated balance sheet as of June 30, 2023. We determine financial assets at fair values by reference to market prices or rates quoted at the end of the reporting period. Observable market prices or rates support the valuation techniques since their variables include only data from observable markets. We categorize Alchemy (Malta)’s derivative financial instruments as level 2.
   
(3)Alchemy (Malta)’s receivables mostly consist of amounts due from previous shareholders of New Star and are included in our accounts receivable in the consolidated balance sheet as of June 30, 2023.
   
(4)All property and equipment are initially recorded at historical cost and included in our fixed assets, net in the consolidated balance sheet as of June 30, 2023. Historical cost includes expenditures directly attributable to the acquisition of the items. We calculate depreciation using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives.
   
(5)We recognize deferred tax using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. We include deferred tax liabilities in our consolidated balance sheet as of June 30, 2023. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it stems from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and Malta laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

 

CIM Acquisition Update

 

On July 19, 2022, the Company signed a non-binding letter of intent to acquire fifty-one percent (51.00%) equity interest in CIM Securities, LLC (“CIM Securities”), a FINRA and SIPC member firm. On September 30, 2022, the Company signed a definitive agreement pending regulatory approval, paid a $20,000 non-refundable deposit, and transferred $180,000 to the escrow account to complete the transaction. The Company filed the CMA form with FINRA in February 2023. Once the Company receives approval from FINRA and pays the balance of $180,000, it will start consolidating income statements and balance sheets as it holds the controlling interest in CIM Securities.

 

At July 31, 2023, the Company sent the notice of termination of the purchase agreement to CIM Securities as future events may result in a change of ownership in the CMA application. The Company believes that this would cause further delay in the approval process. Our board has mandated the management team to concentrate on expanding and developing our core non-US forex business to maximize shareholder value.

 

F-8

 

 

NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)

 

Technology & Software Development

 

The Company has three sources of revenue.

 

  Technology Solutions – The Company licenses its proprietary and sometimes resells third-party technologies to customers. Our proprietary technology includes but is not limited to Condor Risk Management Back Office (“Condor Risk Management”), Condor Pro Multi-Asset Trading Platform (previously known as Condor FX Pro Trading Terminal), Condor Pricing Engine, Crypto Web Trader Platform, and other fintech-related solutions.
     
  Customized Software Development – The Company develops software for Customers with unique requirements outlined in the Software Development Agreement (“Agreement”).
     
  Consulting Services – The Company’s turnkey business solutions - Start-Your-Own-Brokerage (“SYOB”), Start-Your-Own-Prime Brokerage (“SYOPB”), FX/OTC liquidity solutions, and lead generations.

 

The Company has completed the Condor Pro Multi-Asset Trading Platform, previously known as the Condor FX Trading Platform. The Condor Pro Multi-Asset Trading Platform is a regulatory-grade platform targeted at day traders and retail investors. The industry characterized such platforms by their ease of use and helpful features, such as the simplified front-end (user interface/user experience), back-end (reporting system), news feeds, and charting system. The Condor Pro Multi-Asset Trading Platform includes risk management (dealing desk, alert system, margin calls, etc.), a pricing engine (best bid/ask), and connectivity to multiple liquidity providers or market makers. We have tailored the Condor Pro Multi-Asset Trading Platform to markets such as forex, stocks, commodities, and other financial products.

 

The Company released, marketed, and distributed its Condor Pro Multi-Asset Trading Platform in the second quarter of the fiscal year, December 31, 2019. The Company has developed the Condor Back Office API to integrate third-party CRM and banking systems into Condor Back Office.

 

The Company has ten (10) licensing agreements for its Condor Pro Multi-Asset Trading Platform. The Company continuously negotiates additional licensing agreements with several retail online brokers to use the Condor Pro Multi-Asset Trading Platform. Condor Pro Multi-Asset Trading Platform is available in desktop, web, and mobile versions.

 

The Company’s upgraded Condor Back Office (Risk Management) meets various jurisdictions’ regulatory requirements. Condor Back Office meets the directives under the Markets in Financial Instruments Directive (MiFID II/MiFIR), legislation by European Securities and Market Authority (ESMA) implemented across the European Union on January 3, 2018.

 

F-9

 

 

NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)

 

The Company is developing the Condor Investing & Trading App, a simplified trading platform for traders with varied experiences in trading stocks, ETFs, and other financial markets from their mobile phones. The Company expects to commercialize the Condor Investing & Trading App by the end of the second quarter of the fiscal year ending December 31, 2023.

 

The Company had developed NFT Marketplace, a decentralized NFT marketplace, a multichain platform with a lazy minting option to reduce and limit unnecessary blockchain usage fees, also known as gas fees. The Company has no plans to commercialize the NFT Marketplace in the fiscal year ending December 31, 2023, as the market for NFT has slowed considerably.

 

The Company and its subsidiary, ADS, intend to develop a digital wealth management company, initially including a Robo Advice Platform catering to Australia’s wealth management industry. The Company has decided not to build the Robo Advice Platform as of June 30, 2023.

 

The Company generated Technology & Software Revenue of $474,565 and $156,500 for the six months ended June 30, 2023, and 2022.

 

Subsidiaries of the Company

 

ADS is an Australian-regulated wealth management company with 20 offices, 28 advisors, and $530+ million funds under advice.

 

On December 31, 2022, the Company announced the sales purchase agreement (“Agreement”) under which the Company acquired a 50.10% equity interest in New Star Capital Trading Ltd., a British Virgin Island company (“New Star”) and its operating subsidiary Alchemy Markets Ltd. (formerly known as NSFX Ltd., Alchemy (Malta)). Alchemy (Malta) is an online trading brokerage firm regulated by the Malta Financial Services Authority (MFSA). The Company amended the Agreement to February 28, 2023, to comply with the BVI Companies Act requirement for the change of ownership. The Company expects to consolidate the fair value of Alchemy (Malta)’s assets and liabilities on or after February 28, 2023, but no later than June 30, 2023. The Company closed Alchemy (Malta) transactions as of June 30, 2023.

 

Alchemy (Malta) is authorized to deal with its account (market maker) as a Category 3 licensed entity by the MFSA, receive and transmit orders for retail and professional clients, and hold and control clients’ money and assets. Alchemy (Malta) services its customers in the English, French, German, Italian, and Arabic-speaking markets. The customers can trade in currency, commodity, equity, and other derivatives in real time.

 

Settlement of the FRH Group Note

 

Between February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder (“FRH”). The Company executed Convertible Promissory Notes, due between February 28, 2018, and April 24, 2019. The Notes were convertible into common stock initially at $0.10 per share but may be discounted under certain circumstances. In no event will the conversion price be less than $0.05 per share with a maximum of 20,000,000 shares issued to FRH. On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation. The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080 of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH Group Corporation, which Mr. Hong also owned.

 

Termination of Acquisition of Genesis Financial, Inc.

 

In line with the new strategic direction, on June 2, 2021, the Company entered into a Stock Purchase Agreement (the “Genesis Agreement”) with the Shareholders of Genesis Financial, Inc., a Wyoming corporation (“GFNL” or “Seller”). According to the Agreement, the Company plans to acquire 100% of the issued and outstanding equity interests of GNFL, including its wholly owned subsidiaries and other variable interest entities, in consideration for 70,000,000 shares of the Company’s restricted common stock (the” “Securities”) valued at thirty-five Million U.S. Dollars ($35,000,000).

 

On August 24, 2021, FDCTech, Inc., a Delaware corporation (“FDCT” or the “Company” or “Buyer”), terminated the Stock Purchase Agreement (the “Agreement”), dated June 2, 2021, with the Shareholders of Genesis Financial, Inc., a Wyoming corporation (“Genesis” or “Seller”). As of the termination date, the Company did not issue any Securities to the Seller. The Company could not complete nor qualify the Agreement as Genesis could not comply with several non-exhaustive material provisions, covenants, or conditions.

 

F-10

 

 

NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)

 

On June 9, 2021, and in connection with the previous description of the Genesis Agreement, dated June 2, 2021, the Company appointed Warwick Kerridge as Chairman of the Company’s Board of Directors. Effective August 24, 2021, the Company terminated the appointment of Warwick Kerridge as the Board of Directors. The Company approved the termination upon the consent of the majority of the stockholders representing at least 68.73% of the issued and outstanding shares of the Company. The Company authorized the action according to Section 222 of the Delaware General Corporation Law. Upon termination of Mr. Kerridge, the Company currently has four Board of Directors. Mitchell M. Eaglstein shall be the acting Chairman of the Company.

