AtlasClear quarterly loss widens to $1.05M
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
AtlasClear Holdings, Inc. (ATCH) reported revenue of $5.39 million for the three months ended September 30, 2026, versus $4.25 million a year earlier, while net loss widened to $1.05 million from $440,294. Operating expenses were $7.91 million. Net cash used in operating activities was $3.87 million, compared with $2.50 million a year earlier.
As of September 30, 2026, unrestricted cash and cash equivalents were $9.4 million. The company reported significant cash outflows, including a $2.5 million payment in October related to the Ark acquisition; another $2.44 million is expected at closing, and a $2.5 million seller note matures in January 2027. Management said forecast operating cash flows and existing cash balances may not cover all anticipated obligations, but cited accessible capital resources and concluded there is no substantial doubt about the company’s ability to continue as a going concern.
NYSE American suspended trading in ATCH on November 10, 2026, and began delisting proceedings, citing the stock’s low selling price. The company intends to request a review, though it said there can be no assurance the appeal will succeed. Since November 11, 2026, the stock has traded on OTC Pink Limited Market.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointRevenue reached $5.39 million, up from $4.25 million year over year.
Negative
- Major pointNYSE American suspended ATCH trading, citing low selling price and delisting proceedings.
- Moderate pointNet loss widened to $1.05 million from $440,294 year over year.
- Moderate pointOperating cash outflow increased to $3.87 million from $2.50 million.
Filing Explained
Separate from issued shares, the filing lists 18,679,636 convertible securities, 18,979,843 performance-based awards, and 32,441,602 warrants excluded from diluted loss per share.
This unaudited quarterly report shows AtlasClear had 151,838,744 common shares outstanding at
Separately, the filing lists 18,679,636 convertible securities, 18,979,843 performance-based stock awards, and 32,441,602 warrants as excluded from diluted loss per share. These are distinct from the reported outstanding shares; if they result in additional shares, total share count rises and existing holders’ percentage ownership falls, absent offsetting changes.
Under the Commercial Bancorp purchase agreement, sellers may elect all-cash, all-share, or mixed consideration, with the amount based on adjusted book value, premises value, and a tax benefit. Closing conditions include required regulatory approvals; the filing says the resale registration statement was declared effective on
Key Figures
Key Terms
stock locate fees financial
Rule 15c3-3 regulatory
uniform net capital rule regulatory
Fair Value Option financial
antidilutive financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What drove ATCH’s revenue in the quarter ended September 30, 2026?
Why was ATCH’s trading suspended, and what happened next?
Does ATCH have unused credit available for clearing requirements?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
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 Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(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 | ||
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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | 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 Exchange Act). Yes ☐ No
As
of November 3, 2026 , there were
1 On November 10, 2026, AtlasClear Holdings, Inc. (the “Company”) received notice from NYSE Regulation of the NYSE American LLC (“NYSE American”) that it had suspended trading of the Company’s common stock and determined to commence proceedings to delist the Company’s common stock from the NYSE American as a result of its determination that the Company is no longer suitable for listing pursuant to Section 1003(f)(v) of the NYSE American Company Guide due to the low selling price of the Company’s common stock. The Company has a right to a review of NYSE American’s determination to delist the Company’s common stock by the Listings Qualifications Panel of the Committee for Review of the Board of Directors of the NYSE American, and the Company intends to request such a review; however, there can be no assurance that any such appeal will be successful. Since November 11, 2026, the Company’s common stock has traded on the OTC Pink Limited Market.
| Table of Contents |
ATLASCLEAR HOLDINGS, INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2026
TABLE OF CONTENTS
| Page | |
| Part I. Financial Information | 3 |
| Item 1. Interim Consolidated Financial Statements | 3 |
| Condensed Consolidated Balance Sheets as of September 30, 2026 (unaudited) and June 30, 2026 | 3 |
| Condensed Consolidated Statements of Operations for the three months ended September 30, 2026 and 2025 (Unaudited) | 4 |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three months ended September 30, 2026 and 2025 (Unaudited) | 5 |
| Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2026 and 2025 (Unaudited) | 6 |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 8 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 35 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 42 |
| Item 4. Controls and Procedures | 42 |
| Part II. Other Information | 43 |
| Item 1. Legal Proceedings | 43 |
| Item 1A. Risk Factors | 43 |
| Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities | 44 |
| Item 3. Defaults Upon Senior Securities | 44 |
| Item 4. Mine Safety Disclosures | 44 |
| Item 5. Other Information | 44 |
| Item 6. Exhibits | 44 |
| Signatures | 45 |
| 2 |
| Table of Contents |
PART I - FINANCIAL INFORMATION
Item 1. Interim Consolidated Financial Statements.
ATLASCLEAR HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | June 30, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Cash segregated - customers | ||||||||
| Cash segregated - PAB | ||||||||
| Receivables - broker-dealers and clearing organizations | ||||||||
| Receivables - customers, net of allowance
for credit losses of $ | ||||||||
| Other receivables | ||||||||
| Prepaids | ||||||||
| Trading securities, market value, net | — | |||||||
| Total Current Assets | ||||||||
| Operating lease right to use lease asset | ||||||||
| Customer list, net | ||||||||
| Goodwill | ||||||||
| Developed technology, net | ||||||||
| Cash deposits - broker-dealers and clearing organizations | ||||||||
| Bank acquisition deposit | ||||||||
| Other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| LIABILITIES | ||||||||
| Payables to customers | $ | $ | ||||||
| Accounts and payables to officers/directors | — | |||||||
| Accounts payable and accrued expenses | ||||||||
| Payables - broker-dealers and clearing organizations | ||||||||
| Commissions, payroll and payroll taxes | ||||||||
| Current portion of lease liability | ||||||||
| Promissory notes | ||||||||
| Debenture | ||||||||
| Debenture – derivative | ||||||||
| Subordinated borrowings-current | — | |||||||
| Stock payable – related party | ||||||||
| Total Current Liabilities | ||||||||
| Accrued contingent liability | ||||||||
| Long-term secured convertible note, net | ||||||||
| Warrant Liability | ||||||||
| Derivative liability - warrants | ||||||||
| Earnout - liability | ||||||||
| Deferred income tax liability | ||||||||
| Subordinated borrowings | — | |||||||
| Long-term lease liability | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies (Note 10) | - | - | ||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Preferred stock, $ | — | — | ||||||
| Common stock, $ | ||||||||
| Stock subscription receivable | ( | ) | ( | ) | ||||
| Additional paid-in-capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 3 |
| Table of Contents |
ATLASCLEAR HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| 2026 | 2025 | |||||||
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| REVENUES | ||||||||
| Commissions | $ | $ | ||||||
| Vetting fees | ||||||||
| Clearing fees | ||||||||
| Stock locate fees | — | |||||||
| Net gain/(loss) on firm trading accounts | ( | ) | ||||||
| Other revenue | ||||||||
| TOTAL REVENUES | ||||||||
| EXPENSES | ||||||||
| Compensation, payroll taxes and benefits | ||||||||
| Data processing and clearing costs | ||||||||
| Regulatory, professional fees and related expenses | ||||||||
| Stock compensation expense | ||||||||
| Communications | ||||||||
| Occupancy and equipment | ||||||||
| Transfer fees | ||||||||
| Bank charges | ||||||||
| Bad debt | ||||||||
| Intangible assets amortization | ||||||||
| Other | ||||||||
| TOTAL EXPENSES | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME/(EXPENSE) | ||||||||
| Interest income | ||||||||
| Change in fair value of warrant liability derivative | ( | ) | ||||||
| Change in fair value of convertible note derivative | — | ( | ) | |||||
| Change in fair value of long-term and short-term note derivative | — | |||||||
| Change in fair value of secured convertible note | — | |||||||
| Change in fair value of merger financing | — | |||||||
| Change in fair value of earnout liability | ( | ) | ||||||
| Change in fair value of Winston & Strawn agreement | — | |||||||
| Change in fair value of debenture derivative | ( | ) | ( | ) | ||||
| Change in fair value of Tau agreement | — | |||||||
| Interest expense | ( | ) | ( | ) | ||||
| TOTAL OTHER INCOME/(EXPENSE) | ||||||||
| NET LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ||||
| Income tax (expense) benefit | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| Basic weighted average shares outstanding, common stock | ||||||||
| Basic net loss per share, common stock | $ | ( | ) | $ | ( | ) | ||
| Diluted weighted average shares outstanding, common stock | ||||||||
| Diluted net loss per share, common stock | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 4 |
| Table of Contents |
ATLASCLEAR HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2026
| Shares | Amount | Receivable | Capital | Deficit | (Deficit) | |||||||||||||||||||
| Common Stock | Stock Subscription | Additional Paid-in | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Receivable | Capital | Deficit | (Deficit) | |||||||||||||||||||
| Balance — June 30, 2026 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||
| Shares issued to officers under stock based compensation | — | ( | ) | — | — | |||||||||||||||||||
| Vested portion of stock based compensation | — | — | — | — | ||||||||||||||||||||
| Shares issued in non-cash exercise of Warrant Liability | — | — | ||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
| Balance — September 30, 2026 (unaudited) | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2025
| Common Stock | Stock Subscription | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Receivable | Capital | Deficit | Deficit | |||||||||||||||||||
| Balance — June 30, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
| Shares issued as conversion of $ And interest on long-term and merger financing notes | — | — | ||||||||||||||||||||||
| Shares issued as conversion of $ | — | — | ||||||||||||||||||||||
| Shares issued as conversion of $ | — | — | ||||||||||||||||||||||
| Shares issued under Software as a Service License Agreement | — | — | ||||||||||||||||||||||
| Shares issued as conversion of $ | — | — | ||||||||||||||||||||||
| Shares issued for consulting services provided by director | — | — | ||||||||||||||||||||||
| Shares issued to settle vendor invoice | — | — | ||||||||||||||||||||||
| Vested portion of stock-based compensation | — | — | — | — | ||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
| Balance — September 30, 2025 (unaudited) | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 5 |
| Table of Contents |
ATLASCLEAR HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| 2026 | 2025 | |||||||
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ( | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Change in fair value, warrant liability derivative | ( | ) | ||||||
| Change in fair value, convertible note derivative | — | |||||||
| Change in fair value, long-term and short-term note derivative | — | ( | ) | |||||
| Change in fair value, debenture derivative | ||||||||
| Change in fair value, secured convertible note | ( | ) | — | |||||
| Change in fair value, WDCO sellers convertible notes | — | ( | ) | |||||
| Change in fair value, earnout liability | ( | ) | ||||||
| Change in fair value, subscription agreement | — | ( | ) | |||||
| Change in fair value, Tau agreement | — | ( | ) | |||||
| Stock based compensation | ||||||||
| Consulting expense paid with stock | — | |||||||
| Other non-cash (gain) loss | — | |||||||
| Amortization of intangibles | ||||||||
| Bad debt expense | ||||||||
| Amortization of right to use asset | ||||||||
| Deferred tax liability | ( | ) | ( | ) | ||||
| Non-cash interest in expense on financial instruments | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables from brokers & dealers | ( | ) | ||||||
| Receivables from customers | ( | ) | ( | ) | ||||
| Receivables from others | ( | ) | ( | ) | ||||
| Advances & Prepaid expenses | ||||||||
| Cash deposits with clearing organization & other B/Ds | — | ( | ) | |||||
| Other assets | ( | ) | ( | ) | ||||
| Payables to customers | ||||||||
| Payables to officers & directors | ( | ) | ||||||
| Payable to brokers & dealers | ||||||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Commissions and payroll taxes payable | ( | ) | ( | ) | ||||
| Lease liability | ( | ) | ( | ) | ||||
| Trading securities | ( | ) | ( | ) | ||||
| Net cash (used for) operating activities | ( | ) | ( | ) | ||||
| 6 |
| Table of Contents |
ATLASCLEAR HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
(UNAUDITED)
| Cash Flows from Investing Activities | ||||||||
| Cash paid for purchase of Pacsquare | — | ( | ) | |||||
| Net cash used for investing activities | — | ( | ) | |||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from Convertible Notes, net of transaction cost | — | |||||||
| Proceeds from debenture, net of transaction cost | — | |||||||
| Proceeds from third party advance | — | |||||||
| Repayment of promissory notes | ( | ) | ( | ) | ||||
| Net cash provided by (used for) financing activities | ( | ) | ||||||
| Net Change in Cash, Cash Equivalents and Restricted Cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Supplementary cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | — | $ | — | ||||
| Supplemental cash flow information non-cash investing and financing activities: | ||||||||
| Receivable from shares advanced under Tau agreement | $ | — | $ | |||||
| Shares issued for conversion on convertible notes Chardan | $ | — | $ | |||||
| Shares issued for conversion of secured convertible notes | $ | — | $ | |||||
| Shares issued for conversion of principal and interest on short-term note | $ | — | $ | |||||
| Shares issued for conversion of principal and interest on long-term note and merger financing | $ | — | $ | |||||
| Shares issued for conversion of principal and interest on promissory note | — | |||||||
| Shares issued for conversion | — | |||||||
| Initial value of derivative included debenture | $ | — | $ | |||||
| Initial value of derivative included convertible note | $ | — | $ | |||||
| Original issued discount included in convertible note | $ | — | $ | |||||
| Shares issued under stock-based compensation awards | $ | $ | — | |||||
| Shares issued for non-cash exercise of Warrant Liability | $ | $ | — | |||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 7 |
| Table of Contents |
ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
AtlasClear Holdings, Inc. (formerly known as Calculator New Pubco, Inc.) (the “Company” or “AtlasClear Holdings”) is a Delaware corporation and, prior to the Business Combination (defined below), was a direct, wholly-owned subsidiary of Quantum FinTech Acquisition Corporation (“Quantum”). Quantum was incorporated in Delaware on October 1, 2020. Quantum was a blank check company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities.
