ATCH

Business Context and Reporting Period

Company: AtlasClear Holdings, Inc. (NYSE American: ATCH)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended June 30, 2025 (12 months).
Comparison Period: Six-month transition period ended June 30, 2024 (January 1, 2024 – June 30, 2024).
Business Model: A fintech-driven business-to-business platform providing trading, clearing, settlement, and banking services. Operations are primarily conducted through its subsidiary, Wilson-Davis, a correspondent securities broker-dealer specializing in microcap securities. The Company is an Emerging Growth Company and a Smaller Reporting Company.

Key Financial Metrics

Note: The prior period is a six-month transition period; direct year-over-year comparison is not fully comparable without annualization.

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased by approximately 171% to $10.9 million. This is primarily due to the full-year reporting in 2025 versus a six-month period in 2024. Annualized, revenue growth is approximately 71%, driven by increased clearing fees.
• Profitability Shift: The Company reported a net income of $5.8 million in 2025, a significant improvement from a net loss of $120.2 million in the prior transition period. The prior period loss was heavily impacted by a one-time $86.4 million loss on the AtlasClear asset acquisition and approximately $9 million in transaction costs related to the Business Combination.
• Expense Reduction: Total expenses decreased by $2.5 million to $15.8 million. This reduction is largely attributed to the absence of the one-time Business Combination transaction costs and stock compensation expenses incurred in the prior period.
• Derivative Gains: Other income/expense improved significantly due to a $16.5 million gain from changes in the fair value of financial instruments (convertible notes and seller notes) as debt was converted to equity during the year.

Guidance, Outlook, Risks, and Contingencies

Going Concern: The Company's auditor has issued an opinion with "Substantial Doubt" regarding the Company's ability to continue as a going concern. The Company has limited liquidity and requires additional capital to maintain operations. There is no assurance that new financing will be available on acceptable terms.

Strategic Outlook:

• Commercial Bancorp Acquisition: The Company is pursuing the acquisition of Commercial Bancorp (CB Merger) to gain banking capabilities. The agreement has been extended multiple times (currently extended to October 1, 2025). Failure to close could hinder business goals.
• Technology Integration: The Company aims to integrate Wilson-Davis, Quantum, and Commercial Bancorp to create a "one-stop shop" for financial services firms. However, many FinTech assets acquired are not yet in production.

Key Risks:

• Debt and Liquidity: Significant indebtedness exists, including the Funicular Note, Seller Notes, and various convertible promissory notes. Failure to raise capital to satisfy payment obligations could lead to default and insolvency.
• Regulatory Enforcement: Wilson-Davis is subject to ongoing regulatory scrutiny. A FINRA appeal regarding short sales and AML violations resulted in a reduced fine of $490,000, but the Company has appealed to the SEC. The outcome remains uncertain.
• Internal Controls: Management identified material weaknesses in internal control over financial reporting related to the accounting for complex financial instruments and merger agreements.
• Stock Price Volatility: The stock price has traded below the $1.00 minimum listing requirement for NYSE American since March 2025, risking delisting.

Investor Verification Checklist

• Capital Adequacy: Verify the status of the "Hanire Purchase Agreement" and the "Second ELOC Agreement" with Tau Investment Partners to confirm if sufficient working capital has been secured to address the going concern warning.
• Debt Conversion: Review the terms of the Funicular Note and Seller Notes, specifically the conversion floors and recent conversions to equity, to assess the extent of shareholder dilution.
• Commercial Bancorp Status: Confirm the current status of the CB Merger agreement and whether the extension fees paid ($50,000 total to date) indicate a high probability of closing.
• Regulatory Resolution: Monitor the outcome of the SEC appeal regarding the FINRA enforcement action to determine potential future fines or operational restrictions.
• Listing Compliance: Check if the Company has filed a plan to regain compliance with NYSE American listing standards (specifically the $1.00 minimum bid price) to avoid delisting.