AtlasClear Holdings, Inc.

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 transactions pursuant to that certain Business Combination Agreement dated November 16, 2022 (as amended, the “Business Combination Agreement”), among the Company, Quantum, 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 Business Combination. 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. (“Wilson-Davis”).

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 is building 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 seeks to power innovation in fintech, investing, and trading.

Wilson-Davis is a securities broker and dealer, dealing in over-the-counter and listed securities. Wilson-Davis is registered with the Securities and Exchange Commission (the “SEC”) and is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”).

Revenue is derived principally from Wilson-Davis’ operations in three areas: commission revenue, fee revenue and interest revenue.

Wilson-Davis has operations in Utah, Arizona, California, Colorado, Florida, New York, Oklahoma and Texas. 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.

Reverse Stock Split and Authorized Share Increase

On December 31, 2024, the Company effected a 1-for-60 reverse stock split of its Common Stock. As a result of the reverse stock split, every 60 shares of the Company’s issued and outstanding Common Stock were automatically combined into one share of Common Stock, with any fractional shares rounded up to the nearest whole share. The reverse stock split did not change the par value of the Common Stock; however, the Company increased the number of authorized shares of its capital stock to 525,000,000 shares, consisting of 500,000,000 shares of Common Stock, $0.0001 par value per share (“Common Stock”), and 25,000,000 shares of preferred stock, $0.0001 par value per share (“Preferred Stock”).

The reverse stock split has been applied retroactively in the accompanying consolidated financial statements and related disclosures for all periods presented. All share and per-share amounts, including earnings per share (“EPS”), have been adjusted accordingly to reflect the reverse stock split as if it had occurred at the beginning of the earliest period presented.

The impact of the reverse stock split is summarized as follows:

Management believes that the reverse stock split was necessary to regain compliance with stock exchange listing requirements and improve marketability of the stock.

Liquidity and Going Concern Considerations

The Company has incurred recurring operating losses and negative cash flows from operations since inception. These conditions, when considered in the aggregate, previously raised substantial doubt about the Company’s ability to continue as a going concern.

During the three-months ended December 31, 2025, the Company completed a financing transaction that alleviated this substantial doubt. On October 8, 2025, the Company entered into an amended and restated securities purchase agreement (the “Restated SPA”) with Funicular Funds, LP (“Funicular”), pursuant to which the Company issued and sold, for a purchase price of $10.0 million, an amended and restated secured convertible promissory note (the “Restated Note”) in the principal amount of $10,097,782. The Restated Note amends and restates the Company’s original $6.0 million secured convertible note issued to Funicular in February 2024 (the “Secured Convertible Note”). The Restated Note bears interest at 11% per annum, payable semi-annually in cash or in-kind at the Company’s option, matures on October 8, 2030, and is secured by a perfected security interest in substantially all of the Company’s assets and the assets of its subsidiaries.

In addition, on October 8, 2025, the Company entered into a securities purchase agreement (the “Equity SPA”) with certain institutional investors, including Funicular, pursuant to which the Company issued and sold units (“Units”), each consisting ofone share of Common Stock andone warrant to purchaseone share of Common Stock at an exercise price of $0.75 per share (subject to exercise on a cashless exercise basis pursuant to a Black Scholes-based formula set forth in the warrant). The Units were sold at $0.60 per Unit for an aggregate sales price of $10 million, including $4.15 million converted from the Convertible Notes (as defined in Note 2 below). The closings of the issuances of the Restated Note and the Units occurred between October 9 and October 14, 2025.

The aggregate gross proceeds from these financings totaled approximately $15.85 million, after giving effect to the conversion of $4.15 million of Convertible Notes, and before deduction of placement agent fees and offering expenses. Management expects that these proceeds, together with projected cash flows from operations, will provide sufficient liquidity to fund the Company’s operations and satisfy its obligations as they become due for at least twelve months following the issuance of these condensed consolidated financial statements.

Accordingly, management has concluded that the conditions that previously raised substantial doubt about the Company’s ability to continue as a going concern have been alleviated as a result of the successful completion of these financing transactions.

Inflation Reduction Act of 2022

Any redemption or other repurchase of the Company’s Common Stock that occurs after December 31, 2022, including in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax payable under the Inflation Reduction Act of 1922. The Company has accrued for the estimated excise tax as a result of the redemptions that occurred after December 31, 2022. On November 24, 2025, the Treasury Department and Internal Revenue Service issued final regulations (the Final Regulations) regarding the application of the excise tax on repurchases of corporate stock. The Final Regulations, which generally apply to stock repurchases occurring after December 31, 2022, generally provide an exception for repurchases of certain types of stock issued prior to August 16, 2022. Quantum completed its initial public offering prior to August 16, 2022 and, as such, the Company has determined that certain of its stock repurchases qualify for this exception and has reversed the accrual of $2,611,618 incurred during 2023 and 2024 and reversed the penalties and interest that has been accrued during the three-months period ended December 31, 2025.

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/A, as filed with the SEC on September 30, 2025. The accompanying condensed balance sheet as of June 30, 2025 has been derived from the audited financial statements included in the Form 10-K/A. The interim results for the three and six-months ended December 31, 2025 are not necessarily indicative of the results to be expected for the year ending June 30, 2026 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.

Impairment of Long-lived and Intangible Assets

The Company hadno impairment charges during the three and six-month periods ended December 31, 2025 and 2024.

Net (Loss) Income per Common Stock

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net (loss) income per share of Common Stock is computed by dividing net (loss) income by the weighted average number of shares of Common Stock outstanding for the period.

The calculation of diluted net (loss) income per share does not consider the effect of the warrants issued and outstanding. For the three and six-months ended December 31, 2025 and 2024, the calculation excludes the dilutive impact of warrants because none would be issued under the treasury method.

For the three-months ended December 31, 2024, the dilutive shares were excluded as including them would be antidilutive.

For the three and six-months ended December 31, 2025 and the six-months ended December 31, 2024, the convertible financial instrument and other share obligations were included in the dilutive calculation under the as converted method, as such the number of shares were included as if the shares were issued on July 1, 2025 and 2024, respectively and the interest expense and the change in fair value associated with the financial instruments was adjusted from net income to determine the numerator and denominator.

The following table reflects the calculation of basic net income (loss) per share of Common Stock (in dollars, except share amounts):

The following table reflects the calculation of diluted net income (loss) per share of Common Stock (in dollars, except share amounts):

Below is a summary of the potentially dilutive instruments as of December 31, 2025 and 2024:

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 $250,000. The Company has not experienced losses on these accounts. The Company’s cash is deposited attwo financial institutions. At December 31, 2025, the Company hadno amounts in excess of the FDIC limit.

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, convertible notes derivative liability and the earnout out liability (see Note 12).

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.