On February 9, 2024 (the “Closing Date”), the Company consummated the previously announced transactions pursuant to that certain Business Combination Agreement dated November 16, 2022 (as amended, the “Business Combination Agreement”), among the Company, Quantum, AtlasClear, Inc. (“AtlasClear”), Atlas FinTech Holdings Corp. (“Atlas FinTech”) and certain other parties. The transactions consummated as a result of the Business Combination Agreement are hereinafter referred to as the “Business Combination.” In connection with the consummation of the Business Combination (the “Closing”), the Company changed its name from “Calculator New Pubco, Inc.” to “AtlasClear Holdings, Inc.” As a result, the operating history of Quantum survived the merger. Pursuant to the Business Combination Agreement, AtlasClear received certain assets from Atlas FinTech and Atlas Financial Technologies Corp., a Delaware corporation, and completed the acquisition of broker-dealer Wilson-Davis & Co., Inc., which changed its name to AtlasClearing, Inc. (“AtlasClearing”).
On February 16, 2024, AtlasClear and Pacsquare Technologies, LLC (“Pacsquare”) entered into a Source Code Purchase and Master Services Agreement (the “Pacsquare Purchase Agreement”), pursuant to which AtlasClear purchased a proprietary trading platform with clearing and settlement capabilities that will be developed by Pacsquare, including certain software and source code (the “AtlasClear Platform”).
AtlasClear Holdings’ goal is to build a cutting-edge technology-enabled financial services firm that would create a more efficient platform for trading, clearing, settlement and banking, with evolving and innovative financial products that focus on financial services firms. AtlasClear Holdings is a fintech-driven business-to-business platform that expects to power innovation in fintech, investing, and trading.
AtlasClear does not meet the definition of a business and therefore was treated as an asset acquisition by AtlasClear Holdings. As such the assets contributed from Atlas FinTech and the net assets of AtlasClear were recognized at historical cost. ASC 350 prohibits the recognition of goodwill in an asset purchase with related parties.
Quantum was deemed the accounting acquirer based on the following factors: i) Quantum issued cash and shares of its common stock; ii) Quantum controlled the voting rights under the no redemption and the maximum contractual redemption scenarios; iii) Quantum had the largest minority voting interest; iv) Quantum has control over the board of directors of the post-combination company and most of senior management of the post-combination company are former officers of Quantum.
AtlasClearing is a securities broker and dealer, dealing in over-the-counter and listed securities and clears for one other broker-dealer on a fully disclosed basis. AtlasClearing is required to comply with all applicable rules and regulations of the Securities and Exchange Commission (the “SEC”), the Financial Industry Regulatory Authority, Inc. (“FINRA”), and the various securities exchanges in which it maintains a membership.
Revenue is derived principally from AtlasClearing’s operations in four areas: commission revenue, fee revenue, security locates and interest revenue.
AtlasClearing has operations in Utah, Arizona, California, Florida, New York, Oklahoma and Nevada. Transactions for customers are principally in the states where the Company operates, however, some customers are located in other states in which the Company is registered. Principal trading activities are conducted with other broker dealers throughout the United States.
| 8 |
| Table of Contents |
ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Liquidity and Going Concern Considerations
As
of September 30, 2026, the Company had unrestricted cash and cash equivalents of $
Management evaluated the Company’s liquidity position and continuous operational plans in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 205-40, Presentation of Financial Statements – Going Concern. Management’s base cash flow forecast for the twelve months following the issuance date of these condensed consolidated financial statements indicates that projected operating cash flows and existing cash balances on hand may not be sufficient to satisfy all anticipated obligations as they become due.
However, management has evaluated probable and executable mitigation plans. Specifically, the Company has accessible capital resources that can be drawn down or completed to fully fund any potential cash flow deficits. While management does not anticipate requiring capital beyond baseline operational expectations, these funding mechanisms are available, and management believes them to be sufficient to absorb any liquidity shortfalls during the assessment period.
Based on the available capital resources and management’s operational and financial mitigation plans, management expects to have sufficient liquidity to satisfy its obligations as they become due for at least twelve months following the date these condensed consolidated financial statements are issued. Accordingly, management concluded that there is no substantial doubt about the Company’s ability to continue as a going concern.
| 9 |
| Table of Contents |
ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the SEC on September 24, 2026. The accompanying condensed balance sheet as of June 30, 2026 has been derived from the audited financial statements included in the Form 10-K. The interim results for the three months ended September 30, 2026 are not necessarily indicative of the results to be expected for the year ending June 30, 2027 or for any future periods.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Prevailing industry practices requires management to make estimates and assumptions regarding trading securities, depreciation and other matters that affect certain reported amounts and disclosures in the financial statements. The more significant accounting estimates included in these consolidated financial statements are the determination of the fair value of the private warrant liabilities, the fair value of the warrant liability, the fair value of the derivatives included in the convertible notes and debenture agreement, the fair value of the secured convertible note, the merger financing, the short-term merger financing, the long-term merger financing, the fair value of the earnout liability, realization of deferred tax assets and the useful life of its intangible assets. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all bank accounts highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Trading Securities
Securities held in the Company’s trading account and trading securities sold not yet purchased, consist primarily of over-the-counter securities and are valued based upon quoted market prices. The value of securities that are not readily marketable are estimated by management based upon quoted prices, the number of market makers, trading volume and number of shares held. Unrealized gains and losses are reflected in income in the financial statements.
Property and Equipment
Property
and equipment are stated at cost less accumulated depreciation. Depreciation on property and equipment is provided using accelerated
and straight-line methods over expected useful lives of
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Leases
The Company leases office space under the terms of several operating leases. The determination of whether an arrangement is a lease is made at the lease’s inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed.
Right-of-use assets (“ROU assets”) represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses the implicit rate when it is readily determinable. Since the Company’s leases do not provide implicit rates, to determine the present value of lease payments, management uses the Company’s estimated incremental borrowing rate based on the information available at lease commencement.
Goodwill
Goodwill
represents the excess of purchase price in a business combination over the fair value of the net identifiable assets acquired. The
Company evaluates goodwill for impairment at the reporting unit level by assessing whether it is more likely than not that the fair
value of a reporting unit exceeds its carrying value. If this assessment concludes that it is more likely than not that the fair
value of a reporting unit exceeds its carrying value, then goodwill is not considered impaired and no further impairment testing is
required. Conversely, if the assessment concludes that it is more likely than not that the fair value of a reporting unit is less
than its carrying value, a goodwill impairment test is performed to compare the fair value of the reporting unit to its carrying
value. The Company determines fair value of the reporting unit using income models. The models contain significant assumptions and
accounting estimates about discount rates, future cash flows, that could materially affect operating results or financial position
if they were to change significantly in the future and could result in an impairment. The Company performs its goodwill impairment
assessment whenever events or changes in facts or circumstances indicate that impairment may exist and during the fourth fiscal
quarter each year. The cash flow estimates and discount rates incorporate management’s best estimates, using appropriate and
customary assumptions and projections at the date of evaluation. As of September 30, 2026 and June 30, 2026, the carrying value of
goodwill was $
Intangible Assets
Intangible
assets are presented at acquisition-date fair value, net of accumulated amortization. The fair value is determined based on the appraised
value of the asset. Intangible assets comprise of developed technology and customer relationships (See Note 7). Developed technology
and customer list are amortized using the straight-line method over the
Impairment of Long-lived and Intangible Assets
In
accordance with ASC 360-10 Property Plant and Equipment and ASC 350-10 Intangibles, the Company, on a regular basis, reviews the carrying
amount of long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. The
Company determines if the carrying amount of a long-lived asset is impaired based on anticipated undiscounted cash flows, before interest,
from the use of the asset. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds
the fair value of the asset. Fair value is determined based on the appraised value of the assets or the anticipated cash flows from the
use of the asset, discounted at a rate commensurate with the risk involved. The Company had
Warrant Liabilities
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants that do not meet all the criteria for equity classification are recognized as a non-cash gain or loss on the consolidated statements of operations. The fair value of the warrant liabilities were estimated using a Black-Scholes model approach (see Note 13).
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Income Taxes
The Company utilizes the asset and liability method to account for income taxes. The objective of this method is to establish deferred tax assets and liabilities for the temporary differences between net income for financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized.
Income tax expense or benefit is provided based upon the financial statement earnings of the Company. The allowance for doubtful accounts is deductible for financial statement purposes, but not for tax purposes. Depreciation expense is recognized in different periods for tax and financial accounting purposes due to the use of accelerated depreciation methods for income tax purposes. The tax effects of such differences are reported as deferred income taxes in the financial statements.
Revenue Recognition
AtlasClearing, a subsidiary of the Company, recognizes revenue in accordance with ASC 606. This revenue recognition guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five-step model to: (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when the entity satisfies a performance obligation.
AtlasClearing acts as an agent by selling securities to customers and collecting commissions. AtlasClearing recognizes commissions on a trade date basis, which is the day the transaction is executed. AtlasClearing believes that the performance obligation is satisfied on the trade date because that is when the security is selected, the price is determined, the trade is executed, and the risks and rewards of ownership have been transferred to/from the customer.
AtlasClearing also receives commissions on mutual funds purchased by customers. AtlasClearing believes that the performance obligation is not satisfied until the mutual funds are purchased by customers and recognizes the commission revenue upon receipt from fund.
AtlasClearing performs vetting services to customers who wish to convert restricted stock to eligible trading stock. In addition, AtlasClearing charges clearing fees to another broker-dealer that it clears trades for. AtlasClearing recognizes revenue as the related performance obligations are satisfied.
AtlasClearing earns fees from providing security locates to other broker-dealers in connection with short sale transactions. The Company’s performance obligation is satisfied when the locate is provided to the requesting broker-dealer. Revenue from locate services is recognized at a point in time upon delivery of the locate, in an amount that reflects the consideration the Company expects to receive for the service provided.
AtlasClearing charges customers for wires and transfer agent fees. The customer is also charged for blue sheet fees, corporate actions, and ACATS fees. AtlasClearing recognizes revenue as the related performance obligations are satisfied.
AtlasClearing performs underwriting services for companies going public. AtlasClearing enters into an agreement detailing the services to be performed. AtlasClearing recognizes revenue when the shares of stock have been delivered and wire payments have been processed.
AtlasClearing earns interest on its balances with its financial institution. AtlasClearing recognizes the interest income at month end when the income has been earned.
Net Income (Loss) per Common Stock
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period.
Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding plus potential incremental common shares that would have been outstanding if dilutive potential common shares had been issued, calculated using the treasury stock method or the if-converted method, as applicable. Potential common shares are excluded from the computation of diluted net income (loss) per share if their effect would be antidilutive.
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
For the three months ended September 30, 2026 and 2025, the Company was in a net loss position. As a result, basic and diluted net loss per share are identical for all periods presented, as the inclusion of any potentially dilutive securities would have an antidilutive effect on loss per share.
Specifically, for the three months ended September 30, 2026 and 2025:
Stock Options: Outstanding stock options (including options that were in-the-money based on average market price) were excluded from the computation of diluted net loss per share because the Company reported a net loss for the periods, rendering their inclusion antidilutive under the treasury stock method.
Convertible Notes and Debentures: The if-converted calculation for the secured convertible notes and debentures resulted in an adjusted net loss position; therefore, the effect of assuming conversion was antidilutive.
Stock Warrants: Outstanding stock warrants were excluded from the computation of diluted net loss per share as their exercise prices exceeded the average market price of the common stock during the respective periods, rendering them antidilutive.
The following table reflects the calculation of basic and diluted net income (loss) per share of common stock (in dollars, except share amounts):
SCHEDULE OF BASIC AND DILUTED NET INCOME (LOSS) PER SHARE OF COMMON STOCK
| Three Months Ended | Three Months Ended | |||||||
| September 30, 2026 | September 30, 2025 | |||||||
| Basic and diluted net (loss) income per common stock | ||||||||
| Numerator: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Basic and diluted weighted average common stock outstanding | ||||||||
| Basic and diluted net (loss) income per common stock | $ | ( | ) | $ | ( | ) | ||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Below is a summary of the potentially dilutive instruments as of September 30, 2026 and 2025:
SCHEDULE OF DILUTIVE INSTRUMENTS
| Description | September 30, 2026 | September 30, 2025 | ||||||
| Convertible Securities (if-Converted): | ||||||||
| Debenture | ||||||||
| Secured convertible note | ||||||||
| Subscription agreement | — | |||||||
| Promissory note | — | | ||||||
| Total Convertible Securities Excluded | ||||||||
| Contingently issuable shares (Pending Performance Condition) | ||||||||
| Performance-Based (Market Condition) Stock Awards | ||||||||
| Stock Based Awards | ||||||||
| Time-Based Stock Awards | ||||||||
| In-the Money Stock Options | — | |||||||
| Total Stock Based Awards– excluded | ||||||||
| Out-of-the Money Warrants: | ||||||||
| Public Warrants | ||||||||
| Private Warrants | | | ||||||
| Secured convertible note warrants | ||||||||
| Warrant Liability | — | |||||||
| Total Warrants excluded | ||||||||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times may exceed the Federal Deposit Insurance Coverage of $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature, except for warrant liabilities, the debenture derivative liability, the secured convertible note (carried at fair value under the fair value option) and the earnout liability (see Note 13).
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the issuance date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Segment Reporting
The Company operates and manages its business as a single operating and reportable segment in accordance with FASB ASC Topic 280, Segment Reporting. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM is the Executive Chairman, who reviews consolidated financial results, assets, and operational metrics to make decisions for the enterprise as a whole.
Risk Management
Transactions involving financial instruments involve varying degrees of market, credit and operating risk. The Company monitors its exposure to risk on a daily basis.
Market Risk
Market risk is the potential change in value of the financial instrument caused by unfavorable changes in interest rates and equity prices. Management is responsible for reviewing trading positions, exposure limits, profits and losses, and trading strategies. In the normal course of business, the Company purchases, and makes markets in non-investment grade securities. These activities expose the Company to a higher degree of market risk than is associated with investing or trading in investment grade instruments.
Operating Risk
Operating risk focuses on the Company’s ability to accumulate, process and communicate information necessary to conduct its daily operations. Deficiencies in technology, financial systems and controls and losses attributable to operational problems all pose potential operating risks. In order to mitigate these risks, the Company has established and maintains an internal control environment which incorporates various control mechanisms throughout the organization. In addition, the Company periodically monitors its technological needs and makes changes as deemed appropriate.
