Financial Analysis

NOTE 11. 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 were entitled to 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 for five 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 June 30, 2026 and June 30, 2025 the fair value of the earnout liability was $ 263,000 and $ 11,369,00 …

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NOTE 10. NOTES PAYABLE The following table represents the notes payable and related financing as of June 30, 2026 and June 30, 2025: SCHEDULE OF NOTES PAYABLE AND RELATED FINANCING June 30, 2026 June 30, 2025 Promissory notes $ 430,484 $ 1,207,797 Current portion of long-term merger financing, net 980,106 Merger financing payable 1,618,575 Merger financing -derivative 63,696 Tau Agreement 539,787 Debenture (related party) 515,661 Derivative liability - debenture 252,374 Convertible note - derivative 103,185 Current portion $ 1,198,519 $ 4,513,146 Long-term convertible note Chardan, net $ $ 718,866 Secured Convertible Note, net 11,210,358 8,909,070 Subordinated borrowings 1,930,000 1,930,000 Long term portion $ 13,140,358 $ 11,557,936 Chardan Convertible Note During the year ended June 30, 2026, the Company issued a total of 4,845,072 shares of Common Stock to Chardan Capital Markets LLC (Chardan) under a promissory note issued to Chardan on October 23, 2024 (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 June 30, 2026 and June 30, 2025, the balance under the Chardan Note was $ 0 and $ 718,866 , respectively. See Note 15 for additional information on the fair value and change in fair value r …

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NOTE 13. 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 11. 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 Companys equity incentive plan. Time-Based Stock Awards Each of Messrs. Schaible and Ridenhour became entitled to receive a one-time grant of 700,000 shares of Common Stock upon execution of their respective agreements and an additional 286,842 shares on July 1, 2026, in each case subject to stockholder approval of an amendment to the Companys 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 700,000 shares to each were issued on July 14, 2026. The grant-date fair value of the time-based awards was measured based on the closing price of the Companys 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; …

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NOTE 14. 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: SCHEDULE OF BENEFIT PROVISION FOR INCOME TAXES June 30, 2026 June 30, 2025 Current Tax: Federal $ $ State 1,556 1,556 Total current 1,556 1,556 Deferred Tax: Federal (228,073 ) (209,219 ) State (25,588 ) (51,718 ) Total deferred (253,661 ) (260,937 ) Total benefit on income taxes $ (252,105 ) $ (259,381 ) 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: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION June 30, 2026 Rate Tax at S …

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NOTE 7. LEASE COMMITMENTS The Company has operating lease obligations for office spaces at its headquarters location for AtlasClearing and for a corporate apartment utilized for business purposes. The various leases have the following characteristics: The Company renewed a 3 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 sublease agreement for additional office space in February 2026. The sublease commenced on March 1, 2026 and expires February 28, 2029. The lease provides for annual rent escalations over the lease term. The Company entered into an operating lease for a corporate apartment in February 2026. The lease commenced on February 4, 2026 and expires April 2, 2027. The Company entered into an operating lease for a corporate office in June 2026. The lease commenced on June 11, 2026 and expires August 31, 2029. Rent expense under the four operating agreements totaling $ 235,040 and $ 195,266 for the years ended June 30, 2026 and 2025, respectively, was charged to operations during the fiscal years ended June 30, 2026 and 2025, respectively. The following is the future minimum payments required by the office lease agreements in effect at June 30, 2026: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS 2027 314,517 2028 217,115 2029 163,314 2030 7,930 Total minimum lease payments 702,8 …

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Recent Adopted Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 became effectuve for the Company for the annual period ended June 30, 2026. The adoption of ASU 2023-09 impacted the Companys income tax disclosures only and did not have a material effect on the Companys consolidated financial position, results of operations, or cash flows. …

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NOTE 9. RELATED PARTY TRANSACTIONS Advances from Related Parties On May 9, 2024, Quantum Ventures, a related party, transferred 935 shares of Common Stock to pay for $ 47,750 of interest in connection with the Short-Term Notes that were payable to the sellers of AtlasClearing. 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. This amount is reflected on the balance sheet as stock payable to related party as of June 30, 2026 and 2025. As of June 30, 2026 and 2025, amounts due to Executive Chairman for advances made were $ 20,000 and $ 15,000 , respectively, and are included in Accounts and payables to officers/directors on the balance sheet. As of June 30, 2026 and 2025, amounts due to the President for advances made were $ 27,300 and $ 20,000 , respectively, and are included in Accounts and payables to officers/directors on the balance sheet. As of June 30, 2026 and 2025, $ 0 and $ 164,088 , respectively of payables to former officers and directors prior to the Business Combination are included in Accounts and payables to officers/directors on the balance sheet. Note Financing In September 2025, the Company entered into the September Securities Purchase Agreements, as defined and described in Note 10 below. $ 1,050,000 and $ 1,000,000 , respectively, of the aggregate purchase price amount of the Convertible Notes sold pursuant to the September-Securities Purcha …

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NOTE 16. 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 Executive Chairman, 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: SCHEDULE OF REVENUE AND OPERATING INCOME LOSS Year Ended Year Ended June 30, 2026 June 30, 2025 Commissions $ 9,253,906 $ 5,937,532 Vetting fees 1,391,135 1,459,321 Clearing fees 2,055,780 3,165,714 Stock locate fees 6,780,814 287,465 Net gain/(loss) on firm trading accounts 506,141 6,580 Other revenue 64,859 Total revenue $ 20,052,635 $ 10,856,612 Loss from operations $ (9,770,316 ) $ (4,917,281 ) Total assets $ 71,228,683 $ 60,892,833 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 …

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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. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires the Companys management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Prevailing industry practices requires management to make estimates and assumptions regarding trading securities, depreciation and other matters that affect certain reported amounts a …

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NOTE 12. 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, 2026 and June 30, 2025, 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, 2026 and June 30, 2025, there were 150,337,774 and 40,165,603 , 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 ATCHW 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 Companys General Counsel, Chief Financial Officer and a member of the Companys 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 …

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NOTE 17. 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 July 1, 2026, the number of shares available for issuance under the Incentive Plan increased by 7,516,888 shares, equal to 5% of the total number of shares outstanding as of that date, in accordance with the terms of the Plan. On July 14, 2026, the Board of Directors authorized the execution and delivery of equity award agreements in connection with stock option grants previously approved by the Company. Under the authorized agreements, the Company issued Nonstatutory Stock Option Agreements reflecting, 2025 Stock Options: An aggregate of 196,713 stock options granted to officers, directors, and key personnel, with an expiration date of January 26, 2030 and 2026 Director Stock Options: An aggregate of 3,289,634 stock options granted to members of the Board of Directors, with an expiration date of June 30, 2031. Also July 14, 2026, each of Messrs. Schaible and Ridenhour received shares in connection with the one-time grant of 700,000 shares of Common Stock as well as one-time grants of 286,842 shares of restricted stock, in each case pursuant to their respec …

SubsequentEventsTextBlock · excerpt; the full note is in the filing