| Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting
Policies Basis of Presentation and Principles
of Consolidation The accompanying consolidated financial statements
include the accounts of FDCTech, Inc. and its wholly-owned subsidiary. We have eliminated all intercompany balances and transactions.
The Company has prepared the consolidated financial statements in a manner consistent with the accounting policies adopted by the
Company in its financial statements. The Company has measured and presented the consolidated financial statements of the Company
in US Dollars, which is the currency of the primary economic environment in which the Company operates (also known as its functional
currency). Financial Statement Preparation and Use
of Estimates The Company prepared consolidated financial
statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The
preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments
and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the consolidated
financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates include revenue
recognition, the allowance for doubtful accounts, website and internal-use software development costs, recoverability of intangible
assets with finite lives, and other long-lived assets. Actual results could materially differ from these estimates. Cash and Cash Equivalents Cash and cash equivalents include cash on hand,
deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less. On March
31, 2020, and December 31, 2019, the Company had $19,245 and $27,884 cash and cash equivalent held at the financial institution. Accounts Receivable Accounts Receivable primarily represents the
amount due from eight (08) customers. In some cases, Receivables from the customer are due immediately on demand; however, in most
cases, the Company offers net 30 terms, where the payment is due in full 30 days after the date of the invoice. The Company has
based the allowance for doubtful accounts on its assessment of the collectability of customer accounts. The Company regularly reviews
the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances,
economic conditions that may affect a customer’s ability to pay and expected default frequency rates. Trade receivables are
written off at the point when they are considered uncollectible. At March 31, 2020, and December 31, 2019, the
Company has determined that allowance for doubtful accounts was $78,087 and $78,087, respectively. Bad debt expense for the three
months ended March 31, 2020 and 2019, was $0 and $20,000, respectively. Sales, Marketing and Advertising The Company recognizes sales, marketing, and
advertising expenses when incurred. The Company incurred $1,226 and $9,856 in sales,
marketing, and advertising costs (“sales and marketing”) for the three months ended March 31, 2020, and 2019 respectively.
The sales and marketing cost mainly included travel costs for tradeshows, customer meet and greet, online marketing on industry
websites, press releases, and public relations activities. The sales, marketing, and advertising expenses represented 1.46% and
5.65% of the sales for the three months ended March 31, 2020, and 2019 respectively. Office Lease Effective October 29, 2019, the Company leased
office space at 200 Spectrum Center Drive, Suite 300, Irvine, CA 92618. As per the Commitment Term of the lease (“Agreement”),
this Agreement shall continue on a month-to-month basis (any term after the Commitment Term, also known as “Renewal Term”).
The Commitment Term and all subsequent Renewal Terms shall constitute the “Term.” The Company may terminate this Agreement
by delivering to the lessor Form (“Exit Form”) at least one (1) full calendar month before the month in which the Company
intends to terminate this Agreement (“Termination Effective Month”). The Company is entitled to use the office and
conference space as on need basis. Previously, the Company leased office space at 1460 Broadway, New York, NY 10036, from an unrelated
party. The new rent payment or membership fee is $90 per month compared to the previous rent payment or membership fee at the office
of $890 per month, which is included it in the general and administrative expenses. Effective February 2019, the Company leases
office space at Suite 205, Building 9, Potamos Germasogeia, 4047, Limassol District, Cyprus from an unrelated party for one (1)
year. The rent payment at the office is $1,750 per month, and we have included it in the General and administrative expenses. From
February 2020, this agreement is extended for one year period at $1,750 per month. The Company uses the office for sales and marketing
in Europe and Asia. Effective April 2019, the Company leased office
space at Suite 512, 83 Plan, Chelyabinsk, Russia, from an unrelated party for an eleven months term. The rent payment at the office
is $500 per month, and we have included it in the general and administrative expenses. From March 2020, this agreement continues
on a month-to-month basis until the Company or the lessor chooses to terminate by the terms of the agreement by giving thirty (30)
days’ notice. The Company uses the office for software development and technical support. As all leases are either on a month to month
basis or less than one (1) year term, the Company is not required to recognize assets and liabilities for our rental leases. The
Company has included all rental expenses in the General and Administrative expenses. Revenue Recognition On January 1, 2019, the Company adopted ASU
2014-09 Revenue from Contracts with Customers. The majority of the Company’s revenues come from two contracts – IT
support and maintenance (‘IT Agreement’) and software development (‘Second Amendment’) that fall within
the scope of ASC 606. The Company recognizes revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to
receive in exchange for those goods or services as per the contract with the customer. As a result, the Company accounts for revenue
contracts with customers by applying the requirements of Accounting Standards Codification Topic 606, Revenue from Contracts with
Customers (Topic 606), which includes the following steps:
● Identify the contract or contracts, and subsequent amendments with the customer.
