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We have a short operating history, which makes it difficult to evaluate our business and prospects or forecast our future results. In addition, our subsidiary, AtlasClear was formed in March 2022. Prior to such time, AtlasClear had no operations or assets. Upon Closing, AtlasClear received certain intellectual property from Atlas FinTech and Atlas Financial Technologies Corp., acquired the Pacsquare Assets and completed the acquisitions of Wilson-Davis.AtlasClearing. AtlasClear expects to complete CB MergerAcquisition or a similar acquisition, however, we cannot assure you that the CB MergerAcquisition will be completed as anticipated. As a result of these transactions, AtlasClear expects to acquire the capabilities to provide specialized banking and clearing services to other financial services firms. Even if AtlasClear is able to consummate CB Merger, Acquisition, we cannot assure you that we will achieve the anticipated synergies and benefits of such transactions, that our service offerings will appeal to our target market of financial services firms, generally with annual revenues up to $1 billion, or that we will achieve our anticipated financial results. If we are not able to complete the CB Merger,Acquisition, or if the combined company does not achieve the anticipated operational and financial results, the value of your investment would be materially and adversely affected.

The loss lossof members of our Chiefsenior Executive Officer, Chief Financial Officer,management or other key personnel, or failure to attract and retain other highly qualified personnel, could harm our business.

Our future success depends in large part on the continued services of senior management and other key personnel. In particular, we are dependent on the services of John Schaible, our Chief Executive Chairman, Craig Ridenhour, our President, and Sandip Patel, our General Counsel and Chief Financial Officer, whoeach of whom is critical to the future vision and strategic direction of our business. In December 2024, we removed Robert McBey from his role as Chief Executive Officer of AtlasClear Holdings and Wilson-Davis. In addition, in December 2024, Mr. Barber resigned from his role as Chief Financial Officer of AtlasClear Holdings, and in January 2025, Mr. McBey resigned from his role as Director. Although we have since hired a Chief Executive Officer for Wilson-Davis, and we have hired a new Chief Financial Officer for AtlasClear Holdings,we have not yet hired a new Chief Executive Officer. Our senior management and other key personnel are all employed on an at-will basis, which means that their employment could be terminated by us at any time, for any reason, and without notice. Conversely, employees may voluntarily terminate their employment at any time, for any reason, and without notice, and the risk of forfeiting equity incentives and/or losing other employee benefits might not be sufficient incentive for them to remain employed with us. If we lose the services of our senior management, as was the case with Mr. McBey and Mr. Barber, or other key personnel, or if we are unable to attract, train, assimilate, and retain the highly skilled personnel that we need, our business, operating results, and financial condition could be adversely affected.

Our future success depends on our continuing ability to attract, train, assimilate, and retain highly skilled personnel, including a new Chief Executive Officer.personnel. We face intense competition for qualified individuals from numerous software and other technology companies. We may not be able to retain our current key employees or attract, train, assimilate, or retain other highly skilled personnel in the future. We may incur significant costs to attract and retain highly skilled personnel, and we may lose new employees to our competitors before we realize the benefit of our investment in recruiting and training them. If we are unable to attract and retain suitably qualified individuals, including a new Chief Executive Officer,individuals who are capable of meeting our growing technical, operational, and managerial requirements, on a timely basis or at all, our business, operating results, and financial condition may be adversely affected.

The requirement that we repay all outstanding notes, including the FunicularRestated Note, could adversely affect our business plan, liquidity, financial condition, and results of operations.

As discussed below, the Company has sold and issued promissory notesnotes, including the FunicularRestated Note and other convertible notes issued under the Securities Purchase AgreementAgreements (as defined below) (collectively, the Convertible Notes”). If not converted, we are required to repay principal amounts outstanding under the Convertible Notes, as well as interest thereon. These obligations could have important consequences on our business. In particular, they could:

If the proposed CB MergerAcquisition is completed, we may experience difficulties in integrating the operations of Wilson-DavisAtlasClearing and Commercial Bancorp and in realizing the expected benefits of these transactions.

Our success will depend, in part, on the ability of AtlasClear to successfully complete the proposed CB Merger,Acquisition, or a similar acquisition, and to realize the anticipated benefits of combining the operations of Wilson-DavisAtlasClearing and Commercial Bancorp in an efficient and effective manner. The integration process could take longer than anticipated and could result in the loss of key employees from either company, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to continue relationships with Wilson-Davis’ AtlasClearing’s and Commercial Bancorp’s customers, employees or other third parties, or our ability to achieve the anticipated benefits of the transactions or the Business Combination, and could harm the Company’s financial performance. If we are unable to successfully integrate the operations of Wilson-DavisAtlasClearing and Commercial Bancorp with our business, we may incur unanticipated liabilities and be unable to realize the revenue growth, operating efficiencies, synergies and other anticipated benefits resulting from such transactions and the Business Combination, and the Company’s business, results of operations and financial condition could be materially and adversely affected.

Commercial Bancorp, BancorpArk or any other business we may acquire may have liabilities that are not known to AtlasClear and the indemnities negotiated in the Broker-Dealerapplicable Acquisitionacquisition Agreement and the Bank Acquisition Agreementagreement may not offer adequate protection.