 

Equity Line of Credit

 

On October 04, 2021, the Company filed a prospectus that relates to the resale of up to 22,670,000 shares of our Common Stock issued or issuable to selling shareholders for up to $2,200,000, including (i) up to 2,000,000 shares issued to AD Securities America, LLC, (ii) up to 20,000,000 issuable to White Lion Capital, LLC (“White Lion”), according to a “Purchase Notice Right” under an Investment Agreement and (iii) 670,000 shares issued to White Lion as a commitment fee associated with the Investment Agreement. From October 2021 to February 2022, the Company executed seven (7) “Purchase Notice Right” under an Investment Agreement with White Lion and received a net of $111,244 after deducting financing costs associated with the Investment Agreement for the fiscal year ending December 31, 2022.

 

Related Party Loan

 

The Company also received a net amount of $81,000 from the related parties to fund its operations for the fiscal year ending December 31, 2021. The Related Party loan was paid back during the December 31, 2022 fiscal year.

 

Cares Act – Paycheck Protection Program (PPP Note)

 

On May 01, 2020, the Company received proceeds of Fifty-Thousand Six Hundred and Thirty-Two ($50,632) from the Promissory Note (“PPP Note”) under the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). No principal or interest payments will be due before the Deferment Period, which is ten months from the end of the covered period. The PPP Note was not forgiven. The Company started paying off the PPP Note in August 2022. The PPP loan outstanding balance, including accrued interest at 1.00%, is approximately $33,665 as of June 30, 2023.

 

SBA Loan

 

On May 22, 2020, the Company received hundred and forty-four thousand nine hundred and 00/100 Dollars ($144,900). The installment payments will include the principal and interest of $707 monthly and begin Twelve (12) months from the promissory note date. The principal and interest balance will be payable Thirty (30) years from the promissory Note date. Interest will accrue at 3.75% per annum and only on $144,900 funds advanced from May 22, 2020, the advance date. The SBA loan outstanding balance, including accrued interest, is $143,306 as of June 30, 2023.

 

Promissory Note

 

On January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’), a Delaware limited liability company, for the principal amount of $550,000 with a maturity date of July 27, 2022, and a coupon of 10%. As part of the AJB Note, the Company entered into a securities purchase agreement, where AJB Capital will receive equity equal to US $155,000 of the Company’s common stock. The Company issued 2,214,286 common stock priced at $.07 per share upon issuance of the Note (the “Shares”) and 1,000,000 3-year cash warrants (‘Warrants’) priced at $0.30. The Warrants and the Shares, collectively known as the ‘Incentive Fee,’ are issued upon execution of the agreement. The Company paid off the AJB Note in full in February 2023.

 

Governmental Regulation

 

FDCTech is a publicly-traded company subject to SEC and FINRA’s rules and regulations regarding public disclosure, financial reporting, internal controls, and corporate governance.

 

Our wealth management business, AD Advisory Services (ADS), is subject to enhanced regulatory scrutiny and is regulated by multiple regulators in Australia. The Australian Securities and Investments Commission (ASIC) administers a licensing regime for ‘financial services’ providers where ADS holds an Australian Financial Services License (AFSL) and meets various compliance, conduct, and disclosure obligations.

 

Alchemy (Malta) is an online trading brokerage firm regulated by the Malta Financial Services Authority (MFSA).

 

Board of Directors

 

Effective January 1, 2021, Naim Abdullah resigned as the Director of the Company.

 

On July 6, 2021, the Board of Directors of FDCTech, Inc. (the “Company”) increased from four to five directors and appointed Charles R. Provini, age 74, to the vacancy. Mr. Provini is considered independent under NYSE and NASDAQ listing standards. Mr. Provini has been the Chairman, CEO, and President of Natcore Technology Inc. since May 2009, a research and development company protected by 65 patents granted or pending. From November 1997 to October 2000, he was the President of Ladenburg Thalmann Asset Management and a Director of Ladenburg Thalmann, Inc., one of the oldest New York Stock Exchange members. He served as President of Laidlaw Asset Management and Chairman and Chief Investment Officer of Howe & Rusling, Laidlaw’s Portfolio Management Advisory Group, from November 1995 to September 1997. Mr. Provini served as Rodman & Renshaw’s Advisory Services President from February 1994 to August 1995. He was the President of LaSalle Street Corporation, a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette, from January 1983 to April 1985. Mr. Provini has been a leadership instructor at the U.S. Naval Academy, Chairman of the U.S. Naval Academy’s Honor Board, and is a former Marine Corp. officer. Mr. Provini holds an undergraduate Engineering degree from the U.S. Naval Academy in Annapolis, Maryland, and a post-graduate degree from the University of Oklahoma.

 

F-11

 

 

NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)

 

On September 30, 2022, the Company appointed Gope S. Kundnani as the Director of the Company. Upon the appointment of Mr. Kundnani, the Company currently has four Board of Directors. Mr. Kundnani is a seasoned entrepreneur with several decades of experience building successful businesses in the United States, the Middle East, and the United Kingdom. From May 2018 to the present, Mr. Kundnani was the founder and current Director of Alchemy Prime Markets, a financial brokerage services company regulated by the Financial Conduct Authority (FCA). From December 2018 to the present, Mr. Kundnani founded and is the Director of Blackthorn Finance Limited, an authorized payments financial services company regulated by the FCA. From May 2004 to April 2008, Mr. Kundnani was the Director of Tristar Group, responsible for investing and acquiring small retail businesses in the Texas region. From February 1999 to the present, Mr. Kundnani has been a partner and CEO of Flexo Pack, a polyethylene product manufacturer with a global customer base. Mr. Kundnani holds an undergraduate business degree from Mulund College of Commerce, Mumbai, India.

 

Upon the termination of Mr. Kerridge and the resignation of Mr. Provini, the Company currently had four Board of Directors. Mitchell M. Eaglstein is the acting Chairman of the Company. Mitchell M. Eaglstein and Imran Firoz are the executive directors and officers of the Company. Gope S. Kundnani is considered an executive director by owning the Company’s stock of at least 10%. Jonathan Baumgart is an independent director under NYSE and NASDAQ listing standards.

 

Changes in Registrant’s Certifying Accountant

 

On July 2, 2021, the Board of Directors of FDCTech, Inc. (the “Company”) approved the dismissal of Farber Hass Hurley LLP (“FHH”) as the Company’s independent registered public accounting firm. The reports of FHH on the Company’s consolidated financial statements for the fiscal years ended December 31, 2020, and 2019 did not contain an adverse opinion or a disclaimer of opinion. It was not qualified or modified for uncertainty audit scope or accounting principles.

 

On July 2, 2021, the Company appointed BF Borgers CPA PC (“BFB”) as the Company’s new independent registered public accounting firm, effective immediately, to perform independent audit services for the fiscal year ending December 31, 2021.

 

On April 18, 2023, the Board of Directors of FDCTech, Inc. (the “Company”) approved the dismissal of BFB as the Company’s independent registered public accounting firm. The reports of BFB on the Company’s consolidated financial statements for the fiscal years ended December 31, 2022, and 2021 did not contain an adverse opinion or a disclaimer of opinion. It was not qualified or modified for uncertainty audit scope or accounting principles.

 

On April 18, 2023, the Company appointed Bolko & Company (“Bolko”) as the Company’s new independent registered public accounting firm, effective immediately, to perform independent audit services for the fiscal year ending December 31, 2023.

 

F-12

 

 

NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)

 

Description of Company’s Securities to be Registered

 

Effective September 03, 2021, the Company incorporated by reference the description of its common stock, par value $0.0001 per share, to be registered hereunder contained under the heading “Description of Securities” in the Company’s Registration Statement on Form S-1 (File No. 333- 221726), as initially filed with the Securities and Exchange Commission (the “Commission”) on November 22, 2017, as subsequently amended (the “Registration Statement”). Since the Registration Statement filing, the Company made all required filings pursuant to Section 15(d) and has continued to file all reports voluntarily.

 

Covid-19

 

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) pandemic throughout the United States. While the initial outbreak concentrated in China, it spread to several other countries, including Russia and Cyprus, and reported infections globally. Many countries worldwide, including the United States, have implemented significant governmental measures to control the spread of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people, and other material limitations on trade. These measures have resulted in work stoppages, absenteeism in the Company’s labor workforce, and other disruptions. The extent to which the coronavirus impacts our operations will depend on future developments. These developments are highly uncertain. We cannot predict them with confidence, including the duration and severity of the outbreak and the actions required to contain the coronavirus or treat its impact. In particular, the spread of the coronavirus globally could adversely impact our operations and workforce, including our marketing and sales activities and ability to raise additional capital, which could harm our business, financial condition, and operation results.

