PROSPECTS The following discussion includes information that Webull’s management believes is relevant to an assessment and understanding of Webull’s financial condition and results of operations. On April 10, 2025, the Company closed the Business Combination and the related transactions described elsewhere in this Report. The discussion should be read together with (i) the financial statements of Webull as of December 31, 2025 and 2024, and for each of the three years in the period ended December 31, 2025, and the related notes thereto, included elsewhere in this Report. Webull’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in “Item 3. Key Information — D. Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Report. Certain amounts may not foot due to rounding. Overview Webull is a digital investment platform built upon a next-generation global infrastructure. We provide our customers with extensive products, features and functions that go beyond what is offered by most retail investment platforms in the markets today. The Webull platform is specifically designed and developed for our target demographic of young and digitally-savvy retail investors. We believe we are the platform of choice for this new generation of retail investors, whose demands for diverse investment products, mobile-first interface, around-the-clock availability, instant and in-depth market data, and social features may be prohibitively expensive for traditional investment platforms. We pride ourselves in the professional grade trading and investment features we offer. Though we may not be the place where our customers first learn about investing, we aim to be the platform they graduate into as they become more informed about investing. Our customers are primarily millennials and Gen Zs, and 68% report having prior investing experience before opening an account with us as of December 31, 2025. Our young customers provide us with opportunities to grow with and continue to serve them over the next several decades as their trusted lifelong investment partner. Driven by our strong belief that every retail investor should have access to the resources needed to become a more educated and empowered investor — what we refer to as the informed investor — our platform enables anyone to create a free account on Webull and gain access to the information and analytical tools that other brokerages typically lock behind a paywall, through which we help investors become more informed. The days when real-time stock price data were privileged information hidden behind a paywall are gone, and we believe more sophisticated market information should be made affordable and accessible to ordinary investors. We believe that no investment decision should be made without access to relevant public information, and no investor should have to question the stability of the underlying platform. As a result, many experienced investors choose us for the advanced trading tools and functions we offer, while novice investors look to us as a trusted resource for gaining the education and insight needed to become informed investors. We serve our customers through a global platform built around self-directed trading and provide our users access to market data from a broad range of exchanges worldwide as of December 31, 2025. Our freely available information and analytics, coupled with our open digital community features, foster a virtual trading floor experience similar to Wall Street and Canary Wharf where investment theses are freely exchanged and debated with the most popular ideas rising to the surface. Armed with these tools and the Webull Community, experienced and novice investors alike can learn and develop the confidence and ability to grow their personal wealth. While our core product offering is designed for the self-directed retail investor, we have recently added a number of wealth management services catered to those customers who prefer a more passive investment solution. We strive to make Webull the platform of choice for everyone who takes investing seriously. We generate revenues primarily via transaction-based trading activities and interest related income primarily in connection with stock lending and margin financing services provided to our customers. 77 The following tables set forth our key operating and financial metrics as of and for the periods indicated. We regularly review these key metrics to evaluate our business and financial performance as well as make strategic decisions. For the Three Months Ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 Registered users(1) (in millions) 17.3 18.3 19 19.8 20.6 21.1 22.1 23.3 24.1 24.9 25.9 26.8 Funded accounts(2) (in millions) 3.9 4.1 4.1 4.3 4.3 4.4 4.5 4.7 4.7 4.7 4.9 5.0 Quarterly retention rate(3) 98 % 97.5 % 97.4 % 98.2 % 97.3 % 97.9 % 98.4 % 98.3 % 97.5 % 97.1 % 97.7 % 96.9 % Customer assets(4) (US$ in billions) 6.9 7.5 7.2 8.2 8.7 9.7 11.5 13.6 12.6 15.9 21.2 24.6 DARTs(5) (in thousands) 705 639 603 560 640 646 707 777 924 1008 1101 1202 Equity notional volume(6) (US$ in billions) 96 90 93 92 111 102 119 128 128 161 204 239 Options contracts(7) (in