Afternoon, everyone. My name is Mark Haley. I am with Sentry Consulting. We are a non-audit accounting consulting firm focused on the fintech industry. It is my pleasure today to introduce Craig Ridenhour from AtlasClear Holdings. Thanks.
Thank you. I am not sure if Is this on, or is that on? Can you hear me?
Yep.
Sorry, it is a bit down. Normally, I do not have a mic. They do not usually put it on me because I normally scare the living Bejesus out of people because I am a little loud. If I get too loud, let me know. I am Craig Ridenhour. I am the President of AtlasClear Holdings, publicly traded company on the NYSE American, ATCH. John Schaible will be coming up momentarily. He is my business partner. He is the Executive Chairman of the company. We are thrilled to have you here today. We really appreciate the opportunity by ThinkEquity to present here again, and we think we have a wonderful opportunity that we are excited to run through this presentation.
Last year and in other presentations we have done, sometimes the presentation goes on, and then we do not have a lot of time for Q&A, so we are going to run through this fairly quickly so we can get to Q&A and what you all want to know. Disclaimer, any attorneys in here, so I can skip this? Good. What we are building in AtlasClear Holdings, because sometimes it sounds complex, is we are building a platform that is the connective tissue, as it says, of capital markets. What that really means is that we are building the infrastructure to custody, clear, and settle assets, bank those assets, and eventually do digital assets and blockchain with them as the financial markets evolve. That is what we are building. We are well on our way.
We're making significant progress, but at the core of what we're doing is we're building a scalable platform that's going to be used by a segment of the market that I'll get into in a moment. The investment highlights, I'm going to go over here. Regulated infrastructure for the next generation of financial institutions. Trade, clear, settle, bank. What we've already demonstrated, we've had strong revenue growth, up 85% this last fiscal year, or fiscal year end of June. 85%, we did $20.1 million versus the prior year. Next phase of growth under contract. We've got a number of new clients coming on board, which will fuel that growth. Our balance sheet is well-capitalized. We're expanding our platform as we've announced some other acquisitions. Then we're definitely a discount to established peers. We are not going to say that we're the same as our established peers.
They're larger. They have bigger balance sheets. They're more well-established. But we certainly have the infrastructure, the licensing, and the growth in front of us to warrant higher multiples, we believe. Trade, clear, settle, bank. This is an important part. It's still in blue here. Trade, Ark Financial, Dawson James, investment firm placement, step one. Well, that step one was actually just completed last night. We announced it. We had a press release out this morning for those that didn't see it. We actually have officially signed the documents and are acquiring Dawson James, which is under Ark Financial. That gives us the ability from an investment firm for placement agent underwriting. Clear, settle, that's AtlasClearing. Who's heard of Wilson-Davis in here before? Okay. We bought Wilson-Davis. We renamed them recently AtlasClearing.
We did that because Wilson-Davis , well-established firm, but we're expanding AtlasClearing beyond what Wilson-Davis traditionally had done. We wanted that to be reflective. We're already doing those things, correspondent clearing, custody, and settlement, and then bank. We've already announced and are in the process to acquire Commercial Bancorp of Wyoming, which is a Fed member bank, 115-year-old charter. Very good asset, potentially, provided we get the regulatory approval. What are we really focused on? We're focused on an underserved market. That underserved market, we say, are financial institutions, broker-dealers, RIAs, things like that are $1 billion in revenue and less. $1 billion is a large number. But when you're talking about the Pershing and Fidelity worlds that are correspondent clearing, that doesn't move the needle a lot for them. For us, it does.
We're focused on that market because there's an opportunity there to come in and provide a platform that they don't have access to right now. Integrated custody and banking, lower cost clearing, digital asset capabilities, faster onboarding. You can see the strategic infrastructure build-out, integrated clearing, plus the digital assets, plus Fed member banking equals a scalable platform. Built for the mid-market gap. There's a large number of thousands of broker-dealers out there, but there's only 24, 25 correspondent clearing broker-dealers right now, approximately, give or take. We're one of those. Larger clearing firms, the Pershing, Fidelities, all great firms, but they're built around their largest clients. Minimums and pricing favor scale, which small broker-dealers can't meet, and longer onboarding queues. AtlasClearing, barriers to entry you already met. We've been in business since 1968. We're exceeding our net capital by a significant amount now.