● Identify all the performance obligations in the contract and subsequent amendments.
● Determine the transaction price for completing performance obligations.
● Allocate the transaction price to the performance obligations in the contract.
● Recognize the revenue when, or as, the Company satisfies a performance obligation. The Company adopted ASC 606 using the modified
retrospective method applied to all contracts not completed as of January 1, 2019. The Company presents results for reporting periods
beginning after January 1, 2019, under ASC 606 while prior period amounts are reported following legacy GAAP. In addition to the
above guidelines, the Company also considers implementation guidance on warranties, customer options, licensing, and other topics.
The Company takes into account revenue collectability, methods for measuring progress toward complete satisfaction of a performance
obligation, warranties, customer options for additional goods or services, nonrefundable upfront fees, licensing, customer acceptance,
and other relevant categories. The Company accounts for a contract when the
Company and the customer (‘parties’) have approved the contract and are committed to performing their respective obligations,
where each party can identify their rights, obligations, and payment terms, the contract has commercial substance, and it is probable
that the Company will collect substantially all of the consideration. Revenue is recognized when, or as, performance obligations
are satisfied by transferring control of the promised service to a customer. The Company fixes the transaction price for goods
and services at contract inception. The Company’s standard payment terms are generally net 30 days and in some cases due
upon receipt of the invoice. The Company considers contract modification
as a change in the scope or price (or both) of a contract that is approved by the parties. The parties describe contract modification
as a change order, a variation, or an amendment. A contract modification exists when the parties to the contract approve a modification
that either creates new or changes existing enforceable rights and obligations of the parties to the contract. The Company assumes
a contract modification when approved in writing, by oral agreement, or implied by the customary business practice of the customer.
If the parties to the contract have not approved a contract modification, the Company continues to apply the guidance to the existing
contract until the contract modification is approved. The Company recognizes contract modification in various forms – including
but not limited to partial termination, an extension of the contract term with a corresponding increase in price, adding new goods
and/or services to the contract, with or without a corresponding change in price, and reducing the contract price without a change
in goods or services promised. For all its goods and services, at contract
inception, the Company assesses the solutions or services, or bundles of solutions and services, obligated in the contract with
a customer to identify each performance obligation within the contract, and then evaluate whether the performance obligations are
capable of being distinct and distinct within the context of the contract. Solutions and services that are not both capable of
being distinct and distinct within the context of the contract are combined and treated as a single performance obligation in determining
the allocation and recognition of revenue. For multi-element transactions, the Company allocates the transaction price to each
performance obligation on a relative stand-alone selling price basis. The Company determines that stand-alone selling price for
each item at the inception of the transaction involving these multiple elements. Since January 21, 2016 (‘Inception’),
the Company has derived its revenues mainly from three sources – consulting services, technology solutions, and customized
software development. The Company recognizes revenue when it has satisfied a performance obligation by transferring control over
a product or delivering a service to a customer. We measure revenue based upon the consideration outlined in an arrangement or
contract with a customer. The Company’s typical performance obligations
include the following:
Performance Obligation Types of Deliverables When Performance Obligation is Typically Satisfied
Consulting Services Services related to Start-Your-Own-Brokerage (“SYOB”), Start-Your-Own-Prime Brokerage (“SYOPB”), Start-Your-Own-Crypto Exchange (“SYOC”), FX/OTC liquidity solutions and lead generations. The Company recognizes the consulting revenues when the customer receives services over the length of the contract. If the customer pays the Company in advance for these services, the Company records such payment as deferred revenue until the Company completes the services.