As part of the Broker-Dealer Acquisition Agreement, AtlasClear assumed certain liabilities of Wilson-DavisAtlasClearing and as part of the Bank Acquisition Purchase Agreement, AtlasClear expects to assume certain liabilities of Commercial Bancorp if the transaction is consummated. In addition, we expect that any definitive agreements to acquire Ark, the institutional digital asset business or any other business we may seek to acquire will require AtlasClear to assume certain liabilities of the acquired company if the transaction is consummated. There may be liabilities that AtlasClear failed or was unable to discover in the course of performing due diligence investigations into these companies. AtlasClear may also have not correctly assessed the significance of certain liabilities identified in the course of its due diligence. Any such liabilities, individually or in the aggregate, could have a material adverse effect on the combined company’s business, financial condition and results of operations. As we integrate Wilson-DavisAtlasClearing and, if acquired, Commercial Bancorp, Ark or any other business into our operations, we may learn additional information about Wilson-Davisthe andacquired Commercial Bancorp,business, such as unknown or contingent liabilities and issues relating to compliance with applicable laws, that could potentially have a materially adverse effect on our business, financial condition and results of operations.

Risk Related to Wilson-Davis’AtlasClearing’s Business and Industry

Wilson-Davis’ AtlasClearing’s liquidation of microcap securities and related activities in the over-the-counter market segment expose it to significant risk.

Wilson-Davis AtlasClearing conducts activities, including customer liquidations of restricted and control securities, in microcap securities, which are subject to higher risks than securities traded on national securities exchanges. Microcap securities generally are issued by companies with low or “micro” capitalizations, meaning the total market capitalization value of the company’s stock is less than $250 million, which includes low-priced securities, or penny stocks, that trade at below $5.00 per share and have a market capitalization of less than $50 million. Microcap securities frequently are issued by smaller reporting companies, which relaxes many of the disclosure obligations applicable to larger companies (see below). Further, trading in such microcap securities requires Wilson-DavisAtlasClearing to meet heightened customer disclosure obligations for any retail transactions. Because of perceived risks associated with the above factors, Wilson-Davis AtlasClearing believes it faces heightened regulatory scrutiny from the SEC and the Financial Industry Regulatory Authority (the “FINRA”) and other self-regulatory organizations that require particular attention to compliance measures and supervision.

The over-the-counter markets for the microcap securities Wilson-DavisAtlasClearing liquidates frequently have limited trading volume and volatile trading prices.

The trading markets for the microcap securities Wilson-DavisAtlasClearing liquidates frequently have limited trading volume and volatile price fluctuations, which sometimes makes it difficult to fulfill customers’ orders at requested amounts or prices. In addition, because of market conditions, Wilson-DavisAtlasClearing may restrict the number of shares that a customer or a group of customers may liquidate in a single security to mitigate possible undue market selling pressure or to reduce potential market impact. Wilson-DavisAtlasClearing may not be successful in detecting market conditions that warrant the above or other trading precautions to meet its compliance obligations. Any such trading limitations may impair Wilson-Davis’AtlasClearing’s competitive position and contribute to customer dissatisfaction.

The penny stock rules limit Wilson-Davis’AtlasClearing’s trading practices.

Wilson-Davis AtlasClearing must comply with special penny stock rules if it sells such stock to retail customers, as distinguished from other broker-dealers. Although Wilson-Davis AtlasClearing has a policy of limiting penny stock sales only to other broker-dealers, if Wilson-DavisAtlasClearing sells penny stocks to retail customers, it must provide purchasers of these stocks with a standardized risk disclosure document prepared by the Commission. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the purchase. The penny stock rules may make it difficult for investors to sell their shares of penny stock. Because of these rules, many brokers choose not to participate in penny stock transactions and there is less trading in penny stocks. Accordingly, investors may not always be able to resell shares of penny stock publicly at times and prices that they feel are appropriate. Wilson-Davis AtlasClearing cannot assure that any penny stock rules compliance measures that it adopts and implements will be effective.

Wilson-Davis AtlasClearing needs to continue to maintain its excess net capital above the NSCC requirement of $10 million to continue to provide correspondent clearing services for introducing brokers.

Wilson-Davis is subject to amendments of rules adopted by NSCC that require Wilson-Davis to have excess net capital of at least $10.0 million as of October 26, 2023 if Wilson-Davis clears for an introducing broker. As of June 30, 2025 and 2024, Wilson-Davis had net capital of approximately $11.2 million and $10.4 million, respectively. Investors, including the owners of Wilson-Davis and Mr. Schaible, provided an aggregate of $1,300,000 in subordinated demand notes which were funded on October 13, 2023 and FINRA approved the demand notes. The notes were renewed to mature on October 13, 2025 and to have an interest rate of 5% per annum, payable quarterly. During the year ended June 30, 2026, Glendale, provided $1.4 million or approximately 6.6% of AtlasClearing’s revenues. During the year ended June 30, 2025, Glendale, the sole introducing broker at Wilson-Davis, provided $840,000$0.84 million or approximately 6.5% of Wilson-Davis revenues. During the six months transition period ended June 30, 2024, Glendale, the sole introducing broker at Wilson-Davis, provided $164,000 or approximately 3% of Wilson-Davis’AtlasClearing revenues. However, the growth of clearing services for introducing broker customers is expected to be a key driver to meet the Company’s future revenue goals. As a result, if we fail to meet the increased capital requirements of NSCC on an ongoing basis, we would be unable to provide clearing services for introducing brokers which could have a material adverse effect on the Company’s revenues in the future.