millions) 104 105 113 108 112 118 119 112 121 127 147 154 Our platform is a self-directed investment platform. We do not have control over the investment decisions and trading behaviors of our customers. Our results are highly sensitive to our customers’ trading behaviors and market fluctuations. These are significant, inherent limitations of the above metrics which make predicting future results with precision difficult. Notes: (1) Registered users refer to those users who have registered on our platform but not necessarily have opened a brokerage account with one of our licensed broker-dealers. Growth in our registered users provides insight as to the popularity of the Webull App. While we do not generate revenue from registered users who do not have brokerage accounts with us, registering an account on the Webull App is the first step toward opening and funding a brokerage account with us. (2) Funded accounts refer to Webull brokerage accounts into which the customer has made an initial deposit or money transfer, of any amount, whose account balance (which is measured as the fair value of assets in the customer’s account less the amount due from the customer) has not dropped to or below zero for 45 consecutive calendar days as of the record date. Funded accounts reflect unique customers, and multiple funded accounts by a single customer are counted as one funded account. Growth in our funded accounts provides insight as to the effectiveness of our marketing efforts and our ability to acquire monetizable customers. Funded accounts are positively correlated with, but are not determinative, of customer assets, trading volumes, and revenue. (3) Quarterly retention rate is calculated by subtracting the “quarterly churn rate” from 100%. The “quarterly churn rate” means the ratio of (i) churned accounts during the current quarter to (ii) the sum of total funded accounts at the end of the preceding quarter and new funded accounts acquired during the current quarter. A “churned account” means a funded account whose account balance (measured as the fair value of assets in the customer’s account less the amount due from the customer) drops to or below zero for 45 or more consecutive calendar days as of the record date. The quarterly retention rate provides us insight as to how effective we are at servicing our platform users in terms of quality customer support and product offerings. (4) Customer assets refer to the sum of the fair value of all equities, ETFs, options, warrants, futures, digital assets and cash held by customers in their Webull brokerage accounts, net of customer margin balances, as of the record date. While customer assets are significantly impacted by mark-to-market valuations of customers’ investments, we consider customer assets an important metric as growth in customer assets generally leads to an increase in trading volumes and revenue. (5) DARTs refer to daily average revenue trades, which is the number of customer trades executed during a given period divided by the number of trading days in that period. DARTs provide us information on how active our customers trade. A limitation of this metric is that it does not capture the size of the trade and revenue per trade varies significantly depending on size and type of trades. (6) Equity notional volume refers to the aggregate dollar value (purchase price or sale price as applicable) of trades executed over a specified period of time. Equity notional volume directly drives our equities trading revenue, as we earn payment for order flow or commissions for customers’ equities trades based on a percentage of notional value. However, equity notional volume is highly sensitive to market conditions in the short-term which makes predicting our equity trading revenue with precision difficult. (7) Options contracts refer to the total number of options contracts bought or sold over a specified period of time. Options contracts traded directly drive our options trading revenue, as we earn payment for order flow or commissions for customers’ options trades on a per contract basis. However, options contracts traded is highly sensitive to market conditions in the short-term which makes predicting our options trading revenue with precision difficult. 78 For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Key Financial Metrics Total revenues 389,603 390,230 570,996 Net income (loss) attributable to the Company 6,069 (22,694 ) 24,771 Adjusted operating expenses (non-GAAP)(1) 337,211 371,995 460,725 Adjusted operating profit (non-GAAP)(2) 52,392 18,234 110,272 Adjusted net income (loss) (non-GAAP)(3) 37,777 7,921 84,242 Note: (1) Adjusted operating expenses, a non-GAAP financial measure, represent total operating expenses excluding share-based compensation expense and one-time transactions. (2) Adjusted operating profit, a non-GAAP financial measure, represents income (loss) from continuing operations, before income taxes, excluding share-based compensation expense, one-time transactions and other expense, net. (3) Adjusted net income, a non-GAAP financial measure, represents net income (loss) attributable