Recent Accounting Standards

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

Wilson-Davis is required by Rule 15c3-3 of the SEC 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 Wilson-Davis. The required reserve as of December 31, 2025 and June 30, 2025, was calculated to be $23,418,312 and $20,890,603, respectively. As of December 31, 2025, Wilson-Davis had $22,106,869 in cash which was $1,311,443 less than the amount required, and failed to make a timely deposit. Wilson-Davis notified the SEC and FINRA of the deficit and was in compliance as of January 2, 2026. As of June 30, 2025 Wilson-Davis had $21,175,129 cash on deposit which is more than the required amount.

Wilson-Davis is also required by Rule 15c3-3 of the SEC 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 Wilson-Davis. The required reserve as of December 31, 2025 and June 30, 2025 was calculated to be $290,537 and $100,000, respectively. As of December 31, 2025 and June 30, 2025, Wilson-Davis had $373,119 and $200,575, respectively, cash on deposit in the reserve account, which was $82,582 and $100,575, respectively, more than the amount required.

NOTE 4. NET CAPITAL REQUIREMENTS

As a broker-dealer, Wilson-Davis 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 $250,000 or 2% of aggregate debit items arising from customer transactions, as defined. Also, Wilson-Davis has a minimum requirement based upon the number of securities markets that it maintains. On December 31, 2025 and June 30, 2025, Wilson-Davis’s net capital was $14,691,647 and $11,190,362, respectively, which was $14,441,647 and $10,940,362, respectively, in excess of the minimum required.

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:

NOTE 6. RELATED PARTY TRANSACTIONS

Related Party Share Issuance/Transfers

During the month of July 2024, Quantum Ventures LLC (“Quantum Ventures” or the “Sponsor”) and AtlasFinTech transferred to various debt holders as described below,25,982 and 16,528 shares, respectively, for total contributed shares of 42,510 shares recorded as contributed capital for $2,412,930. The Company recorded contributed capital for the value of the liabilities settled with their personal shareholdings. The contributed capital recognized was $21,299 in interest paid in shares for promissory notes, $217,397 in interest for the Secured Convertible Note, $400,000 of principal under a convertible note (the “Chardan Note”) payable to Chardan Capital Markets LLC (“Chardan”) along with $212,803 in interest paid for the Chardan Note, $351,141 in interest for short and long term Notes and $1,210,290 for payment under contingent obligation to Wilson-Davis sellers.

On August 9, 2024, the Company entered into a Satisfaction of Discharge of Indebtedness Agreement with Atlas FinTech. Pursuant to the agreement, the Company issued 46,471 shares of Common Stock in satisfaction of $803,860 included in accounts payable. In addition, the Company issued 22,292 shares of Common Stock as reimbursement for shares that were transferred by AtlasFinTech, as described above, to satisfy the Company’s requirements to pay interest on various loans with unrestricted shares. As such, a total of 68,763 shares of Common Stock were transferred to Atlas FinTech in satisfaction.

Advances from Related Parties

On May 9, 2024, Quantum Ventures, a related party, transferred 935 shares of Common Stock to pay for the $47,750 of interest in connection with the Short-Term Notes (as defined in Note 8 below). The Company agreed to reimburse Quantum Ventures for the value of the shares plus 13% interest; as such a payable of $55,087 is due and payable to Quantum Ventures.

During the six-months ended December 31, 2025, $5,000 was advanced by the Executive Chairman to the Company to cover vendor obligations. As of December 31, 2025, amounts due to the Executive Chairman is $20,000.

During the six-months ended December 31, 2025 $7,300 was advanced by the President to the Company to cover vendor obligations. As of December 31, 2025, amounts due to the President is $27,300.

As of December 31, 2025, $8,308 is due in payable to employees of Wilson-Davis.

On July 17, 2025, the Company issued 800,000 shares of Common Stock to Sandip I. Patel, P.A., a law firm that is wholly owned by Sandip I. Patel, the Company’s General Counsel, Chief Financial Officer and a member of the Company’s board of directors, as consideration for legal and consulting services provided to the Company prior to his employment. The shares were valued based on the closing price of the date of issuance of $0.21 for a total value of $169,920.

Note Financing

In September 2025, the Company entered into the September-Securities Purchase Agreements, as defined and described in Note 8 below. $1,050,000 and $1,000,000, respectively, of the aggregate principal amount of the Convertible Notes sold pursuant to the September-Securities Purchase Agreements were sold to 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 to Sandip Patel, a member of the Company’s board of directors.

On October 8, 2025 the Company repaid to Sandip Patel $1,200,000 in cash and to Sixth Borough Capital Funds, LP, $640,000 in cash and $500,000 through the issuance of Units sold pursuant to the Equity SPA. As such as of December 31, 2025, no amounts are due under the September Securities Purchase agreement held by Sandip Patel and Sixth Borough Capital Fund, LP.

NOTE 7. 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 74,000 shares of Common Stock. In addition, the AtlasClear Stockholders will receive up to 5,944,444 shares of Common Stock (the “Earn Out Shares”) upon certain milestones (based on the achievement of certain price targets of Common Stock following the Closing). The milestones were not met during the first 18 months following the Closing, and as such the price target Earn Out Shares will not be issued. Atlas FinTech will also receive up to $20 million of shares of Common Stock (“Software Products Earn Out Shares”), which will be issued to Atlas FinTech upon certain milestones based on the achievement of certain revenue targets of software products contributed to AtlasClear by Atlas FinTech and Atlas Financial Technologies Corp. following the Closing. The revenue targets will be measured yearly forfive years following the Closing, with no catch-up between the years. The Earn Out provision was analyzed under ASC 480 and ASC 815. The Software Products Earn Out Shares Payments in this transaction are within the scope of ASC 480 and therefore have been accounted for as a liability. As of December 31, 2025 and June 30, 2025 the fair value of the earnout liability was $861,000 and $11,369,000, respectively. As a result of the delay in the Company’s planned acquisition of Commercial Bancorp of Wyoming (“Commercial Bancorp”), the Company has not yet been able to implement the targets of software product revenue under the earnout. As such, management has revisited its revenue targets through the earnout period, resulting in a significant reduction in the estimated value attributed to the Software Product Earn Out Shares. See Note 12 Fair Value Measurements for additional information.

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.

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 ofthree years, subject to automatic successive one-year renewals unless either party provides written notice of non-renewal at least 60 days’ prior to the end of the then-current term. Each executive is entitled to receive an initial annual base salary of $400,000, subject to review at least annually and increase to $450,000 and $500,000 in the second and third years of the term, respectively. In addition, each executive is entitled to receive (i) a one-time cash signing bonus of $300,000, of whichone-third was payable immediately and the balance is payable upon the earlier of (a) a minimum qualified cumulative financing of $5 million or (b)one-third at the end of the fourth quarter of 2025 andone-third at the end of the first quarter of 2026; and (ii) one-time stock grants of 700,000 shares and 286,842 shares on signing and July 1, 2026, respectively, in each case to vest on June 30 of the year following the grant. Each executive is also entitled to receive an annual bonus, provided that the Company is profitable and determined at the discretion of the board, annual equity awards under the Company’s equity incentive plan, and up to five stock awards, each in an amount equal to 1% of the total number of the Company’s outstanding shares, vesting over three years, in the event the Company’s stock trading price reaches the following 10-day volume weighted average prices: $0.75, $1.00, $1.24, $1.49 and $1.74.