Wilson-Davis AtlasClearing customers liquidate securities of smaller reporting companies that have relaxed disclosure obligations.

The microcap securities Wilson-DavisAtlasClearing customers principally liquidate are issued by smaller reporting companies. The disclosures smaller reporting companies are required to provide in SEC periodic reports are less than those of larger reporting companies. Specifically, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings, are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 requiring that independent registered public accounting firms provide an attestation on the effectiveness of internal control over financial reporting, and have certain other reduced disclosure obligations in their SEC filings, including being permitted to provide two, rather than three, years of audited financial statements in annual reports. Reduced disclosures in smaller reporting company periodic reports may make it harder for investors to analyze results of operations and financial prospects. Wilson-DavisAtlasClearing believes that the foregoing contributes to increased volatility and lower trading volume for the securities markets for smaller reporting companies, many of which are microcap securities.

Wilson-Davis AtlasClearing customers also liquidate securities in companies that do not file SEC reports, so there is very little, if any, reliable data publicly available about them.

In addition to smaller reporting companies, Wilson-DavisAtlasClearing customers also liquidate securities of companies that are not subject to SEC reporting requirements and thus do not file any periodic reports. Frequently, there is little reliable available public information about the business activities, financial condition or results of operations, management, operating risks, or other material matters about such companies. Many of such companies have only recently been organized, have inadequate financial resources or liquidity and rely on the ongoing sale of stock or borrowings to sustain operations, do not have independent directors, and have engaged in material transactions with related parties. These companies may not have financial statements that have been reviewed by independent auditors. Transactions in the securities of these companies may expose Wilson-DavisAtlasClearing to liability.

Wilson-Davis AtlasClearing is, and may in the future be, subject to significant regulatory enforcement proceedings.

In the ordinary course of business, securities broker-dealers such as Wilson-DavisAtlasClearing are highly regulated and are routinely and frequently examined by the SEC, FINRA, and the securities regulatory authorities of states in which they are licensed or conduct business. Such examinations review a broad ranges of business activities for compliance with the many statutes, rules, regulations, and interpretations governing Wilson-Davis’AtlasClearing’s activities. Examinations by any of the above authorities may lead to enforcement actions that expose Wilson-Davis AtlasClearing and its personnel to defense costs and potential fines or other sanctions. For example, Wilson-DavisAtlasClearing has appealed to the SEC an adverse ruling by FINRA’s National Adjudicatory Council, or “NAC,” finding that Wilson-DavisAtlasClearing had violated FINRA rules respecting short sales, failing to supervise and implement adequate anti money-laundering procedures. NAC had ordered Wilson-DavisAtlasClearing to pay a $1,100,000$1.265 finemillion fine. andAtlas disgorgeClearing $51,624.appealed Wilson-Davis cannot predictto the outcomeSEC, ofthe itsSEC appealaffirmed orthe whenfindings abut decisionsent willthe bematter rendered.back to the NAC to reconsider the appropriate sanctions. On July 10, 2025 the National Adjudicatory CouncilNAC reduced the fines to an aggregate of $490,000. The Company made a timely appeal to the SEC to hear the case. Pursuant to FINRA Rules, the Company’s timely appeal of the decision to the SEC deferred the effectiveness of the findings and sanctions. Wilson-DavisAtlasClearing established a $100,000 contingency reserve in the year ended June 30, 2021, for this litigation contingence, but cannot assure that this amount is adequate to cover any penalty determined on appeal. The amount of the fine and disgorgement by which a final judgment exceeds the contingency reserve amount would reduce Wilson-Davis’ AtlasClearing’s excess capital. In addition to the payment of defense costs and potential fines or other sanctions associated with enforcement actions, customers may assert claims against Wilson-DavisAtlasClearing or its personnel in legal suits or arbitration proceedings.

Wilson-Davis AtlasClearing and certain of its personnel are subject to various regulatory disciplinary orders that could be the basis of future regulatory action.

