Business Strategy and Client Focus - The company aims to build a cutting-edge technology-enabled financial services firm, focusing on trading, clearing, settlement, and banking, with innovative financial products targeting financial services firms[161] - The target client base includes financial services firms with annual revenues up to $1 billion, such as brokerage firms, hedge funds, pension plans, and family offices[162] Acquisitions and Mergers - The acquisition of Wilson-Davis and the anticipated merger with Commercial Bancorp are expected to provide specialized clearing and banking services, with synergies leading to lower cost of capital, higher net interest margins, and expanded product development[163] - The company completed the Business Combination on February 9, 2024, which included the acquisition of Wilson-Davis and the anticipated merger with Commercial Bancorp[167] - Commercial Bancorp merger termination date extended to May 14, 2025, with 500,000 shares of common stock to be issued to shareholders[177] Technology and Platform Development - The AtlasClear Platform, developed by Pacsquare, is a cutting-edge, flexible, and scalable proprietary trading platform with clearing and settlement capabilities[164] - The Pacsquare Purchase Agreement involves the development and delivery of the AtlasClear Platform, with a total purchase price of $4.8 million, payable in cash and shares of Common Stock[175] Revenue and Financial Performance - Wilson-Davis derives revenue from commissions, vetting fees, and clearing service fees, with commissions earned by executing transactions for customers[165] - Total revenues for Q3 2024 were $2,804,082, a 100% increase from $0 in Q3 2023[193] - Net income for Q3 2024 was $10,748,033, compared to a loss of $255,978 in Q3 2023[193] - Net income was $10,509,003 for the three months ended September 30, 2024, compared to a net loss of $255,978 in the prior period, primarily due to gains from changes in fair value of convertible notes[210] Expenses and Cost Structure - Total expenses increased to $3,782,966 for the three months ended September 30, 2024, up by $3,142,153 compared to the same period in 2023, primarily due to the operations of Wilson-Davis[196] - Compensation, payroll taxes, and benefits rose to $1,279,304 for the three months ended September 30, 2024, compared to no expense in the prior period[197] - Data processing and clearing costs increased to $611,646 for the three months ended September 30, 2024, compared to no expense in the prior period[198] - Regulatory, professional fees, and related expenses increased to $1,133,600 for the three months ended September 30, 2024, compared to no expense in the prior period[199] - Intangible asset amortization increased by $307,192 for the three months ended September 30, 2024, due to assets acquired from Wilson-Davis[200] - Other expenses, including communications and occupancy, increased to $451,224 for the three months ended September 30, 2024, compared to no expense in the prior period[201] - Loss from operations was $978,884 for the three months ended September 30, 2024, compared to a loss of $640,813 in the prior period[202] Financial Instruments and Notes - The total purchase price for Wilson-Davis was reduced by $5 million, with $8 million paid in cash and the remaining $12.971 million paid through convertible promissory notes[170] - The company issued a $6 million secured convertible promissory note to Funicular, with interest accruing at 12.5% per annum and a maturity date of November 9, 2025[172] - As of September 30, 2024, the carrying value of the Funicular Note is $7,066,449, with $246,660 recognized in interest expense on the principal and $180,085 related to the amortization of the debt discount[173] - AtlasClear Holdings issued a $4,150,000 convertible promissory note to Chardan with a 13% annual interest rate[178] - Chardan Note amended to $5,209,764 non-interest bearing convertible note with similar conversion terms[181] - Company to file a registration statement by December 31, 2024, for resale of shares from Chardan Note conversion[182] - Interest Solutions Note issued for $275,000 with 13% annual interest, payable in cash or shares[185] - JonesTrading Note issued for $375,000 with 13% annual interest, payable in cash or shares[186] - The company and Chardan entered into a settlement agreement on October 23, 2024, with Chardan exchanging the Original Chardan Note for the Amended Chardan Note in the aggregate principal amount of $5,209,764[227] Other Income and Expenses - Other income increased significantly to $11,710,887 for the three months ended September 30, 2024, compared to $526,037 in the prior period, due to changes in fair value of financial instruments[203] - Interest income and interest earned on investments decreased by approximately 16% to $606,758 for the three months ended September 30, 2024, compared to $722,390 in the prior period[204] Legal and Consulting Services - Carriage House Capital to receive up to 350,000 shares of Common Stock for consulting services[184] - Winston & Strawn to receive up to $2,500,000 in shares for legal services[187] Internal Controls and Risk Factors - The company's disclosure controls and procedures were not effective as of September 30, 2024, as concluded by the CEO and CFO[223] - The company has incorporated changes in internal controls due to the business combination, including additional controls to enhance the control environment and ensure proper accounting for consolidated financial statements[224] - No material changes to the risk factors disclosed in the Transition Report as of the date of the Quarterly Report[228]
AtlasClear Holdings(ATCH) - 2024 Q3 - Quarterly Report