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 ofthree years, subject to automatic successive one-year renewals unless either party provides written notice of non-renewal at least 60 days’ prior to the end of the then-current term. Mr. Patel is entitled to receive an initial annual base salary of $350,000, subject to review at least annually and increase to $400,000 and $450,000 in the second and third years of the term, respectively. In addition, Mr. Patel is entitled to receive a one-time cash signing bonus of $250,000, of which one-third was payable immediately and the balance is payable upon the earlier of (a) a minimum qualified cumulative financing of $5 million or (b) one-third at the end of the fourth quarter of 2025 and one-third at the end of the first quarter of 2026. Mr. Patel is also entitled to receive an annual bonus, provided that the Company is profitable and determined at the discretion of the board, annual equity awards under the Company’s equity incentive plan, and up to five stock awards, each in an amount equal to 0.5% of the total number of the Company’s outstanding shares, vesting over three years, in the event the Company’s stock trading price reaches the following 10-day volume weighted average prices: $0.75, $1.00, $1.24, $1.49 and $1.74.

Refer to Note 11 for discussion regarding stock based compensation. As of December 31, 2025 the Company paid the one time signing bonuses for a total of $850,000 under the employment agreements discussed above.

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.

Wilson-Davis

On February 27, 2018, an extended hearing panel of the Department of Enforcement of FINRA, Office of Hearing Officers, issued its decision ordering Wilson-Davis to pay fines aggregating $1.47 million for violations of the applicable short sales and anti-money laundering rules. Wilson-Davis appealed the decision to the National Adjudicatory Council (“NAC”). On December 19, 2019, NAC issued its decision ordering that the fines be reduced by $205,000 to an aggregate of $1.265 million. Wilson-Davis made a timely appeal to the SEC to hear the case. On December 28, 2023, the SEC issued a ruling affirming the findings of violations and remanding the matter back to FINRA to reconsider the appropriate sanctions in light of the SEC decision. On July 10, 2025, the NAC reduced the fines to an aggregate of $490,000. The Company made a timely appeal of the decision to the SEC. Pursuant to FINRA Rules, the Company’s timely appeal of the decision to the SEC deferred the effectiveness of the findings and sanctions. Due to the disparity in the range of fines of similar cases, the Company believes that the final amount is not reasonably estimable. The Company has booked a contingent liability totaling $100,000 which represents the estimated low end of the possible range of fines.

NOTE 8. NOTES PAYABLE

Chardan Convertible Note

During the six-months ended December 31, 2025, the Company issued a total of 4,845,072 shares of Common Stock to Chardan under the Chardan Note, for a total of $959,764 in principal. The conversion rate of 90% of the trailing seven-trading day VWAP prior to payment was between $0.16 and $0.18 per share. As a result, the Company recognized $240,897 in amortized debt discount included in interest expense and has fully settled the Chardan Note balance. As of December 31, 2025 and June 30, 2025, the balance under the Chardan Note was $0 and $718,866, respectively.

During the six-month period ended December 31, 2024, the Company received conversion notices under the Chardan Note for an aggregate principal amount of $725,000, and issued a total of 37,717 shares of Common Stock, of which 6,113 were transferred from Quantum Ventures and 2,119 were transferred from Atlas FinTech (see Note 6 above), and 29,485 were newly issued shares. During the six-month period ended December 31, 2024, the Company recognized $137,872 in interest expense on the principal and $86,209 of interest related to the amortization of the debt discount created with the derivative liability. During the six-month period ended December 31, 2024, Quantum Ventures transferred 2,427 and Atlas fintech transferred 877 shares to Chardan to pay for accrued interest of $212,803.

See Note 12 for additional information on the fair value and change in fair value related to the derivative.

Secured Convertible Note Financing

During the six-months ended December 31, 2025, the Company issued a total of 63,944,332 shares of Common Stock to Funicular under the Secured Convertible Note for total of $9,324,489 in Principal and $267,161 of interest. The conversion rate was $0.15 per share, which is the floor established under the agreement.

As of December 31, 2025, the company recognized $269,925 in interest expense on the principal and $513,201 of interest related to the amortization of the debt discount. As of October 8, 2025, the carrying value of the Secured Convertible Note was $100,546.

As of June 30, 2025, the carrying value of the Secured Convertible Note was $8,909,070, net of discount of $513,201.

As of December 31, 2024, the Company recognized $899,165 in interest expense on the principal and $180,085 of interest related to the amortization of the debt discount. As of December 31, 2024, the carrying value of the Secured Convertible Note was $8,745,699, net of discount of $611,496. During the six-month period ended December 31, 2024, Quantum Ventures transferred 6,133 shares to pay for accrued interest of $217,373.

On October 8, 2025, the Company entered into the Restated SPA with 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, the Secured Convertible Note, in the original principal amount of $6,000,000. Pursuant to the Restated SPA, the Company issued and sold to Funicular, for a purchase price of $10,000,000, the Restated Note, which amends and restates the Secured Convertible 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 Secured Convertible Note.

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.

The Restated Note issued by the Company to Funicular on October 8, 2025 represents a freestanding financial liability within the scope of ASC 470-10 Debt – Overall, with certain fair value election provisions applied under ASC 825-10 Financial Instruments – Overall. The Restated Note replaces the prior Secured Convertible Note originally issued on February 9, 2024, described above, increasing the principal balance from approximately $97,782 to $10,097,782, thereby constituting a significant new investment and creating an extinguishment of the prior note under ASC 470-50 Debt – Modifications and Extinguishments.

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, and the Company separately presents in other comprehensive income the portion of fair value changes attributable to instrument-specific credit risk, 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 $25,000 were deducted from the proceeds of the note and treated as fees paid to the creditor under ASC 470-50-40-17. Because the Restated Note is accounted for under the fair value option, third-party costs are expensed as incurred in accordance with ASC 825-10-25-3.

As a result, the Company recognized $22,235 as transaction cost consisting of $25,000 legal cost incurred net of the accumulated that was extinguished as a result of $2,764. Accordingly, the Company recognized $255,626 in accumulated interest under the Restated Note and recognized a change in the fair value of $1,796,432. See Note 12 for additional information on the fair value and change in fair value related to the Secured Convertible Note.