Wilson-Davis AtlasClearing is subject to previous disciplinary orders by FINRA and the SEC which, by their terms, do not expire. FINRA and the SEC can impose special supervision and compliance measures and may increase future regulatory scrutiny. In July 2019, FINRA initiated an enforcement proceeding against Wilson-Davis,AtlasClearing, certain former principals of Wilson-Davis,AtlasClearing, and a former registered representative/trader alleging that the firm and the registered representative manipulated the market of a designated security, responsible supervisory personnel failed to establish and maintain appropriate supervisory procedures, the firm and a former principal failed to implement and maintain appropriate anti-money laundering procedures, and provided inaccurate documents to FINRA staff (the “2019 FINRA Action”). Wilson-DavisAtlasClearing and its former principals agreed to settle the matter, without admitting or denying the allegations respecting supervision, anti-money laundering, and documentation in July 2021 by consenting to an order under which the firm was censured and paid a $500,000 monetary penalty, one former principal was suspended in all capacities for 90 days, that principal and two other former principals were suspended for two years, and the firm was required to undertake certain compliance and remediation efforts. The firm promptly paid the fine and timely completed the required compliance and remediation efforts. In connection with the resolution of some matters, Wilson-DavisAtlasClearing engaged qualified consultants to recommend specific compliance procedures and has implemented such required compliance enhancements. Wilson-DavisAtlasClearing believes it has fully complied with all sanctions related to the July 2019 complaint. Previously, in December 2016, FINRA filed a complaint against Wilson-Davis AtlasClearing asserting potential violations of several securities laws and regulations, regarding supervision, anti-money-laundering, and Regulation SHO speculation prohibitions (the “2016 FINRA Action”). Wilson-DavisAtlasClearing denied the allegations and FINRA-imposed sanctions have been stayed pending appeal.

Wilson-Davis’ AtlasClearing’s procedures, policies, and practices to comply with the comprehensive anti-money laundering regulatory regime may not be sufficient to assure compliance.

Wilson-Davis AtlasClearing is subject to comprehensive anti-money laundering (“AML”) laws, regulations, and interpretations that apply to its activities under the Bank Secrecy Act. The AML regulatory regime covers a wide range of activities, including trading activities, securities liquidations and other transactions, funds and securities transfers, the opening of customer accounts, customer interactions, and other activities.

In July 2019, FINRA censured Wilson-DavisAtlasClearing and assessed a $500,000 fine for violations, among others, of applicable AML rules. Further, Wilson-Davis AtlasClearing engaged an independent consultant to help develop and implement new comprehensive policies and procedures designed to comply with applicable AML requirements. Wilson-DavisAtlasClearing has completed this process but cannot assure that its new policies and procedures will in fact be adequate to assure AML compliance in practice. This enforcement proceeding and the related implementation of new AML policies and procedures may have heightened regulatory scrutiny of Wilson-Davis.AtlasClearing. Regulatory authorities may consider Wilson-Davis’AtlasClearing’s previous discipline as warranting increased sanctions in any subsequent enforcement proceeding finding AML violations.

Although Wilson-Davis AtlasClearing expends significant time and financial resources to monitor and investigate potential AML issues, Wilson-Davis’ AtlasClearing’s resources, technologies, personnel, and fraud detection tools may be insufficient to accurately detect and prevent such activities. Significant increases in fraudulent or illegal activities could negatively impact Wilson-Davis’AtlasClearing’s reputation and reduce the trading volume through the firm. Any misbehavior of or violation by Wilson-Davis’AtlasClearing’s customers may also lead to regulatory investigations into the firm. Further, although Wilson-DavisAtlasClearing may ultimately conclude that no fraud or money laundering exists, regulatory authorities may disagree that the red flags pointed towards such a conclusion and may impose various penalties without needing to point to any evidence of fraud or money laundering. Any such penalties could significantly harm the financial condition and results of operations of Wilson-Davis.AtlasClearing.

Wilson-Davis AtlasClearing cannot predict the duration or severity of economic conditions that may adversely affect its results of operations.

Wilson-Davis’ AtlasClearing’s revenue and profitability had been adversely affected by general downturns in the securities markets since early 2022, resulting from rising inflation, increased interest rates, the lingering economic effects of the COVID-19 pandemic, the military conflict in Ukraine and Israel, Hamas’ attack on Israel and the ensuing war and other factors. Wilson-DavisAtlasClearing cannot predict the duration or severity of downturns of the securities markets or the economic and other factors that contribute to these market conditions.

General, long-term financial and economic conditions and unforeseen events may adversely affect Wilson-Davis’AtlasClearing’s financial condition and results of operations.

In addition to the previous and current securities markets and economic challenges, previous long-term market downturns, economic depressions and unforeseen events, such as the COVID-19 pandemic, have had an adverse impact on Wilson-Davis’AtlasClearing’s business. Although Wilson-Davis AtlasClearing has established a disaster recovery plan, there is no guarantee that it could operate without disruption in the event a disaster were to occur. The occurrence of various unforeseeable events such as natural disasters, pandemics, terrorism and acts of war, could result in fewer customer orders and, as a result, decreased commissions and revenue, resulting in a significant impact on Wilson-Davis’ AtlasClearing’s ability to conduct business and adversely affecting its results of operations and financial condition.

Wilson-DavisAtlasClearing may be unable to attract and retain registered representatives and other professional employees.

There is intense competition for experienced registered representatives with a knowledge of over-the-counter markets and a large customer network. Further, many customers may be more loyal to individual representatives than to the firm itself. If Wilson-DavisAtlasClearing is unable to attract and retain the services of registered representatives, the firm may be unable to maintain or expand its customer base or may be unable to effectively manage the volume of orders it executes and clears. Likewise, Wilson-DavisAtlasClearing relies upon financial and compliance professionals who are not registered representatives but who perform important services to the firm. If Wilson-DavisAtlasClearing is unable to attract and retain such professionals, it may be unable to stay compliant in an increasingly complex regulatory environment. Further, the number of young professionals entering the broker-dealer industry has declined over time and Wilson-Davis’AtlasClearing’s inability to hire young professionals, particularly in light of the average age of Wilson-Davis’AtlasClearing’s existing professionals, may adversely impact its ability to retain or expand its customer base.

