Financial Analysis

NOTE 10. ACQUISITION OF WILSON-DAVIS Prior to the Closing, AtlasClear and the Company entered into two amendments to the Broker-Dealer Acquisition Agreement with Wilson-Davis and the then-owners of Wilson-Davis. As a result of the closing of the business combination the Company allocated the purchase price with the acquisition of Wilson-Davis under the acquisition method of accounting. The final allocation of the purchase consideration for the merger was determined and is summarized below. As such the allocation of the purchase price is as follows: Cash paid to Wilson-Davis shareholders $ 8,092,569 Short-term notes 5,000,000 Long-term notes 7,971,197 Value of shares transferred from sponsor 6,000,000 Total consideration paid 27,063,766 Allocated to: Cash $ 11,333,271 Cash segregated 22,000,605 Receivables 4,065,148 Trading Securities, market value 6,875 Prepaid Income Tax 201,125 Accounts payable, accrued expenses and other current liabilities (28,045,034) Current portion of lease liability (161,212) Property and equipment 23,645 Cash deposit BDs and Clearing Organizations 3,536,664 Operating Lease Right-to-Use Lease Assets 395,063 Other Assets 385,058 Stock loan (1,431,068) Long-term Lease liability (239,629) Subordinated Borrowing (1,950,000) Deferred tax liability (3,724,270) Trading Account deposit (100,000) Net assets acquired 6,296,241 Excess of purchase price over net liabilities assumed before allocation to identifiable intangible assets and goodwill $ 20,767,525 The …

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NOTE 16. INCOME TAX The Company accounts for income taxes using an asset and liability approach. Under this method, the tax provision includes taxes currently due plus the net change in deferred tax assets and liabilities. Deferred tax assets and liabilities arise from temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements, as well as from net operating loss and tax credit carryforwards. Deferred tax amounts are determined by using the tax rates expected to be in effect when the taxes will actually be paid or refund received, as provided for under currently enacted tax law. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, is not expected to be realized. The benefit (provision) for income taxes consisted of the following for the periods indicated: June 30, 2025 June 30, 2024 Current Tax: Federal $ $ State 1,556 3,170 Total current 1,556 3,170 Deferred Tax: Federal (209,219) (546,276) State (51,718) (26,630) Total deferred (260,937) (572,906) Total benefit on income taxes $ (259,381) $ (569,736) The benefit from or provision for income taxes differs from the amount computed by applying the federal statutory income tax rate to the Companys loss or income before income taxes as follows for the periods indicated: June 30, 2025 Rate Tax at Statutory rate (21%) $ 1,153,091 21.00 % Permanent Differences: Change in fair value of warrant liability $ ( …

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NOTE 13. LEASES The Company has operating lease obligations for office space at its headquarters location. The various leases have the following characteristics: The Company renewed a three-year operating lease for office space in February 2024, which will expire January 31, 2027. The terms of the agreement call for an annual 3% escalation in rents and one three-year renewal option at market rates. The Company entered into a 63- month operating lease for office space in April 2020, which will expire June 30, 2025. Rent expense under the three operating agreements totaling $195,266 for the year ended June 30, 2025 and $203,227 for the transition period ended June 30, 2024 was charged to operations during the fiscal year ended June 30, 2025 and the transition period ended June 30, 2024, respectively. The following is the future minimum payments required by the office lease agreements in effect at June 30, 2025: 2026 118,597 2027 70,377 Total minimum lease payments 188,974 Less interest factor (6,245) Total operating lease liability 182,729 Less operating lease liability - current portion (111,983) Operating lease liability - long term portion $ 70,746 As disclosed in Note 2, the Company adopted ASU No. 2016-02, Leases (Topic 842), which requires leases with durations greater than 12 months to be recognized on the statement of financial condition. The Company uses its estimated cost-of-capital at lease commencement as its interest rate, as the operating leases do not provide rea …

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Recent Accounting Standards Beginning in 2025 annual reporting, the Company adopted Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07) that was issued by the Financial Accounting Standards Board (FASB). This new standard requires an enhanced disclosure of significant segment expenses on an annual basis. Management has determined that there is only one reportable operating segment. The segment information aligns with how the Companys Chief Operating Decision Maker (CODM) reviews and manages our business. The Companys CODM is the Companys Chief Executive Officer who reviews the assets, operating results, and financial metrics for the company. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 will become effective for annual periods beginning after December 15, 2024. The Company is still reviewing the impact of ASU 2023-09. We are currently evaluating the provisions of this. In November 2024, th …