Sellers Note

As a result of the acquisition of Wilson-Davis, the Company issued (i) $5,000,000 in aggregate principal amount of notes due 90 days after the Closing Date (the “Short-Term Notes”) and (ii) $7,971,000 in aggregate principal amount of notes due 24 months after the Closing Date (the “Long-Term Notes” and, together with the Short-Term Notes, the “Seller Notes”). The Short-Term Notes accrue interest at a rate of 9% per annum, payable quarterly in arrears in shares of Common Stock, at a rate equal to 90% of the trailing seven-trading day VWAP prior to payment (or, at the Company’s option, cash), and are convertible at the option of the holder at any time during the continuance of an event of default, at a rate equal to 90% of the trailing seven-trading day VWAP prior to conversion. The Long-Term Notes accrue interest at a rate of 13% per annum, payable quarterly in arrears in shares of Common Stock, at a rate equal to 90% of the trailing seven-trading day VWAP prior to payment (or, at the Company’s option, in cash), and are convertible at the option of the holder at any time commencing six-months after the Closing Date, at a rate equal to 90% of the trailing seven-trading day VWAP prior to conversion (or 85% if an event of default occurs and is continuing).

As of June 30, 2025 the principal balance and accrued interest of the Short-Term Notes was fully settled with shares in agreed upon conversion terms. As of June 30, 2025 the principal balance on the Long-Term Notes was $975,573 and $31,706 in accrued interest less $27,167 of unamortized debt discount, for total principal balance of $980,106 under the Long-Term Notes. The Long-Term Notes mature on February 9, 2026 and, as such, the amounts payable under the Long-Term Notes had been included in current liabilities.

As of September 19, 2025, all of the Seller Notes have been fully settled via the conversion to shares of Common Stock. The Company during the six-months ended December 31, 2025, issued a total of 15,922,008 shares of Common Stock to the Wilson-Davis sellers under both the Long-Term Notes and the Merger Financing Note, as defined below, for total of $2,565,931 in Principal and $113,791 of interest. The conversion rate of 90% of the trailing seven-trading day VWAP prior to payment was between $0.16 and $0.18 per share.

During the six-months ended December 31, 2024, the Company received conversion notices for a total $359,896 in Short-Term Note principal and $7,530 of Short-Term Note interest, and issued a total of 31,035 shares of Common Stock. During the six-months ended December 31, 2024, the company recognized $309,136 in interest expense on the short-term principal, $518,128 in interest expense on the long-term principal and $199,780 of interest related to the amortization of the debt discount on long-term loan created with the derivative liability. During the six-month period ended December 31, 2024, Quantum Ventures transferred 6,133 shares to the Wilson-Davis sellers to pay for accrued interest of $92,083 on the Short-Term Notes and $259,058 on the Long-Term Notes. As of December 31, 2024, the principal balance on the Short-Term Notes was $4,640,104 and $301,606 in accrued interest net of $0 of unamortized debt discount, for a total carrying balance of $4,941,710 on the Short-Term Notes. As of December 31, 2024 the principal balance on the Long-Term Notes was $7,971,197 and $518,134 in accrued interest net of $421,756 of unamortized debt discount, for a total carrying balance of $8,067,569 on the Long-Term Notes.

Contingent Guarantee/ Merger Financing

In connection with the acquisition of Wilson-Davis, shares of Common Stock were transferred to the Wilson-Davis sellers, to cover a cash deficit of $6,000,000 (the Gross Proceeds Shortfall). The shares have a make-whole provision that is required to be accounted for under ASC 480. The Company has valued the obligation as of June 30, 2024 of $3,256,863 based on the cash value that would need to be remunerated by the Company. The value of the cash that would be paid was deemed to be the fair value of the contingent guarantee. The Company analyzed the public sales of the shares transferred to determine the amount of cash recovered less the $4,000,000 contingent guarantee resulting in a liability due of $3,256,863. As of February 9, 2024, the 885,010 shares transferred by Quantum Ventures and AtlasFintech were valued at $8,850,100 which was greater than the $4,000,000 guaranteed value, and as such the value of the guarantee was deemed to be zero on February 9, 2024. As a result of the decrease in stock prices through June 30, 2024, the Wilson-Davis sellers have recovered $743,137 in cash through sales of the shares transferred, resulting in the value of the liability as of June 30, 2024 to be $3,256,863.

During the six-month period ended December 31, 2024, Atlas FinTech agreed to transfer 1,234,990 in shares of Common Stock to the Wilson-Davis sellers under the contingent guarantee, resulting in a reduction in the contingent guarantee of $1,210,290 based on the fair value of the shares transferred on the transfer date.

On August 9, 2024, the Company entered into an agreement to modify the terms of the contingent guarantee where the Company agreed to enter into a convertible note on the amount that had not yet been recovered through share issuances of $2,886,347 plus a 5% convenience fee, resulting in the Company issuing a convertible note of $3,030,665. This Convertible Promissory Note (the “Merger Financing Note”) was issued pursuant to that certain Post-Closing Agreement dated effective August 9, 2024 (the “Agreement”), by and between the Company and the former stockholders of Wilson-Davis, to address the remaining Gross Proceeds Shortfall that was not remedied by the transfer of Additional Shares. The Merger Financing Note was analyzed under ASC 480 and ASC 815, and as a result of the Company not having sufficient shares authorized to settle the convertible note, the Merger Financing Note falls under ASC 815.

Under ASC 815, the conversion feature was bifurcated resulting in a conversion liability of $113,044 for the Merger Financing Note at issuance. For the three and six-months ended December 31, 2024, the Company recognized $100,685 and 157,594, respectively, in interest expense on the principal and $18,944 and 29,651, respectively, of interest related to the amortization of the debt discount created with the derivative liability. See Note 12 for additional information on the fair value of the derivative.

The carrying balance of the Merger Financing Note as of June 30, 2025, net of principal converted to shares of $1,439,586, was $1,618,575, net of $24,215 in unamortized debt discount. The Company issued a total of 15,922,008 shares of Common Stock to the Wilson-Davis sellers for both the Long-Term Note and the Merger Financing Note for a total of $2,565,931 in principal and $113,791 of interest. The conversion rate of 90% of the trailing seven - trading day VWAP prior to payment was between $0.16 and $0.18 per share. As of September 19, 2025 the Merger Financing Note was paid in full and the Company recognized $24,215 in amortized debt discount and $23,599 in interest expense.