to the Company excluding share-based compensation expense, foreign currency transaction gains and losses and one-time transactions. Key Factors Affecting Our Results of Operations Our business and operating results are affected by general factors driving the capital markets, digital trading and investment, and other industries in our markets, including demographic and macroeconomic growth, technology adoption trends, and the digital transformation of financial service industries. In addition, we believe our results of operations and financial performance are directly affected by certain factors specific to us, including the following: Growth of our customer base We have achieved rapid growth in customers since the launch of our trading app in the United States in May 2018. Sustaining our growth requires continued adoption of our platform by new customers and retention of existing customers. Our ability to continue to achieve customer growth is supported by our mobile-first interface and competitive pricing, depth of products, in-depth data and analytics tools, connected social community, and multi-platform interoperability. Additionally, we leverage our customers to organically recommend our platform to their family and friends and drive our growth. The expansion of our customer base depends on the recognition and acceptance of our product and service offerings as well as our value propositions to them. Our ability to educate and demonstrate to existing and prospective customers the value and the effectiveness of our product and service offering is and will continue to be crucial for our business growth, financial performance, and prospects. Leveraging our solid foundation and proven track record, we believe we are well placed to capitalize on overall market growth and attract new retail investors globally. Our ability to engage and monetize our customers We have a highly engaged customer base, which contributed to significant increases in trading volume on our platform. As we enrich our product and service offerings, we believe there is significant opportunity to further engage our customers and increase their usage of our platform. Since the launch of our Webull App in the United States in 2018, we have added a wide selection of features, products and services in response to customer demands including ETFs, options, fractional shares and futures trading as well as cash sweep, margin financing, stock lending, retirement accounts, and syndicate services. We have also created a robust community of investors by embedding social media tools and user-generated content into our platform. Our Webull Community complements the investing tools, education, market data, and insight we provide and in turn drives customer engagement and retention. Furthermore, we are constantly improving our existing features, products and services in response to customer feedback and keep our customers engaged. For example, we rolled out “Webull Lite” in April 2024, an easier-to-use version of the Webull App designed to better serve customers who are new to investing and preferred a more simplified experience. 79 While not all forms of customer engagement with our platform directly contribute to revenues or otherwise impact our results of operations, as more users join our platform and engage with new and existing features, products, and services, we expect to generate more revenue over time. We believe the increasing customer engagement on our platform demonstrates the growing lifetime value of our young customer base, providing us with opportunities to grow with them over the next several decades. Our ability to expand globally We see significant market opportunities globally in the digital brokerage industry. Our proven track record of successful execution in the United States provides us with a strong brand and a tested strategy for expansion to other markets. Our centrally-developed platform is designed to be seamlessly deployed across different markets, and we believe our highly scalable technology infrastructure will allow us to continue to penetrate new markets with moderate investment and marginal cost. Additionally, our strong localization capabilities enable us to better understand local market characteristics as well as the varying needs of local customers, which give us a significant competitive advantage as we continue to expand across the globe. In addition to the U.S. market, we have launched our licensed brokerage business across North America, Asia Pacific, Europe, and Africa, and are in the process of securing additional licenses in Latin America. We believe a global footprint will enable us to capture the significant potential of underserved markets, creating opportunities for our sustainable growth and business prospects. Optimization of our operating expenses Our results of operations depend in part on our ability to manage our operating expenses, especially our marketing and branding expenses. We have invested significantly in marketing and branding to attract customers and sustain our growth. We utilize various marketing tools to attract new customers, such as