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NOTE 8. 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 1,558,923 and 991,665 pre reverse split shares, respectively for total contributed shares of 2,550,588 or 42,510 post reverse split shares recorded as contributed capital for $2,412,930. The Company recorded contributed capital for the value of the liabilities settled with their personal shareholding. The contributed capital recognized was$21,299 in interest paid in shares for Promissory Notes, $217,397 in interest for Secured Convertible Note, $400,000 of principal under the Chardan convertible note along with $212,803 in interest paid for the Chardan convertible note, $351,141 in interest for Short and long term Notes and $1,210,290 for payment under the contingent obligation to 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 2,788,276 pre reverse split or 46,471 post reverse split shares in satisfaction of $803,860 included in accounts payable. In addition, the Company issued 1,337,500 pre reverse split or 22,292 post reverse split shares as reimbursement for 991,665 pre reverse split or 16,528 post reverse split shares that were transferred by AtlasFinTech, as stated above, to satisfy the Company requirements to pay interest on various loans with unrestricted share …

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NOTE 18. SEGMENT REPORTING The Company operates as one reportable segment in accordance with ASC 280, Segment Reporting. The single reportable segment reflects the Companys 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 Executive Officer, who reviews financial performance and allocates resources on a consolidated basis. The Companys 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: For the Transition Year Ended Period Ended June 30, 2025 June 30, 2024 Commissions $ 5,937,532 $ 2,679,673 Vetting fees 1,459,321 499,125 Clearing fees 3,165,714 756,393 Net gain/(loss) on firm trading accounts 6,580 10,046 Other revenue 287,465 56,246 Total revenue $ 10,856,612 $ 4,001,483 Loss from operations $ (4,917,281) $ (14,268,826) Total assets $ 60,892,833 $ 57,466,554 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 t …

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NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and pursuant to the rules and regulations of the SEC. On August 9, 2024, the Company changed its fiscal year-end from December 31 to June 30. As a result, the prior year reflects a transition period of six months, from January 1, 2024, to June 30, 2024, as previously reported in our Form 10-KT filed with the SEC on October 16, 2024. The current fiscal year covers the twelve-month period from July 1, 2024, to June 30, 2025. As such, the periods presented in this Form 10-K are not directly comparable due to the difference in reporting periods. Where appropriate, we have included supplemental unaudited pro forma information and comparative commentary to aid in understanding period-over-period performance trends. 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. Emerging Growth Company The Company is an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the JOBS Act), and it may take advantage of certain exemptions from various reporting requirements that are applicable …

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NOTE 14. STOCKHOLDERS EQUITY (DEFICIT) Preferred Stock The Company is authorized to issue 25,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Companys board of directors. At June 30, 2025 and June 30, 2024, there were no shares of preferred stock issued or outstanding. Common stock The Company is authorized to issue 500,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the Companys common stock are entitled to one vote for each share. At June 30, 2025 and June 30, 2024, there were 40,165,603 and 207,585, respectively. In connection with the Closing, each share of Quantums common stock (Quantum Common Stock or Public Shares) that was outstanding and had not been redeemed was converted into one share of Common Stock. Each outstanding public warrant to purchase Quantum Common Stock became a warrant to purchase one -half of a share of Common Stock. Each outstanding warrant to purchase Quantum Common Stock initially issued in a private placement in connection with Quantums initial public offering became a warrant to purchase one share of Common Stock. The Common Stock commenced trading on the NYSE American LLC (NYSE) under the symbol ATCH on February 12, 2024. AtlasClear Holdings warrants commenced trading on the over-the-counter market (the OTC) under the symbol ATCH WS on February 12, 2024. Refer to Note 8, 9, 11 and …

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NOTE 19. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the consolidated financial statements were issued. Based upon this review, other than described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements, other than as described below. 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 (, a Debenture) for an aggregate principal amount of $500,000, for a gross purchase price of $490,000, net of legal fees. The Debenture bear a 10% interest and mature on August 3, 2026. The holder is entitled to convert the unpaid Face Amount of this Debenture, plus accrued interest and penalties, any time following a Closing Date, at $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 …

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