Tau Agreement - ELOC

On July 31, 2024, the Company and Tau Investment Partners LLC (“Tau”) entered into an at-the-market agreement (the “ELOC”). Pursuant to the ELOC, upon the terms of and subject to the satisfaction of certain conditions, the Company has the right from time to time at its option to direct Tau to purchase up to a specified maximum amount of shares of the Common Stock, up to a maximum aggregate purchase price of $10 million (the “Commitment Amount”), over a 24-month term commencing on the date of the ELOC. The Company may request, on dates determined by it, individual advances up to the greater of 100,000 shares or such amount as is equal to 50% of the average daily volume traded of the Common Stock during the 30 trading days immediately prior to the date the Company requests each advance, subject to the aggregate limit of $10 million. Any such advance will reduce amounts that the Company can request for future advances and draw downs. The purchase price payable for the shares sold pursuant to any advance will be equal to 97% of the lowest volume weighted average price of the Common Stock during a pricing period of three consecutive trading days following Tau’s receipt of the applicable advance notice. Tau’s obligation to purchase the shares the Company requests to sell pursuant to any advance is conditioned upon, in addition to certain other customary closing conditions, the continued effectiveness of a registration statement pursuant to which Tau may freely sell the shares to be received. The Company was to issue to Tau a fee equal to 1.25% of the Commitment Amount (the “Commitment Fee”) due in shares upon closing based on the closing price on the day prior to approval of the S-1.

The issuance and sale of the shares of Common Stock pursuant to the ELOC will be exempt from the registration requirements of the Securities Act of 1933, as amended, in accordance with Section 4(a)(2) thereof. The Company filed a registration statement with the Securities and Exchange Commission for the resale by Tau of at least 10,000,000 pre reverse split or 166,667 post reverse split shares of Common Stock.

When estimating the fair value, the Company has followed the guidance in ASC 820 Fair Value Measurement.

As both the Commitment Amount and Commitment Fee were issued in a single transaction and are both remeasured to fair value through earnings in each subsequent reporting period, the proceeds received should be allocated to each freestanding financial instrument on a relative fair value basis. As of December 31, 2024 the Company requested advance notices for a total of $569,345 which resulted in approximately 41,250 shares to be issued

During the six-months period ended December 31, 2024, Tau sold and settled 41,250 of the shares which were issued under the ELOC resulting in the sale of $546,099, Tau purchased the shares for $569,345 resulting in a realized loss to the Company of $23,245.

As of December 31, 2025, there areno share available under the ELOC and accordingly no further advances are anticipated. See Note 12 for additional information regarding the fair value method and related disclosures.

Second ELOC Agreement

On February 5, 2025, the Company and Tau entered into an at-the-market agreement (“Second ELOC Agreement”). Pursuant to the Second ELOC Agreement, upon the terms thereof and subject to the satisfaction of certain conditions, the Company has the right from time to time at its option to direct Tau to purchase up to a specified maximum amount of shares of Common Stock, up to a maximum aggregate purchase price of $12.25 million (the “Commitment Amount”), over the 24-month term of the Second ELOC Agreement. The Company may request, on dates determined by it, individual advances up to the greater of 2,000 shares or such amount as is equal to 50% of the average daily volume traded of the Common Stock during the 30 trading days immediately prior to the date the Company requests each advance, subject to the Commitment Amount. Any such advance will reduce amounts that the Company can request for future advances and draw downs. The purchase price payable for the shares sold pursuant to any advance will be equal to 97% of the lowest VWAP of the Common Stock during a pricing period ofthree consecutive trading days following Tau’s receipt of the applicable advance notice. Tau’s obligation to purchase the shares the Company requests to sell pursuant to any advance is conditioned upon, in addition to certain other customary closing conditions, the continued effectiveness of a registration statement pursuant to which Tau may freely sell the shares to be received.

The Company analyzed both the Commitment Amount and the Commitment Fee (as defined below) under ASC 480 and ASC 815. The Commitment Amount is classified as a liability and is initially measured at fair value. The Commitment Amount is subsequently measured at fair value at each reporting period with subsequent changes in fair value recorded in earnings. ASC 815-40-35-8 through 35-9 require an issuer to reassess the classification of both freestanding equity contracts and embedded equity features at each balance sheet date. If the classification changes because of events occurring during the reporting period, the instrument is reclassified as of the date of the event that caused the reclassification.

As consideration for the Second ELOC Agreement, the Company was to issue to Tau a fee equal to 1.25% of the Commitment Amount (the “Commitment Fee”) due in shares upon closing based on the closing price on the day prior to approval of the S-1. As the Commitment Fee is a variable share obligation within the scope of ASC 480, it must be initially and subsequently measured at fair value through earnings at each reporting period.

Promissory Notes

Interest Solutions, LLC. Shares of Common Stock may become issuable to Interest Solutions, LLC (“Interest Solutions”) pursuant to a convertible promissory note, dated as of February 9, 2024, in the aggregate principal amount of $275,000 (the “Interest Solutions Note”) at a price per share of $120, subject to adjustment. Accrued interest on the Interest Solutions Note was payable monthly, beginning on June 30, 2024, at a rate of 13% per annum and the Interest Solution Note was to mature on February 9, 2026. Until all payments have been made to the Wilson-Davis sellers, interest on the Interest Solutions Note may be paid in cash or shares of Common Stock valued at the then-current conversion price. Thereafter, all accrued interest must be paid in cash. During the three-months ended December 31, 2025 and 2024, the Company recognized $8,913 and $8,815 in interest expense, respectively. During the six-months ended December 31, 2025 and 2024 the Company recognized $8,913 and $17,826 in interest expenses, respectively. On October 1, 2025, the Company issued 576,616 shares of Common Stock at a conversion price of $0.5627 in full settlement of $275,000 in principal and $49,462 of accrued interest. As of December 31, 2025 and June 30, 2025, there was $0 and $315,549 included in Promissory note payable.

JonesTrading Institutional Services LLC. Up to 3,283 shares of Common Stock may become issuable to JonesTrading Institutional Services LLC (“JonesTrading”), pursuant to a convertible promissory note, dated as of February 9, 2024, in the aggregate principal amount of $375,000 (the “JonesTrading Note”) at a price per share of $120, subject to adjustment. Accrued interest on the JonesTrading Note was payable monthly, beginning on June 30, 2024, at a rate of 13% per annum. Until all payments have been made to the Wilson-Davis sellers, interest on the Jones Trading Note may be paid in cash or shares of Common Stock valued at the then-current conversion price. Thereafter, all accrued interest must be paid in cash. During the three and six-month period ended December 31, 2025, the Company recognized $8,627 and $8,627, respectively and for the three and six-months ended December 31, 2024, the Company recognized $12,288 and $24,309, respectively, in interest expenses. On September 16, 2025, the Company and JonesTrading entered into an amendment to the promissory note agreement, whereby the conversion price floor of $2.00 was amended to $0.75. As a result, on September 16, 2025, the Company issued 585,229 shares of Common Stock at a conversion price of $0.75 in full settlement of $375,000 in principal and $63,922 of accrued interest. During the three and six-months ended December 31, 2024, Quantum Ventures transferred 101 shares of Common Stock to pay for $12,288 in accrued interest. As of December 31, 2025 and June 30, 2025, there was $0 and $430,295 included in Promissory note payable.