Credit Risk
AtlasClearing’s transactions with customers and other broker dealers are recorded on a trade date basis and are collateralized by the underlying securities. AtlasClearing’s exposure to credit risk associated with nonperformance by customers or contra brokers is impacted by volatile or illiquid trading markets. Should either the customers or other broker dealers fail to perform, AtlasClearing may be required to complete the transactions at prevailing market prices. AtlasClearing manages credit risk by monitoring net exposure to individual counterparties on a regular basis. Historically, reserve requirements arising from instruments with off-balance sheet risk have not been material. Receivables and payables with clearing and other broker dealers are generally collateralized by cash deposits. Additional cash deposits are requested when considered necessary by the clearing organization or contra broker dealer.
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Customer transactions are primarily entered in cash accounts. AtlasClearing maintains a few customer margin accounts which expose the company to credit and market risks. However, this risk is minimized by AtlasClearing requirement that margin accounts must maintain at least a 4:1 ratio of securities to margin obligations.
Concentrations of credit risk that arise from financial instruments (whether on or off-balance sheet) exist for groups of counterparties when they have similar economic characteristics that would cause their ability to meet obligations to be similarly affected by economic, industry or geographic factors.
Recent Accounting Standards
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 became effective for the Company for the annual period ended June 30, 2026. The adoption of ASU 2023-09 impacted the Company’s income tax disclosures only and did not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.
In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20) Induced Conversions of Convertible Debt Instruments, a new standard to clarify the accounting for settlements of convertible debt instruments. The amendments clarify the criteria used to determine whether a settlement of convertible debt should be accounted for as an induced conversion (resulting in the recognition of an inducement expense) or as a debt extinguishment (resulting in a gain or loss on extinguishment). Specifically, the update clarifies that induced conversion accounting applies only if the inducement offer preserves the form and amount of consideration issuable under the instrument’s existing conversion privileges. It also extends the guidance to include convertible debt instruments containing cash conversion features and instruments that are not currently convertible at the offer date, provided they contain a substantive conversion feature. The Company adopted ASU 2024-04 effective July 1, 2026, the beginning of its fiscal year ending June 30, 2027. The adoption of this guidance did not have an impact on the Company’s condensed consolidated financial statements or its accounting treatment for its existing debt obligations.
Recent Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures, a new standard to expand disclosures about income statement expenses. The guidance requires disaggregation of certain costs and expenses included in each relevant expense caption on the income statements in a separate note to the financial statements at each interim and annual reporting period, including amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The standard will be effective for annual periods beginning after December 15, 2026 (the Company’s fiscal year ending June 30, 2028), and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the provision of this ASU.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.
NOTE 3. CASH SEGREGATED IN ACCORDANCE WITH FEDERAL REGULATIONS
AtlasClearing
is required by Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) to maintain a cash
reserve with respect to customers’ transactions and credit balances, on a settlement date basis. Such a reserve is computed
weekly using a formula provided by the rule and the reserve account must be separate from all other bank accounts of AtlasClearing.
The required reserve as of September 30, 2026 and June 30, 2026, was calculated to be $
AtlasClearing
is also required by Rule 15c3-3 of the Exchange Act to maintain a cash reserve with respect to broker-dealer transactions and credit
balances. Such a reserve is computed weekly using a formula provided by the rule and the reserve account must be separate from all
other bank accounts of AtlasClearing. The required reserve as of September 30, 2026 and June 30, 2026, was calculated to be $
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
NOTE 4. NET CAPITAL REQUIREMENTS
As
a broker dealer, AtlasClearing is subject to the uniform net capital rule adopted and administered by the SEC.
The rule requires maintenance of minimum net capital and prohibits a broker dealer from engaging in securities transactions at a time
when its net capital falls below minimum requirements, as those terms are defined by the rule. Under the alternative method permitted
by this rule, net capital shall not be less than the greater of $
NOTE 5 – CASH AND RESTRICTED CASH
Reconciliation of cash and restricted cash as shown in the condensed statements of cash flows is presented in the table below:
SCHEDULE OF RECONCILIATION OF CASH AND RESTRICTED CASH AS SHOWN IN THE STATEMENTS OF CASH FLOWS
| September 30, 2026 | June 30, 2026 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Cash segregated - customers | ||||||||
| Cash segregated – FPL | ||||||||
| Cash segregated - PAB | ||||||||
| Total cash and restricted cash shown in the statement of cash flows. | $ | $ | ||||||
NOTE 6. - RECEIVABLES & PAYABLES WITH BROKER DEALERS AND CLEARING ORGANIZATION
Amounts receivable and payable with broker dealers and the clearing organization include:
SCHEDULE OF AMOUNTS RECEIVABLE AND PAYABLE WITH BROKER DEALERS AND THE CLEARING ORGANIZATION
| September 30, 2026 | June 30, 2026 | |||||||
| Due from clearing organizations, net | $ | $ | ||||||
| Fails to deliver and receive | ||||||||
| Total receivables | $ | $ | ||||||
| Due to clearing organizations, net | $ | — | $ | |||||
| Fails to deliver and receive | — | |||||||
| Total payables | $ | $ | ||||||
Accounts
receivable from and payable to customers at September 30, 2026 and June 30, 2026, include cash and margin accounts. Securities owned
by customers are held as collateral for any unpaid amounts. Such collateral is not reflected in the financial statements. The Company
provides an allowance for credit losses, as needed, for accounts in which collection is uncertain. Management periodically evaluates
each account on a case-by-case basis to determine impairment. Accounts that are deemed uncollectible are written off to bad debt expense.
Bad debt expense net of bad debt recoveries and trading error adjustments for the periods ended September 30, 2026 and 2025 was $
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
NOTE 7. INTANGIBLE ASSETS AND GOODWILL
Amortization
expense related to the amortization of developed technology and customer list. During the periods ended September 30, 2026 and 2025
amortization expense of $
Intangible Assets of the Company at September 30, 2026 and June 30, 2026 are summarized as follows:
SCHEDULE OF INTANGIBLE ASSETS
| September 30, 2026 | ||||||||||||||||||
| Est useful | Accumulated | Impairment | ||||||||||||||||
| life | Cost | Amortization | of Asset | Net | ||||||||||||||
| Goodwill | Indefinite | $ | $ | — | $ | — | $ | |||||||||||
| Developed technology | ( | ) | — | |||||||||||||||
| Customer Lists | ( | ) | — | |||||||||||||||
| Intangible Assets | $ | $ | ( | ) | $ | — | $ | |||||||||||
| June 30, 2026 | ||||||||||||||||||
| Est useful | Accumulated | Impairment | ||||||||||||||||
| life | Cost | Amortization | of Asset | Net | ||||||||||||||
| Goodwill | Indefinite | $ | $ | — | $ | — | $ | |||||||||||
| Developed technology | ( | ) | — | |||||||||||||||
| Customer Lists | ( | ) | — | |||||||||||||||
| Intangible Assets | $ | $ | ( | ) | $ | — | $ | |||||||||||
Below is a summary of the amortization of intangible assets for the next five years:
SCHEDULE OF AMORTIZATION OF INTANGIBLE ASSETS
| Year | Amount | |||
| Remainder of fiscal year ending June 30, 2027 | $ | |||
| June 30, 2028 | ||||
| June 30, 2029 | ||||
| June 30, 2030 | ||||
| June 30, 2031 | ||||
| Thereafter | ||||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
NOTE 8. RELATED PARTY TRANSACTIONS
Advances from Related Parties
On
May 9, 2024, Quantum Ventures, a related party, transferred
As
of September 30, 2026 and June 30, 2026, amounts due to Executive Chairman for advances made were $
As
of September 30, 2026 and June 30, 2026, amounts due to the President for advances made were $
Note Financing
In
September 2025, the Company entered into the September Securities Purchase Agreements, as defined and described in Note 9 below. $
On
October 8, 2025, the Company repaid the principal to Sandip Patel $
Other related party transactions
On
July 17, 2025, the Company issued
Twelve
subordinated loan agreements totaling $
Debenture
On
August 4, 2025, the Company entered into a securities purchase agreement (“August Securities Purchase Agreement”) with an
institutional investor (the “Holder”) controlled by Robert D. Keyser, Jr., a member of our board of directors, under which
the Company agreed to issue and sell, in a private placement, a Series A convertible debentures (the “Debenture”) for an
aggregate principal amount of $
The Holder is an entity controlled by Robert D. Keyser, Jr., a member of the Company’s board of directors. The amendment was accounted for as a modification.
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
The Debenture is within the scope of ASC 470-10 and is not an ASC 480 liability. The Company did not elect the fair value option under ASC 825-10. The instrument contains two embedded derivatives—the conversion option and the event-of-default feature—each of which requires bifurcation and separate measurement at fair value through earnings. Other redemption and prepayment features are clearly and closely related and remain within the debt host. The Debenture is therefore recognized net of a debt discount, with the derivative liabilities recorded separately and subsequently remeasured to fair value through earnings. Interest expense will be recognized using the effective-interest method.
The
Company recognized the discount of $
NOTE 9. NOTES PAYABLE
The following table represents the notes payable and related financing as of September 30, 2026 and June 30, 2026:
SCHEDULE OF NOTES PAYABLE AND RELATED FINANCING
| September 30, 2026 | June 30, 2026 | |||||||
| Promissory notes | $ | $ | ||||||
| Debenture (related party) | ||||||||
| Subordinated borrowings | — | |||||||
| Derivative liability - debenture | ||||||||
| Current portion | $ | $ | ||||||
| Secured Convertible Note, net | ||||||||
| Subordinated borrowings | — | |||||||
| Long term portion | $ | $ | ||||||
Chardan Convertible Note
During
the three months ended September 30, 2025, the Company issued a total of
See Note 13 for additional information on the fair value and change in fair value related to the derivative.
Secured Convertible Note Financing
On October 8, 2025, the Company entered into an amended and restated securities purchase agreement (the “Restated
SPA”) with Funicular Funds, LP (“Funicular”), which amended and restated in its entirety the securities purchase agreement,
dated February 9, 2024, pursuant to which the Company had issued and sold to Funicular, in a private placement, a secured convertible
note in the original principal amount of $
The Company elected to apply the Fair Value Option (FVO) under ASC 825-10 to the Restated Note. Under ASC 825-10-15-4 and 825-10-25-4, the Restated Note qualifies as an eligible financial liability because it is recognized upon initial issuance and not within any of the prohibited categories. The election was made at initial recognition and applies to the entire instrument, with upfront fees and costs expensed as incurred. As a result, the Restated Note is measured at fair value with changes recognized in earnings each reporting period consistent with ASC 825-10-45-5.
As
part of the transaction, fees and expenses incurred in connection with the amendment—principally legal and negotiation costs up
to $
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
For
the three months ended September 30, 2026, the Company recognized $
Promissory Notes
Pursuant
to a convertible promissory note with Interest Solutions, LLC., dated as of February 9, 2024, in the aggregate principal amount of $
Pursuant
to a convertible promissory note with JonesTrading Institutional Services LLC, dated as of February 9, 2024, in the aggregate principal
amount of $
Hanire
Purchase Agreement: During the year ended June 30, 2026, the Company received $
D&O
financing: During the year ended June 30, 2026, the Company renewed its Directors and Officers insurance policy and entered into a premium
financing agreement to fund the annual premium which is included in Promissory note balance of $
Equity Financing
On
October 8, 2025, the Company entered into a securities purchase agreement (the “Equity SPA”) with certain institutional
investors (each, an “Investor”), including Funicular, pursuant to which the Company agreed to issue and sell, in a
private placement,
The
Warrant Liability are immediately exercisable on a cash basis or exchangeable on a cashless basis and will expire
In the event of a Fundamental Transaction (as defined in the Warrant Liability ), the holders of the Warrant Liability will be entitled to receive upon exercise of the Warrant Liability the kind and amount of securities, cash or other property that the holders would have received had they exercised the Warrant Liability immediately prior to such Fundamental Transaction. Additionally, as more fully described in the Warrant Liability , the holders of the Warrant Liability will be entitled to receive consideration in an amount equal to the Black Scholes value of the Warrant Liability in connection with a Fundamental Transaction. If the Company fails to timely deliver the shares of Common Stock issuable upon exercise of the Warrant Liability, the Company will be subject to liquidated damages.
Subject
to the provisions of the Equity SPA, if, during the
The
Company engaged Dawson James Securities, Inc. as the placement agent (the “Placement Agent”) with respect to the
offering of the Restated Note and the Units. The Company agreed to pay the Placement Agent’s fees totaling (i)
$
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
The
closings of the issuance and sale of the Restated Note and the Units occurred on October 9th through October 14th, 2025, and the Company
issued an aggregate of
At the closings, the Company entered into a registration rights agreement with the Investors (the “Registration Rights Agreement”), pursuant to which the Company agreed, among other things, to file one or more registration statements covering the resale of the shares of Common Stock included as part of the Units, as well as the shares issuable upon conversion of the Restated Note or exercise of the Warrant Liability. The Company will be subject to liquidated damages if it fails to meet certain conditions set forth in the Registration Rights Agreement.
The Company evaluated the classification of the Warrant Liability, Common Stock, and the Registration Rights Agreement issued or entered into pursuant to the Equity SPA. The assessment was performed under the relevant guidance in ASC 480-10, ASC 815-10, ASC 815-40, and ASC 825-20, to determine whether these instruments should be accounted for as freestanding or embedded financial instruments, and whether they meet the criteria for equity or liability classification. The Warrant Liability is classified as freestanding derivative financial liabilities within the scope of ASC 815-10 and ASC 815-40, measured initially and subsequently at fair value through earnings. The issued shares of Common Stock are freestanding equity instruments. The Registration Rights Agreement is a freestanding contingent obligation within the scope of ASC 825-20, with potential liability recognition contingent on probability and estimability under ASC 450-20. See Note 13 for additional disclosure regarding fair value of the Warrant Liability.