We're multi-client, meaning we're bringing more correspondents on, and we're increasing our onboarding abilities because we've brought in talent to meet the demand that we have. Clearing in-house, significant net capital requirements, clearinghouse, and compliance burden. All this says right here is we meet the necessary requirements to build and scale our business. Team built to scale, Robinhood, Axos, Morgan Stanley. What that really means is we've brought in some executives from those areas to help us meet the demand that's in front of us right now. I'm going to run through the financial highlights. We just did our K, released it last month. We had an exceptional year. We will have our Q out sometime mid-November. We'll look to file timely, and we're on track for that. We had year-over-year revenue growth 85%, total assets $71.2, up 17% from same time year before.
Cash and cash equivalents, stockholder equity. Everything's going in the right direction and has really turned around from when we originally went through the de-SPAC in 2024 to acquire Wilson-Davis . I do want to focus on this correspondent agreements. Six signed. We are focused on scaling the correspondent business, meaning introducing broker-dealers that we bring into the platform. So far, we've added six. When we originally started and acquired Wilson-Davis , they had one. So we've added six more. We'll be able to articulate what that means from a revenue standpoint over the next couple of months as they get fully on board and operating. Fiscal revenue line. Biggest thing on this I just want to point out is when we originally bought Wilson-Davis , Wilson-Davis primarily just focused, everyone knew it as the microcap company.
You brought your microcaps, your hard-to-execute securities to them, be it nanocaps, whatever it might be. We take them through a review process and then put it in and execute and liquidate the securities. We're changing that business line now. As you can see here, commissions still drive things, but we're now doing stock loan and stock locate, clearing fees, vetting fees, firm trading gains, interest income. All of these things are expanding and diversifying our revenue base, which helps us long term. We're very excited. How growth compounds, correspondent onboarding, customer assets, stock loan, interest income. These things all come together to expand our revenue lines, and now we're expanding to the point where we're not reliant on one single line of business, which was microcap review and execution. Second consecutive year of positive net income.
Not going to bore you with all the numbers, but all this shows you is that we are doing what we said we would do. We had to go through a really rough de-SPAC. We affectionately refer to it as a street fight for a year and a half, dealing with the toxic debt that we had to put on the books just to get the trade done, and now we're coming out the other side. So we're excited about the direction we're going, and we think we've got a much brighter future than probably most assumed at one point in time. Here again, capital and balance sheet. I do want to focus on stockholders' equity real quick, because shortly after the de-SPAC, June of 2024, we had about $55 million in debt that was deal expenses for the SPAC. That was two actual deal expenses.
That was also toxic debt, penalties we were paying on that debt. We had $55 million in debt, and we had $400,000 in net income, and at our lowest point, we were about - $40 million in stockholder or shareholder equity. That is completely flipped now. As of this last quarter, June of fiscal year-end, $21.1 million in stockholder equity. So we have had basically a $60 million reversal on that. Take a look at what we are trading right now and our market cap, and you will see why we think we are undervalued. All that being said, down this line, net capital and funding, we are doing all of these things. We are increasing these lines, but this is a big number down here. See that zero?
Because we get this all the time, and last year, "What are you using to actually fund your business?" Well, we took in a $20 million financing in October of last year. We have not taken any more money in since then. But I do want to emphasize to this group and to whoever is watching online, we have not used ATMs, we have not used ELOCs, we have not been in the market selling our stock to generate capital. We have been operating off our capital base from last year, and I think that is very important for people to understand. We believe in where we are going, and we are trying to do the best thing we can for the long-term benefit of the company, and we think we are in a really good position. Well, I get to hand it off to John.
