Overview

AtlasClear Holdings, Inc. (the “Company”) provides specialized clearing and banking services to financial services firms through its subsidiaries Wilson-Davis and the planned acquisition of Commercial Bancorp. The Company aims to create an efficient platform for trading, clearing, settlement, and banking with innovative financial products.

On February 9, 2024, the Company completed its previously announced business combination with Quantum FinTech Acquisition Corporation. In connection with this, the Company acquired the software, intellectual property, and other assets of AtlasClear, Inc. to develop the AtlasClear Platform.

Key Developments

• Acquired Wilson-Davis, a self-clearing correspondent securities broker-dealer, for $20 million
• Entered agreement to acquire Commercial Bancorp, a federal reserve member bank
• Acquired assets to develop the AtlasClear Platform, a trading and clearing platform, from Pacsquare Technologies and Atlas FinTech

Financial Performance

Revenue	Expenses	Loss from Operations	Net Loss
$1.3 million	$15.1 million	$13.9 million	$88.6 million

• The net loss of $88.6 million was primarily due to a $68.5 million loss related to the AtlasClear asset acquisition
• Excluding this and other one-time expenses related to the business combination, the operating loss was $13.9 million

Revenue and Expense Analysis

Revenues were driven by commissions, vetting fees, and clearing fees from Wilson-Davis. Expenses increased substantially due to costs related to the AtlasClear acquisition, including $11.5 million in legal and professional fees.

Going forward, the Company aims to leverage synergies between its business lines to achieve lower cost of capital, higher margins, expanded products, and increased credit extension.

Liquidity and Capital Resources

• Cash used in operations was $13.3 million
• Cash provided by investing activities was $81 million, primarily due to the business combination
• Cash used in financing activities was $40.7 million
• The Company has a $10 million revolving credit facility secured by Wilson-Davis’ assets

The Company’s liquidity position and need to raise additional capital raises doubt about its ability to continue as a going concern in the next 12 months.

Business Lines

Wilson-Davis

Wilson-Davis is a self-clearing correspondent securities broker-dealer that derives revenue from:

• Commissions on liquidating microcap securities
• Vetting and clearing fees from introducing brokers
• Proprietary trading
  

Commercial Bancorp Acquisition

The Company has an agreement to acquire Commercial Bancorp, a federal reserve member bank. The acquisition would provide:

• Lower cost of capital
• Higher net interest margins
• Expanded banking products
• Greater credit extension capability

AtlasClear Platform

The Company acquired assets to develop the AtlasClear Platform, a trading and clearing platform, from Pacsquare Technologies and Atlas FinTech. Key benefits include:

• Cutting-edge and scalable technology
• Flexible and customizable for clients
• Competitive advantage for the Company’s target client base

Pacsquare will develop and implement the platform over the next 12 months.

Other Key Information

• Settled $5.4 million of expenses through issuing 2.2 million shares
• Issued $7.5 million of convertible notes to settle additional expenses
• Signed a term sheet for a $10 million equity line of credit over 24 months
  

Outlook

The Company aims to leverage synergies across its business lines to achieve scale, improve margins, and create innovative products for underserved segments of the financial services industry. However, substantial doubt exists around its ability to meet liquidity needs over the next 12 months. Raising additional capital is key to the Company’s ability to continue operations.