Subordinated borrowings
The
Company has entered into FINRA-approved subordinated loan agreements totaling $
The subordinated loan agreements generally mature annually and may be renewed upon agreement of the parties and approval by FINRA. Management currently anticipates that these borrowings will continue to be renewed as they mature; however, future renewals are subject to regulatory approval and the Company’s capital requirements.
The loan principal and related accrued interest are unsecured and subordinated in right of payment to all present and future creditors of the Company. The subordinated loans are allowable in the computation of net capital under Rule 15c3-1 of the Exchange Act. To the extent the subordinated borrowings are required for compliance with minimum net capital requirements, they may not be repaid without FINRA approval.
NOTE 10. COMMITMENTS AND CONTINGENCIES
Earnout Liability
In
connection with the Closing, and pursuant to the terms of the Business Combination Agreement, stockholders of AtlasClear (the “AtlasClear
Stockholders”) received merger consideration (the “Merger Consideration Shares”) consisting of
As
of September 30, 2026 and June 30, 2026, the fair value of the earnout liability was $
Employment Agreements
On September 19, 2025, the Company entered into employment agreements and amendments to employment agreements with each of John Schaible, the Company’s Executive Chairman, and Craig Ridenhour, the Company’s President, and on September 24, 2025, the Company entered into second amendments to such agreements with each such officer.
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
The
employment agreements with Mr. Schaible and Mr. Ridenhour, as amended by such amendments (as so amended, the “Schaible Employment
Agreement” and the “Ridenhour Employment Agreement,” respectively) provide for the employment of Mr. Schaible and Mr.
Ridenhour as Executive Chairman and President, respectively, reporting to the Board, for an initial term of three
On
September 24, 2025, the Company entered into an employment agreement with Sandip Patel (the “Patel Employment Agreement”),
a member of the Board, pursuant to which Mr. Patel is employed as the Company’s General Counsel and Chief Financial Officer, reporting
to the Board, for an initial term of
Refer
to Note 12 for discussion regarding stock based compensation. As of June 30, 2026 the Company paid the one time signing bonuses for a
total of $
Commercial Bancorp Share Purchase Agreement
On February 5, 2026, the Company entered into a share purchase agreement (the “Purchase Agreement”) with Commercial Bancorp, and each of the shareholders of Commercial Bancorp (collectively, the “Sellers”). The Purchase Agreement provides for the Company to acquire (the “CB Acquisition”) from the Sellers all of the outstanding shares (the “Shares”) of common stock of Commercial Bancorp, which is the owner of all of the outstanding stock of Farmers State Bank, a Wyoming state-chartered member bank (the “Bank”), subject to the terms and conditions set forth in the Purchase Agreement. As previously disclosed, the Company had previously entered into an agreement and plan of merger, as amended, to acquire Commercial Bancorp, which agreement has expired in accordance with its terms.
Pursuant
to the terms of the Purchase Agreement, the Company has agreed to purchase the Shares from the Sellers for consideration consisting of
a combination of cash and shares Common Stock, with the total amount of consideration to be determined based on (i) each Seller’s
election to receive cash, shares of Common Stock, or a combination thereof, (ii) the adjusted book value of the operational portion of
the equity capital of Commercial Bancorp as of the closing of the CB Acquisition (the “CB Closing”), determined in accordance
with the provisions of the Purchase Agreement (the “ABV”), (iii) the value of the existing building and land comprising the
physical location of the Bank (the “Premises”), and (iv) Commercial Bancorp’s net operating loss as reflected on its
most recent tax return prior to the CB Closing, multiplied by the maximum corporate federal income tax rate in effect as of the date
of the CB Closing (the “NOL Tax Benefit”). Each Seller may elect (the “Election”) to receive an amount equal
to any of the following three options: (i) three times such Seller’s pro rata portion of the ABV, plus such Seller’s pro
rata portion of the value of the Premises and the NOL Tax Benefit, payable one-third in cash and two-thirds in shares of Common Stock;
(ii) two times such Seller’s pro rata portion of the ABV, plus such Seller’s pro rata portion of the value of the Premises
and the NOL Tax Benefit, payable entirely in cash; or (iii) three times such Seller’s pro rata portion of the ABV, plus such Seller’s
pro rata portion of the value of the Premises and the NOL Tax Benefit, payable entirely in shares of Common Stock. The Company has made
an earnest money deposit payment in the amount of $
The shares of Common Stock to be issued pursuant to the Purchase Agreement will be valued based on either the closing price of the Common Stock on the date of execution of the Purchase Agreement ($0.23), or on the business day immediately preceding the date of the CB Closing, at each Seller’s option. The Company agreed to file with the SEC, by the later of 90 days following the date of the Purchase Agreement and ten business days following the deadline for each Seller to make an Election, a resale registration statement with respect to the shares of Common Stock issuable pursuant to the Purchase Agreement (the “Resale Registration Statement”). The Resale Registration Statement was filed on June 8, 2026 and declared effective on June 17 , 2026.
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
The obligations of each of the Sellers and the Company under the Purchase Agreement are subject to specified conditions, including, among other matters: (i) the receipt of all required regulatory approvals, (ii) the Resale Registration Statement having been declared effective by the SEC, such that all shares of Common Stock to be issued pursuant to the Purchase Agreement shall be registered for resale and freely tradeable, (iii) the receipt of certain specified third-party consents, and (iv) the absence of any injunctions being entered into or law being adopted that would make the CB Acquisition illegal.
The Purchase Agreement contains customary representations and warranties of Commercial Bancorp and the Bank, the Sellers and the Company. It also contains customary covenants, including (i) covenants providing for each of the parties to use reasonable best efforts to cause the CB Acquisition to be consummated and to receive all required regulatory approvals, including from the Federal Reserve Board and the Wyoming Division of Banking, (ii) covenants providing for Commercial Bancorp and the Bank to carry on their respective businesses in the ordinary course of business, and to refrain from taking certain actions, during the period between the execution of the Purchase Agreement and the CB Closing, and (iii) granting the Company observation rights with respect to meetings of the boards of directors of Commercial Bancorp and the Bank during the period between the execution of the Purchase Agreement and the CB Closing. Commercial Bancorp, the Bank and the Sellers have also agreed not to initiate, solicit, encourage or otherwise facilitate the making of any proposal or offer relating to alternate transactions or, engage in any discussions or negotiations with respect to alternate transactions.
The Purchase Agreement contains termination rights for each of the Sellers and the Company, including, without limitation, in the event that (i) any governmental entity issues a non-appealable final order denying approval of the CB Acquisition; (ii) the CB Acquisition is not consummated within two years of the execution of the Purchase Agreement, subject to extension under certain circumstances; or (iii) the other party breaches its representations, warranties or covenants under the Purchase Agreement which would give rise to the failure of a closing condition and such breach is not cured within 30-days of receipt of written notice of such breach.
Line of Credit
AtlasClearing
has a $
The line of credit agreement requires AtlasClearing to maintain line of credit collateral with value, as determined by the bank, in an amount at least equal to a percentage of the loan amount as specified by the bank. Advances on the line of credit are payable on demand. The entire amount of this credit facility is available to be drawn and used to meet AtlasClearing’s liquidity requirements for NSCC clearing margin deposits.
Indemnification Agreements
On the Closing Date, in connection with the Closing, the Company entered into indemnification agreements with each of its directors and executive officers, which provide for indemnification and advancements by the Company of certain expenses and costs under certain circumstances. The indemnification agreements provide that AtlasClear Holdings will indemnify each of its directors and executive officers against any and all expenses incurred by that director or executive officer because of his or her status as a director or officer of AtlasClear Holdings, to the fullest extent permitted by Delaware law, the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws.
AtlasClearing
On
February 27, 2018, an extended hearing panel of the Department of Enforcement of FINRA, Office of Hearing Officers, issued a
decision ordering AtlasClearing to pay fines aggregating $
Software Development and License agreement
On
June 10, 2025, the Company and Pacsquare entered into a Software Development and License agreement, where the parties agreed to
supersede and replace the Pacsquare Purchase Agreement and to fully release one another from any and all obligations or claims
arising from or pursuant to the prior agreement. Therefore as a result of entering into the agreement the parties agreed to a
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
NOTE 11. STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred
Stock — The Company is authorized to issue
Common
stock — The Company is authorized to issue
The Common Stock commenced trading on the NYSE American LLC (“NYSE American”) under the symbol “ATCH” on February 12, 2024. AtlasClear Holdings’ public warrants (the “Public Warrants”) commenced trading on the over-the-counter market (the “OTC”) under the symbol “ATCHW” on February 12, 2024.
Warrants—In connection with the Equity SPA, on October 8, 2025, the Company issued the Warrant Liability as discussed in Note 9 above. The warrants were issued to investors as an equity-linked incentive and to the placement agent as part of transaction compensation. The warrants entitle holders to purchase fully paid and non-assessable shares of common stock, subject to the terms summarized below.
Instruments Issued and Outstanding
| ● | Investor
Warrants: | |
| ● | Placement
Agent Warrants: | |
| ● | Public
Warrants: | |
| ● | Private
Warrants: | |
| ● | Secured
Convertible Note Warrants: | |
| ● | As
of September 30, 2026 there are a total of
As
of June 30, 2026 there were a total of |
The warrants are freestanding financial instruments within the scope of ASC 815-10 and ASC 815-40. Although indexed to the Company’s own stock, the warrants do not qualify for equity classification because they contain provisions that could require net cash settlement (e.g., cash payout upon certain fundamental transactions and cash penalties for delayed share delivery). Accordingly, the warrants are classified as derivative financial liabilities and recorded at fair value on the balance sheet, with subsequent changes in fair value recognized in earnings.
Refer to Note 13 for discussion regarding the fair value disclosures.
The following is a roll forward of the warrants as of September 30, 2026 and June 30, 2026:
SCHEDULE OF ROLL FORWARD OF THE WARRANTS
| Warrant class | Beginning Balance June 30, 2026 | Issued | Exercised | Expired/Cancelled | Ending Balance September 30, 2026 | |||||||||||||||
| Investor warrants | — | — | — | |||||||||||||||||
| Placement Agent Warrants | — | ( | ) | — | ||||||||||||||||
| Public Warrants | — | — | — | |||||||||||||||||
| Private Warrants | — | — | — | |||||||||||||||||
| Secured Note Warrants | — | — | — | |||||||||||||||||
| Total | - | ( | ) | — | ||||||||||||||||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
NOTE 12. STOCK BASED COMPENSATION
Plan Overview and Authorization
The
Company grants stock options and restricted stock units to eligible employees, non-employee directors, and consultants pursuant to the
2024 Equity Incentive Plan (the “Plan”). On May 27, 2026, the Company amended the Plan to authorize
As
of September 30, 2026, there were
Summary of Award Groups and Terms
Group A and Group B (Stock Options)
Options granted under Groups A and B are fully vested as of the grant date. Group A options have a maximum contractual term expiring on January 26, 2030, and Group B options have a maximum contractual term expiring on June 30, 2031.
Group C and Group D (Restricted Stock / Equity Awards)
Group
C awards are fully vested upon grant. Group D awards consist of
Accounting Policies and Valuation Methodology
Measurement and Recognition Policy
The
Company measures stock-based compensation cost for equity instruments at fair value on the grant date. For award grants (Groups A, B,
and C) authorized on May 27, 2026, for services rendered prior to June 30, 2026, where final grant approval and execution occurred
on July 13 and July 14, 2026, compensation cost for the fiscal year ended June 30, 2026, was recognized based on the reporting-date fair
value as of June 30, 2026, pursuant to ASC 718-10-35-6 and ASC 718-10-55-112. A cumulative catch-up adjustment to reflect the final grant-date
fair values (July 13–14, 2026) was recognized in the first quarter of fiscal year 2027, resulting in a credit of $
Performance-Based (Market Condition) Stock Awards
Each of Messrs. Schaible and Ridenhour is eligible to receive up to five performance-based stock awards, each equal to 1% of the Company’s total outstanding shares at the time of grant, and Mr. Patel is eligible to receive up to five performance-based stock awards, each equal to 0.5% of the Company’s total outstanding shares, upon achievement of specified stock price milestones, in each case subject to stockholder approval of an amendment to the Company’s equity incentive plan to increase the number of shares authorized for issuance thereunder.
Compensation cost for these awards will be recognized over the derived service period, regardless of whether the market condition is ultimately achieved, provided the requisite service is rendered.
As of September 30, 2026, none of the stock price milestones had been achieved and no shares had vested under the performance-based awards.
Forfeiture Policy
The Company accounts for forfeitures of share-based awards as they occur. Previously recognized compensation cost is reversed in the period an unvested award is forfeited.
Valuation Assumptions
The fair value of restricted stock is determined using the unadjusted closing market price of the Company’s common stock on the grant date. The fair value of stock options is estimated using the Black-Scholes option-pricing model.