 

Ukraine-Russia Conflict

 

The geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia’s invasion of Ukraine. The war between the two countries continues to evolve as military activity continues. The United States and certain European countries have imposed additional sanctions on Russia and specific individuals. By the end of August 2022, the Company closed its technical support and development office in Russia. We relocated our personnel to Turkey, currently considered a neutral zone. In April 2023, we relocated our personnel to Kazakhstan. No individual associated with the Company is banned or under Special Designated Nationals and Blocked Person list. The relocation may impact our software development capabilities and the Company's business plans if we cannot relocate our technical and development operations to a safer zone.

 

As of the date of this report, there has been no disruption in our operations.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation and Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of FDCTech, Inc. and its wholly-owned subsidiary. We have eliminated all intercompany balances and transactions. The Company has prepared consolidated financial statements consistent with the accounting policies adopted by the Company in its financial statements. The Company has measured and presented its consolidated financial statements in US Dollars, the currency of the primary economic environment in which it operates (also known as its functional currency).

 

Financial Statement Preparation and Use of Estimates

 

The Company prepared consolidated financial statements according to accounting principles generally accepted in the United States of America (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions. This could affect the reported amounts of assets and liabilities, the related disclosures at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the periods presented. Estimates include revenue recognition, the allowance for doubtful accounts, website and internal-use software development costs, recoverability of intangible assets with finite lives, and other long-lived assets. Actual results could materially differ from these estimates. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the coronavirus (“COVID-19”).

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term, highly liquid investments with three months or less of original maturities. On June 30, 2023, and December 31, 2022, the Company had $127,057 and $264,829 cash and cash equivalent held at the financial institution.

 

F-13

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Accounts Receivable

 

Accounts Receivable primarily represents the amount due from three (3) technology customers. In some cases, the customer receivables are due immediately on demand; however, in most cases, the Company offers net 30 terms or n/30, where the payment is due in full 30 days after the invoice’s date. The Company has based the allowance for doubtful accounts on its assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering historical experience, credit quality, the accounts receivable balances’ age, and economic conditions that may affect a customer’s ability to pay and expected default frequency rates. Trade receivables are written off at the point when they are considered uncollectible.

 

At June 30, 2023, and December 31, 2022, the Management determined that allowance for doubtful accounts was $136,487 and $123,987, respectively. There was $10,500 and $0 bad debt expense for the six months ended June 30, 2023, and 2022.

 

Sales, Marketing, and Advertising

 

The Company recognizes sales, marketing, and advertising expenses when incurred.

 

The Company incurred $41,823 and $239,448 in sales, marketing, and advertising costs (“sales and marketing”) for the six months ended June 30, 2023, and 2022. The sales and marketing costs mainly included travel costs for tradeshows, customer meetings, online marketing on industry websites, press releases, and public relations activities. The decrease in expense is mainly due to the reduction in promotional marketing costs for the three-month ending June 30, 2023.

 

The sales, marketing, and advertising expenses represented 1.26% and 7.81% of the sales for the six months ended June 30, 2023, and 2022.

 

Revenue Recognition

 

On January 1, 2019, the Company adopted ASU 2014-09 Revenue from Contracts with Customers. The majority of the Company’s revenues come from two contracts – IT support and maintenance (‘IT Agreement’) and software development (‘Second Amendment’) that fall within the scope of ASC 606.

 

The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services as per the contract with the customer. As a result, the Company accounts for revenue contracts with customers by applying the requirements of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606), which includes the following steps:

 

  Identify the contract or contracts and subsequent amendments with the customer.
  Identify all the performance obligations in the contract and subsequent amendments.
  Determine the transaction price for completing performance obligations.
  Allocate the transaction price to the performance obligations in the contract.
  Recognize the revenue when, or as, the Company satisfies a performance obligation.

 

F-14

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

The Company adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2019. The Company presents results for reporting periods beginning after January 1, 2019, under ASC 606, while prior period amounts are reported following legacy GAAP. In addition to the above guidelines, the Company also considers implementation guidance on warranties, customer options, licensing, and other topics. The Company considers revenue collectability, methods for measuring progress toward complete satisfaction of a performance obligation, warranties, customer options for additional goods or services, nonrefundable upfront fees, licensing, customer acceptance, and other relevant categories.

 

The Company accounts for a contract when the Company and the customer (‘parties’) have approved the contract and are committed to performing their respective obligations. Each party can identify its rights, obligations, and payment terms; the contract has commercial substance. The Company will probably collect all of the consideration. Revenue is recognized when performance obligations are satisfied by transferring control of the promised service to a customer. The Company fixes the transaction price for goods and services at contract inception. The Company’s standard payment terms are generally net 30 days and, in some cases, due upon receipt of the invoice.

 

The Company considers the change in scope, price, or both as contract modifications. The parties describe contract modification as a change order, a variation, or an amendment. A contract modification exists when the parties approve a modification that either creates new or changes existing enforceable rights and obligations. The Company assumes a contract modification by oral agreement or implied by the customer’s customary business practice when agreed in writing. If the parties to the contract have not approved a contract modification, the Company continues to apply the existing contract’s guidance until the contract modification is approved. The Company recognizes contract modification in various forms –partial termination, an extension of the contract term with a corresponding price increase, adding new goods or services to the contract, with or without a corresponding price change, and reducing the contract price without a change in goods/services promised.

 

At contract inception, the Company assesses the solutions or services, or bundles of solutions and services, obligated in the contract with a customer to identify each performance obligation within the contract and then evaluate whether the performance obligations are capable of being distinct and distinct within the context of the agreement. Solutions and services that are not capable of being distinct and distinct within the contract context are combined and treated as a single performance obligation in determining the allocation and recognition of revenue. For multi-element transactions, the Company allocates the transaction price to each performance obligation on a relative stand-alone selling price basis. The Company determines the stand-alone selling price for each item at the transaction’s inception involving these multiple elements.

 

Since January 21, 2016 (‘Inception’), the Company has derived its revenues mainly from consulting services, technology solutions, and customized software development. The Company recognizes revenue when it has satisfied a performance obligation by transferring control over a product or delivering a service to a customer. We measure revenue based upon the consideration outlined in an arrangement or contract with a customer.

 

F-15

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

The Company’s typic The Company’s typical performance obligations include the following:

 

Performance Obligation   Types of Deliverables   When Performance Obligation is Typically Satisfied
Consulting Services   Consulting related to Start-Your-Own-Brokerage (“SYOB”), Start-Your-Own-Prime Brokerage (“SYOPB”), FX/OTC liquidity solutions and lead generations.   The Company recognizes the consulting revenues when the customer receives services over the contract length. If the customer pays the Company in advance for these services, the Company records such payment as deferred revenue until the Company completes the services.
         
Technology Services   Licensing of Condor Risk Management Back Office (“Condor Risk Management”), Condor FX Pro Trading Terminal, Condor Pricing Engine, Crypto Trading Platform (“Crypto Web Trader Platform”), and other fintech-related solutions.   The Company recognizes ratably over the contractual period that the services are delivered, beginning on the date such service is made available to the customer. Licensing agreements are typically one year in length with an option to cancel by giving notice; customers have the right to terminate their agreements if the Company materially breaches its obligations under the agreement. Licensing agreements do not provide customers the right to take possession of the software. The Company charges the customers a set-up fee for installing the platform, and implementation activities are insignificant and not subject to a separate fee.
         
Software Development   Design and build development software projects for customers, where the Company develops the project to meet the design criteria and performance requirements as specified in the contract.   The Company recognizes the software development revenues when the Customer obtains control of the deliverables as stated in the Statement-of-Work contract.

 

The Company assumes that the goods or services promised in the existing contract will be transferred to the customer to determine the transaction price. The Company believes that the contract will not be canceled, renewed, or modified; therefore, the transaction price includes only those amounts to which the Company has rights under the present contract. For example,

 

if the Company enters into a contract with a customer with an original term of one year and expects the customer to renew for a second year, the Company would determine the transaction price based on the initial one-year period. When choosing the transaction price, the company first identifies the fixed consideration, including non-refundable upfront payment amounts.

 

To allocate the transaction price, the Company gives an amount that best represents the consideration that the entity expects to receive for transferring each promised good or service to the customer. The Company allocates the transaction price to each performance obligation identified in the contract on a relative standalone selling price basis to meet the allocation objective. In determining the standalone selling price, the Company uses the best evidence of the stand-alone selling price that the Company charges to similar customers in similar circumstances. In some cases, the Company uses the adjusted market assessment approach to determine the standalone selling price. It evaluates the market in which it sells the goods or services and estimates the price that customers in that market would pay for those goods or services when sold separately.

 

F-16

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

The Company recognizes revenue when or as it transfers the promised goods or services in the contract. The Company considers the “transfers” of the promised goods or services when the customer obtains control of the goods or services. The Company considers a customer “obtains control” of an asset when it can direct the use of, and obtain all the remaining benefits from, an asset substantially. The Company recognizes deferred revenue related to services it will deliver within one year as a current liability. The Company presents deferred revenue related to services that the Company will provide more than one year into the future as a non-current liability.