Technology Services Software licensing of Condor Risk Management Back Office for MT4 (“Condor Risk Management”), Condor FX Pro Trading Terminal, Condor Pricing Engine, Crypto Trading Platform (“Crypto Web Trader Platform”), and other cryptocurrency-related solutions. The Company recognizes ratably over the contractual period for services delivered, beginning on the date in which such service is made available to the customer. Licensing agreements are typically one year in length with an option to cancel by giving notice; customers have the right to terminate their agreements if the Company materially breaches its obligations under the agreement. Licensing agreements do not provide customers the right to take possession of the software at any time. The Company charges the customers a set-up fee for the installation of the platform, and implementation activities are insignificant and not subject to a separate fee.
Software Development Design-build software development projects for customers, where the Company develops the project to meet the design criteria and performance requirements as specified in the contract. The Company recognizes the software development revenues when the Customer obtains control of the deliverables, as stated in the Statement-of-Work in the contract. For purposes of determining the transaction
price, the Company assumes that the goods or services promised in the existing contract will be transferred to the customer. The
Company assumes that the contract will not be canceled, renewed, or modified; therefore, the transaction price includes only those
amounts to which the Company has rights under the present contract. For example, if the Company enters into a contract with a customer
that has an original term of one year and the Company expects the customer to renew for a second year, the Company would determine
the transaction price based on the original one-year term. When determining the transaction price, the Company first identifies
the fixed consideration, which includes any nonrefundable upfront payment amounts. For purposes of allocating the transaction
price, the Company allocates an amount that best represents consideration that the entity expects to receive for transferring each
promised good or service to the customer. To meet the allocation objective, the Company allocates the transaction price to each
performance obligation identified in the contract on a relative standalone selling price basis. In determining the standalone selling
price, the Company uses the best evidence of the stand-alone selling price that the Company charges to similar customers in similar
circumstances. In some cases, the Company uses the adjusted market assessment approach to determine the standalone selling price,
where it evaluates the market in which it sells the goods or services and estimates the price that customers in that market would
pay for those goods or services when sold separately. The Company recognizes revenue when or as it
transfers the promised goods or services in the contract. The Company considers the “transfers” the promised goods
or services when, or as, the customer obtains control of the goods or services. The Company considers a customer “obtains
control” of an asset when, or as, it can direct the use of, and obtain all the remaining benefits from, an asset substantially.
The Company recognizes deferred revenue related to services which it will deliver within one year as a current liability. The Company
presents deferred revenue related to services that the Company will deliver more than one year into the future as a non-current
liability. For the period ending March 31, 2020, the Company’s
three revenue streams accounted for under ASC 606 follows: IT Support On February 5, 2018 (‘Effective Date’),
the Company signed IT support and maintenance agreement (‘IT Agreement’) with an FX/OTC broker (‘FX Broker’)
regulated by the Malta Financial Services Authority. The Company earns the recurring monthly payment from the FX Broker for delivering
IT support and maintenance services (‘Services’) to FX Broker’s legacy technology infrastructure. The term of
this Agreement commenced on the Effective Date and shall continue until terminated by either party either for cause, bankruptcy,
and other default clauses. The Company completes and satisfies its performance obligation upon accomplishment of all support and
maintenance activities every month. The Company invoices the FX Broker at the beginning of the month for services performed, delivered,
and accepted for the prior month. At the time of the invoice, the Company renders all Services, and any cash received for Services
is non-refundable. Licensing Fees The Company receives a monthly licensing fees
for its Condor Prime Back Office and Condor FX Pro Trading Terminal. Licensing revenues are allocated to software license and recognized
when control over the license is transferred to the customer. Software Development The Company receives $75 per hour for the first
100 hours/month of approved development services and $45 per hour for all services over 100 hours per month. The Company invoices
the Customer for all development services rendered, and any cash received for the development services is non-refundable. The Company invoices the customer at the beginning
of the month for services delivered for the month. The invoice amount is due upon receipt. The Company recognizes the revenue at
the end of each month, which is equal to the invoice amount. Concentrations of Credit Risk Cash The Company maintains its cash balances at
a single financial institution. The balances do not exceed FDIC limits as of March 31, 2020 and December 31, 2019. Revenues For the three months ended March 31, 2020 and
2019, the Company had six (6) and eight (8) active customers, respectively. Revenues generated from the top three (3) customers