Oh, is this my turn? Is my microphone working? Can you guys hear me okay?
Yeah.
Thanks, Craig.
Yeah.
Is there a trick here?
It's just the green button.
The big green button?
The big green button.
All right. Thank you. We are expanding the platform. We were proud to announce this morning, finally, we completed the acquisition of Dawson James, at least the first 24.9% of that. We have been talking for some time about how that would benefit our company, allow us to purify the clearing relationship in that we have retail assets currently operating through our clearing relationship. Eventually, we want to consolidate that into a single introducing brokerage firm. We have announced a letter of intent to acquire an institutional digital asset business. We do think digital assets are absolutely the most important product set for us to expand into and necessary for us to be what we want to be, which is a true total prime brokerage and banking solution for other financial intermediaries, especially the smaller ones. Then finally, Commercial Bancorp of Wyoming.
That is a Federal Reserve member bank we have under contract to acquire. We very much want to complete that acquisition. We are going to need more capital to do so. We are going to need to get through the approval process to do so, but we are committed to do that. All of these pieces tied together will truly make us a very small version of Interactive Brokers with a bank. Big green button is not working. There we go.
One of the things that I wake up in the morning and check, of course, is the stock price, and I just shake my head in terms of where we are relative to the value I think we have already created. If you look at our competitors, we are not Interactive Brokers. We hope one day we can grow up to be like them. We do not have the scale.
But if you look at their multiples, they are trading at 22.1x trailing revenues, or something on the order of 1.4. If you look at the median for this amount, trailing revenue valuation is 6.1x . Even if we were taken at 6.1x , we would be over $120 million market cap, and we are probably trading right now around $27 million in our market cap, growing at 85%, totally restructured technology base, brand new management team. Things are going well for us, and I think as a valuation, we are very cheap. Our leadership team. This is the executive leadership team at the Holdco. I have been in fintech for close to 35 years. Built and sold a company called NexTrade to Citigroup. Built and sold Marketplaces, banks, correspondent clearing firms. This is a space that we know really well and have been successful at in the past.
Craig and I have known each other for over 30 years. We began working together in the same brokerage firm back in 1994, and Craig is one of the best business development experts in financial services I have ever known. Sandip Patel is our General Counsel. Sandip helped found a company called WellCare, which he sold to the Soros Fund. Thereafter, when we built our first bank, which is a bank called Anderen, Sandip joined us as a shareholder in 2006 and has been involved in fintech since then. Ilya Bogdanov is our Chief Technology Officer. Ilya was with DoubleClick, the Surface exchange, and with our companies for the better part of 15 years. Our board of directors is something that I am very proud of, and it is a very serious board of directors. Our board meetings are very demanding, to say the least.
That's because every single one of our board members is cash invested in this enterprise, and many of the board members standalone could run the company. I've talked about myself, Craig, and Sandip. I want to talk about Bob Keyser since we just closed on the acquisition of his company. Bob invested into our company a couple of times, joined the board of directors about a year ago, and Bob is expert truly in the microcap space. He's going to help us bring capital in for the next acquisition as we move forward in our business plan. Steven Carlson. Steven Carlson was formerly the President of FCStone, which then became StoneX Securities, which is one of our better competitors that we also want to compare ourselves to as we move forward. Then finally, Tom Hammond. Tom Hammond was the CEO of the Chicago Board of Trade.
Tom Hammond was the President of ICE Clearing. I believe Tom Hammond is one of the foremost minds in the space, 45+ years probably running clearing companies. Tom isn't doing anything else. He's otherwise retired but working on our board. He recently put more money in, like almost every other board member did recently because we believe in this enterprise and we know we've got a very good management team and a very good leadership team. We tried to go through that faster than we usually do because we're starting to learn that live questions are really what investors want to talk about and hear about. We'll open the floor for any questions if anyone has some. Go ahead, Michael.