Webull Referral Program and paid advertising. In 2023, 2024 and 2025, our marketing and branding expenses amounted to $152.3 million, $138.7 million and $135.9 million, respectively. Our ability to lower such expenses as a percentage of our total revenues depends on our ability to improve customer acquisition efficiency. In addition, we have made, and will continue to make, significant investments in our technology infrastructure which is critical for us to offer high-quality products and services as well as to attract and retain customers. Our proprietary technology infrastructure is the backbone of our highly stable and scalable trading platform, enabling us to facilitate secure, fast and cost-efficient financial transactions. Our ability to leverage our investment in technology infrastructure and talent to develop and enhance our products and services in a cost-effective manner affects our results of operations. As our business further grows in scale, we expect our operating expenses to increase in absolute amounts in the foreseeable future. Nevertheless, with our continuous growth in scale and further optimization of our operational capabilities, including through the adoption and implementation of artificial intelligence across our business operations, we believe our continued commitment to operational efficiency and investment in technology will fuel our growth, and reinforce economies of scale to optimize our operating margin. Macroenvironment and conditions Investment behavior of our customers is affected by the overall macroenvironment, including economic, regulatory and market events and conditions, all of which are beyond our control. In particular, tariffs, inflation, tax rates, fluctuations in interest rates and any other unfavorable changes in market conditions can have a material impact on investor sentiment and trading volume, resulting in fluctuation in our trading revenues and interest related revenues. 80 Key Components of Results of Operations Revenues We generate revenues primarily from our equity and option order flow rebates and interest related income. The following table sets forth the components of our revenues by amounts and percentages of our total revenues for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ % $ % $ % (in thousands) Revenues: Equity and option order flow rebates 192,233 49.3 % 197,070 50.5 % 304,127 53.3 % Interest related income 155,792 40.0 % 130,452 33.4 % 154,256 27.0 % Handling charge income(1) 30,678 7.9 % 49,045 12.6 % 87,294 15.3 % Other revenues(1) 10,900 2.8 % 13,663 3.5 % 25,319 4.4 % Total revenues 389,603 100.0 % 390,230 100.0 % 570,996 100.0 % Note: (1) Promotional expenses paid to certain of our customers are required to be recorded as a reduction of revenue, rather than as a marketing and branding expense. For the years ended December 31, 2023, 2024 and 2025, we recorded $0.52 million, $3.6 million and $19.8 million, respectively, in promotional expenses as a reduction to handling charge income. In addition, we recorded $1.3 million in promotional expenses as a reduction to other revenues for the year ended December 31, 2025. No such reduction was recorded to other revenues for the years ended December 31, 2023 and 2024. The following table sets forth a breakdown of our revenues generated from trading activities for each of the key types of assets traded on our platform for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Revenues generated from trading activities for: Equities 51,223 61,435 94,163 Options(1) 169,241 164,017 237,542 Total 220,464 225,452 331,705 Note: (1) The revenues generated from trading activities for options also included option handling income, which amounted to $28.2 million, $28.4 million and $27.6 million for the years ended December 31, 2023, 2024 and 2025, respectively. 81 The following table sets forth a breakdown of our revenues generated from external customers, excluding interest income arising from our corporate bank deposits, by geographic region for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Revenues: United States 363,746 355,022 516,465 Canada - 1,654 8,305 Hong Kong 5,067 6,692 6,770 Singapore 5,591 10,923 13,155 Others 366 3,015 11,338 Total 374,770 377,306 556,033 Note: (1) The revenues from external customers does not include interest income arising from our corporate bank deposits, which amounted to $14.8 million, $12.9 million and $14.9 million for the years ended December 31, 2023, 2024 and 2025, respectively. Our revenues from external customers amounted to $374.8 million, $377.3 million and $556.0 million in 2023, 2024 and 2025, respectively. The revenues from external customers in various geographic locations are attributable to the operating performance in those markets. Our external revenue attributable to the United States increased by $161.4 million from 2024, primarily a result of increases in (i) equity and option order flow income of $104.9 million; (ii) interest related income, excluding corporate interest, of $19.4 million; and handling charge income of $22.5 million, respectively. See Results of Operations section for further