represented approximately 84.67% and 96.62% of total revenue for the three months ended March 31, 2020 and 2019 respectively. Accounts Receivable At March 31, 2020, and December 31, 2019, Company’s
top four (4) customers comprise roughly 76.22% and 84.43% of total A/R, respectively. The loss of any of the top four customers
would have a significant impact on the Company’s operations. Research and Development (R and D) Cost The Company acknowledges that future benefits
from research and development (R and D) are uncertain, and as a result, we cannot capitalize on R and D expenditures. The GAAP
accounting standards require us to expense all research and development expenditures as incurred. For the three months ended March
31, 2020 and 2019, the Company did not incur R and D cost. Legal Proceedings The Company discloses a loss contingency if
there is at least a reasonable possibility that a material loss has incurred. The Company records its best estimate of loss related
to pending legal proceedings when the loss is considered probable, and the amount can be reasonably estimated. Where the Company
can reasonably estimate a range of loss with no best estimate in the range, the Company records the minimum estimated liability.
As additional information becomes available, the Company assesses the potential liability related to pending legal proceedings
and revises its estimates and updates its disclosures accordingly. The Company’s legal costs associated with defending itself
are recorded to expense as incurred. The Company is currently not involved in any litigation. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment
in accordance with FASB ASC 360, Property, Plant, and Equipment. Under the standard, long-lived assets are tested for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment charge is
recognized for the amount if and when the carrying value of the asset exceeds the fair value. On March 31, 2020, and December 31,
2019, there are no impairment charges. Provision for Income Taxes The provision for income taxes is determined
using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary
differences between the consolidated financial statement and income tax bases of assets and liabilities using the enacted tax rates
that are applicable in each year. The Company utilizes a two-step approach to
recognizing and measuring uncertain tax positions (“tax contingencies”). The first step is to evaluate the tax position
for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will
be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit
as the largest amount, which is more than 50% likely to be realized upon ultimate settlement. The Company considers many factors
when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately
forecast actual outcomes. The Company includes interest and penalties related to tax contingencies in the provision of income taxes
in the consolidated statements of operations. Management of the Company does not expect the total amount of unrecognized tax benefits
to change in the next twelve (12) months significantly. Software Development Costs By ASC 985-20, Software development costs,
including costs to develop software sold, leased, or otherwise marketed, that are incurred after the establishment of technological
feasibility, are capitalized if significant. Capitalized software development costs are amortized using the straight-line amortization
method over the estimated useful life of the application software. By the end of February 2016, the Company completed the activities
(planning, designing, coding, and testing) necessary to establish that it can produce and meet the design specifications of the
Condor FX Back Office Version, Condor FX Pro Trading Terminal Version, and Condor Pricing Engine. The Company established the technological
feasibility of the Crypto Web Trader Platform in 2018. The Company estimates the useful life of the software to be three (3) years. Amortization expense was $49,584 and $10,282
for the three months ended March 31, 2020 and 2019 respectively, and the Company classifies such cost as the Cost of Sales. The
increase in amortization expense for the three months ending March 31, 2020, is due to the cumulative amortization expense of Condor
Back Office, Condor Crypto Trading Platform, and Condor FX Trading Platform (Desktop). The Company capitalizes significant costs incurred
during the application development stage for internal-use software. The Company does not believe that the capitalization of software
development costs is material to date. Convertible Debentures The cash conversion guidance in ASC 470-20,
Debt with Conversion and Other Options, is considered when evaluating the accounting for convertible debt instruments (this includes
certain convertible preferred stock that is classified as a liability) to determine whether the conversion feature should be recognized
as a separate component of equity. The cash conversion guidance applies to all convertible debt instruments that upon conversion
may be settled entirely or partially in cash or other assets where the conversion option is not bifurcated and separately accounted
for pursuant to ASC 815. If the conversion features of conventional
convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion
feature (“BCF”). The Company records BCF as a debt discount pursuant to ASC Topic 470-20, Debt with Conversion and
Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and the Company
amortizes the discount to interest expense over the life of the debt using the effective interest method. As of March 31, 2020, the conversion features
of conventional FRH Group convertible notes dated February 22, 2016, May 16, 2016, November 17, 2016, and April 24, 2017 (See Note
8) provide for a rate of conversion where the conversion price is below the market value. As a result, the conversion feature on
all FRH Group convertible notes has as a beneficial conversion feature (“BCF”) to the extent of the price difference.