Compared to Fidelity and some of the other big players like that, it's very interesting, but really, how do you sort of play in the same category, or are you sort of looking at the lower end of that category from a scale?
Sure.
Repeat the question.
The question was, compared to Fidelity, do we look at ourselves on the Fidelity level or do we look at the lower end of that scale, correct?
Correct.
And then scale up from there. You hit it on the back end of that, right? We do want to grow up and be with Fidelity. We do want to be an Interactive Brokers. But the reality is you have to crawl before you walk, and you have to do all these things. One of which is for us and what's opening the doors for us, we get this all the time, is we do focus on the microcaps. That's what we're known for, right? There are very few that do that. We're comfortable with how we do it. We're comfortable with our review process, with the regulators, and so we do it, and it's high margin business for us.
But what it's done over the course of the last 6-12 months, and the reason we've added correspondents and we have a very large pipeline, is because a lot of them can't get the clearing for these securities at their current clearing relationship of Fidelity, of Pershing, things like that. What it does for us is we're able to open the door with the microcaps, but because we're expanding the platform, margin lending, stock loan, all of these things, and we'll continue to increase our capital base, we see a real opportunity to capture more of their, let's say, higher-end business over time as we expand our platform.
What's the expected capital need to close the bank transaction, both the purchase price and then also if there's an expected regulatory requirement associated?
The question was, what's the expected capital need to close the bank transaction, and is there a regulatory process involved in that?
The acquisition has been described in terms of economics for some time in the contracts that we've attached. Think of it roughly as it's going to be 3x book. Because we've offered a menu of how the shareholders can elect to take what portion of that in cash and stock, as it turned out, approximately 72% of the transaction will be done in equity and the rest will be done in cash. That'll just get us to where we close, though, and we don't want to just close on it. If we look at what was Wilson-Davis. I almost said Wilson-Davis . I've got to keep calling it AtlasClearing. If we look at AtlasClearing today, we can be sitting on $22 million- $25 million in segregated funds that we're sweeping off primarily the Bank of Montreal right now.
We'd obviously prefer to sweep that to our own bank. But the capital base of the bank wouldn't permit it, so we need to get more cash in there. So while we're going to be paying around $12 million based on the current book value for the bank, we'd like to see that bank have at least $10 million- $15 million, depending on our own deposit sweeps when we close. So we could be looking into the scenario where $15 million in cash is what we'd want to have for the bank. But if we only had the $3 million, we would still close because it's such a valuable asset.
Anyone else? Jeff?
Yeah. Your numbers have been growing organically from Wilson-Davis , and you have correspondents coming on board. Can you give us an idea when we might start seeing some of that revenue and which we might?
Sure. The question was, we've been growing organically, n ow we're adding correspondents. When are we actually going to start to recognize? You'll see the impact of those correspondents, which we get all the time. We've got six that are onboarding in various stages right now, and it's segmented, right? Some are faster, some are slower. One is moving a very large, actually all their clients over, which we didn't expect at this point in time, which with that comes margin balances and all these things that really add into us. It's been hard for us to articulate that because the correspondent clearing firms are introducing broker-dealers we're bringing in, they're varying sizes. Right? People ask about projections, and we say we need the data over the next couple of quarters as they onboard to where now we'll be able to point and say, "Look, this is what this means.
When we say we added three correspondents, this is what it can mean in the big picture." Again, it's incremental. We just have this one situation that they're moving in 2,500- 3,000 accounts, a very large margin balance for their clients and do a lot of things, including stock loan, that really add a lot to our bottom line. I wish I could be more specific about that, but you will see measurables over the next several quarters as these new correspondents come online, and we'll finally be able to point to it and say, "This is what this really means," and we'll be able to articulate it to the street. Hopefully, that answers the question.
Yeah.
Go, Jason.
Is the debt fully cleaned up then?