 

For the period ending December 31, 2019, the Company’s two primary revenue streams accounted for under ASC 606 follows:

 

The Company entered into a definitive asset purchase agreement on July 19, 2017, to sell the code, installation, and future development for two hundred and fifty thousand ($250,000) dollars. The first part was the sale of source code and installation. The second part consisted of the future development of the Platform, which is not essential to the functionality of the Platform, as third parties or customer(s) themselves can perform these services. By December 31, 2017, the Company received two installments totaling one hundred and sixty thousand ($160,000) dollars for the source code and successful platform installation. The Company has recognized revenue of $160,000 for the fiscal year ended December 31, 2017. On December 31, 2019, the Company wrote off a software development revenue equaling $18,675 for the fiscal year ended December 31, 2017, for accounts receivable over ninety days. However, in August 2018, the Company signed the second amendment to the asset purchase agreement. The purchaser issued to the Company seventeen thousand, seven hundred and fifty dollars ($17,750) as a complete and final settlement of all past delivered services. The Company received the funds in September 2018. On September 4, 2018, the Company signed the Second Amendment Agreement (‘Second Amendment’) to continue the asset purchase agreement. The Company signed the First Amendment Agreement signed on July 19, 2017, and August 1, 2017, between the Company and the Purchaser. Under the Second Amendment, the Company received $80,000 as the second part was selling source code in four equal installments of $20,000 each. The Company received payments by May 5, 2019.

 

According to the Second Amendment, the Company identifies two primary ongoing performance obligations in the contract for the following development services of the Platform:

 

a) Customized developments, and

b) Software updates.

 

The Company receives $75 per hour for the first 100 hours/month of approved development services and $45 per hour for all services over 100 hours per month. The Company invoices the Customer for all development services rendered, and any cash received for the development services is non-refundable.

 

On February 5, 2018 (‘Effective Date’), the Company signed an IT support and maintenance agreement (‘IT Agreement’) with an FX/OTC broker (‘FX Broker’) regulated by the Malta Financial Services Authority. The Company earns the recurring monthly payment from the FX Broker for delivering IT support and maintenance services (‘Services’) to FX Broker’s legacy technology infrastructure. The term of this Agreement commenced on the Effective Date and shall continue until terminated by either party either for cause, bankruptcy, and other default clauses. The Company completes and satisfies its performance obligation upon accomplishing all support and maintenance activities every month. The Company invoices the FX Broker at the beginning of the month for services performed, delivered, and accepted for the prior month. At the time of the invoice, the Company renders all Services, and any cash received for Services is non-refundable.

 

According to the contract’s terms and conditions, the Company invoices the customer at the beginning of the month for the month’s services. The invoice amount is due upon receipt. The Company recognizes the revenue at the end of each month, equal to the invoice amount.

 

AD Advisory Services Pty (ADS), the Company’s wealth management revenue, primarily consists of advisory revenue, commission revenue from insurance products, fees to prepare the statement of advice, rebalancing portfolio, and other financial planning activities. We recognize revenue upon the transfer of services to customers in an amount that reflects the consideration we expect to receive in exchange for those services. If we receive payments in advance of services, we defer and recognize them as revenue when satisfied with our performance obligation. Advisory revenue includes fees charged to clients in advisory accounts for which we are the licensed investment advisor. We bill advisory fees weekly.

 

F-17

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Concentrations of Credit Risk

 

Cash

 

The Company maintains its cash balances at a single financial institution. The account balances are within FDIC limits as of June 30, 2023, and December 31, 2022.

 

Revenues

 

Technology & Software Revenue – The Company generated Technology & Software Revenue of $474,565 and $156,500 for the six months ended June 30, 2023, and 2022. For the six months ended June 30, 2023, and 2022, the Company had thirteen (13) and six (6) active customers, which is the main reason for the increase in revenue. Revenues generated from the top three (3) customers represented approximately 68.59% and 86.41% of Technology and Software revenue for the six months ended June 30, 2023, and 2022.

 

Wealth Management Revenue – the Company’s subsidiary ADS generated $2,836,271 in revenue from 28 advisors for the six months ending June 30, 2023.

 

Accounts Receivable

 

Accounts Receivable primarily represents the amount due from three (3) active technology customers. In some cases, the customer receivables are due immediately on demand; however, in most cases, the Company offers net 30 terms or n/30, where the payment is due in full 30 days after the invoice’s date. The Company has based the allowance for doubtful accounts on its assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering historical experience, credit quality, the accounts receivable balances’ age, and economic conditions that may affect a customer’s ability to pay and expected default frequency rates. Trade receivables are written off at the point when they are considered uncollectible.

 

At June 30, 2023, and December 31, 2022, the Management determined that allowance for doubtful accounts was $136,487 and $123,987, respectively. There was $10,500 and $0 bad debt expense for the six months ended June 30, 2023, and 2022.

 

Research and Development (R and D) Cost

 

The Company acknowledges that future benefits from research and development (R and D) are uncertain, so we cannot capitalize on R and D expenditure. The GAAP accounting standards require us to expense all research and development expenditures as incurred. For the Three Months ended June 30, 2023, and 2022, the Company incurred no R and D costs. The R and D costs in the previous period were due to evaluating the technological feasibility costs of the Condor Investing and Trading App.

 

Legal Proceedings

 

The Company discloses a loss contingency if at least there is a reasonable possibility that a material loss has been incurred. The Company records its best estimate of loss related to pending legal proceedings when the loss is considered probable and the amount can be reasonably estimated. The Company can reasonably estimate a range of loss with no best estimate; the Company records the minimum estimated liability. As additional information becomes available, the Company assesses the potential liability related to pending legal proceedings, revises its estimates, and updates its disclosures accordingly. The Company’s legal costs associated with defending itself are recorded as expenses incurred. The Company is currently not involved in any litigation.

 

F-18

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Impairment of Long-Lived Assets

 

The Company reviews long-lived assets for impairment under FASB ASC 360, Property, Plant, and Equipment. Under the standard, long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment charge is recognized when the asset’s carrying value exceeds the fair value. There are no impairment charges on June 30, 2023, and December 31, 2022.

 

Provision for Income Taxes

 

The provision for income taxes is determined using the asset and liability method. This method calculates deferred tax assets and liabilities based on the temporary differences between the consolidated financial statement and income tax bases of assets and liabilities using the enacted tax rates applicable each year.

 

The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions (“tax contingencies”). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount, more than 50%, likely to be realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and benefits, requiring periodic adjustments, which may not accurately forecast actual outcomes. The Company includes interest and penalties related to tax contingencies in the provision of income taxes in the operations’ consolidated statements. The Company’s management does not expect the total amount of unrecognized tax benefits to change significantly in the next twelve (12) months.

 

Software Development Costs

 

By ASC 985-20, Software development costs, including costs to develop software sold, leased, or otherwise marketed, are capitalized after establishing technological feasibility, if significant. The Company amortizes the capitalized software development costs using the straight-line amortization method over the application software’s estimated useful life. By the end of February 2016, the Company completed the technical feasibility of the Condor FX Back Office, Condor Pro Multi-Asset Trading Platform Version, and Condor Pricing Engine. The Company established the technical feasibility of the Crypto Web Trader Platform in February 2018. The Company completed the technical feasibility of the Condor Investing and Trading App in January 2021.

 

The Company estimates the useful life of the software to be three (3) years.

 

Amortization expenses were $22,503 and $120,988 for the six months ended June 30, 2023, and 2022 respectively, and the Company classifies such cost as the Cost of Sales.

 

The Company is developing the Condor Investing and Trading App and NFT Marketplace. The Company is currently capitalizing the costs associated with the development. The Company spent $15,600 in R and D costs in the fiscal year ended December 31, 2021, to evaluate the technical feasibility of the Condor Investing and Trading App.

 

The Company capitalizes significant costs incurred during the application development stage for internal-use software.

 

F-19

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Convertible Debentures

 

The cash conversion guidance in ASC 470-20, Debt with Conversion and Other Options, is considered when evaluating the accounting for convertible debt instruments (this includes certain convertible preferred stock that is classified as a liability) to determine whether the conversion feature should be recognized as a separate component of equity. The cash conversion guidance applies to all convertible debt instruments that, upon conversion, may be settled entirely or partially in cash or other assets where the conversion option is not bifurcated and separately accounted for pursuant to ASC 815.