information on the revenue changes we experienced for the years ended 2023, 2024, and 2025. Our external revenues from markets outside the United States increased $17.3 million from 2024 driven by continued expansion of our existing business, entry into new markets and strengthening of our market position. Equity and option order flow rebates We generate a portion of our revenues from equity and option order flow rebates that we receive from our market makers and liquidity providers for directing our customers’ trade orders to them for execution. In the case of equities and ETFs, the payments we receive are generally based on a percentage of the notional volume of securities being traded. In the case of options, we receive payments on a per contract basis. Our equity and option order flow revenues are recognized on a trade-date basis when we satisfy our performance obligation by routing a trade order to a market maker or a liquidity provider. 82 The following table sets forth a breakdown of our equity and option order flow rebates by asset type for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Equity and option order flow rebates Option order flow rebates 141,010 135,634 209,964 Equity order flow rebates 51,223 61,436 94,163 Total 192,233 197,070 304,127 Interest related income Interest related income primarily consists of revenues generated from (i) stock lending services, (ii) margin financing services, (iii) interest income from customers’ bank deposits, and (iv) interest income from our own corporate bank deposits. We received a significant portion our interest related income from our clearing partner. In 2023, 2024 and 2025, interest from our clearing partner represented 80.5%, 48.4%, and 31.9% of total interest income, respectively. Interest related income from stock lending is generated from our clearing partner’s fully paid stock lending program, through which our clearing partner provides us with a portion of the fees it generates from the program, and revenue is recognized over the period that the lending activities are outstanding. Interest related income from margin financing is related to the margin loans provided by our clearing partner to our platform users’ fully disclosed accounts as well the margin loans we provide to our platform users’ who have an omnibus account with us, and revenue is recognized over the period during which the margin loans are outstanding. Additionally, a portion of our interest income is generated from customers’ bank deposits and our own bank deposits, and is recorded on an accrual basis using the effective interest method. The following table sets forth the components of our interest related income for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Interest related income Interest related income from stock lending 56,052 26,090 28,531 Interest related income from margin financing 23,227 29,962 39,203 Interest income from customer bank deposits 61,680 61,476 71,559 Interest income from corporate bank deposits 14,833 12,924 14,963 Total 155,792 130,452 154,256 83 The following table summarizes interest-earning assets, the revenue generated by these assets, and their respective yields for the years ended December 31, 2025, 2024 and 2023. (in thousands) Corporate Bank Deposits Customer Bank Deposits(1) Margin Lending(2) Fully Paid Securities Lending(3) Total Interest Income 2025 Interest income $ 14,963 $ 71,559 $ 39,203 $ 28,531 $ 154,256 Average balance(4) $ 464,412 $ 3,407,916 $ 542,385 $ 5,969,363 Annual yield(5) 3.22 % 2.10 % 7.23 % 0.48 % 2024 Interest income $ 12,924 $ 61,476 $ 29,962 $ 26,090 $ 130,452 Average balance(4) $ 344,029 $ 2,406,173 $ 357,880 $ 3,521,036 Annual yield(5) 3.76 % 2.55 % 8.37 % 0.74 % 2023 Interest income $ 14,833 $ 61,680 $ 23,227 $ 56,052 $ 155,792 Average balance(4) $ 401,177 $ 1,612,125 $ 261,077 $ 3,436,917 Annual yield(5) 3.70 % 3.83 % 8.90 % 1.63 % Notes: (1) Includes cash and cash equivalents segregated under federal and foreign requirements, customers’ cash that is participating in our off-balance sheet cash sweep program, and cash of our platform users who are on a fully introduced basis with Apex Clearing. (2) Balance includes both our on-balance sheet margin loans and the off-balance sheet margin loans of our platform users’ that are administered on a fully-introduced basis with Apex Clearing. (3) Balance represents the value of the platform users’ securities that are enrolled in Apex Clearing’s fully paid stock lending program on either a fully-introduced or on an omnibus basis. (4) Represents the average of month-end balances for the year. (5) Annual yield is calculated by dividing revenue for the year by the applicable average balance. Corporate Bank Deposits — Although our average corporate cash balances decreased from 2022, the impact of the higher average federal funds rate in 2023 led to the increase of $10.5 million in interest revenue on our corporate cash. In 2024, interest income on our corporate cash decreased $1.9 million as a result of our lower average corporate cash balances. In 2025, interest income on our corporate cash increased $2.0 million as a