The Company extended the due date on the four (4) tranches of FRH Group convertible notes. Management performed an analysis to
determine the fair value of the BCF on the four (4) tranches and noted that the value of the BCF for each note was insignificant;
thus, the Company did not record any debt discount as of March 31, 2020. For FRH Group convertible note dated April
24, 2017, the value of the stock at issuance date was above the floor conversion price; this feature is characterized as a beneficial
conversion feature (“BCF”). The Company records a BCF as a debt discount pursuant to ASC Topic 470-20 “Debt with
Conversion and Other Options.” As a result, the convertible debt is recorded net of the discount related to the BCF. As of
December 31, 2017, the Company has amortized the discount of $97,996 to interest expense at the date of issuance because the debt
is convertible at the date of issuance. The $97,996 amount equaled to the intrinsic
value and the Company allocated it to additional paid-in capital in 2017. Basic and Diluted Income (loss) per Share The Company follows ASC 260, Earnings Per Share,
to account for earnings per share. Basic earnings per share (“EPS”) calculations are determined by dividing net loss
by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share calculations are
determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.
As of March 31, 2020, and December 31, 2019, the Company had 68,626,332 and 68,626,332 basic and dilutive shares issued and outstanding,
respectively. The Company had 20,000,000 million potentially dilutive shares related to four outstanding FRH Group convertible
notes, which were excluded from the diluted net loss per share as the effects would have been anti-dilutive. During the three months
ended March 31, 2020, common stock equivalents were anti-dilutive due to a net loss for the period. Hence, the Company has not
considered in the computation. During the three months ended March 31, 2019, common stock equivalents were dilutive due to a net
income of $9,677 for the period. Reclassifications We have reclassified certain prior period amounts
to conform to the current year’s presentation. None of these classifications had an impact on reported operating loss or
net loss for any of the periods presented. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue
Recognition, including most industry-specific requirements. ASU 2014-09 establishes a five-step revenue recognition process in
which entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration
to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced disclosures
regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. In August 2015,
the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the
effective date of ASU 2014-09 by one (1) year. The Company adopted ASC 606 using the modified retrospective method applied to all
contracts not completed as of January 1, 2019. The Company presents results for reporting periods beginning after January 1, 2019,
under ASC 606 while prior period amounts are reported following legacy GAAP. Refer to Note 2 Revenue from Major Contracts with
Customers for further discussion on the Company’s accounting policies for revenue sources within the scope of ASC 606. In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 840), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities
on the balance sheet and disclosing key information about leasing arrangements. The amendments to this standard are effective for
fiscal years beginning after December 15, 2019. Early adoption of the amendments in this standard is permitted for all entities,
and the Company must recognize and measure leases at the beginning of the earliest period presented using a modified retrospective
approach. We have adopted ASU as of March 31, 2020 for
ASC 606, Revenue Recognition and Amended ASU 2016-02, Leases (Topic 840). The ASU is currently not expected to have a material
impact on our consolidated financial statements. Other recent accounting pronouncements issued
by the FASB (including its Emerging Issues Task Force) and the United States Securities and Exchange Commission did not or are
not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