 

If the conversion features of conventional convertible debt provide a conversion rate below market value, this feature is characterized as a beneficial conversion feature (“BCF”). The Company records BCF as a debt discount pursuant to ASC Topic 470-20, Debt with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the BCF. The Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

 

As of December 31, 2020, the conversion features of conventional FRH Group convertible notes dated February 22, 2016, May 16, 2016, November 17, 2016, and April 24, 2017 (See Note 8) provide for a rate of conversion where the conversion price is below the market value. As a result, the conversion feature on all FRH Group convertible notes has a beneficial conversion feature (“BCF”) to the extent of the price difference.

 

As the Company and FRH Group extended the maturity date of the four (4) tranches of convertible notes to June 30, 2021, Management analyzed the fair value of the BCF on these tranches. The Company noted that the value of the BCF for each note was insignificant; thus, it did not record debt discounts as of December 31, 2020.

 

For FRH Group convertible note dated April 24, 2017, the stock’s value at the issuance date was above the floor conversion price; this feature is characterized as a beneficial conversion feature (“BCF”). The Company records a BCF as a debt discount pursuant to ASC Topic 470-20, “Debt with Conversion and Other Options.” As a result, the convertible debt is recorded net of the discount related to the BCF. As of December 31, 2017, the Company has amortized the discount of $97,996 to interest expense at the issuance date because the debt is convertible at issuance.

 

The $97,996 amount is equal to the intrinsic value, and the Company allocated it to additional paid-in capital in 2017.

 

Foreign Currency Translation and Re-measurement

 

The Company translates its foreign operations to US dollars following ASC 830, “Foreign Currency Matters.”

 

We have translated the local currency of ADS, the Australian Dollar (“AUD”), and the Euro (“EUR”) as some of our clients pay in EUR; we have cash balances in EUR into US$1.00 at the following exchange rates for the respective dates.

 

Exchange rate at the reporting end date:

 

SCHEDULE OF EXCHANGE RATE

   June 30, 2023 
USD: AUD  $1.5009 
USD: EUR  $0.9222 

 

Average exchange rate for the period:

 

  

January 1, 2022, to

June 30, 2023

 
USD: AUD  $1.4965 

 

The Company subsidiary’s functional currency is AUD, and reporting currency is the US dollar.

 

The Company translates its records into USD as follows:

 

  Assets and liabilities at the rate of exchange in effect at the balance sheet date
  Equities at the historical rate
  Revenue and expense items at the average rate of exchange prevailing during the period

 

F-20

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Fair Value

 

The Company uses current market values to recognize certain assets and liabilities at a fair value. The fair value is the estimated price at which the Company can sell the asset or settle a liability in an orderly transaction to a third party under current market conditions. The Company uses the following methods and valuation techniques for deriving fair values:

 

Market Approach – The market approach uses the prices associated with actual market transactions for similar or identical assets and liabilities to derive a fair value.

 

Income Approach – The income approach uses estimated future cash flows or earnings, adjusted by a discount rate representing the time value of money and the risk of cash flows not being achieved to derive a discounted present value.

 

Cost Approach – The cost approach uses the estimated cost to replace an asset adjusted for the obsolescence of the existing asset.

 

The Company ranks the fair value hierarchy of information sources from Level 1 (best) to Level 3 (worst). The Company uses these three levels to select inputs for valuation techniques:

 

Level I   Level 2   Level 3
Level 1 is a quoted price for an identical item in an active market on the measurement date. Level 1 is the most reliable evidence of fair value and is used whenever this information is available.   Level 2 is directly or indirectly observable inputs other than quoted prices. An example of a Level 2 input is a valuation multiple for a business unit based on comparable companies’ sales, EBITDA, or net income.   Level 3 is an unobservable input. It may include the company’s data, adjusted for other reasonably available information. Examples of a Level 3 input are an internally-generated financial forecast.

 

Basic and Diluted Income (Loss) per Share

 

The Company follows ASC 260, Earnings Per Share, to account for earnings per share. Basic earnings per share (“EPS”) calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. As of June 30, 2023, and December 31, 2022, the Company had 333,584,729 and 211,275,550 basic and dilutive shares issued and outstanding. The Company converted the four FRH Group convertible notes into 12,569,080 dilutive shares. During the six months ended June 30, 2023, and 2022, common stock equivalents were dilutive and anti-dilutive due to net income and a net loss of $685,168 and $785,417, respectively, for the period. Hence, the Company has not considered it in the computation.

 

Reclassifications

 

We have reclassified certain prior period amounts to conform to the current year’s presentation. None of these classifications impacted reported operating loss or net loss for any period presented.

 

F-21

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific requirements. ASU 2014-09 establishes a five-step revenue recognition process; an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from customers’ contracts. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one (1) year. The Company adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2019. The Company presents results for reporting periods beginning after January 1, 2019, under ASC 606, while prior period amounts are reported following legacy GAAP. Refer to Note 2 Revenue from Major Contracts with Customers for further discussion on the Company’s accounting policies for revenue sources within the scope of ASC 606.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 840) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments to this standard are effective for fiscal years beginning after December 15, 2019. Early adoption of the amendments to this standard is permitted for all entities. The Company must recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company adopted this policy as of January 1, 2020, and there is no material effect on its financial reporting.

 

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments modify the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty. The amendments removed and modified certain disclosure requirements in Topic 820. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Certain amendments are to be applied prospectively, while others are to be applied retrospectively. Early adoption is permitted.

 

The Company adopted the ASU 2018-13 as of January 1, 2020. The Company used the Level 1 Fair Market Measurement to record, at cost, ADS’ intangible assets valued at $2,550,003. We evaluate acquired intangible assets for impairment at least annually to confirm if the carrying amount of acquired intangible assets exceeds their fair value. The acquired intangible assets primarily consist of assets under management, wealth management license, and our technology. We use various qualitative or quantitative methods for these impairment tests to estimate the fair value of our acquired intangible assets. If the fair value is less than its carrying value, we would recognize an impairment charge for the difference. The Company did not record impairment for March 31, 2022, and the fiscal year ended December 31, 2021.

 

ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, issued in August 2020 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to present certain conversion features in equity separately. In addition, the amendments also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring the use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. The amendments are effective for public companies for fiscal years beginning after December 15, 2021. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The guidance must be adopted as of the beginning of the fiscal year of adoption. The Company does not expect this ASU 2020-06 to impact its condensed consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

 

F-22

 

 

NOTE 3. MANAGEMENT’S PLANS

 

The Company has prepared consolidated financial statements on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the ordinary business course. At June 30, 2023, and December 31, 2022, the accumulated deficit was $3,649,885 and $4,335,053, respectively. At June 30, 2023, and December 31, 2022, the working capital surplus and the deficit were $2,307,322 and $550,098, respectively. The working capital deficit decreased mainly due to the lower cash balances compared to the previous period, decreasing current assets.

 

During the six months ended June 30, 2023, and 2022, the Company incurred a net income and net loss of $685,168 and $785,417.

 

Since its inception, the Company has sustained recurring losses and negative cash flows from operations. As of June 30, 2023, and December 31, 2022, the Company had $127,057 and $264,829 cash. The Management believes that future cash flows may not be sufficient for the Company to meet its debt obligations as they become due in the ordinary course of business for twelve (12) months following June 30, 2023. Even though the Company’s revenues have increased considerably following the acquisition of ADS, we continue to experience a low gross and net margin from current operations. As a result, the Company continues to experience negative cash flows from operations and the ongoing requirement for substantial additional capital investment to develop its financial technologies. The Management expects that it will need to raise significant additional capital to accomplish its growth plan over the next twelve (12) months. The Management expects to seek to obtain additional funding through private equity or public markets. However, there can be no assurance about the availability or terms of such type of financing and capital might be available. The Company expects to integrate operations of Alchemy (Malta) in the second half of fiscal 2023. This will allow the Company to increase its revenue and cash flow.

 

The Company’s ability to continue as a going concern may depend on the Management’s plans discussed below. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company cannot continue as a going concern.

 

To the extent the Company’s operations are insufficient to fund the Company’s capital requirements, the Management may attempt to enter into a revolving loan agreement with financial institutions or raise capital through the sale of additional capital stock or issuance of debt.

 

The Management intends to continue its efforts to enhance its revenue from its diversified portfolio of technological solutions, become cash flow positive, and raise funds through private placement offerings and debt financing. See Note 8 for Notes Payable. As the Company increases its customer base globally, it intends to acquire long-lived assets that will provide a future economic benefit beyond fiscal 2023.

 

On January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’), a Delaware limited liability company, for the principal amount of $550,000 with a maturity date of July 27, 2022, and a coupon of 10%. As part of the AJB Note, the Company entered into a securities purchase agreement, where AJB Capital will receive equity equal to US $155,000 of the Company’s common stock. The Company issued 2,214,286 common stock priced at $.07 per share upon issuance of the Note (the “Shares”), and 1,000,000 3-year cash warrants (‘Warrants’) priced at $0.30. The Warrants and the Shares, collectively known as the ‘Incentive Fee,’ are issued upon execution of the agreement. The Company paid off the outstanding loan in February 2023.