result of higher average corporate cash balances. Our average corporate cash increased due to various equity financing transactions we entered during 2025. Customer Bank Deposits — Our customer bank deposit growth is attributable to the growth in our funded accounts between 2022 and 2025. We experienced an increase in interest income on customer bank deposits of $42.6 million between 2022 and 2023 due to the impact of the higher average federal funds rate in 2023. Our interest income on customer bank deposits remained consistent between 2023 and 2024 despite growth in our average customer bank deposit balances as a result of launching our off-balance sheet sweep program in April 2023. The launch of our off-balance sheet sweep program had the effect of lowering our annual yield from 3.83% during 2023 to 2.55% during 2024. In 2025, our interest on customer deposits increased $10.1 million due to higher average customer cash deposits. Our annual yield slightly decreased from 2.55% during 2024 to 2.10% during 2025 due to a lower average federal funds rate in 2025. 84 Margin Balances — Our margin interest income was comparable between 2022 and 2023 despite a decrease in the average margin balance as a result of higher average margin rates charged to customers during 2023 in response to higher interest rate environment. During 2024, our margin interest income increased $6.7 million, as compared to 2023. The increase in our margin interest income was due to higher average margin balances between the periods. Our estimated annual yield between the periods slightly decreased from 8.90% to 8.37% because of a shift in average margin balances from margin loan tiers with higher annual margin rates to margin loan tiers with lower annual margin rates. In 2025, our margin interest income increased $9.2 million, as compared to 2024. The increase in our margin interest income was due to higher average margin balances between the periods. Our estimated annual yield between 2024 and 2025 decreased from 8.37% to 7.23% as a result of a lower average federal funds rate in 2025 as well as more our margin customers subscribing to our premium subscription service that offers lower margin rates to subscribers. Fully Paid Securities Lending — Interest income from the fully paid securities lending program is difficult to predict as the general demand for borrowing stocks is highly impacted by overall market conditions. Also, hard to borrow stocks can cause volatility in the rate earned between periods. For 2024, our fully paid securities lending income decreased $29.9 million, as compared to 2023. The decrease is primarily due to the migration of our U.S. client accounts to an omnibus clearing arrangement with Apex Clearing, as fully paid stock lending was not available to such migrated accounts for the majority of the year. We had more client accounts on an omnibus clearing arrangement with Apex Clearing during 2024 than compared to 2023. Starting in August 2024, fully paid stock lending became available for our omnibus accounts. For 2025, our fully paid securities lending income increased $2.4 million mainly due to our omnibus accounts having access to our fully paid stock lending program for the entire year. Handling charge income — Our handling charge income primarily includes our commissions and platform trading fees charged to customers of our foreign broker-dealers as well as other trade fees charged to customers which represent pass-thru of trading fees charged to us by regulatory authorities and exchange fees passed through to us by market makers. Such fees may include SEC fees, OCC fees, and per contract charges for index options. Other revenues The following table sets forth the components of our other revenues for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Other Revenues Data subscription income 6,756 7,236 8,036 Co-marketing income 487 225 - Syndicate fees 955 968 2,106 Lease income 1,102 1,136 1,203 Foreign exchange fees 22 1,275 3,817 Non-trading rebates - - 5,555 Proxy income 681 2,623 3,423 Other 897 200 1,180 Total 10,900 13,663 25,320 Revenue from data subscription services represents subscription by our users to our market information services. We provide advanced quotation services, such as Level 2 Advance powered by Nasdaq TotalView, for which our customers subscribe on a monthly basis. Revenue from co-marketing services is primarily derived from our co-marketing services provided to Nasdaq and Cboe. In 2020, we entered into a service agreement with Nasdaq, pursuant to which Nasdaq granted us a license to receive and use Nasdaq’s proprietary data products in accordance with Nasdaq’s requirements. By presenting the underlying market data and information from Nasdaq on our platform, we functionally promote such data products for Nasdaq and therefore receive incentives from Nasdaq for the marketing and promotion effects we bring to Nasdaq. In 2021, we entered into a sponsored content agreement with Cboe whereby Cboe provides us sponsored content to market and promote Cboe securities products and services. We receive incentive payments that are based upon the level of our marketing and promotional spend. Our service agreement with Nasdaq expired in July 2023 and our agreement with Cboe expired in August 2024. 