The significant assumptions utilized to estimate the fair value of stock options granted during the periods presented were as follows:
SCHEDULE OF ESTIMATE FAIR VALUE OF STOCK OPTIONS GRANTED
| Assumption (Group A and Group B) | July 2026 Grants | |||
| Share Price | $ | |||
| Exercise Price | $ | |||
| Valuation Date | July 14, 2026 | |||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Expected term | ||||
| Expected dividend yield | % | |||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Stock Option Activity and Roll-Forward
The following table summarizes stock option activity for the periods presented:
SCHEDULE OF STOCK OPTION ACTIVITY
| Option Roll-Forward | Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value ($) | ||||||||||||
| Granted (Group A & B) | $ | |||||||||||||||
| Exercised | — | |||||||||||||||
| Forfeited/Expired | — | |||||||||||||||
| Outstanding at September 30, 2026 | $ | $ | ||||||||||||||
| Exercisable as of September 30, 2026 (Group A & B) | $ | $ | ||||||||||||||
| Total | — | |||||||||||||||
Nonvested Restricted Share Activity
The following table summarizes nonvested restricted share activity for the periods presented:
SCHEDULE OF NONVESTED STOCK AWARDS
| Nonvested Share Roll-Forward | Weighted-Average | |||||||
| Number of Shares | Grant-Date Fair value | |||||||
| Granted (Group C & D) – July 13, 2026 | $ | |||||||
| Vested (Group C) | ( | ) | $ | |||||
| Forfeited | — | $ | — | |||||
| Nonvested at September 30, 2026 (Group D) | $ | |||||||
As
of September 30, 2026, total unrecognized compensation cost related to nonvested Group D restricted shares was approximately $
Stock-Based Compensation Expense
As
of September 30, 2026, none of the stock price milestones had been achieved and
Stock-based compensation expense recognized in the consolidated statements of operations was as follows:
SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE
| Three months ended | Three months ended | |||||||
| September 30, 2026 | September 30, 2025 | |||||||
| Time-based stock awards | $ | ( | ) | $ | ||||
| Market-based stock awards | $ | $ | ||||||
| Total stock-based compensation expense | $ | $ | ||||||
NOTE 13. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; | |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2026 and June 30, 2026, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
SCHEDULE OF FAIR VALUE HIERARCHY OF THE VALUATION INPUTS
| September 30, | June 30, | |||||||||||
| Description | Level | 2026 | 2026 | |||||||||
| Assets: | ||||||||||||
| Trading securities | 1 | $ | $ | — | ||||||||
| Liabilities: | ||||||||||||
| Warrant liability – Private Warrants | 3 | $ | $ | |||||||||
| Earnout liability | 3 | $ | $ | |||||||||
| Debenture – derivative | 3 | $ | $ | |||||||||
| Secured Convertible Note | 3 | $ | $ | |||||||||
| Warrants liability – Equity SPA | 3 | $ | $ | |||||||||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Warrant Liability
The private placement warrants originally issued by Quantum and assumed by the Company in connection with the Business Combination (the “Private Warrants”) were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liability in the consolidated statements of operations.
The Private Warrants were, initially and as of the end of each subsequent reporting period, valued using a lattice model, specifically a Black-Scholes model, which is considered to be a Level 3 fair value measurement. The primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility of the Company’s Common Stock. The expected volatility of the Company’s Common Stock was determined based on the implied volatility of the publicly traded Public Warrants.
The key inputs into the Black-Scholes model for the Private Warrants were as follows:
SCHEDULE OF FAIR VALUE MEASUREMENT INPUTS AND VALUATION
| Input | September 30, 2026 | June 30, 2026 | ||||||
| Market price of public shares | $ | $ | ||||||
| Risk-free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Volatility | % | % | ||||||
| Exercise price | $ | $ | ||||||
| Warrants and rights expiration date description | $ | $ | ||||||
| Effective expiration date | ||||||||
Earnout Liability
The liability associated with the Earnout Shares was, initially as of February 9, 2024, valued using a Monte Carlo simulation to determine if and when the revenue hurdles would be achieved. The revenue volatility and revenue to equity correlation was based upon the same guideline public companies. As of June 30, 2026, the Company revised when revenue hurdles would be achieved, as a result of the delay in financing and implementation of the Commercial Bancorp acquisition. Revenue targets were deemed less likely to be reached and as such, this resulted in a significant decrease in the value of the Earnout liability. The Monte Carlo simulation was performed simultaneously on both the share price and revenue to account for the correlation between revenue and equity.
The key inputs into the Monte Carlo model for the Earnout liability were as follows:
| Input | September 30, 2026 | June 30, 2026 | ||||||
| Market price of public shares | $ | $ | ||||||
| Revenue volatility | % | % | ||||||
| Discount factor for revenue | % | % | ||||||
| Earnout liability measurement input | % | % | ||||||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
Secured Convertible Note
On
October 8, 2025, the Company entered into the Restated SPA with Funicular. The Restated Note issued pursuant to the Restated SPA is convertible,
in whole or in part, into shares of the Company’s Common Stock at the election of the holder at any time at an initial Conversion
price of $
As
of September 30, 2026 and June 30, 2026, the Restated Note was valued using Black-Scholes model combined with the discounted cash
flow model, resulting in the fair value of the Restated Note of $
The key inputs into the Black-Scholes model for the conversion derivative as of September 30, 2026 and June 30, 2026 were as follows:
| Input | September 30, 2026 | June 30, 2026 | ||||||
| Market price of public shares | $ | $ | ||||||
| Conversion Price | $ | $ | ||||||
| Principal and interest balance at valuation date | $ | $ | ||||||
| Risk-free rate | % | % | ||||||
| Discount rate | % | % | ||||||
| Volatility | % | % | ||||||
| Effective expiration date | ||||||||
| Term | ||||||||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Debenture Derivative
On
August 4, 2025 the Company issued the Debenture as discussed in Note 8. The Company determined that the conversion feature was required
to be bifurcated under ASC 815 and, as such, the Company fair valued the embedded derivative. As of September 30, 2026 the Debenture
was valued using a Black-Scholes model and as of August 4, 2025, the issuance date, the Debenture was valued using a Scenario Based Methodology
model resulting in the fair value of the conversion option included in the Debenture embedded derivative of $
The key inputs into the Black-Scholes for the conversion derivative as of September 30, 2026 and June 30, 2026 were as follows:
| Input | September 30, 2026 | June 30, 2026 | ||||||
| Market price of public shares | $ | $ | ||||||
| Risk-free rate | % | % | ||||||
| Discount rate | % | % | ||||||
| Volatility | % | % | ||||||
| Effective expiration date | ||||||||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Warrant Liability- Equity SPA
On
October 8, 2025, the Company entered into the Equity SPA pursuant to which the Company agreed to issue and sell, in a private placement,
The Warrant Liability was, initially and as of the end of each subsequent reporting period, valued using a lattice model, specifically a Black-Scholes model, which is considered to be a Level 3 fair value measurement. The primary unobservable input utilized in determining the fair value of the Warrant Liability is the expected volatility of the Company’s Common Stock.
The key inputs into the Black-Scholes model for the Warrant Liability was as follows:
| Input | September 30, 2026 | June 30, 2026 | ||||||
| Market price of public shares | $ | $ | ||||||
| Risk-free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Volatility | % | % | ||||||
| Exercise price | $ | $ | ||||||
| Term | | |||||||
| Derivative liability measurement input | $ | $ | ||||||
| Effective expiration date | ||||||||
The following table presents the changes in the fair value of the following:
SCHEDULE OF CHANGES IN THE FAIR VALUE
| Private Placement | Earnout | |||||||
| Warrants | Liability | |||||||
| Fair value as of June 30, 2026 | $ | $ | ||||||
| ( | ) | ( | ) | |||||
| Fair value as of September 30, 2026 | $ | $ | ||||||
| Private Placement | Tau Agreement | |||||||
| Warrants | Liability | |||||||
| Fair value as of June 30, 2025 | $ | $ | ||||||
| Write off receivable | — | ( | ) | |||||
| ( | ) | |||||||
| Fair value as of September 30, 2025 | $ | $ | — | |||||
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
| Conversion | Earnout | |||||||
| Derivative | Liability | |||||||
| Fair value as of June 30, 2025 | $ | $ | ||||||
| Change in valuation inputs or other assumptions | ( | ) | ||||||
| Fair value as of September 30, 2025 | $ | — | $ | |||||
| Winston & Strawn | Merger Financing | |||||||
| Agreement | Derivative | |||||||
| Fair value as of June 30, 2025 | $ | $ | ||||||
| Change in valuation inputs or other assumptions | ( | ) | ( | ) | ||||
| Fair value liability as of September 30, 2025 | $ | $ | — | |||||
| Debenture | ||||
| Derivative | ||||
| Fair value as of June 30, 2026 | $ | |||
| Change in valuation inputs or other assumptions | ||||
| Fair value as of September 30, 2026 | $ | |||
| Debenture | Convertible Notes | |||||||
| Derivative | Derivative | |||||||
| Fair value as of June 30, 2025 | $ | — | $ | — | ||||
| Initial measurement | ||||||||
| Change in valuation inputs or other assumptions | ||||||||
| Fair value as of September 30, 2025 | $ | $ | ||||||
Secured Convertible Note | Warrant Liability | |||||||
| Fair value as of June 30, 2026 | $ | $ | ||||||
| Accrued interest through September 30, 2026 | — | |||||||
| Fair value of warrants exercised | ( | ) | ||||||
| Change in valuation inputs or other assumptions | ( | ) | ( | ) | ||||
| Fair value as of September 30, 2026 | $ | $ | ||||||
There
were
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
NOTE 14. SEGMENT REPORTING
The
Company operates as
The Chief Operating Decision Maker (CODM), identified as the Executive Chairman, reviews financial performance and allocates resources on a consolidated basis. The Company’s internal reporting is prepared and reviewed as a single operating unit, without disaggregated information by product line, region, or customer type. Accordingly, the Company has determined that it operates in a single reportable segment.
The following table presents revenue and operating income (loss) for the periods presented:
SCHEDULE OF REVENUE AND OPERATING INCOME LOSS
| Three months ended | Three months ended | |||||||
| September 30, 2026 | September 30, 2025 | |||||||
| Commissions | $ | $ | ||||||
| Vetting fees | ||||||||
| Clearing fees | ||||||||
| Stock locate fees | — | |||||||
| Net gain/(loss) on firm trading accounts | ( | ) | ||||||
| Other revenue | ||||||||
| Total revenue | $ | $ | ||||||
| Compensation, payroll taxes and benefits | ||||||||
| Data processing and clearing costs | ||||||||
| Regulatory, professional fees and related expenses | ||||||||
| Stock compensation expense | ||||||||
| Communications | ||||||||
| Occupancy and equipment | ||||||||
| Transfer fees | ||||||||
| Bank charges | ||||||||
| Bad debt | ||||||||
| Intangible assets amortization | ||||||||
| Other | ||||||||
| TOTAL EXPENSES | ||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||
| Total assets | $ | $ | ||||||
Corporate general and administrative expenses are not allocated to any specific operating component and are included within total operating income.
Segment Assets
The Company does not report separate asset information by segment to the CODM. However, in accordance with ASC 280-10-50-30, the Company has elected to disclose total segment assets, which are equal to consolidated total assets. The table above summarizes total assets.
NOTE 15. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon this review the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements, other than as described below.
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ATLASCLEAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(Unaudited)
Business Combination Agreement with Ark Financial Services, Inc.
On October 14, 2026 (the “Signing Date”), the Company entered into a Business Combination Agreement (the “Acquisition Agreement”) with Ark Financial Services, Inc., a Delaware corporation (“Ark”), AC Ark Subco 1, Inc. (“Merger Sub”), AC Ark Subco 2, LLC (“Merger Sub II”), The Robert D. Keyser, Jr. Revocable Trust (the “Trust”), and Robert D. Keyser, Jr., as trustee and individual. Ark is the sole owner of Dawson James Securities, Inc., an investment bank and registered broker-dealer. Robert D. Keyser, Jr. is an officer and director of Ark and a member of the Board of Directors of the Company, and the Acquisition Agreement is therefore a related party transaction.
Pursuant
to the terms of the Acquisition Agreement on the Signing Date, the Company acquired a
A portion of the cash and stock consideration payable at Closing will be placed in escrow for up to 18 months post-Closing to secure indemnification obligations. In connection with the agreement, the Company and the Trust executed a Registration Rights and Lock-Up Agreement, which becomes effective at Closing and will subject the shares issued to a six-month lock-up period and provides customary registration rights.
The Closing is subject to specified closing conditions, including required regulatory approvals (including FINRA approval) and, if required under NYSE American listing rules, approval by the Company’s stockholders. The Acquisition Agreement contains customary representations, warranties, covenants, and termination provisions.
The Company is currently evaluating the accounting treatment for the Initial Equity Purchase and the overall business combination under applicable U.S. GAAP guidance, including ASC 805, Business Combinations, ASC 323, Investments – Equity Method and Joint Ventures, and ASC 480 / ASC 815 regarding the classification and measurement of the consideration components, embedded terms, and contingent/deferred consideration structures. Because the initial transaction occurred subsequent to the balance sheet date of September 30, 2026, and the valuation and accounting analyses remain in process, the initial accounting for the transaction, including the allocation of purchase price and determination of control/significant influence during the interim period, has not been finalized as of the date these financial statements were issued.
October 2026 Grants
Options granted under Group E and Group F vest over a three-year graded vesting schedule (one-third on each of October 1, 2027, October 1, 2028, and October 1, 2029, subject to continued service through each applicable vesting date), with a seven-year maximum contractual term expiring on October 1, 2033. Group E option awards are subject to single-trigger accelerated vesting upon a Change in Control pursuant to Section 9 of the Plan. The Company accounts for graded vesting awards using the straight-line attribution method under ASC 718-10-35-8.
October 2026 Subordinated Loan Maturity
Subsequent to September 30, 2026,
four subordinated loan agreements with aggregate principal of $
NYSE American Delisting
On November 10, 2026, the Company received notice from NYSE Regulation of the NYSE American LLC (“NYSE American”) that it had suspended trading of the Company’s Common Stock and determined to commence proceedings to delist the Company’s Common Stock from the NYSE American as a result of its determination that the Company is no longer suitable for listing pursuant to Section 1003(f)(v) of the NYSE American Company Guide due to the low selling price of the Company’s Common Stock.
The Company has a right to a review of NYSE American’s determination to delist the Company’s Common Stock by the Listings Qualifications Panel of the Committee for Review of the Board of Directors of the NYSE American, and the Company intends to request such a review; however, there can be no assurance that any such appeal will be successful. The NYSE American notice states that it will apply to the SEC to delist the Company’s Common Stock pending completion of applicable procedures, including any appeal by the Company of its determination.
The Company’s Common Stock began trading on the OTC Pink Limited Market on November 11, 2026.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this quarterly report on Form 10-Q (the “Quarterly Report”) to “we,” “us,” “AtlasClear Holdings,” or the “Company” refer to AtlasClear Holdings, Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Certain defined terms used herein have the meaning ascribed to them in the notes to the financial statements.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy, plans and objectives of management for future operations, including the expected completion of the acquisitions of Commercial Bancorp of Wyomin, (“Commercial Bancorp”) and Ark Financial Services, Inc. (“Ark”), are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements.