 

NOTE 4. CAPITALIZED SOFTWARE COSTS

 

During the three months ended June 30, 2023, and 2022, the estimated remaining weighted-average useful life of the Company’s capitalized software was three (3) years. The Company recognizes amortization expenses for capitalized software on a straight-line basis.

 

At June 30, 2023, and December 31, 2022, the gross capitalized software assets were $1,743,599 and $1,586,989, respectively. At the end of June 30, 2023, and 2022, the accumulated software amortization expenses were $847,850 and $825,347, respectively. As a result, the unamortized balance of capitalized software on June 30, 2023, and December 31, 2022, was $895,748 and $761,642.

 

F-23

 

 

NOTE 5. RELATED PARTY TRANSACTIONS

 

In April 2016, the Company established its wholly-owned subsidiary – FRH Prime Ltd. (“FRH Prime”), incorporated under section 14 of Bermuda’s Companies Act 1981. In January 2017, FRH Prime established its wholly-owned subsidiary – FXClients Limited (“FXClients”), under the United Kingdom Companies Act. The Company established FRH Prime and FXClients to conduct financial technology service activities. The Company established FRH Prime and FXClients to conduct financial technology service activities. At present, both companies have ceased to exist.

 

For the fiscal year ended December 31, 2021, and 2020, FRH Prime has generated volume rebates of $0 and $1,861 from the Condor Risk Management Back Office Platform. The Company has included rebates in revenue in the consolidated income statements.

 

Between February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder (“FRH Group”). The Company executed Convertible Promissory Notes due between April 24, 2019, and June 30, 2019. The Notes are convertible into common stock initially at $0.10 per share but may be discounted under certain circumstances, but in no event will the conversion price be less than $0.05 per share. The Notes carry an interest rate of 6% per annum, which is due and payable at maturity.

 

Between March 15 and 21, 2017, subject to the terms and conditions of the Stock Purchase Agreement, the Company issued 1,000,000 shares to Susan Eaglstein and 400,000 shares to Brent Eaglstein at $0.05 per share, a cumulative cash amount of $70,000. Ms. Eaglstein and Mr. Eaglstein are the Mother and Brother, respectively, of Mitchell Eaglstein, the Company’s CEO and Director.

 

On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation. The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080 of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH Group Corporation, also owned by Mr. Hong.

 

The Company paid off all the outstanding related parties’ liabilities as of January 31, 2022.

 

In September 2022, the Company issued 30,000,000 common stock for cash consideration of $300,000 for Alchemy Prime Limited (APL) and appointed Gope S. Kundnani as the director of the Company. As director’s compensation, the Company issued 5,000,000 valued at $60,000. Mr. Kundnani is the director and owner of APL.

 

In January 2023, the Company issued 115,000,000 common stock for cash consideration of $550,000 to Gope S. Kundnani, the director of the Company.

 

NOTE 6. LINE OF CREDIT

 

As of June 24, 2016, the Company obtained an unsecured revolving line of credit of $40,000 from Bank of America to fund various purchases and travel expenses. The line of credit has an average interest rate at the close of business on March 31, 2022, for purchases and cash withdrawals at 12% and 25%, respectively. As of June 30, 2023, the Company complies with the credit line’s terms and conditions. At June 30, 2023, and December 31, 2022, the outstanding balance was $50,310 and $47,369, respectively.

 

NOTE 7. NOTES PAYABLE

 

Convertible Notes Payable – Related Party

 

Between February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder. The Company executed Convertible Promissory Notes, due between April 24, 2019, and June 30, 2019. The Notes are convertible into common stock initially at $0.10 per share but may be discounted under certain circumstances, but in no event will the conversion price be less than $0.05 per share. The Notes carry an interest rate of 6% per annum, which is due and payable at maturity. The parties have extended the Notes’ maturity date to June 30, 2021.

 

At December 31, 2020, the current portion of convertible notes payable and accrued interest was $1,000,000 and $256,908, respectively. There was no non-current portion of convertible notes payable and accrued interest.

 

At December 31, 2019, the current portion of convertible notes payable and accrued interest was $1,000,000 and $196,908, respectively. There was no non-current portion of convertible notes payable and accrued interest.

 

At December 31, 2020, there was no non-current portion of the Notes payable and accrued interest.

 

The Company will pay the Notes’ outstanding principal amount and interest at 6% per annum in cash on the Maturity Date to this Note’s registered holder. In the event the Company does not make, when due, any payment, when due, of principal or interest required to be made, the Company will pay, on demand, interest on the amount of any overdue payment of principal or interest for the period following the due date of such payment, at a rate of ten percent (10%) per annum.

 

F-24

 

 

NOTE 7. NOTES PAYABLE (continued)

 

Convertible Notes Payable – Related Party

 

On February 22, 2016, the Company issued and promised to pay a convertible note to FRH Group for the principal sum of One Hundred Thousand and 00/100 Dollars ($100,000) on February 28, 2018 (the “Original Maturity Date”). The initial conversion rate will be $0.10 per share or 1,000,000 shares if FRH Group converts the entire Note, subject to adjustments in certain events as set forth below. For example, the Company’s common stock’s fair market value is less than $0.10 per share. In that case, the conversion price shall be discounted by 30%, but in no event will the conversion price be less than $0.05 per share with a maximum of 2,000,000 shares if FRH Group converts the entire Note subject to adjustments in certain events. No fractional Share or scrip representing a fractional Share will be issued upon conversion of the Notes.

 

On May 16, 2016, the Company issued and promised to pay a convertible note to FRH Group for the principal sum of Four Hundred Thousand and 00/100 Dollars ($400,000) on May 31, 2018 (the “Original Maturity Date”). The initial conversion rate will be $0.10 per share or 4,000,000 shares if FRH Group converts the entire Note, subject to adjustments in certain events as set forth below. For example, the Company’s common stock’s fair market value is less than $0.10 per share. In that case, the conversion price shall be discounted by 30%, but in no event will the conversion price be less than $0.05 per share with a maximum of 8,000,000 shares if FRH Group converts the entire Note, subject to adjustments in certain events. No fractional Share or scrip representing a fractional Share will be issued upon conversion of the Notes.

 

On November 17, 2016, the Company issued and promised to pay a convertible note to FRH Group for the principal sum of Two Hundred and Fifty Thousand and 00/100 Dollars ($250,000) on November 30, 2018 (the “Original Maturity Date”). The initial conversion rate would be $0.10 per share or 2,500,000 shares if the entire Note were converted, subject to adjustments in certain events as set forth below. For example, the Company’s common stock’s fair market value is less than $0.10 per share. In that case, the conversion price shall be discounted by 30%, but in no event will the conversion price be less than $0.05 per share with a maximum of 5,000,000 shares if FRH Group converts the entire Note, subject to adjustments in certain events. No fractional Share or scrip representing a fractional Share will be issued upon conversion of the Notes.

 

On April 24, 2017, the Company issued and promised to pay a convertible note to FRH Group for the principal sum of Two Hundred and Fifty Thousand and 00/100 Dollars ($250,000) on April 24, 2019 (the “Original Maturity Date”). The initial conversion rate will be $0.10 per share or 2,500,000 shares if FRH Group converts the entire Note, subject to adjustments in certain events as set forth below. For example, the Company’s common stock’s fair market value is less than $0.10 per share. In that case, the conversion price shall be discounted by 30%, but in no event will the conversion price be less than $0.05 per share with a maximum of 5,000,000 shares if the entire Note was converted, subject to adjustments in certain events. No fractional Share or scrip representing a fractional Share will be issued upon conversion of the Notes.

 

F-25

 

 

NOTE 7. NOTES PAYABLE (continued)

 

FRH Group Note Summary

 

Date of Note:  2/22/2016   5/16/2016   11/17/2016   4/24/2017 
Original Amount of Note:  $100,000   $400,000   $250,000   $250,000 
Outstanding Principal Balance:  $-   $-   $-   $- 
Conversion Date (1):   02/22/2021    02/22/2021    02/22/2021    02/22/2021 
Interest Rate:   6%   6%   6%   6%
Date to which interest has been paid:   Accrued    Accrued    Accrued    Accrued 
Conversion Rate on February 22, 2021:  $0.10   $0.10   $0.10   $0.10 
Floor Conversion Price:  $0.05   $0.05   $0.05   $0.05 
Number Shares Converted for Original Note:   1,000,000    4,000,000    2,500,000    2,500,000 
Number Shares Converted for Interest:   29,117    111,000    61,792    55,000 

 

(1) Note Extension – On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation. The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080 of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH Group Corporation, an entity also owned by Mr. Hong.