Toppan Merrill LLC. The Company issued to Toppan Merrill LLC (“Toppan”) a promissory note, dated as of February 9, 2024, in the aggregate principal amount of $160,025 (the “Toppan Note”). The maturity date of the Toppan Note was February 8, 2026 and the note accrued interest at a rate of 13% per annum. The principal and interest payments due under the note was not payable in shares of Common Stock. The Company paid $180,000 in cash on November 4, 2025 as full repayment of the promissory note. As of December 31, 2025 and June 30, 2025, there was $0 and $175,286, respectively, included in Promissory note payable.

Winston & Strawn Agreement

Up to $2,500,000 in shares of Common Stock were issuable to Winston & Strawn LLP (“Winston & Strawn”) pursuant to a subscription agreement, dated as of February 9, 2024, between Winston & Strawn and the Company (the “Winston & Strawn Agreement”). Pursuant to the Winston & Strawn Agreement, the Company was to issue $2,500,000 worth of shares of Common Stock as payment for legal services, inthree equal installments of $833,333 beginning on August 9, 2024. As of December 31, 2025 and June 30, 2025, the amount is included in Winston & Strawn Agreement as a liability of $690,400 and $2,489,945, respectively. Due to the nature of the settlement terms, the Winston & Strawn Agreement was deemed to be a derivative liability to the Company as of June 30, 2025 under ASC 480. Change in fair value of the subscription agreement are measured at each reporting period with change reported in earnings. See valuation approach and further disclosure on Note 12.

On January 26, 2026, the Company and Winston & Strawn, entered into a settlement agreement. The Company agreed to provide Winston & Strawn with cash and shares of the Company’s Common Stock. The Company paid $1,000,000 in cash, and issued a total of 1,000,000 shares of the Company Common Stock with a deemed value of $750,000 and a fair value of $256,300 based on the closing stock price on January 26, 2026. As of the date of this filing the Company has complied with the terms and has fully settled the obligations with Winston & Strawn.

Hanire Purchase Agreement

During the six-months ended December 31, 2025, the Company received $200,000 as a good faith deposit towards the securities purchase agreement entered into on December 31, 2024 between the Company and Hanire, LLC (the “ Hanire Purchase Agreement”). An amendment to the Hanire Purchase Agreement is currently being negotiated. As such, the proceeds received are treated as due on demand non interest bearing advances. If terms or repayment and additional funding is not negotiated, the Company expects to refund the good faith deposit.

Debenture

On August 4, 2025, the Company entered into a securities purchase agreement (“August-Securities Purchase Agreement”) with an institutional investor 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 matures on August 3, 2026. The holder is entitled to convert the unpaid principal amount of the Debenture, plus accrued interest and penalties, at any time $0.15 per share. If, at any time after Closing, the Company receives financing from 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, one hundred percent (100%) of the proceeds raised from the third party in excess of an aggregate amount of $10,000,000 (the “Threshold Amount”) until such time as the Face Amount of the Debenture has been paid in full. The Company agreed that, within 60 days after the sale of the Debenture, the Company would file with the SEC a registration statement, or an amendment to a previously-filed registration statement, registering the resale of the shares of Common Stock underlying the Debenture.

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 $362,067 at issuance consisting of the fair value of the derivative at issuance of $352,067, and $10,000 of transaction cost paid at closing. As a result, the Company recognized $90,517 in amortized debt discount and $12,500 in interest expense for the three-months ended December 31, 2025 and $150,861 in amortized debt discount and $20,833 in interest expense for the six-months ended December 31, 2025. The balance as of December 31, 2025 is $309,627, net of $211,206 of unamortized debt discount. See note 12 for additional disclosure regarding fair value of the derivative.

Convertible Notes

On September 16, 2025, September 19, 2025 and September 23, 2025, the Company entered into separate securities purchase agreements (each, a “September-Securities Purchase Agreement”) with certain institutional investors under which the Company agreed to issue and sell, in a private placement, convertible promissory notes (each, a “Convertible Note” and collectively, the “Convertible Notes”) for an aggregate principal amount of $6,000,000, for a gross purchase price of $5,000,000, reflecting a 20% original issue discount, before fees and other expenses. The Notes did not bear interest, and were to mature on the earlier of six-months from issuance or the date that the Company completes a Qualified Financing (meaning an issuance and sale of capital stock raising gross proceeds of at least $10 million, as defined in the Convertible Notes). The Convertible Notes were convertible into equity, at each holder’s option, at the closing of a Qualified Financing, at the same per share price as the securities sold in the Qualified Financing. The Notes were subject to customary events of default and related remedies.

The Convertible Notes are within the scope of ASC 470-10 and not an ASC 480 liability. The Company did not elect the ASC 825-10 fair value option. The instrument includes two embedded derivative features—the Conversion upon Qualified Financing and Event of Default acceleration—each meeting the definition of a derivative under ASC 815-15 and therefore requiring bifurcation and separate recognition at fair value. The Convertible Notes were issued at a 16.67% discount, and the aggregate discount (original issue plus bifurcation-related) will be amortized under ASC 835-30 using the effective interest method. The Convertible Notes did not bear any stated interest, and imputed interest was recognized accordingly. The Convertible Notes are presented as debt, with derivative liabilities separately disclosed and measured at fair value.

The Company recognized the discount of $1,682,154 at issuance consisting of the fair value of the derivative at issuance of $382,154, $1,000,000 originally issued discount and $300,000 of transaction cost paid at closing. On October 8, 2025 in connection with the Equity SPA discussed below, the Company repaid $1,850,000 in cash and converted $4,150,000 of the Convertible Note into the Units sold pursuant to the Equity SPA. As a result, the Company recognized $1,541,975 and $1,682,154 in amortized debt discount for the three and six-months ended December 31, 2025, respectively. The balance as of December 31, 2025 fully settled and no amounts remain due under the Convertible Note. The derivative was derecognized as a result of the full settlement of the Convertible Note. See note 12 for additional disclosure regarding fair value of the derivative.

Equity Financing

On October 8, 2025, the Company entered into 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,16,666,666 Units for a purchase price of $0.60 per Unit. Each Unit consists ofone share of the Common Stock andone warrant (each, a “2025 Warrant”) to purchase Common Stock. Of the total investment amount of $10,000,000, $5,850,000 of proceeds were received and $4,150,000 were converted from the Convertible Notes discussed above.

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 forone 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 the 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 thetwo closing bid prices of the Common Stock in thetwo 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 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). Resulting in total transaction cost paid of $1,228,500. The Company also agreed to issue warrants to purchase up to an aggregate of 1,005,000 shares of Common Stock with a fair value of $334,062 to the Placement Agent and its designees, resulting in total transaction cost of $1,562,562. The fair value of the warrants issued to the Placement Agent was included in the transaction cost and allocated between the 2025 Warrant in the amount of $865,659 and the Common Stock in the amount of $696,903 on a pro rated basis.

$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, and the Company issued an aggregate of 16,666,666 shares of Common Stock and 16,666,665 2025 Warrants.