Wilson-Davis AtlasClearing policy is to not recommend investments to its customers. However, Wilson-DavisAtlasClearing cannot assure you that its policy of not making recommendations to customers will be observed in all cases or that any investment recommendation rules compliance measures that Wilson-DavisAtlasClearing adopts and implements will be effective. Breaches of Wilson-Davis’AtlasClearing’s policy could expose Wilson-DavisAtlasClearing to regulatory enforcement and to liability from its customers.

Wilson-Davis AtlasClearing faces significant competition from other brokers and clearing firms.

The broker-dealer and clearing firm industries are dominated by a small number of very large broker-dealers and clearing firms and a number of smaller self-clearing firms and clearing firms that clear for small introducing brokers clearing microcap securities transactions. Wilson-Davis AtlasClearing continues to compete with larger firms that have greater financial resources, vast customer networks, diverse business lines, household name recognition, large-scale marketing campaigns, and established relationships with regulatory and legislative institutions. Further, the firm’s competitors are comparatively less impacted by adverse regulatory actions and rulemaking than Wilson-Davis AtlasClearing as a smaller firm, including impacts of net capital and margin calls imposed by NSCC. If Wilson-DavisAtlasClearing does provide new products and services, doing so may require substantial expenditures and take considerable time. If Wilson-DavisAtlasClearing fails to innovate and deliver products and services quickly enough as compared to its competitors, it might fail to attract and retain customers.

Wilson-Davis AtlasClearing is exposed to credit risk and other risks from customers, market makers, and other counterparties.

Wilson-Davis AtlasClearing is exposed to the risk that third parties that owe the firm money, securities, or other assets will not perform their obligations. These parties include other clearing firms, broker-dealers, customers, clearing houses, exchanges, and other financial intermediaries. Such parties may default on their obligations owed to Wilson-DavisAtlasClearing due to bankruptcy, lack of liquidity, operational failure, or other reasons. For example, Wilson-DavisAtlasClearing permits certain clients to purchase securities on a margin basis. These transactions may be collateralized by the customer’s cash and securities. If customers are unable to cover their short position or repay the credit extended by Wilson-Davis, AtlasClearing, the firm may incur a loss if it liquidates the customer’s collateral at market rates. Those risks may be particularly great during periods of rapidly declining markets in which the value of the collateral held by Wilson-DavisAtlasClearing may fall below the amount of a customer’s indebtedness.

NSCC requires daily cash deposits on unsettled trades, those between trade date and settlement date. In some cases, the deposit may be an amount that is significantly in excess of the value of the trade itself. NSCC also may require intraday deposits that must be met in only a few hours or less. If the cash to make these deposits is not available, NSCC may impose penalties that could be severe, such as revoking membership or restricting correspondent clearing, either of which would have a significant negative impact on the business. Although Wilson-DavisAtlasClearing imposes limits on the size of some trades as a risk management procedure, it is not always possible to determine in advance the size of the deposit requirements.

Additionally, if Wilson-DavisAtlasClearing fails to adequately monitor its customers’ accounts and certain business reorganizations are not timely or properly updated on its system, such failure could lead to severe losses. For example, if when undertaking a reverse stock split, a customer sells the previous amount of shares at the new share price, it would result in a severe loss, which has resulted in some broker-dealers going out of business. Although Wilson-Davis’AtlasClearing’s procedure is to put a freeze on trading for companies that are in the process of a reorganization in advance of the effective date of such reorganization, if Wilson-DavisAtlasClearing is not aware of the pending reorganization or fails to adequately update its system, any improper sales could significantly harm the results of operations of Wilson-Davis.AtlasClearing.

Wilson-Davis AtlasClearing faces significant risks in conducting its market making business.

Wilson-Davis AtlasClearing faces various risks relating to making markets in microcap securities. The regulations relating to market making are complex and subject to a significant breadth of regulatory interpretation, resulting in inconsistent and unpredictable enforcement of applicable law. If the firm acts in a manner that a regulator perceives to be inconsistent with applicable law, the firm may be subject to costly penalties and sanctions. Regulatory scrutiny of Wilson-Davis’AtlasClearing’s market making activities may have increased because of Wilson-Davis’ AtlasClearing’s previous sanctions for short sale compliance deficiencies.

Systems and security failures could significantly disrupt Wilson-Davis’AtlasClearing’s business and subject the firm to losses, litigation, and regulatory actions.