 

Cares Act – Paycheck Protection Program (PPP Note)

 

On May 01, 2020, the Company received proceeds of Fifty-Thousand Six Hundred and Thirty-Two ($50,632) from the Promissory Note (“PPP Note”) under the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The funding of the PPP Note is conditioned upon approval of the Company’s application by the Small Business Administration (SBA) and Bank of America (“Bank”), receiving confirmation from the SBA that the Bank may proceed with the PPP Note. Suppose the SBA does not confirm the PPP Note’s forgiveness, or only partly confirms forgiveness of the PPP Note, or the Company fails to apply for PPP Note forgiveness. In that case, the Company will be obligated to repay the Bank the total outstanding balance remaining due under the PPP Note, including principal and interest (the “PPP Note Balance”). In such case, Bank will establish the terms for repayment of the PPP Note Balance in a separate letter to be provided to the Company, which letter will set forth the PPP Note Balance, the amount of each monthly payment, the interest rate (not above a fixed rate of one percent (1.00%) per annum), the term of the PPP Note, and the maturity date of two (2) years from the funding date of the PPP Note. No principal or interest payments will be due before the Deferment Period, which is ten months from the end of the covered period. The PPP Note was not forgiven. The Company started paying off the PPP Note in August 2022. The PPP loan outstanding balance, including accrued interest at 1.00%, is approximately $33,665 as of June 30, 2023.

 

SBA Loan

 

On May 22, 2020, the Company received hundred and forty-four thousand nine hundred and 00/100 Dollars ($144,900). The installment payments will include the principal and interest of $707 monthly and begin Twelve (12) months from the promissory note date. The principal and interest balance will be payable Thirty (30) years from the promissory Note date. Interest will accrue at 3.75% per annum and only on $144,900 funds advanced from May 22, 2020, the advance date. The SBA loan outstanding balance, including accrued interest, is $143,306 as of June 30, 2023.

 

AJB Note

 

On January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’), a Delaware limited liability company, for the principal amount of $550,000 with a maturity date of July 27, 2022, and a coupon of 10%. As part of the AJB Note, the Company entered into a securities purchase agreement, where AJB Capital will receive equity equal to US $155,000 of the Company’s common stock. The Company issued 2,214,286 common stock valued at $71,521 upon issuance of the Note (the “Shares”) and 1,000,000 3-year cash warrants (‘Warrants’) priced at $0.30. The Warrants and the Shares, collectively known as the ‘Incentive Fee,’ are issued upon execution of the agreement. The Company paid off the loan in February 2023.

 

Economic Injury Disaster Loan (EIDL)

 

The Small Business Administration offers the Economic Injury Disaster Loan program. The CARES Act changed the program to provide an emergency grant of up to $10,000 per business, which is forgivable like the PPP Note. The Company doesn’t have to repay the grant. On May 14, 2020, the Company received $4,000 in EIDL grants. The Company has recorded it as other income since the EIDL grant is forgivable.

 

F-26

 

 

NOTE 8. COMMITMENTS AND CONTINGENCIES

 

Office Facility and Other Operating Leases

 

The rental expenses were $12,790 and $14,602 for the six months ended June 30, 2023, and 2022, respectively.

 

Effective October 29, 2019, the Company leased office space at 200 Spectrum Center Drive, Suite 300, Irvine, CA 92618. As per the Commitment Term of the lease (“Agreement”), this Agreement shall continue on a month-to-month basis (any term after the Commitment Term, also known as “Renewal Term”). The Commitment Term and all subsequent Renewal Terms shall constitute the “Term.” The Company may terminate this Agreement by delivering to the lessor Form (“Exit Form”) at least one (1) whole calendar month before the month in which the Company intends to terminate this Agreement (“Termination Effective Month”). The Company is entitled to use the office and conference space on a need basis. The new rent payment or membership fee for Irvine Office is $95 per month compared to the previous rent payment or membership fee for the New York Office of $890 per month as the General and administrative expenses.

 

From February 2019 to the present, the Company leased office space in Limassol District, Cyprus, from an unrelated party for a year. The office’s rent payment is $1,750 per month; included in the General and administrative expenses.

 

From February 2020, this agreement continues every year upon written request by the Company. The Company uses the office for sales and marketing in Europe and Asia. From April 2019 to August 2022, the Company leased office space in Chelyabinsk, Russia, from an unrelated party for an eleven (11) month term. The office’s rent payment is $500 per month, and the Company has included it in the General and administrative expenses. From March 2020, this agreement continues on a month-to-month basis until the Company or the lessor chooses to terminate by the agreement’s terms by giving thirty (30) days’ notice. The Company uses the office for software development and technical support. Effective August 2022, the Company closed its offices in Russia and relocated its team to Turkey. In April 2023, we relocated our personnel to Kazakhstan.

 

As all leases are on a month-to-month basis or for less than one (1) year term, the Company is not required to recognize assets and liabilities for our rental leases. The Company has included all rental expenses in the General and Administrative costs.

 

Employment Agreement

 

The Company gave all salary compensation to key executives as independent contractors, where Eaglstein, Firoz, and Platt commit one hundred percent (100%) of their time to the Company. The Company still needs to formalize performance bonuses and other incentive plans. Each executive is paid every month at the beginning of the month. From September 2018 to September 30, 2020, the Company is paying a monthly compensation of $5,000 to its CEO and CFO, respectively, with increases each succeeding year should the agreement be approved annually. Effective October 1, 2020, the Company expenses $12,000 monthly to its CEO and CFO. Effective January 1, 2023, the Company expenses $15,000 monthly to its CEO and CFO.

 

Accrued Interest

 

At June 30, 2023, and December 31, 2022, the cumulative accrued interest for SBA and other loans defined as an accrued non-current was $17,386 and $14,703, respectively.

 

Pending Litigation

 

The management is not aware of any actions, suits, investigations, or proceedings (public or private) pending against or threatened against or affecting any of the assets or any affiliate of the Company.

 

Tax Compliance Matters

 

The Company has estimated payroll tax liabilities based on its officers’ reclassification from independent contractors to employees from the fiscal ended December 31, 2017, to 2020. As of June 30, 2023, the Company has assessed federal and state payroll tax payments in the aggregate amount of $226,779, and we have included it in the General and administrative expenses.

 

F-27

 

 

NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT)

 

Authorized Shares

 

On February 12, 2021, the Company filed the Certificate of Amendment with the Secretary of State of Delaware to change authorized shares. As per the Amendment, the Company shall have the authority to issue 260,000,000 shares, consisting of 250,000,000 shares of Common Stock having a par value of $.0001 per share and 10,000,000 shares of Preferred Stock having a par value of $.0001 per share.

 

On February 17, 2022, the Company filed the Information Statement pursuant to Section 14C of the Securities Exchange Act of 1934 and informed all holders of record on February 10, 2022 (the “Record Date”) of the common stock, $0.0001 par value per share (the “Common Stock”), of the Company, in connection with the approval of the following actions taken by the Board of Directors of the Company (the “Board”) and by written consent of the holders of a majority of the voting power of Company’s issued and outstanding capital stock (the “Approving Stockholders”):

 

1. To amend our certificate of incorporation, as amended (the “Certificate”), to increase the number of authorized shares of common stock from 250,000,000 to 500,000,000 (the “Authorized Share Increase” and together with the 2022 Equity Plan, the “Corporate Action”), and
   
2. To approve the Company’s 2022 Equity Plan (the “2022 Equity Plan”)

 

On February 10, 2022, our Board unanimously approved the Corporate Actions. To eliminate the costs and management time for a special meeting and to effect the actions, the Company chose to obtain the written consent of a majority of the Company’s voting power to approve the actions described in the Information Statement following Sections 228 and 242 of the Delaware General Corporation Law (the “DGCL”) and per our bylaws. On February 10, 2022, the Approving Stockholders approved the Corporate Actions by written consent. The Approving Stockholders (common stock only) own 96,778,105 shares, representing 64.62% of the Company’s total issued and outstanding voting power.

 

As of June 30, 2023, and December 31, 2022, the Company’s authorized capital stock consists of 10,000,000 shares of preferred stock, a par value of $0.0001 per share, and 500,000,000 shares of common stock, a par value of $0.0001 per share.

 

As of June 30, 2023, and December 31, 2022, the Company had 333,584,729 and 211,275,550, respectively, common shares issued and outstanding and 4,000,000 preferred shares issued and outstanding.

 

The preferred stock has fifty votes for each share of preferred shares owned. The preferred shares have no other rights, privileges, and higher claims on the Company’s assets and earnings than common stock.