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 2025 Warrants. 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 2025 Warrants, 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 2025 Warrants are 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 12 for additional disclosure regarding fair value of the 2025 Warrants.

NOTE 9. INTANGIBLE ASSETS

Amortization expense was $355,795 and $307,192 for the three-month period ended December 31, 2025 and December 31, 2024. Amortization expense was $711,590 and $662,459 for the six-month period ended December 31, 2025 and December 31, 2024, respectively.

Intangible Assets of the company at December 31, 2025 and June 30, 2025 are summarized as follows:

Below is a summary of the amortization of intangible assets for the next five years:

NOTE 10. STOCKHOLDERS’ DEFICIT

Preferred Stock — The Company is authorized to issue 25,000,000 shares of Preferred Stock with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At December 31, 2025 and June 30, 2025, there wereno shares of Preferred Stock issued or outstanding.

Common stock — The Company is authorized to issue 500,000,000 shares of Common Stock. Holders of the Company’s Common Stock are entitled toone vote for each share. At December 31, 2025 and June 30, 2025, there were 144,580,170 and 40,165,603 shares of Common Stock outstanding, respectively.

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 “ATCH WS” on February 12, 2024.

On July 17, 2025, the Company issued 800,000 shares of Common Stock to Sandip I. Patel, P.A., a law firm that is wholly owned by Sandip I. Patel, the Company’s General Counsel, Chief Financial Officer and a member of the Company’s board of directors, as consideration for legal and consulting services provided to the Company prior to his employment. The shares were valued based on the closing price of the date of issuance of $0.21 for a total value of $169,920.

On August 11, 2025, the Company issued 200,000 shares of Common Stock as consideration for $40,000 in open invoices to a service provider.

Pursuant to a Software As A Services License Agreement, as payment in shares for services rendered during the six-months period ended December 31, 2025, the Company issued 356,901 shares of Common Stock valued at the closing price on the date of issuance of $0.162 per share, resulting in compensation expense of $57,821.

On October 1, 2025, the Company and Interest Solutions entered into an amendment to the Interest Solutions Note whereby the conversion price floor of $2.00 was amended to $0.5627. As a result, on October 1, 2025, the Company issued 576,616 shares of Common Stock at a conversion price of $0.5627 in full settlement of $275,000 in principal and $49,462 of accrued interest.

On October 13, 2025, the Company and a vendor entered into a settlement agreement and release, whereas the Company agreed to issue 192,744 shares of Common Stock in settlement of $34,000 of a vendor payable balance.

On October 13, 2025, the Company issued 325,000 shares of Common Stock to consultants for services rendered. The shares were valued based on the date the date shares were issued for total compensation expenses of $132,373.

In connection with the Equity SPA discussed in Note 8 above, the closings of the issuance and sale of the Units occurred on October 9 through October 14, 2025, and the Company issued an aggregate of 16,666,666 shares of Common Stock.

Refer to Notes 6 and 8 for details regarding shares issued during the three and six-months ended December 31, 2025 and 2024.

***Warrants—***In connection with the Equity SPA, on October 8, 2025, the Company issued the 2025 Warrants as discussed in Note 8above. 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

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 12 for discussion regarding the fair value disclosures.

NOTE 11. STOCK BASED COMPENSATION

Executive Employment Agreements and Equity Awards

In September 2025, the Company entered into the Schaible Employment Agreement, the Ridenhour Employment Agreement and the Patel Employment Agreement, each as discussed in Note 7.

Under the terms of these agreements, the executives are entitled to annual base salaries ranging from $350,000 to $500,000 over the three-year term, annual discretionary cash bonuses contingent upon Company profitability and board approval, and various stock-based awards under the Company’s equity incentive plan.

Time-Based Stock Awards

Each of Messrs. Schaible and Ridenhour received a one-time grant of 700,000 shares of Common Stock upon execution of their respective agreements and are entitled to receive an additional 286,842 shares on July 1, 2026, 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. Each such grant vests on June 30 of the year following the grant date, subject to continued employment.

The grant-date fair value of the time-based awards was measured based on the closing price of the Company’s Common Stock determined to be $641,900 each for total of $1,283,800, on the respective grant dates and is recognized as compensation expense on a straight-line basis over the vesting period.

Schedule of Nonvested Stock Awards

(Shares in units; weighted-average grant-date fair value in $)

Performance-Based (Market Condition) Stock Awards

Each of Messrs. Schaible and Ridenhour is eligible to receive up tofive 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 tofive 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.

These milestones are based on the Company’s Common Stock achieving a 10-day volume-weighted average price (“VWAP”) of $0.75, $1.00, $1.24, $1.49, and $1.74, respectively. Each award vests over three years following achievement of the applicable stock price target, subject to continued employment.

Schedule of Performance-Based (Market Condition) Awards by Tranche (Units; grant-date fair value per share in $)

Because these awards include market conditions, the Company estimated their grant-date fair value using a Monte Carlo simulation model. The following table summarizes the key assumptions used in the valuation of these awards:

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. Expense is not reversed solely because the market condition is not satisfied.

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.

Stock-Based Compensation Expense

As of December 31, 2025, none of the stock price milestones had been achieved andno shares had vested under the performance-based awards.

Stock-based compensation expense recognized in the unaudited condensed consolidated statements of operations was as follows:

As of December 31, 2025, total unrecognized compensation cost related to unvested time- and market-based stock awards was approximately $10,100,561, which is expected to be recognized over a weighted-average period of 2.75 years.

NOTE 12. 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:

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 December 31, 2025 and June 30, 2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Winston & Strawn Agreement

On February 9, 2024, the Company entered into the Winston & Strawn Agreement, as described in Note 8.

The Winston & Strawn Agreement is considered a variable-share obligation under ASC Topic 480 (“Distinguishing Liabilities from Equity”). The Winston & Strawn Agreement meets the requirements for classification under ASC 480 and as a result is required to be accounted for as a liability under ASC 480 and is presented as such on the Condensed Consolidated Balance Sheets. The Company will record a change in fair value on each reporting period until settlement in its Condensed Consolidated Statement of Operations. See Note 8 for further discussion.

As of December 31, 2025 the Company had not issued the shares as stipulated under the Winston & Strawn Agreement and, as such, the Company determined that utilizing a Monte Carlo model was no longer appropriate considering the economic nature of the contract. The Company anticipated making cash payments to settled the obligations. As such, the Winston & Strawn Agreement was valued using the discounted cash flow approach to better determine the fair value of the Winston & Strawn Agreement. The agreement did not have any specific provision regarding default. The key valuation input under the discounted cash flow approach was 15.6% discount rate applied to the anticipated cash out flows over a year.