Forward-looking statements are not guarantees of performance, and the absence of these words does not mean that a statement is not forward looking. You should understand that the following important factors could affect our future results, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements herein:
| ● | the ability to maintain the listing of our Common Stock on the NYSE American LLC (“NYSE American”), including regaining compliance with the listing standards of the NYSE American, and the potential liquidity and trading of our Common Stock; | |
| ● | our ability to realize the benefits expected from the Business Combination (as defined herein); | |
| ● | our ability to obtain the required regulatory approvals for, and to complete, the acquisitions of Commercial Bancorp and Ark; | |
| ● | our ability to successfully integrate our proposed acquisitions, including the planned acquisitions of Commercial Bancorp and Ark, and to realize the synergies and benefits of such acquisitions; | |
| ● | our ability to successfully implement the AtlasClear Platform (as defined herein); | |
| ● | our significant indebtedness and our ability to service such indebtedness; | |
| ● | the volatility of the price of our common stock, par value $0.0001 per share (the “Common Stock”) and the possibility that stockholders could incur substantial losses; | |
| ● | potential dilution of our stockholder interests resulting from our issuance of equity securities; | |
| ● | our ability to grow and manage growth profitably; | |
| ● | our ability to raise financing in the future, if and when needed; | |
| ● | our success in retaining or recruiting, or adapting to changes in, our officers, key employees, or directors following the Business Combination; | |
| ● | our ability to attract and retain our senior management and other highly qualified personnel; | |
| ● | our ability to achieve or maintain profitability; | |
| ● | the period over which we anticipate our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements; | |
| ● | our ability to successfully protect against cybersecurity attacks or breaches, ransomware attacks, and other disruptions to our information technology structure; | |
| ● | our ability to successfully compete against other companies; | |
| ● | our estimates regarding expenses, future revenue, and needs for additional financing; and | |
| ● | the effect of economic downturns and political and market conditions beyond our control. |
For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended June 30, 2026 (the “Annual Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 24, 2026. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
Our goal is to build a cutting-edge technology-enabled financial services firm that would create a more efficient platform for trading, clearing, settlement and banking, with evolving and innovative financial products that focus on financial services firms. We are a fintech-driven business-to-business platform that expects to power innovation in fintech, investing, underwriting and trading. We believe we are positioned to provide a modern, mission-critical suite of solutions to our clients, enabling them to reduce their transactions costs and compete more effectively in their businesses.
Our target client base for our prime banking and prime brokerage services includes financial services firms, generally with annual revenues up to $1 billion, including brokerage firms, hedge funds, pension plans, and family offices that are not adequately served by today’s larger correspondent clearing firms and banks.
Through our subsidiary AtlasClearing, Inc. (formerly Wilson-Davis & Co) (“AtlasClearing”), a correspondent clearing company, and the anticipated acquisition of Commercial Bancorp, we provide specialized clearing and banking services to financial services firms, with an emphasis on global markets currently underserviced by larger vendors. Once properly integrated, anticipated synergies between Commercial Bancorp, if acquired, and AtlasClearing are expected to allow for lower cost of capital, higher net interest margins, expanded product development and greater credit extension.
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AtlasClearing
AtlasClearing is a correspondent securities broker-dealer registered with the SEC, licensed in 50 states, District of Columbia, and Puerto Rico, and is a member in good standing of the Financial Industry Regulatory Authority, Inc. (“FINRA”). AtlasClearing derives revenue principally from commissions charged on the liquidation of restricted and control microcap securities, vetting, and clearing service fees charged to introducing brokers for which AtlasClearing clears transactions on a fully disclosed basis, stock locate fees charged to other broker-dealers, and other financial service fees. Commissions are earned by executing transactions for customers. Vetting fee revenues are earned when AtlasClearing vets stock the customers want to bring into their accounts. Clearing fees are earned by clearing transactions for Glendale Securities, as introducing broker on a fully disclosed basis, pursuant to a clearing agreement with Glendale Securities.
Key Factors Impacting AtlasClearing’s Business
AtlasClearing’s business and results of operations have been, and will continue to be, affected by numerous factors and trends, which AtlasClearing believes include the following and those discussed in the section titled “Risk Factors” of the Annual Report.
| ○ | Liquidity. As a clearing broker-dealer in the U.S., AtlasClearing is subject to cash deposit requirements with clearing organizations, brokers, and banks that may be large in relation to its total liquid assets. | |
| ○ | Growth of Customer Base. AtlasClearing’s growth requires continued use of its services by new customers. | |
| ○ | Expanding AtlasClearing’s Relationship with Existing Customers. AtlasClearing’s ability to expand its relationship with its existing customers will be an important contributor to its long-term growth. | |
| ○ | Market Trends. As financial markets grow and contract, AtlasClearing’s customers’ behaviors are affected. AtlasClearing’s revenue and profitability can be affected by general downturns in the securities markets, resulting from factors such as increased inflation, increased interest rates and other factors. |
Commercial Bancorp Share Purchase Agreement
On February 5, 2026, the Company entered into a share purchase agreement (the “Purchase Agreement”) with Commercial Bancorp, and each of the shareholders of Commercial Bancorp (collectively, the “Sellers”). The Purchase Agreement provides for the Company to acquire (the “CB Acquisition”) from the Sellers all of the outstanding shares (the “Shares”) of common stock of Commercial Bancorp, which is the owner of all of the outstanding stock of Farmers State Bank, a Wyoming state-chartered member bank (the “Bank”), subject to the terms and conditions set forth in the Purchase Agreement. As previously disclosed, the Company had previously entered into an agreement and plan of merger, as amended, to acquire Commercial Bancorp, which agreement has expired in accordance with its terms.
Pursuant to the terms of the Purchase Agreement, the Company has agreed to purchase the Shares from the Sellers for consideration consisting of a combination of cash and shares of Common Stock, with the total amount of consideration to be determined based on (i) each Seller’s election to receive cash, shares of Common Stock, or a combination thereof, (ii) the adjusted book value of the operational portion of the equity capital of Commercial Bancorp as of the closing of the CB Acquisition (the “CB Closing”), determined in accordance with the provisions of the Purchase Agreement (the “ABV”), (iii) the value of the existing building and land comprising the physical location of the Bank (the “Premises”), and (iv) Commercial Bancorp’s net operating loss as reflected on its most recent tax return prior to the CB Closing, multiplied by the maximum corporate federal income tax rate in effect as of the date of the CB Closing (the “NOL Tax Benefit”). Each Seller may elect (the “Election”) to receive an amount equal to any of the following three options: (i) three times such Seller’s pro rata portion of the ABV, plus such Seller’s pro rata portion of the value of the Premises and the NOL Tax Benefit, payable one-third in cash and two-thirds in shares of Common Stock; (ii) two times such Seller’s pro rata portion of the ABV, plus such Seller’s pro rata portion of the value of the Premises and the NOL Tax Benefit, payable entirely in cash; or (iii) three times such Seller’s pro rata portion of the ABV, plus such Seller’s pro rata portion of the value of the Premises and the NOL Tax Benefit, payable entirely in shares of Common Stock. The Company has made an earnest money deposit payment in the amount of $100,000 to Commercial Bancorp, which deposit will be applied to the cash portion of the consideration payable at the CB Closing or, if the CB Closing does not occur under certain circumstances, retained by Commercial Bancorp.
The shares of Common Stock to be issued pursuant to the Purchase Agreement will be valued based on either the closing price of the Common Stock on the date of execution of the Purchase Agreement ($0.23), or on the business day immediately preceding the date of the CB Closing, at each Seller’s option. The Company agreed to file with the Securities Exchange Commission (the “SEC”) a resale registration statement with respect to the shares of Common Stock issuable pursuant to the Purchase Agreement (the “Resale Registration Statement”), which was filed on June 8, 2026.
The obligations of each of the Sellers and the Company under the Purchase Agreement are subject to specified conditions, including, among other matters: (i) the receipt of all required regulatory approvals, (ii) the Resale Registration Statement having been declared effective by the SEC, such that all shares of Common Stock to be issued pursuant to the Purchase Agreement shall be registered for resale and freely tradeable (which occurred on June 17, 2026), (iii) the receipt of certain specified third-party consents, and (iv) the absence of any injunctions being entered into or law being adopted that would make the CB Acquisition illegal.
The Purchase Agreement contains customary representations and warranties of Commercial Bancorp and the Bank, the Sellers and the Company. It also contains customary covenants, including (i) covenants providing for each of the parties to use reasonable best efforts to cause the CB Acquisition to be consummated and to receive all required regulatory approvals, including from the Federal Reserve Board and the Wyoming Division of Banking, (ii) covenants providing for Commercial Bancorp and the Bank to carry on their respective businesses in the ordinary course of business, and to refrain from taking certain actions, during the period between the execution of the Purchase Agreement and the CB Closing, and (iii) granting the Company observation rights with respect to meetings of the boards of directors of Commercial Bancorp and the Bank during the period between the execution of the Purchase Agreement and the CB Closing. Commercial Bancorp, the Bank and the Sellers have also agreed not to initiate, solicit, encourage or otherwise facilitate the making of any proposal or offer relating to alternate transactions or, engage in any discussions or negotiations with respect to alternate transactions.
The Purchase Agreement contains termination rights for each of the Sellers and the Company, including, without limitation, in the event that (i) any governmental entity issues a non-appealable final order denying approval of the CB Acquisition; (ii) the CB Acquisition is not consummated within two years of the execution of the Purchase Agreement, subject to extension under certain circumstances; or (iii) the other party breaches its representations, warranties or covenants under the Purchase Agreement which would give rise to the failure of a closing condition and such breach is not cured within 30-days of receipt of written notice of such breach.
Ark
On October 14, 2026 (the “Signing Date”), the Company entered into a business combination agreement (the “Acquisition Agreement”) with Ark Financial Services, Inc., a Delaware corporation (“Ark”), AC Ark Subco 1, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), AC Ark Subco 2, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger Sub II” and together with Merger Sub, the “Merger Subs”), The Robert D. Keyser, Jr. Revocable Trust, a Florida revocable trust and the majority stockholder of Ark (the “Trust”), and Robert D. Keyser, Jr., an individual. Ark is the sole owner of Dawson James Securities, Inc. (“Dawson James”), an investment bank and registered broker-dealer. Robert D. Keyser, Jr., the trustee of the Trust, is also an officer and director of Ark and a director of the Company. Pursuant to the terms of the Acquisition Agreement, on the Signing Date the Company purchased 24.9% of the issued and outstanding equity securities of Ark from the Trust (the “Initial Equity Purchase”), and the Company will, subject to the satisfaction of certain conditions, acquire the remaining equity securities of Ark at a subsequent closing (the “Closing”) by means of the merger of Merger Sub with and into Ark, immediately followed by the merger of the surviving company with and into Merger Sub II.
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The purchase price for the Initial Equity Purchase on the Signing Date consisted of $2,500,000 in cash and the issuance to the Trust of a promissory note in the original principal amount of $2,500,000 (the “Seller Note”). The Seller Note bears interest at the rate of 5% per annum and is payable in full on the earliest to occur of 90 days from the Signing Date, the date of the closing of a Qualified Financing (as defined in the Seller Note), and the Closing. Pursuant to the terms of the Acquisition Agreement, the purchase price payable by the Company at the Closing for the remaining equity securities of Ark will consist of $2,437,500 in cash and a number of shares of the Company’s common stock (“Common Stock”) calculated as $13,812,500 divided by the average volume weighted average price (“VWAP”) of the Common Stock over the five trading day period ending on the date of the Closing. In addition, the Company may pay up to an additional $812,500 in cash and a number of additional shares of Common Stock calculated as $2,437,500 divided by the average VWAP of the Common Stock immediately prior to issuance (collectively, the “Deferred Consideration”) based on the revenue of Ark and its subsidiaries exceeding $21,250,000 in the years ending December 31, 2026 and 2027 (with up to 50% of the Deferred Consideration payable on account of each such year). A portion of the cash and shares of Common Stock payable at Closing is to be held in an escrow account for up to 18 months following the Closing as security for the Company’s indemnification rights under the Acquisition Agreement.
The obligations of each of the parties under the Acquisition Agreement are subject to specified conditions, including, among other things: (i) the receipt of all required regulatory approvals, including the consent of FINRA, (ii) the Company’s stockholders having approved the issuance of the shares of Common Stock pursuant to the Acquisition Agreement, if such stockholder approval is required pursuant to the listing rules of the NYSE American (the “Company Stockholder Approval”), (iii) the absence of any material adverse effect with respect to the other parties, and (iv) the absence of any injunctions being entered into or law being adopted that would make the consummation of the transactions at the Closing illegal.
The Acquisition Agreement contains customary representations and warranties of the parties. It also contains customary covenants, including (i) covenants providing for each of the parties to use best efforts to satisfy all conditions to Closing, (ii) covenants providing for Ark to carry on its business in the ordinary course of business, and to refrain from taking certain actions, during the period between the Signing Date and the Closing, and (iii) covenants regarding efforts to obtain all required regulatory approvals and the Company Stockholder Approval. Ark and the Trust have also agreed not to solicit, initiate, induce, encourage or otherwise facilitate the making of any proposal or offer relating to alternate transactions or, engage in any discussions or negotiations with respect to certain alternate transactions.
The Acquisition Agreement contains termination rights for each of Ark and the Company, including, without limitation, in the event that (i) any governmental entity issues a non-appealable final order denying approval of the transactions contemplated by the Acquisition Agreement; (ii) the Closing does not occur within one year of the Signing Date; or (iii) the other party breaches its representations, warranties or covenants under the Acquisition Agreement which would give rise to the failure of a closing condition and such breach is not cured within 30 days of receipt of written notice of such breach.