Wilson-Davis’ AtlasClearing’s business depends on its ability to execute large volumes of transactions for its own customers and to clear large volumes of transactions for introducing broker-dealers. The firm relies heavily on its communications systems and on stable and functioning Internet, mobile devices, and computer systems, all of which are subject to internal and external security vulnerabilities. Those vulnerabilities include disruptions from natural disasters, power and service outages, interruptions or losses, software bugs, cybersecurity attacks, computer viruses, malware, phishing, unauthorized entry, and other similar events. Further, Wilson-DavisAtlasClearing is reliant on numerous service providers that may themselves have insufficient security measures that Wilson-DavisAtlasClearing cannot effectively monitor. Although Wilson-DavisAtlasClearing generally has agreements, policies, and procedures relating to cybersecurity and data privacy in place with third-party service providers, security breaches may still occur. Vulnerabilities with Wilson-DavisAtlasClearing and third-party systems may result in, for example, the inability of Wilson-Davis AtlasClearing to conduct its business, the theft or ransom of Wilson-DavisAtlasClearing property, or the unauthorized disclosure of confidential customer information or the proprietary or confidential data of Wilson-DavisAtlasClearing and its supervised persons. Unauthorized disclosures may in turn result in reputational damage, regulatory action, and civil suits, and may further require Wilson-DavisAtlasClearing to expend significant additional resources to modify its protective measures, to investigate and remediate vulnerabilities, and to defend against legal and regulatory claims. Such events may also result in uninsured liability and the firm being subject to increased regulatory scrutiny and legal liabilities. Wilson-Davis AtlasClearing may be unable to receive reimbursement from third-party service providers in the event of a security incident but may still be subject to adverse regulatory action if the firm is held responsible for security failures attributed to its vendors.

Wilson-Davis AtlasClearing also faces risks relating to mistakes made in recoding, accounting for, confirming, and settling transactions. Wilson-DavisAtlasClearing also faces risks relating to software and internet malfunctions. Any such malfunction or depletion of functionality could result in Wilson-Davis’ AtlasClearing’s inability to execute trade orders, adverse operational and regulatory action, and reputational damage. Wilson-Davis’AtlasClearing’s board oversees cybersecurity risk management and controls, including appropriate risk mitigation strategies, systems, processes, and controls. This oversight involves reviewing an annual cybersecurity report from the firm’s chief information security officer, with whom the board maintains an ongoing dialog on current strategies, systems, processes, controls and possible needs for additional processes and controls to keep current with the latest threats.

Wilson-Davis AtlasClearing relies on numerous external service providers whose failure to provide those services properly may result in significant adverse events.

Wilson-Davis AtlasClearing relies on numerous third-party service providers, including communication systems providers, regulatory services providers, clearing systems, exchange systems, banking systems, and market information providers. If the provision of services by these third parties is interrupted or terminated, Wilson-DavisAtlasClearing may be unable to conduct its business effectively, including by being unable to accept receipt of securities or funds or to provide information regarding stock trades. For example, the firm relies heavily on websites and software provided by or relating to OTC Markets. Any disruption to those websites or services could result in a significant reduction of orders received from the firm’s customers and even a cessation of the firm’s business activities.

Wilson-Davis AtlasClearing relies on representations of third parties to ensure compliance with applicable laws and rules.

Through our thesubsidiary acquisitionAtlasClearing of(formerly Wilson-Davis,Wilson-Davis), a correspondent clearing company, and the anticipated CB Merger,Acquisition, we expect to acquire the capabilities to provide specialized clearing and banking services to financial services firms, with an emphasis on global markets currently underserviced by larger vendors. Once properly integrated, anticipated synergies between Commercial Bancorp, if acquired, and Wilson-DavisAtlasClearing are expected to allow for lower cost of capital, higher net interest margins, expanded product development and greater credit extension.

Wilson-Davis AtlasClearing is a self-clearing correspondent securities broker-dealer registered with the SEC, licensed in 50 states, District of Columbia, and Puerto Rico, and is a member in good standing of FINRA. Wilson-DavisAtlasClearing derives revenue principally from commissions charged on the liquidation of restricted and control microcap securities, vetting, and clearing service fees charged to introducing brokers for which Wilson-DavisAtlasClearing clears transactions on a fully disclosed basis, and other financial service fees. Commissions are earned by executing transactions for customers. Vetting fee revenues are earned when Wilson-DavisAtlasClearing vests stock the customers want to bring into their accounts. Clearing fees are earned by clearing transactions for Glendale Securities, as introducing broker on a fully disclosed basis, pursuant to a clearing agreement with Glendale Securities.

Key Factors Impacting Wilson-Davis’AtlasClearing’s Business

Wilson-Davis’ AtlasClearing’s business and results of operations have been, and will continue to be, affected by numerous factors and trends, which Wilson-DavisAtlasClearing believes include those discussed in the section titled “Risk Factors” of the Annual Report.