The key inputs into the Monte Carlo model for the Winston & Strawn Agreement were as follows:

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:

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 December 31, 2025, 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:

Convertible Note Derivatives

The conversion derivatives associated with Short-Term Notes, Long-Term Notes and the Chardan Note were accounted for as a liability in accordance with ASC 815-40. The conversion derivative liabilities were measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of conversion derivative liability in the consolidated statements of operations. The convertible note derivatives are made up of the fair value of the embedded conversion option included in the Long-Term Notes and the Chardan Note, which each had fair value as of December 31, 2025 of $0. The fair value of the embedded conversion option included in the Long-Term Notes and the Chardan Note had a fair value as of June 30, 2025 of $103,185 and $0, respectively, totaling $103,185.

Long-Term Notes

As of June 30, 2025 the conversion feature was valued using Monte Carlo model resulting in the fair value of the conversion option included in the Long-Term Notes at $103,185. During the six-months ended December 31, 2025 the Long-Term Notes were settled in full and, as such, the derivative was settled in full with azero value as of December 31, 2025.

Chardan Note

As of June 30, 2025, the conversion feature of the Chardan Note was valued using Monte Carlo model resulting in the fair value of the conversion option at $0. During the six-months ended December 31, 2025 the Chardan Note was fully converted into shares and was settled in full and, as such, the derivative was settled in full with azero value as of December 31, 2025.

Secured Convertible Note

As a result of the changes in stock price and the limitation on authorized shares to comply with the conversion option, the Company determined that as of June 30, 2025 valuation of the Secured Convertible Note conversion feature now was required to be bifurcated under ASC 815 and, as such, the Company fair valued the embedded derivative. As of June 30, 2025, the conversion feature was valued using the Monte Carlo model resulting in the fair value of the conversion option included in the Secured Convertible Note at $0. See Note 9 for additional information. As of October 8, 2025 as a result of the Restated SPA, the Secured Convertible Note was considered extinguished and replaced with the new Secured Convertible Note, see below for additional information.

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 $0.75 per share. 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 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, and the Company separately presents in other comprehensive income the portion of fair value changes attributable to instrument-specific credit risk, consistent with ASC 825-10-45-5.

As of December 31, 2025 and October 8, 2025, 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 $12,149,840 and $14,585,961, respectively.

The key inputs into the Black-Scholes model for the conversion derivative as of December 31, 2025 and October 8, 2025 were as follows:

Merger Financing Note

As of June 30, 2025 the conversion feature was valued using Monte Carlo model resulting in the fair value of the conversion option included in the Merger Financing Note of $63,696. During the six-months ended December 31, 2025, the Merger Financing Note was settled in full and, as such, the derivative was settled in full with a zero value as of December 31, 2025.

Tau Agreement

As discussed in Note 8 the Tau Agreement no longer has shares available to utilize and management does not intend to utilize the ELOC. As such as of December 31, 2025 the fair value of the Tau Agreement was deemed to bezero. As of June 30, 2025 the Tau Agreement was valued using Monte Carlo model resulting in the fair value of $539,448 and the Commitment Fee at $337.

The key inputs into the Monte-Carlo model for the Commitment Amount as of issuance date of June 30, 2025 was as follows:

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 December 31, 2025 the Debenture was valued using a Black-Scholes model and as of August 4, 2025, the issuance date, the Debenture was valued using Scenario Based Methodology model resulting in the fair value of the conversion option included in the Debenture embedded derivative at $1,189,955 and $352,067, respectively. See Note 8 for additional information.

The key inputs into the Black-Scholes for the conversion derivative as of December 31, 2025 and Scenario Based Methodology model August 4, 2025 were as follows:

Convertible Note Derivative

On September 16, 2025 the Company issued Convertible Notes 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 16, 2025, the issuance date, the Convertible Notes derivative was valued using a Scenario Based methodology model resulting in the fair value of the embedded derivatives included in the Convertible Notes of $5,382,154, of which at $382,154 was allocated to the embedded derivative. On October 8, 2025 in connection with the Equity SPA, the Company repaid the Convertible Note in full; as such as of December 31, 2025 the derivative was derecognized. See Note 8 for additional information.

The key inputs into Scenario Based Method for the conversion derivative as of September 16, 2025 were as follows:

2025 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,16,666,666 Units for a purchase price of $0.60 per Unit. Each Unit consists of one share of the Company’s Common Stock and one 2025 Warrant. In addition,1,005,000 of 2025 Warrants were issued to the placement agent as transaction cost. The 2025 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 fair value of all 2025 Warrants issued at issuance was $5,874,061 ($5,539,999 for the warrants included in the units and $334,062 for the warrants issued to placement agents).

The 2025 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 2025 Warrants is the expected volatility of the Company’s Common Stock.

The key inputs into the Black-Scholes model for the 2025 Warrants were as follows:

The following table presents the changes in the fair value of the following:

There wereno transfers between levels during the three and six-months ended December 31, 2025 and 2024.

NOTE 13. SEGMENT REPORTING

The Company operates asone reportable segment in accordance with ASC 280, Segment Reporting. The single reportable segment reflects the Company’s core business operations of securities broker and dealer, dealing in over-the-counter and listed securities.

The Chief Operating Decision Maker (CODM), identified as the Chief Financial Officer, who 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:

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 14. 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.

On January 12, 2026, the Company received a cashless exercise notice in respect of 483,333 warrants from the 2025 Warrants held by Funicular, resulting in the issuance of 1,294,558 shares of Common Stock.

On February 9, 2026, the Company received a cashless exercise notice in respect of 900,000 warrants from the 2025 Warrants held by Funicular, resulting in the issuance of 2,817,768 shares of Common Stock.

On January 26, 2026, the Company and Winston & Strawn, entered into a settlement agreement. The Company agreed to provide Winston & Strawn with cash and shares of the Company’s Common Stock. The Company paid $1,000,000 in cash and issued a total of 1,000,000 shares of the Company Common Stock with a deemed value of $750,000 and a fair value of $256,300 based on the closing stock price on January 26, 2026. As of the date of filing the Company has complied with the terms and is has fully settled the obligations with Winston & Strawn.

Commercial Bancorp Share Purchase Agreement

On February 5, 2026, the Company entered into a share purchase agreement (the “Purchase Agreement”) with Commercial Bancorp, a Wyoming corporation (“Commercial Bancorp”), and each of the shareholders of Commercial Bancorp (collectively, the “Sellers”). The Purchase Agreement provides for the Company to acquire (the “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 the Company’s common stock (“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 potion of the equity capital of Commercial Bancorp as of the closing of the Acquisition (the “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 Closing, multiplied by the maximum corporate federal income tax rate in effect as of the date of the 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 Closing or, if the 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 Closing, at each Seller’s option. The Company has agreed to file with the Securities Exchange Commission (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 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 Transaction 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 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 Closing, and (ii) granting the Company observation rights with respect to meetings of the boards of directors of Commercial Bancorp and the Bank during the between the execution of the Purchase Agreement and the 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 Acquisition; (ii) the Transaction is not consummated within two years of the execution of the Purchase, 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 with 30-days of receipt of written notice of such breach.