 

Preferred Stock

 

On December 12, 2016, the Board agreed to issue 2,600,000, 400,000, and 1,000,000 shares of Preferred Stock to Mitchell Eaglstein, Imran Firoz, and Felix R. Hong (FRH Group) as the founders in consideration of services rendered to the Company.

 

In January 2023, Eaglstein and Firoz transferred 1,100,000 and 400,000 shares to Gope S. Kundnani, the Director of the Company. As of June 30, 2023, the Company had 4,000,000 preferred shares issued and outstanding, with Eaglstein, Kundnani, and Hong holding 1,500,000, 1,500,000, and 1,000,000 shares, respectively.

 

Common Stock

 

On January 21, 2016, the Company collectively issued 30,000,000 and 5,310,000 common shares at par value to On January 21, 2016, the Company collectively issued 30,000,000 and 5,310,000 common shares at par value to Mitchell Eaglstein and Imran Firoz, respectively, as the founders in consideration of services rendered to the Company.

 

On December 12, 2016, the Company issued 28,600,000 common shares to the remaining two (2) founding members of the Company.

 

On March 15, 2017, the Company issued 1,000,000 restricted common shares for platform development valued at $50,000. The Company issued the securities with a restrictive legend.

 

On March 15, 2017, the Company issued 1,500,000 restricted common shares for professional services to three (3) individuals valued at $75,000. The Company issued the securities with a restrictive legend.

 

On March 17, 2017, subject to the terms and conditions of the Stock Purchase Agreement, the Company issued 1,000,000 shares to Susan Eaglstein for a cash amount of $50,000. The Company issued the securities with a restrictive legend.

 

F-28

 

 

NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

 

On March 21, 2017, subject to the terms and conditions of the Stock Purchase Agreement, the Company issued 400,000 shares to Bret Eaglstein for a cash amount of $20,000. The Company issued the securities with a restrictive legend.

 

Ms. Eaglstein and Mr. Eaglstein are the Mother and Brother, respectively, of Mitchell Eaglstein, the CEO and Director of the Company.

 

From July 1, 2017, to October 03, 2017, the Company has issued 653,332 units for a cash amount of $98,000 under its offering Memorandum, where the unit consists of one (1) share of common stock and one Class A warrant (See Note 11).

 

On October 31, 2017, the Company issued 70,000 restricted common shares to management consultants valued at $10,500. The Company issued the securities with a restrictive legend.

 

On January 15, 2019, the Company issued 60,000 restricted common shares for professional services to eight (8) consultants valued at $9,000.

 

From January 29, 2019 to February 15, 2019, the Company issued 33,000 registered shares under the Securities Act of 1933 for a cash amount of $4,950. On February 26, 2019, the Company filed the Post-Effective Amendment No. 1 (the “Amendment”) related to the Registration Statement on Form S-1and its amendments thereto, filed with the U.S. Securities and Exchange Commission on November 22, 2017 and declared effective on August 7, 2018 (Registration No. 333-221726) (the “Registration Statement”) of FDCTech, Inc., a Delaware corporation (the “Registrant”), amended the Registration Statement to remove from registration all shares of common stock that were offered for sale by the Registrant but were not sold prior to the termination of the offering made pursuant to the Registration Statement. At the termination of the offering made pursuant to the Registration Statement, 2,967,000 shares of common stock that were offered for sale by the Registrant were not sold or issued.

 

Effective June 3, 2020, the Company issued 2,745,053 shares to Benchmark Investments, Inc. (“Broker-Dealer” or “Kingswood Capital Markets”) of common stock at $0.25 per share for a total value of $686,263. The Broker-Dealer is retained to provide general financial advisory to the Company for the next twelve months. The Company has expensed the prepaid compensation through the income statement following a regular straight-line amortization schedule over the contract’s life, which is for twelve months—when Kingswood Capital Markets presumably will produce benefits for the Company. On August 25, 2020, the Company and Broker-Dealer terminated all obligations other than maintaining confidentiality, with no fees due by the Company to the Broker-Dealer. The Broker-Dealer returned the 2,745,053 shares of the Company’s common stock as of December 31, 2020.

 

On October 1, 2020, the Company issued 250,000 restricted common shares to a digital marketing consultant valued at $30,000. The Company issued the securities with a restrictive legend.

 

On January 31, 2021, the Company issued 2,300,000 restricted common shares for professional services to two (2) consultants valued at $621,000.

 

On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation. The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080 of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH Group Corporation, an entity also owned by Mr. Hong.

 

On May 19, 2021, the Company issued 1,750,000 restricted common shares for professional services to a consultant valued at $350,000.

 

F-29

 

 

NOTE 9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

 

On June 02, 2021, the Company issued 1,750,000 restricted common shares for Genesis Agreement to a consultant valued at $437,500. As the Genesis Agreement did not materialize, the Consultant returned the shares to the treasury.

 

On June 15, 2021, the Company issued 100,000 restricted common shares to a board member for services to a consultant valued at $21,000.

 

On July 06, 2021, the Company issued 100,000 restricted common shares to a board member for services to a consultant valued at $22,000.

 

On July 20, 2021, the Company issued 545,852 restricted common shares for professional services to a consultant valued at $98,253.

 

On October 04, 2021, the Company filed a prospectus related to the resale of shares to White Lion and AD Securities America, LLC. The Company issued 2,000,000 shares to AD Securities America, LLC for $200,000. The Company has not received the cash as of the date of the report. The Company issued 670,000 registered shares to White Lion as consideration shares valued at $80,400.

 

On October 5, 2021, the Company issued 1,500,000 restricted common shares for professional services to a consultant valued at $164,250.

 

From October 2021 to November 2021, the Company issued 750,000 registered shares to White Lion for a gross cash amount of $62,375.

 

On December 22, 2021, the Company issued 45,000,000 restricted common shares to ADFP to acquire 51% controlling interest in AD Advisory Service Pty Ltd, Australia’s regulated wealth management company.

 

In December 2021, the Company issued 5,650,000 restricted common shares to two board members, a consultant, and two officers, for services and software development valued at $169,500.

 

On January 4, 2022, the Company issued 1,500,000 restricted common shares for professional services to a consultant valued at $93,750.

 

From January 4, 2022, to February 10, 2022, the Company issued 2,500,000 registered shares to White Lion for a gross cash amount of $114,185.

 

On January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’). The Company issued 2,214,286 common stock valued at $71,521 upon issuance of the Note (the “Shares”) and 1,000,000 3-year cash warrants (‘AJB Warrants’) priced at $0.30 as consideration fees for AJB Note. The AJB Warrants and the Shares, collectively known as the ‘Incentive Fee,’ are issued upon execution of the agreement. As of March 31, 2022, all AJB Warrants are out-of-money and not exercised.

 

On July 31, 2022, the Company issued 250,000 restricted common shares for professional services to a consultant valued at $9,475.

 

On September 30, 2022, the Company issued 30,000,000 restricted common shares for cash valued at $300,000.

 

On September 30, 2022, the Company issued 5,000,000 restricted common shares to Gope S. Kundnani for services valued at $60,000.

 

On December 12, 2022, the Company issued 20,000,000 restricted common shares to two officers for services valued at $166,000.

 

On December 15, 2022, the Company issued 8,000,000 restricted common shares to two officers for services valued at $76,000.

 

On January 25, 2023, the Company issued 5,309,179 restricted common shares to AJB to compensate for consideration shares related to the AJB Note valued at $60,525.

 

On January 25, 2023, the Company issued 115,000,000 restricted common shares for cash valued at $550,000.

 

On March 28, 2023, the Company issued 2,000,000 restricted common shares for cash valued at $20,000.

 

F-30

 

 

NOTE 10. WARRANTS

 

Effective June 1, 2017, the Company is raising $600,000 through a Private Placement Memorandum (the “Memorandum”) of up to 4,000,000 Units. Each unit (a “Unit”) consists of one (1) share of Common Stock, par value $.0001 per share (the “Common Stock), and one (1) redeemable Class A Warrant (the “Class A Warrant(s)”) of the Company. The Company closed the private placement effective December 15, 2017.

 

Each Class A Warrant entitles the holder to purchase one (1) share of Common Stock for $0.30 per share until April 30, 2019 (‘Expiration Date’). The Company issued the securities with a restrictive legend.

 

Information About the Warrants Outstanding During Fiscal 2022 Follows

 

Original


Number of


Warrants


Issued

   Exercise
Price per
Common
Share
  

Exercisable


at


December 31,


2020

   Became
Exercisable
   Exercised  

Terminated

/ Canceled /
Expired

  

Exercisable

At March 31,
2022

   Expiration
Date
 653,332   $0.30    -    -    -    653,332    -   April 2019

 

The Warrants are redeemable by the Company, upon thirty (30) day notice, at a price of $.05 per Warrant, provided the average of the closing