The question was, is the debt fully cleaned up? The answer is no. The original debt that we took on through the de-SPAC is all paid off. In October of 2025, we took on another convertible note, largely from the same investor that was in the de-SPAC. That was a friendly, but the terms are much different. Unlike the floorless convertible note we had to accept in the de-SPAC, this convertible note has a fixed floor of $0.75. It has an 11% coupon. We are paying PIK, so at this point, the principal is probably 11.3. We also have some subordinated demand notes at AtlasClearing for about $1.9 million, but more than half of those are going to be paid off this month as well. That is the debt stack.
As a follow-on to that, one of the questions we get, I am just going to jump out there, is we get a question all the time, how are you going to pay for all these things? Because people are worried about dilution. They are worried about what are we going to take in order to make sure that we have the capital necessary. What we can say is that we are very mindful of. We think we have evolved and grown up enough to where we can avoid the traditional ELOC, the things that are very disruptive and can be obviously very dilutive. In a perfect world, if our stock was not sitting at $0.18, we would just pretty much do equity. We would like to clean up everything and just have our only investment vehicle equity.
We think we are at that growth stage now that we can afford to do that and need to do that over the course of the next several quarters and into the years because we think that the growth opportunity is there. We do not carry a lot of debt right now, obviously, but we would like to get everything cleaned up eventually.
Follow up to say [audio distortion]
You were asking?
You were asking for the principal on the debt, right? There was two pieces. A piece was the $10.1 million almost that we took it in 2025 in the new convertible. That is paying in PIK, and I'm estimating the principal's around $11.3 million. We have to validate that. I don't remember the exact numbers. Then the subordinated demand notes. Subordinated demand notes, the way those work, if you don't know, is the cash is actually sitting in the brokerage account to cover that. It's a weird piece of debt, but it's out there. Was $1.9 million. We're paying, I think, approximately half of that off this month, and that'll be the debt.
We're getting close to running out of time. Any last question? We can certainly talk afterwards, but we want to make sure we're mindful of the next presenters. Any other questions at this moment?
What's that?
Are we getting taken off the crane?
Well, we're trying to be timely. But we will be here if anyone's got any questions. Do you have another question?
You have time?
Yeah. No one's put the hook on us yet.
All right. So two to Dawson James. One is, excuse me. So you own 25% roughly. Why are you waiting for FINRA approval? Do you derive economic value from that 25%?
The only economic value. The question was, we just bought 24.9% of Dawson James. Do we derive economic value from that Dawson James acquisition? There is no value for us other than the additional business they might be bringing over to us that perhaps was being slightly gated until the trade was closed. We will not have real economic value until we are able to consolidate it up into the public company in terms of how it affects our bottom line.
Yep.
The consolidated bottom line. The business will start coming over to us. If that's best.
Yeah.
There was a second question?
Second question is maybe just if you could talk a bit about the synergies. We didn't just acquire their revenue, right? There's synergies, I imagine, between Dawson James and the Atlas business, right?
Yeah. The question was, are there really synergies between AtlasClear and the Dawson James business? The answer is absolutely. We have been expanding our underwriting powers through our brokerage firm. Dawson James is absolutely expert at that. There are product distribution pieces that can be attached to Dawson James. There are also trading synergies that we're looking at that can be created between the firms almost immediately prior to consolidation because we're using and paying for a lot of the same systems across both platforms. So there's efficiencies and there's synergies, and then, of course, when the consolidation is complete, it'll more than double our revenue and make us consolidated profitable based on trailing numbers for sure.
Yeah. If you looked at the numbers, and I know we've got to get out of here, but just right now in our trailing 12 for both firms, we'd be at about $47 million in top-line revenue and dropping several million in net income. So we start to get the real numbers going back to that valuation slide and the metrics compared to other competitors. So we'd encourage you to take a look. Of course, we believe we're undervalued. We think there's a real opportunity, but not just for the next two, three, four, five months. We're talking about the next two, three, four, five years. So again, we appreciate everyone's time. We appreciate everyone's consideration, and thank you once again to ThinkEquity.