On February 9, 2024, AtlasClear Holdings and Quantum entered into a securities purchase agreement (the “Funicular Purchase Agreement”) with Funicular, pursuant to which AtlasClear Holdings sold and issued to Funicular, on that date, a secured convertible promissory note (the “Funicular Note”) in the principal amount of $6,000,000 for a purchase price of $6,000,000, in a private placement (the “Note Financing”). The proceeds raised in the Note Financing were used to pay a portion of the purchase price paid at Closing to the Wilson-Davis sellers. The Funicular Restated Note has a stated maturity date of NovemberOctober 9,8, 2025.2030. Interest accrues at a rate per annum equal to 12.5%,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 Funicular Restated Note. In the event of an Event of Default (as defined in the FunicularRestated Note), in addition to Funicular’s other rights and remedies, the interest rate would increase to 20%14% per annum. The FunicularRestated 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 $10.00$0.75 per share (the “Conversion Price”). The Conversion Price is subject to adjustment monthly to a price equal to the trailing five-day VWAP, subject to a floor of $2.00 per share (provided that if the Company sellsissues stockor is deemed to issue shares of Common Stock at an effectivea price below $2.00the perthen-current share,conversion suchprice floor would be reduced(subject to suchcertain effective priceexceptions), and is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like. The CompanyRestated hadNote contains covenants which, among other things, limit the right to redeem the Funicular Note upon 30 days’ notice after the earlier of August 7, 2024 and the effectivenessability of the Registration Statement (as defined in the Funicular Note),Company and Funicularits would have the rightsubsidiaries to requireincur theadditional Companyindebtedness, toincur redeemadditional the Note in connection with a Change of Control (as defined in the Note), in each case for a price equal to 101% of the outstanding principal amount of the Note plus accruedliens and sell unpaidits interest.assets or properties.

Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report.Report, other than the following additional risk factor:

References in this quarterly report on Form 10-Q (the “Quarterly Report”) to “we,” “us,” “AtlasClear Holdings,” or the “Company” refer to AtlasClear Holdings, Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction withwith, and certain capitalized terms and not otherwise used in this section are defined in, the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Certain defined terms used herein have the meaning ascribed to them in the notes to the financial statements.

Wilson-Davis is a self-clearing correspondent securities broker-dealer registered with the SEC, licensed in 50 states, District of Columbia, and Puerto Puerto Rico, and is a member in good standing of FINRA. Wilson-Davis is engaged principally in the over-the-counter, or “OTC,” markets in microcap securities. Microcap securities generally are issued by companies with low or “micro” capitalizations, meaning the total market capitalization value of the company’s stock is less than $250 million, which includes low-priced securities, or penny stocks, that trade for less than $5.00 per share and have a market capitalization of less than $50 million. Wilson-Davis also executes transactions in exchange-traded securities. It derives its revenue from the liquidation of restricted and control microcap securities; clearing transactions on behalf of an introducing broker-dealer on a fully disclosed basis; and trading in equity securities for its own account. It receives limited revenues from fully paid stock lending, stock locates and margin accounts. During its history, Wilson-Davis has underwritten at-the-market offerings for publicly traded companies, placed private offerings, sold mutual funds, introduced margin accounts cleared by other firms on a fully disclosed basis, and provided ancillary financial services. Wilson-Davis derives revenue principally from commissions charged on the liquidation of restricted and control microcap securities, vetting, and clearing service fees charged to introducing brokers for which Wilson-Davis clears transactions on a fully disclosed basis, and other financial service fees. Commissions are earned by executing transactions for customers. Vetting fee revenues are earned when Wilson-Davis vests stock the customers want to bring into their accounts. Clearing fees are earned by clearing transactions for Glendale Securities, as introducing broker on a fully disclosed basis, pursuant to a clearing agreement with Glendale Securities.

On August 4, 2025, the Company entered into a securities purchase agreement (“August-Securities Purchase Agreement”) with an an institutional investor under which the Company agreed to issue and sell, in a private placement, a 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, any time, 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 Company agreed that, within 60 days after the sale of the Debenture, the Company would file with the Securities and Exchange Commission (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 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 DecemberMarch 31. On each interest payment date, the accrued and unpaid interest shall, at the election of the Company in 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 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.

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”),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 the operational potionportion of the equity capital of Commercial Bancorp as of the closing of the Acquisition (the “CB Closing”), determined 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 CB Closing, multiplied by the maximum corporate federal income tax rate in effect as of the date of the CB 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 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 CB Closing or, if the CB 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 theCB 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 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 CB 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 CB 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 alternate transactions.

Comparison of the Three Months Ended DecemberMarch 31, 20252026 Compared to the Three Months Ended DecemberMarch 31, 20242025

TotalRevenues expenses of $7,512,416$4,201,852 for the three-months ended DecemberMarch 31, 2025,2026, represent a 93%65% increase of $3,616,768 from total expensesrevenues of $3,895,648 $2,543,103 for the three-month period ended DecemberMarch 31, 2024.2025. The increase was primarily dueattributable to anthe increaseaddition of stock locate fees which is a new revenue source and the participation in variablean compensationat related to the increasemarket inoffering revenue.as a selling agent.

Total expenses of $12,640,244$7,134,711 for the six-monthsthree-months ended DecemberMarch 31, 2025,2026, represent a 65%97% increase of $4,999,412$3,519,434 from total expenses fromof $7,640,832$3,615,277 for the six-monththree-month period ended DecemberMarch 31, 2024.2025. The increase was primarily due to an increase in variable compensation related to the increase in revenue.revenue and stock based compensation of $1,154,829 which was not present in the period ended March 31, 2025.

Compensation, payroll taxes and benefits increased to $5,914,191$2,329,261 for the six-monththree-month period ended DecemberMarch 31, 2025,2026, an increase of $3,054,705$780,033 from total expenses of $2,859,486$1,549,228 for the six-monththree-month period ended DecemberMarch 31, 2024.2025. The increase was primarily due to increase in variable compensation related to the increase in revenue.