85 Our lease income represents revenue earned from leasing a portion of our excess corporate office space. In November 2022, we acquired a 5-story office building located in St. Petersburg, Florida to function as our corporate and operations headquarters. Revenue from syndicate fees is derived from our participation in IPO and secondary offerings as a member of the syndicate selling group. As a member of the selling group, we do not commit any capital. We publicize to our users the opportunity to subscribe to offerings in which we are a selling group member. We are allocated shares by the lead underwriter at a discount to the offering price. We then allocate those shares among the users that subscribe to the offering at the offering price, thereby capturing the selling group spread. Revenue is recognized when realized on the trade date of the sale of allocated shares to users. Revenue from foreign exchange fees consist of the fee we charge to convert a platform user’s domestic currency into a foreign currency to facilitate the platform user’s purchase of securities in foreign markets, and, conversely, the fee we charge to convert proceeds from the sale of securities in foreign markets to the platform user’s domestic currency. Revenue is recognized once the foreign exchange transaction is completed. Revenue from non-trading rebates represents rebates we receive from our banking partner in connection with our debit card funding and withdrawal feature offered to our platform users. The rebate is earned upon settlement of the debit card transaction. Revenue from proxy rebates represents income generated through our collaboration with a third-party investor communications company. We share certain shareholder information with the third-party, enabling them to distribute materials to shareholders, such as documents related to shareholder meetings and voting instructions. Our revenue comes from a portion of the payments the third party receives from issuers. This revenue is recognized once we fulfill our obligation to provide the required data and the third-party provider verifies our share. Operating expenses The following table sets forth the components of our operating expenses by amounts and percentages of operating expenses for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ % $ % $ % (in thousands) Operating expenses Brokerage and transaction 66,419 18.1 % 79,307 19.6 % 128,749 25.1 % Technology and development 52,156 14.2 % 63,840 15.8 % 79,184 15.4 % Marketing and branding 152,258 41.5 % 138,721 34.3 % 135,947 26.5 % General and administrative 95,790 26.2 % 122,715 30.3 % 168,643 33.0 % Total operating expenses 366,623 100.0 % 404,583 100.0 % 512,523 100.0 % 86 Brokerage and transaction Brokerage and transaction expenses primarily consist of clearing and operation costs, market information and data fees, and handling charge expenses. Our clearing and operation costs accounted for 66.0%, 66.5% and 65.0% of our brokerage and transaction expenses in 2023, 2024 and 2025, respectively. The following table sets forth the components of our brokerage and transaction expenses for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Brokerage and transaction Clearing and operation costs 43,833 52,722 83,591 Market information and data fees 12,721 16,056 22,676 Handling charge expenses 9,865 10,529 22,482 Total 66,419 79,307 128,749 Clearing and operation costs consist of clearing costs, mainly representing service fees charged by our clearing partner, and operation costs, mainly representing customer verification fees, transaction fees, and customer debit balances for which we are responsible. Market information and data fees mainly represent information and data fees that we pay to stock exchanges and market data providers. Handling charge expenses mainly represent handling fees charged by the OCC in connection with the clearing of settled option transactions. Technology and development Technology and development expenses consist of research and development expenses, primarily in the form of compensation and benefits for engineers and developers, and related costs, cloud service fees, and system costs. Cloud service fees represent data storage and computing service fees. System costs represent fees to software providers to access and use their systems. The following table sets forth the components of our technology and development expenses for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Technology and development Employee compensation benefits 35,112 43,400 55,559 Cloud services fees 11,806 13,280 14,316 System costs 5,238 7,160 9,309 Total 52,156 63,840 79,184 87 Marketing and branding Marketing and branding expenses primarily consist of advertising and promotion costs, costs of free stock promotions, and expenses for personnel engaged in marketing and business development activities. The following table sets forth the components of our marketing and branding expenses for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Marketing