FDCTech, Inc. Issues Non-Reliance Notice and Announces Major Financial Restatements
FDCTech, Inc. (OTC: N/A) has filed a Form 8-K, announcing that its Board of Directors has determined that investors and shareholders should no longer rely on several previously issued financial statements and related audit reports. This decision is due to the identification of significant errors and misclassifications in the company’s financial reporting for the fiscal years ended December 31, 2024 and December 31, 2025, as well as for several quarterly reporting periods in 2025 and 2026.
Key Points for Investors
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Non-Reliance Determination: The Board, after consulting with management and its current independent auditor, LAO Professionals, concluded that financial statements for the following periods should not be relied upon:
- Audited consolidated financial statements for FY 2024 and FY 2025
- Quarterly reports for Q1, Q2, and Q3 of 2025, and Q1 of 2026
- Related earnings releases and communications
- Restatement Background: The company received a comment letter from the SEC Division of Corporation Finance regarding the presentation of client funds held by regulated brokerage subsidiaries. The errors were evaluated under SEC Staff Accounting Bulletins No. 99 and 108, as well as ASC Topic 250 (“Accounting Changes and Error Corrections”), and were found to be material.
Details of Errors and Corrections
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FY 2024:
- Correction reduced general and administrative expense by \$167,516
- Misclassification of \$3.5 million client funds (Alchemy Prime Ltd) and €3,457,534 (\$3,574,201) of third-party assets (Alchemy Markets Ltd), totaling \$7,074,201
- Misclassification of related party cash credits
- \$8.2 million subscription receivable wrongly classified as a current asset, should be contra-equity
- \$732,375 intercompany elimination errors within related party receivable
- Omission of 500,000 shares of common stock issued (October 2021, \$54,750), recognized retrospectively
- Segregation of client funds as restricted cash per ASC 230-10-50-8
- Errors in foreign currency translation adjustment
- Result: Restated total stockholders’ equity is \$6,454,531 (down from previously reported), and net income attributable to FDCTech, Inc. shareholders is \$247,544 (up from \$80,027)
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FY 2025:
- Corrections to foreign currency translation adjustments and other comprehensive income/loss
- Disaggregation of “Cash” into “Cash and cash equivalents” (\$11,855,861) and “Restricted cash – client funds (segregated)” (\$5,813,888)
- Corresponding liability “Client funds payable” (\$5,813,888) presented separately
- Further corrections relating to parent company operating lease, raising total assets by \$280,690 to \$64,051,886
- Consolidated net income increased by \$14,366 to \$5,828,978 (\$5,797,589 attributable to FDCTech, Inc. shareholders)
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Quarterly Reports (2025 & 2026):
- Q1 2025: Subscription receivable reclassified, recognition of previously unrecorded shares, segregation of \$17,453,282 client funds as restricted cash, corrections in noncontrolling interest and accumulated other comprehensive income
- Q2 2025: Restatement decreased total assets to \$31,659,210 (from \$47,520,040), decreased stockholders’ equity to \$8,226,039 (from \$16,201,884), minor changes in net loss
- Q3 2025: Restatement decreased total assets to \$32,121,281 (from \$47,928,079), decreased equity to \$8,390,506 (from \$16,386,507), minor changes to revenue and net income
- Q1 2026: Minor corrections to lease expense, correction of sign and footing error in other income, balance sheet corrections, and intercompany reclassifications. As restated, total assets are now \$72,807,161 (up from \$72,195,266)
Internal Control Weaknesses
Management identified material weaknesses in internal control over financial reporting as part of the restatement process. The company has included descriptions of these weaknesses and its remediation plan in amended annual and quarterly reports.
Communications with Auditors
The Board (acting as audit committee) discussed these matters with LAO, the current independent auditor. Olayinka Oyebola & Co., the former auditor for FY 2024, was notified of the non-reliance determination and provided a copy of the disclosures.
Immediate Actions
- Amendments Filed: FDCTech, Inc. is filing amendments to all affected annual and quarterly reports. Investors and readers should rely on the restated financial information contained in the amendments, not on previous filings.
Potential Price Sensitivity and Shareholder Impact
- Material Restatements: The magnitude and nature of these corrections could significantly affect investor confidence, potentially impacting FDCTech, Inc.’s share value.
- Internal Control Weaknesses: Material weaknesses in internal controls are a red flag for governance and reliability of financial reporting.
- SEC Scrutiny: The SEC’s involvement and requirement for corrections may raise concerns about compliance and regulatory risk.
- Equity and Asset Adjustments: Large reductions in reported assets and equity, as well as changes to net income, may alter valuation metrics and investor perceptions.
- No trading symbol: The company currently lists its trading symbol as “N/A,” indicating potential issues with exchange listing or trading status.
Summary
FDCTech, Inc. has announced significant financial restatements and internal control weaknesses, affecting multiple reporting periods. These developments are highly price sensitive and could materially affect shareholder value. Investors should immediately review the amended filings for accurate financial information and exercise caution in relying on previous reports.
Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell securities. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. FDCTech, Inc. is currently subject to material financial reporting corrections and identified internal control weaknesses. Past financial statements should not be relied upon. The information herein is based on public filings and may change as more details become available.