Also on the Signing Date and in connection with the execution of the Acquisition Agreement, the Company and the Trust entered into a registration rights and lock-up agreement (the “RRA”), which will become effective at the Closing. Pursuant to the terms of the RRA, the Company granted the Trust certain registration rights with respect to the shares of Common Stock issuable pursuant to the terms of the Acquisition Agreement, and the Trust agreed not to transfer any of such shares for a period of six months following the Closing, subject to certain exceptions. Among other things, the Company agreed to file a resale shelf registration statement within six months following the Closing.
Debenture
On August 4, 2025, the Company entered into a securities purchase agreement with an institutional investor (the “Holder”) controlled by Robert D. Keyser, Jr., a member of our board of directors, under which the Company agreed to issue and sell, in a private placement, Series A convertible debentures (the “Debenture”) for an aggregate principal amount of $500,000, for a gross purchase price of $490,000, net of legal fees. The Debenture bears 10% interest and originally was to mature on August 3, 2026. On September 11, 2026, the maturity date was extended to February 3, 2027, subject to accelerated repayment under certain circumstances. The holder is entitled to convert the unpaid principal amount of the Debenture, plus accrued interest and penalties, any time, at $0.15 per share. If, at any time prior to maturity, the Company receives financing from a third party (excluding the Holder), the Company is required to pay to the Holder, in the form of cash, equity, or a combination of the two, solely at the discretion of the Holder, 100% of the proceeds raised from the third party until such time as the face amount of the Debenture has been paid in full. The Company also agreed (to file with the “SEC”) (at the Company’s sole cost and expense) a registration statement, or an amendment to a previously-filed registration statement registering the resale of the shares of Common Stock underlying the Debenture.
Convertible Note Financing
On October 8, 2025, the Company entered into an amended and restated securities purchase agreement (the “Restated SPA”) with Funicular Funds, LP (“Funicular”), which amended and restated in its entirety the securities purchase agreement, dated February 9, 2024, pursuant to which the Company had issued and sold to Funicular, in a private placement, a secured convertible note in the original principal amount of $6,000,000 (the “Funicular Note”). Pursuant to the Restated SPA, the Company issued and sold to Funicular, for a purchase price of $10,000,000, an amended and restated convertible promissory note, dated October 8, 2025 (the “Restated Note”), which amends and restates the Funicular Note in its entirety. The principal amount of the Restated Note is $10,097,782, consisting of the $10,000,000 purchase price plus $97,782 in remaining outstanding principal under the Funicular Note.
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The Restated Note has a stated maturity date of October 8, 2030. Interest accrues at a rate per annum equal to 11%, and is payable semi-annually on each June 30 and December 31. On each interest payment date, the accrued and unpaid interest shall, at the election of the Company in its sole discretion, be either paid in cash or paid in-kind by increasing the principal amount of the Restated Note. In the event of an Event of Default (as defined in the Restated Note), in addition to Funicular’s other rights and remedies, the interest rate would increase to 14% per annum. The Restated Note is convertible, in whole or in part, into shares of the Company’s common stock at the election of the holder at any time at an initial conversion price of $0.75 per share (the “Conversion Price”). The Conversion Price is subject to adjustment if the Company issues or is deemed to issue shares of common stock at a price below the then-current conversion price (subject to certain exceptions), and is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like. The Restated Note contains covenants which, among other things, limit the ability of the Company and its subsidiaries to incur additional indebtedness, incur additional liens and sell its assets or properties.
The Restated Note is secured by a perfected security interest in substantially all of the existing and future assets of the Company and each Grantor (as defined in the Security Agreement, as defined below), including a pledge of all of the capital stock of each of the Grantors, subject to certain exceptions, as evidenced by (i) the security agreement, dated as of February 9, 2024 (the “Security Agreement”), among the Company, each of the Company’s subsidiaries and Funicular, and (ii) the guaranty, dated as of February 9, 2024 (the “Guaranty”), executed by each of the Company’s subsidiaries pursuant to which each of them has agreed to guaranty the obligations of the Company under the Restated Note and the other Loan Documents (as defined in the Restated Note), each of which was entered into in connection with the Funicular Note.
Pursuant to the Restated SPA, the Company agreed, among other things, that if the Restated Note becomes convertible into a number of shares of common stock in excess of 19.9% of the Company’s total number of shares of common stock outstanding, to seek the approval of its stockholders for the issuance of all shares of common stock issuable upon conversion of the Restated Note in excess of that amount, in accordance with the rules of the NYSE American.
Equity Financing
On October 8, 2025, the Company entered into a securities purchase agreement (the “Equity SPA”) with certain institutional investors (each, an “Investor”), including Funicular, pursuant to which the Company agreed to issue and sell, in a private placement, an aggregate of 16,666,666 units of securities (each, a “Unit”), for a purchase price of $0.60 per Unit. Each Unit consists of one share of the Company’s common stock and one warrant (each, a “2025 Warrant”) to purchase common stock.
The 2025 Warrants are immediately exercisable on a cash basis or exchangeable on a cashless basis and will expire five years from the date of issuance. Each 2025 Warrant will be initially exercisable for one share of common stock at an initial exercise price of $0.75 per share, subject to adjustment for stock splits, distributions and the like (the “Initial Exercise Price”). The Initial Exercise Price is also subject to potential increase if the Company completes certain subsequent offerings at a price greater than the Initial Exercise Price while the 2025 Warrants remain outstanding. At any time after the issuance of the 2025 Warrants, the holder of a 2025 Warrants may exchange the 2025 Warrants on a cashless basis for a number of shares of common stock determined by multiplying the total number of shares with respect to which the 2025 Warrant is then being exercised by the Black Scholes Value (as defined in the 2025 Warrant) divided by the lower of the two closing bid prices of the common stock in the two days prior the time of such exercise.
In the event of a Fundamental Transaction (as defined in the 2025 Warrants), the holders of the 2025 Warrants will be entitled to receive upon exercise of the 2025 Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the 2025 Warrants immediately prior to such Fundamental Transaction. Additionally, as more fully described in the 2025 Warrants, the holders of the 2025 Warrants will be entitled to receive consideration in an amount equal to the Black Scholes value of the 2025 Warrant in connection with a Fundamental Transaction. If the Company fails to timely deliver the shares of common stock issuable upon exercise of the 2025 Warrants, the Company will be subject to liquidated damages.
Subject to the provisions of the Equity SPA, if, during the 12-month period commencing on the date of the closing, the Company carries out one or more Subsequent Financings (as defined in the Equity SPA), each Investor that purchases $50,000 or more of Units will have the right to participate in an amount up to 100% of such Investor’s investment amount under the Equity SPA in any such securities offered by the Company, subject to certain exceptions.
The Company engaged Dawson James Securities, Inc. as the placement agent (the “Placement Agent”) with respect to the offering of the Restated Note and the Units. The Company agreed to pay the Placement Agent’s fees totaling (i) 4.5% of the aggregate gross proceeds from the sale of the Restated Note, (ii) 6% of the aggregate gross proceeds from the sale of the Units to current or previous investors not introduced to the Company by the Placement Agent and (iii) 7% of the aggregate gross proceeds from the sale of the Units to investors introduced to the Company by the Placement Agent, and to reimburse the Placement Agent’s expenses (subject to a cap). The Company also agreed to issue certain warrants to the Placement Agent and its designees.
$500,000 of the Units sold pursuant to the Equity SPA were purchased by Sixth Borough Capital Fund, LP, an entity controlled by Robert D. Keyser, Jr., who is a member of the Company’s board of directors and the Chief Executive Officer of the Placement Agent.
The closings of the issuance and sale of the Restated Note and the Units occurred on October 9 through October 14, 2025.
At the closings, the Company entered into a registration rights agreement with the Investors (the “Registration Rights Agreement”), pursuant to which the Company agreed, among other things, to file one or more registration statements covering the resale of the shares of common stock included as part of the Units, as well as the shares issuable upon conversion of the Restated Note or exercise of the Warrants. The Company will be subject to liquidated damages if it fails to meet certain conditions set forth in the Registration Rights Agreement.
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Results of Operations
Comparison of the Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
| Three Months Ended | Three Months | |||||||||||
| September 30, | Ended | |||||||||||
| 2026 | 2025 | Changes | ||||||||||
| REVENUES | ||||||||||||
| Commissions | $ | 1,736,434 | $ | 2,334,389 | (597,955 | ) | ||||||
| Vetting fees | 230,015 | 371,700 | (141,685 | ) | ||||||||
| Clearing fees | 101,786 | 714,349 | (612,563 | ) | ||||||||
| Stock locate fees | 2,997,205 | — | 2,997,205 | |||||||||
| Net gain/(loss) on firm trading accounts | 66,825 | (111 | ) | 66,936 | ||||||||
| Other revenue | 261,846 | 830,263 | (568,417 | ) | ||||||||
| TOTAL REVENUES | 5,394,111 | 4,250,590 | 1,143,521 | |||||||||
| EXPENSES | ||||||||||||
| Compensation, payroll taxes and benefits | 2,718,784 | 3,123,630 | (404,846 | ) | ||||||||
| Data processing and clearing costs | 1,897,046 | 584,250 | 1,312,796 | |||||||||
| Regulatory, professional fees and related expenses | 1,302,136 | 250,573 | 1,051,563 | |||||||||
| Stock compensation expense | 606,740 | 155,411 | 451,329 | |||||||||
| Communications | 195,547 | 218,869 | (23,322 | ) | ||||||||
| Occupancy and equipment | 103,595 | 36,751 | 66,844 | |||||||||
| Transfer fees | 18,415 | 48,160 | (29,745 | ) | ||||||||
| Bank charges | 60,570 | 58,718 | 1,852 | |||||||||
| Bad debt | 62,328 | 40 | 62,288 | |||||||||
| Intangible assets amortization | 355,795 | 355,795 | — | |||||||||
| Other | 592,717 | 295,631 | 297,086 | |||||||||
| TOTAL EXPENSES | 7,913,673 | 5,127,828 | 2,785,845 | |||||||||
| LOSS FROM OPERATIONS | (2,519,562 | ) | (877,238 | ) | (1,642,324 | ) | ||||||
| OTHER INCOME/(EXPENSE) | ||||||||||||
| Interest income | 496,135 | 486,357 | 9,778 | |||||||||
| Change in fair value of warrant liability derivative | 344,380 | (61,531 | ) | 405,911 | ||||||||
| Change in fair value, convertible note derivative | — | (52,873 | ) | 52,873 | ||||||||
| Change in fair value, long-term and short-term note derivative | — | 103,185 | (103,185 | ) | ||||||||
| Change in fair value of secured convertible note | 665,192 | — | 665,192 | |||||||||
| Change in fair value of Merger financing | — | 63,696 | (63,696 | ) | ||||||||
| Change in fair value of earnout liability | 249,000 | (116,000 | ) | 365,000 | ||||||||
| Change in fair value of subscription agreement | — | 1,798,624 | (1,798,624 | ) | ||||||||
| Change in fair value of debenture | (109,721 | ) | (837,888 | ) | 728,167 | |||||||
| Change in fair value of Tau agreement | — | 334,549 | (334,549 | ) | ||||||||
| Interest expense | (401,713 | ) | (1,434,210 | ) | 1,032,497 | |||||||
| TOTAL OTHER INCOME/(EXPENSE) | 1,243,273 | 283,909 | 959,364 | |||||||||
| Income before provision for income taxes | (1,276,289 | ) | (593,329 | ) | (682,960 | ) | ||||||
| Benefit (provision) for income taxes | 223,318 | 153,035 | 70,283 | |||||||||
| Net income (loss) | $ | (1,052,971 | ) | $ | (440,294 | ) | (612,677 | ) | ||||
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Total revenues increased by $1,143,521, or 27%, to $5,394,111 for the three months ended September 30, 2026, compared to $4,250,590 for the three months ended September 30, 2025.
AtlasClearing is a self-clearing correspondent securities broker-dealer registered with the SEC and a member in good standing of FINRA. AtlasClearing is engaged principally in over-the-counter (“OTC”) microcap securities transactions (defined as companies with market capitalizations under $250 million, including penny stocks trading under $5.00 per share with market capitalizations under $50 million), as well as exchange-traded securities. It derives its revenue from liquidations of restricted and control microcap securities; clearing transactions on behalf of introducing broker-dealers on a fully disclosed basis; and trading in equity securities for its own account. Secondary revenues stem from fully paid stock lending, stock locates, and margin accounts. Historical activities also include underwritten at-the-market offerings, private placements, mutual fund sales, and ancillary financial services.
The net revenue growth was primarily driven by $2,997,205 generated from stock locate fees during the three months ended September 30, 2026. This increase was partially offset by decreases in clearing fees (down $612,563, or 86%), commissions (down $597,955, or 26%), other revenue (down $568,417, or 68%), and vetting fees (down $141,685, or 38%).
Operating Expenses
Total operating expenses increased by $2,785,845, or 54%, to $7,913,673 for the three months ended September 30, 2026, compared to $5,127,828 for the three months ended September 30, 2025. Primary drivers of period-over-period variations include:
Compensation, Payroll Taxes, and Benefits: Decreased by $404,846, or 13%, to $2,718,784 for the three months ended September 30, 2026, compared to $3,123,630 for the prior three month period. Variable compensation continues to correlate with line-item volume shifts across operations.
Data Processing and Clearing Costs: Increased by $1,312,796, or 225%, to $1,897,046 for the three months ended September 30, 2026, from $584,250 for the prior three month period. Primary drivers for the increase is due to cost associated to the new stock locate revenue stream.
Regulatory, Professional Fees, and Related Expenses: Increased by $1,051,563, or 420%, to $1,302,136 for the three months ended September 30, 2026, compared to $250,573 for the three months ended September 30, 2025, driven by higher legal and professional advisory requirements in the current period as a result of the planned transaction with Commercial Bancorp and Ark.
Stock-Based Compensation: Increased by $451,329, or 290%, to $606,740 for the three months ended September 30, 2026, compared to $155,411 in the prior three month period. This reflects the continued pro-rata amortization over the requisite service periods of stock-based compensation granted under executive officer employment agreements and additional stock options grants in the quarter.
Occupancy and Equipment: Increased by $66,844, or 182%, to $103,595 for the three months ended September 30, 2026, from $36,751 for the prior three months period.