Data processing and clearing costs increased to $1,552,028$999,545 for the six-monththree-month period ended DecemberMarch 31, 20252026 compared to $1,241,379$435,307 for the three-month six-month period ending DecemberMarch 31, 2024.2025. The increase was primarily due to additionalincrease expensesin variable compensation related to the stockincrease locatein line of business.revenue.

Regulatory, professional fees and related expenses decreasedincreased to $1,759,347$1,540,079 for the six-monthsthree-months ended DecemberMarch 31, 20252026 compared to $2,203,581$845,350 in the six-monththree-month period ended DecemberMarch 31, 2024.2025. The decreaseincrease was primarily due to a reductionthe in legalprofessional fees and consulting services as a result of the Commercial Bancorp negotiations and hiring of new consulting support, that were not present in the comparative three-month period ending DecemberMarch 31, 2025.

Stock based compensation increased to $1,328,771$1,154,829 for the six-monthsthree-months ended DecemberMarch 31, 20252026 as a result of the new employment agreement entered entered into with the executive officers.officers in September 2025. The expense incurred in the quarter ended DecemberMarch 31, 20252026 is the pro rata portion over the service period of the granted stock based compensation. No such expense was present in the six-months period ended DecemberMarch 31, 2024. 2025.

Income tax of $42,979 for the six-months period ended December 31, 2025 increased from a from income tax benefit of $63,616$195,554 for the six-monththree-months period ended March 31, 2026 decreased from an income taxes benefit of $304,212 for the three-month period ended DecemberMarch 31, 2024.2025. The increased incomedecreased tax of $106,595$108,658 is primarily due to changes in deferred tax liabilities and assets.

The foregoing factors resulted in a net income of $6,343,877$4,412,993 for the six-monthnine-month period ended DecemberMarch 31, 2025,2026, compared to net income of $7,425,515 $10,328,343 for the six-monthnine-month period ended DecemberMarch 31, 2024.2025. The decrease was primarily due to the gain recognized from changes in fair value of the convertible notes that resulted from a change is valuation model as a result of the Company settled a substantial balance of the sellers’ notes, resulting in a significant decrease in the carrying balance of the derivative embedded in the sellers notes obligations during the six-monthnine-month period ended DecemberMarch 31, 2025.2026.

Cash used in operating activities for the six-monthnine-month period ended DecemberMarch 31, 20252026 was $1,001,804 as compared to cash provided by operating activities for the six-month period ended December 31, 2024 of $761,406. This was primarily affected by $998,924 in changes in operational assets and liabilities.$4,998,995. Adjustment to net income of $4,412,993 primarily consisted of change in fair value related to various financial instruments as discussed above, resulting in an adjustment of $12,951,826,$14,328,549, where the largest change in fair value was related to the revised revenue projection qualified under the Earnoutearnout liability, resulting in a decrease of $10,508,000.$10,680,000. Further adjustments for the income waswere non-cash interest expense on convertible notes and other financial instruments of $4,132,383,$3,646,719, loss on settlement on Winston & Strawn agreement of $570,300, amortization of intangible assets of $1,059,650 $711,590transaction cost of $865,659, consulting expense paid with stock of $434,114, changes in allowance for bad debt of $12,754, net lease payments of $7,125 and stock based compensation of $1,328,771.$2,483,600 offset by cash used in operational assets and liabilities of $4,163,360.

Cash used for investing activities for the three-monthnine-month period ended DecemberMarch 31, 20252026 was $65,000 as compared to $125,000 for the six-monthnine-month period period ended DecemberMarch 31, 2024.2025. This is primarily due to $65,000 in deposits made to extend the Commercial Bancorp acquisition agreement. The $125,000 of cash used for investing activities in the period ended DecemberMarch 31, 20242025 represents cash payment towards the AtlasClear Platform.

Cash provided by financing activities for the six-monthnine-month period ended DecemberMarch 31, 20252026 was $17,673,908$16,626,779 as compared to $513,381$1,360,862 for the six-monthnine-month period ended DecemberMarch 31, 2024.2025. ThisDuring wasthe nine-month period financing activities consisted primarily due toof the $5,850,000 in cash proceed from the Equity SPA, $9,975,000 in cash proceeds under the restated SPA Secured Convertible Note, $4,700,000 in cash proceeds from the Convertible Notes, $490,000 in cash proceeds from the Debenture and $200,000 of good faith advance from Hanire Purchase AgreementAgreement, less repayments of promissory notes of $462,592,$509,721, repayment of Convertible Notes of $1,850,000$1,850,000, payment of $1,000,000 in cash to Winston & Strawn as part of the settlement agreement and payment of transaction cost under the Equity SPA of $1,228,500. During the six-month period ended December 31, 2024, the Company received $533,381 under the ELOC Agreement and repaid $20,000 in subordinated debt.

Historically, the Company has funded its operations primarily through the issuance of equity and debt securities. As of DecemberMarch 31, 2025,2026, the Company had cash and cash equivalents of $23,080,646$16,706,099 and had experienced recurring operating losses. These factors previously raised substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of these financial statements.

The Company has no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of DecemberMarch 31, 2025.2026.