| 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 consistent with the accounting policies adopted by the Company in its financial
statements. The Company has measured and presented the company’s consolidated financial statements 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. This could affect
the reported amounts of assets and liabilities and the related disclosures at the date of the consolidated financial statements, and 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. Actual results and outcomes may differ from management’s estimates
and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the coronavirus (“COVID-19”). 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, 2021, and
December 31, 2020, the Company had $4,724 and $22,467 cash and cash equivalent held at the financial institution. Accounts Receivable Accounts Receivable primarily represents the amount
due from six (6) customers. In some cases, the customer receivables are due immediately on demand; however, in most cases, the Company
offers net 30 terms or n/30, where the payment is due in full 30 days after the invoice’s date. 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
historical experience, credit quality, the accounts receivable balances’ age, and 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, 2021, and December 31, 2020, the Management
determined that allowance for doubtful accounts was $95,961 and $95,961, respectively. There was no bad debt expense for the three months
ended March 31, 2021, and 2020. Sales, Marketing, and Advertising The Company recognizes sales, marketing, and advertising
expenses when incurred. The Company incurred $64,720 and $1,226 in sales,
marketing, and advertising costs (“sales and marketing”) for the three months ended March 31, 2021, and 2020. 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 100.57% and 1.46% of the sales for the three
months ended March 31, 2021, and 2020. The increase in expense is mainly due to $60,000 digital marketing cost for the three months ended
March 31, 2021. 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. Each
party can identify their rights, obligations, and payment terms; the contract has commercial substance. The Company will probably collect
all of the consideration. Revenue is recognized when 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 the change in scope or price
or both as contract modifications by the Company. 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. The Company assumes a contract modification when approved in writing, by oral agreement, or implied
by the customer’s customary business practice. If the parties to the contract have not approved a contract modification, the Company
continues to apply the existing contract’s guidance until the contract modification is approved. The Company recognizes contract
modification in various forms –partial termination, an extension of the contract term with a corresponding price increase, adding
new goods or services to the contract, with or without a corresponding price change, and reducing the contract price without a change
in goods/services promised. 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 cannot be distinct and distinct within the contract context 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 the 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 THIRD-PARTY PLATFORMS (“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 when 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 installing 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 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. To determine 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 with an original term of one year and 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, including non-refundable 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. The Company allocates the transaction price to each performance obligation identified in the contract on a
relative standalone selling price basis to meet the allocation objective. 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. 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
the customer obtains control of the goods or services. The Company considers a customer “obtains control” of an asset when
it can direct the use of, and obtain all the remaining benefits from, an asset substantially. The Company recognizes deferred revenue
related to services 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, 2021, the Company’s
two primary revenue streams accounted for under ASC 606 follows: On February 5, 2018 (‘Effective Date’),
the Company signed an 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. According to the contract’s terms and conditions,
the Company invoices the customer at the beginning of the month for the month’s services. The invoice amount is due upon receipt.
The Company recognizes the revenue at the end of each month, equal to the invoice amount. Effective January 2021, the Company signed two licensing
agreements for its Condor FX Pro Trading platform, where it receives monthly maintenance and volume rebate fees. The initial set-up fee
is $5,000, followed by recurring monthly fees of $2,500. The volume fees can range from $2 to $5 per million traded depending on the volume. 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, 2021, and December 31, 2020. Revenues For the three months ended December 31, 2021, and
2020, the Company had six (6) and eight (8) active customers. Revenues generated from the top three (3) customers represented approximately
86.01% and 84.67% of total revenue for the three months ended March 31, 2021, and 2020. Accounts Receivable Accounts Receivable primarily represents the amount
due from six (6) active customers. In some cases, the customer receivables are due immediately on demand; however, in most cases, the
Company offers net 30 terms or n/30, where the payment is due in full 30 days after the invoice’s date. 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 historical experience, credit quality, the accounts receivable balances’ age, and 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, 2021, and December 31, 2020, the Management
determined that allowance for doubtful accounts was $95,961 and $95,961, respectively. There was no bad debt expense for the three months
ended March 31, 2021, and 2020. 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, 2021 and 2020, the Company
incurred R and D costs of $15,600 and $0. The increase in R and D costs was due to evaluate technological feasibility costs of Condor
Stocks and ETF platform. Legal Proceedings The Company discloses a loss contingency if there
is at least a reasonable possibility that a material loss has been 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. 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, 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 asset’s carrying value exceeds the fair value. On March 31, 2021, and December 31, 2020, 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 applicable 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, requiring periodic adjustments, 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 operations’ consolidated statements.
The Company’s management does not expect the total amount of unrecognized tax benefits to significantly change in the next twelve
(12) months. 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 application software’s estimated useful life. 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 Condor FX Back Office Version’s design specifications,
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 $68,616 and $49,584 for the
three months ended March 31, 2021, and 2020 respectively, and the Company classifies such cost as the Cost of Sales. The Company is developing
the Condor Stocks and ETF platform. All costs associated with the development is currently being capitalized. The Company expensed $15,600
as R and D costs to evaluate technological feasibility of Condor Stocks and ETF platform. The Company capitalizes significant costs incurred
during the application development stage for internal-use software. 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 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 a conversion rate 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. The Company amortizes the discount to interest expense over the
life of the debt using the effective interest method. As of December 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 a beneficial conversion feature (“BCF”) to the extent of the price difference. As the Company and FRH Group extended the maturity
date of the four (4) tranches of convertible notes to June 30, 2021, Management performed an analysis to determine the fair value of the
BCF on these tranches. The Company noted that the value of the BCF for each note was insignificant; thus, it did not record debt discount
as of December 31, 2020. For FRH Group convertible note dated April 24, 2017,
the stock’s value 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 issuance date 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. On February 22, 2021, the Company entered into an
Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation. The Company eliminated all four FRH Group
convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080 of unregistered common stock of the Company
(the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH Group Corporation, an entity also owned by
Mr. Hong. 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, 2021, and
December 31, 2020, the Company had 83,445,412 and 68,876,332 basic and dilutive shares issued and outstanding. The Company converted the
four FRH Group convertible notes into 12,569,080 dilutive shares. During the three months ended March 31, 2021, and 2020, common stock
equivalents were anti-dilutive due to a net loss of $221,838 and $59,585, respectively, for the period. During the three months ended
March 31, 2021, common stock equivalents were anti-dilutive due to a net loss for the period. Hence, the Company has not considered in
the computation. Reclassifications We have reclassified certain prior period amounts
to conform to the current year’s presentation. None of these classifications impacted reported operating loss or net loss for any
of the periods presented. Recent Accounting Pronouncements 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. The Company adopted this
policy as of January 1, 2020, and there is no material effect on its financial reporting. 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. |