Other expenses: Increased by $297,086, or 100%, to $592,717 for the three months ended September 30, 2026, from $295,631 for the prior three-month period. The increase was primarily driven by a true-up entry recorded as of September 30, 2026. The Company routinely adjusts its monthly balances to match FIS reports as of the final day of each reporting period. Management believes the period-over-period variance is largely attributable to timing differences between the balance sheet and the underlying adjusted accounts.
Other Income (Expense)
Total other income increased by $959,364, or 338%, to $1,243,273 for the three months ended September 30, 2026, compared to $283,909 for the three months ended September 30, 2025.
The primary variance in other income was driven by fair value adjustments on financial instruments and derivative liabilities:
During the three months ended September 30, 2026, the Company recognized fair value gains on the Secured Convertible note ($665,192), Warrant Liability ($344,380), and Earnout Liability ($249,000), offset by a fair value loss on the Debenture derivative of $109,721.
In contrast, the prior period ending September 30, 2025, included a $1,798,624 fair value gain on the Subscription Agreement, offset by fair value losses on Debentures ($837,888) and Earnout Liability ($116,000). In addition, remaining seller note balances were converted into shares during the prior year, resulting in a fair value adjustment of $103,185.
Interest Expense: Decreased by $1,032,497, or 72%, to $401,713 for the three months ended September 30, 2026, from $1,434,210 for the three months ended September 30, 2025, reflecting lower outstanding principal balances on debt instruments during the current period.
Income Taxes
Income tax benefit was $223,318 for the three months ended September 30, 2026, compared to an income tax benefit of $153,035 for the three months ended September 30, 2025. The increase in tax benefit of $70,283 was primarily attributable to changes in deferred tax liabilities and assets and valuation allowance assessments.
Net Loss
As a result of the operational and non-operating factors outlined above, net loss increased by $612,677 to $1,052,971 for the three months ended September 30, 2026, compared to a net loss of $440,294 for the three months ended September 30, 2025.
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Liquidity and Capital Resources
Net cash used in operating activities was $3,867,059 for the three months ended September 30, 2026, compared to net cash used in operating activities of $2,500,236 for the three months ended September 30, 2025. The increase in cash used in operations was primarily driven by the following factors:
| ● | Net Loss and Non-Cash Items: Our operating cash flows for the current period were impacted by our net loss of $1,052,971, which was offset by significant non-cash adjustments including net fair value gains on financial instruments and derivative liabilities (such as the Secured Convertible Note (Funicular) fair value gain of $665,192, Warrant liability gain of $344,380, and Earnout liability gain of $249,000, offset by Debenture losses of $109,721), stock-based compensation expense of $606,740, amortization of intangibles of $355,795, non-cash interest expense of $344,825, and bad debt expense of $62,328. | |
| ● | Working Capital Fluctuations: Changes in operating assets and liabilities used net cash during the period, primarily resulting from an increase in receivables from customers of $5,560,889, decreases in accounts payable and accrued expenses of $660,234, and decreases in commissions and payroll taxes payable of $482,449. These outflows were partially offset by positive cash impacts from a decrease in receivables from brokers and dealers of $2,467,410 and an increase in payables to customers of $1,482,024. |
Investing Activities
Net cash used in investing activities was $0 for the three months ended September 30, 2026, compared to $65,000 for the three months ended September 30, 2025. The prior-period cash outflow was entirely attributable to cash paid for purchase of Pacsquare.
Financing Activities
Net cash used in financing activities was $137,260 for the three months ended September 30, 2026, compared to net cash provided by financing activities of $5,140,445 for the three months ended September 30, 2025.
| ● | Current Period: Cash outflows during the three months ended September 30, 2026, consisted exclusively of promissory note repayments totaling $137,260. | |
| ● | Comparative Period: In contrast, cash inflows during the three months ended September 30, 2025, were driven by capital raises, including $4,700,000 in net proceeds from the Securities Agreement, $490,000 in proceeds from debentures, and $200,000 in third-party advances, offset by $249,555 in promissory note repayments. |
Going Concern Consideration
As of September 30, 2026, the Company had unrestricted cash and cash equivalents of $9.4 million and has experienced recurring operating losses and negative cash flows from operations since inception. During the three months ended September 30, 2026, and in the period immediately following the balance sheet date, the Company incurred significant cash outflows, including operating cash expenditures, a $2.5 million cash payment in October 2026 related to the Ark acquisition (see Note 15). In addition, additional cash commitments are expected for $2.44 million due at the Ark closing, and the Company has a $2.5 million seller note maturing in January 2027.
Management evaluated the Company’s liquidity position and continuous operational plans in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 205-40, Presentation of Financial Statements – Going Concern. Management’s base cash flow forecast for the twelve months following the issuance date of these condensed consolidated financial statements indicates that projected operating cash flows and existing cash balances on hand may not be sufficient to satisfy all anticipated obligations as they become due.
However, management has evaluated probable and executable mitigation plans. Specifically, the Company has accessible capital resources that can be drawn down or completed to fully fund any potential cash flow deficits. While management does not anticipate requiring capital beyond baseline operational expectations, these funding mechanisms are available, and management believes them to be sufficient to absorb any liquidity shortfalls during the assessment period.
Based on the available capital resources and management’s operational and financial mitigation plans, management expects to have sufficient liquidity to satisfy its obligations as they become due for at least twelve months following the date these condensed consolidated financial statements are issued. Accordingly, management concluded that there is no substantial doubt about the Company’s ability to continue as a going concern.
Off-Balance Sheet Arrangements
The Company has no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2026.
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Contractual Obligations
The Company holds several long-term debt obligations with outside vendors and investors, with loans maturing between 2026 and 2030 (see Notes 8 and 9 in the accompanying condensed consolidated financial statements). Additionally, the Company leases office space under several operating leases. The Company has no capital lease obligations. Further, there are no other outstanding long-term liabilities contractually obligated by the Company.
Critical Accounting Policies
The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.
Derivative Liabilities
We account for derivative instruments as either equity-classified or liability-classified instruments based on an assessment of the derivative instruments’ specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the derivative instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the derivative instruments meet all of the requirements for equity classification under ASC 815, including whether the derivative instruments are indexed to our own Common Stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance and as of each subsequent quarterly period end date while financial instruments are outstanding.
For issued or modified derivatives that meet all of the criteria for equity classification, the derivatives are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified derivatives that do not meet all the criteria for equity classification, the derivatives are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the derivatives are recognized as a non-cash gain or loss on the statements of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
As of September 30, 2026, an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) was carried out by our management, with the participation of our Executive Chairman (our principal executive officer) and Chief Financial Officer (CFO). Based upon that evaluation, the Executive Chairman and CFO have concluded that as of the end of that fiscal quarter, our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarter ended September 30, 2026.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are, from time to time, party to various legal proceedings arising in the ordinary course of business, including as disclosed in Note 10 to the accompanying condensed consolidated financial statements. We are currently not party to any litigation , the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material and adverse effect on our business, financial position or results of operations.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report, other than the following amended and restated or new risk factors:
We have been suspended from the NYSE American and are currently not in compliance with the continued listing standards of the NYSE American. Our failure to resume compliance with the continued listing standards or make continued progress toward compliance consistent with a plan of compliance that we submitted to NYSE Regulation may result in the delisting of our common stock.
On November 10, 2026, the Company received notice from NYSE Regulation of the NYSE that it had suspended trading of the Company’s Common Stock on the NYSE American and determined to commence proceedings to delist the Company’s common stock from the NYSE American as a result of its determination that the Company is no longer suitable for listing pursuant to Section 1003(f)(v) of the NYSE American Company Guide due to the low selling price of the Company’s common stock. Trading of the Company’s common stock on the NYSE American was suspended on November 10, 2026 and began trading on the OTC Pink Limited Market on November 11, 2026. The Company has a right to a review of NYSE Regulation’s determination to delist the Company’s common stock by the Listings Qualifications Panel of the Committee for Review of the Board of Directors of the Exchange, and the Company intends to request such a review; however, there can be no assurance that any such appeal will be successful.
Because our common stock has been suspended from the NYSE American and is now listed on the Pink Limited Market of the OTC Markets Group, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our securities; | |
| ● | reduced liquidity with respect to our securities; | |
| ● | a determination that our shares of Common Stock are “penny stock” which will require brokers trading in our shares of Common Stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of Common Stock; and | |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
Such a delisting may also have a negative effect on the price of our Common Stock and may impair our investors’ ability to sell or purchase our Common Stock when investors wish to do so.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Shares of our Common Stock were considered to be covered securities because they were listed on the NYSE American. If our Common Stock is not listed on the NYSE American, it would not be deemed covered securities and we will be subject to regulation in each state in which we offer our securities.
We may not be able to successfully consummate the acquisitions of Ark or an institutional digital asset business.
On October 14, 2026, we entered into the Acquisition Agreement to acquire Ark and its wholly-owned subsidiary, Dawson James Securities, Inc., and on July 22, 2026, we announced that we had entered into a letter of intent to acquire an institutional digital asset business. The Acquisition Agreement contains a number of conditions to Closing, including the receipt of all required regulatory approvals (including the consent of FINRA) and the Company’s stockholders having approved the issuance of the shares of Common Stock pursuant to the Acquisition Agreement, if such stockholder approval is required pursuant to the listing rules of the NYSE American. There can be no assurance that the transactions contemplated by the Acquisition Agreement will be completed on a timely basis, or at all.
In addition, the letter of intent for the institutional digital asset business is non-binding, except for certain provisions including exclusivity and confidentiality. The completion of a definitive agreement to acquire the institutional digital asset business remains subject to a number of factors, including due diligence satisfactory to us and board approvals by both companies. Although the letter of intent provides that certain provisions are binding on the parties, it does not obligate the parties to consummate the proposed transaction. If a definitive agreement is entered into, the closing of the transaction will be subject to various closing conditions, including regulatory approval. There can be no assurance that any definitive agreement for the institutional digital asset business will be entered into or that the proposed transaction (or either of them) will be consummated on the terms contemplated by the letter of intent, or at all.
Our pending acquisitions of Commercial Bancorp, Ark or any other potential acquisition we may pursue involve a number of risks, the occurrence of which could materially adversely affect our business, financial condition and operating results.
Our pending acquisitions of Commercial Bancorp and Ark involve, and any other acquisition we may pursue may involve, a number of risks, including the following:
| ● | delays in completing the acquisition within the expected time period and the risk that the acquisition may not be completed at all; |
| ● | the occurrence of any fact, event, change, development or circumstance that could give rise to the termination of the acquisition agreement; |
| ● | the failure to satisfy any of the conditions to the consummation of any such acquisition; |
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| ● | significant dilution to our existing stockholders as a result of the issuance of shares of Common Stock and/or other securities as consideration; |
| ● | diversion of management’s attention to complete the acquisition; |
| ● | the announcement and/or consummation of the acquisition disrupting the Company’s current plans or operations; |
| ● | potential litigation relating to the acquisition, including any resulting costs, delays or diversion of management’s attention; |
| ● | significant transactions costs and expenses associated with the acquisition, whether or not it is completed; |
| ● | the failure to recognize the anticipated benefits of the acquisition, which may be affected by, among other things, the potential loss of customers and/or employees of the acquired business, competition, and/or the ability of the Company to grow and manage growth profitably; and |
| ● | the risk that costs savings and other anticipated synergies from the acquisition may not be realized when expected, or at all. |
The occurrence of any of the above risks could materially adversely affect our business, financial condition and operating results.
Commercial Bancorp, Ark or any other business we may acquire may have liabilities that are not known to AtlasClear and the indemnities negotiated in the applicable acquisition agreement may not offer adequate protection.
AtlasClear expects to assume certain liabilities of Commercial Bancorp, Ark and the institutional digital asset business if any such transaction is consummated. There may be liabilities that AtlasClear failed or was unable to discover in the course of performing due diligence investigations into these companies. AtlasClear may also have not correctly assessed the significance of certain liabilities identified in the course of its due diligence. Any such liabilities, individually or in the aggregate, could have a material adverse effect on the combined company’s business, financial condition and results of operations. As we integrate Commercial Bancorp, Ark or any other acquired business into our operations, we may learn additional information about the acquired business, such as unknown or contingent liabilities and issues relating to compliance with applicable laws, that could potentially have a materially adverse effect on our business, financial condition and results of operations.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During
the three months ended September 30, 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Exchange
Act)
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
| Exhibit No. | Description | |
| 3.1 | Amended and Restated Certificate of Incorporation of AtlasClear Holdings, Inc. (formerly Calculator New Pubco, Inc.) (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-41956), filed with the SEC on February 15, 2024). | |
| 3.2 | Certificate of Amendment to Amended and Restated Certificate of Incorporation of AtlasClear Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-41956), filed with the SEC on January 8, 2025). | |
| 3.3 | Certificate of Amendment to Amended and Restated Certificate of Incorporation of AtlasClear Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-41956), filed with the SEC on January 8, 2025). | |
| 3.4 | Amended and Restated By-Laws of AtlasClear Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-41956), filed with the SEC on February 15, 2024). | |
| 3.5 | Amendment to the Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-41956), filed with the SEC on December 27, 2024). | |
| 10.1 | Amendment No. 1 to Debenture Agreement between the Registrant and Sixth Borough Capital Fund, LP, dated September 11, 2026 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-41956), filed with the SEC on September 15, 2026). | |
| 31.1* | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
| 31.2* | Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
| 32.1** | Certification of the Chief Executive Officer and the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. | |
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
* Filed herewith.
** Furnished herewith.
# Indicates management contract or compensatory plan, contract or arrangement.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ATLASCLEAR HOLDINGS, INC. | ||
| Date: November 13, 2026 | By: | /s/ John Schaible |
| Name: | John Schaible | |
| Title: | Executive Chairman | |
| (Principal Executive Officer) | ||
| Date: November 13, 2026 | By: | /s/ Sandip Patel |
| Name: | Sandip Patel | |
| Title: | General Counsel and Chief Financial Officer | |
| (Principal Financial Officer) | ||
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