and branding Advertising and promotions 92,182 108,191 111,073 Free stock promotions 55,226 23,980 14,771 Employee compensation and benefits 4,850 6,550 10,103 Total 152,258 138,721 135,947 Our advertising and promotion costs represent our expenditures in advertising marketing and branding activities. As a digital trading platform, the vast majority of our advertising and promotion costs are incurred for digital advertising such as paid search on search engines and paid social advertising on social network platforms. In 2023, 2024 and 2025, we spent a total of $58.7 million, $61.9 million and $59.3 million on paid search and paid social advertising, respectively. In addition, starting in 2021, we also increased our spending on branding activities to promote awareness of the Webull brand globally. Specifically, we entered into a global multi-year agreement with Brooklyn Nets, LLC and its affiliates in September 2021, pursuant to which were are obliged to pay an aggregate of $90 million in non-refundable fees over the following three years for the placement of a “Webull”-branded patch on Brooklyn Nets game jerseys. In 2023 and 2024, we recognized $30.1 million and $24.8 million, respectively, in advertising and promotion costs attributable to the Brooklyn Nets sponsorship. The Brooklyn Nets sponsorship ended during September 2024; therefore, no such costs were incurred in 2025. Since 2023 the cost of our free stock promotions have continued to decreased as we have shifted to higher return promotions that drive AUM growth, such as offering a cash bonus match on new cash deposits and asset transfers that are not payable until after the cash deposit or asset transfer has been maintained for a required length of time. The expense of free stock promotions is determined when an eligible customers receive their free stock and is based upon the fair value of the stock transferred to the customer. We acquire the stock after the stock rewards are claimed. At the time eligible customers claim their free stock rewards, they become entitled to those free stock rewards and we assign the specific stocks to the users using an algorithm. At market close on each trading day, we use a designated account that we have established with our clearing partner to purchase all of the award stocks claimed prior to the market close and our clearing partner executes and settles such purchases. For our fully disclosed accounts, the acquired stocks are deposited into the designated account at Apex Clearing and we instruct Apex Clearing to transfer the stocks from our account to the account of the eligible customers who are entitled to the free stock rewards. For omnibus accounts, we purchase the stocks within our designated stock omnibus account and then allocate the shares to the accounts of eligible customers who are entitled to the free stock rewards. We record the cost of acquiring the stock rewards as marketing and branding expenses within our statement of operations and comprehensive (loss) income. At each reporting period, an estimated accrual for unsettled stock award is recorded as a liability with corresponding accrued marketing expense. Any changes to the fair value of the stock award from the accrual to the time the security is transferred to the customer’s account at our clearing broker is recorded as marketing expense. However, we are required to account for free stock and cash promotions paid to certain of our platform users who are determined to be customers as a reduction in revenue, rather than as a marketing and branding expense. For the years ended December 31, 2023, 2024 and 2025, we classified $0.52 million, $3.6 million and $21.2 million, respectively, of promotional expenses as a reduction to revenue. 88 Our marketing and branding expenses also include the compensation to our referral partners. Our referral partners are opinion leaders and other third-party organizations/forums, generally influential individuals, who primarily utilize social media to express views and values, demonstrate professional competence, and maintain a network of followers. We compensate our referral partners for each new user that uses the referral partner’s event-specific link to open and fund a Webull brokerage account with a minimum deposit amount, the total compensation for whom depends on the size of the referral partners’ network of followers and the effect of the marketing activities. We primarily compensate our referral partners by free stocks transferred into their Webull accounts, which are recorded as our costs of free stock promotions, and to a much lesser extent, cash, which is recorded as our advertising and promotion costs. In 2023, 2024 and 2025, the total expenses recognized for our referral partners, including the compensation recognized as our costs of free stock promotions and our advertising and promotion costs, amounted to $10.3 million, $9.4 million and $9.9 million, respectively. General and administrative General and administrative expenses primarily consist of employee compensation and benefits, professional services, compliance fees, rental payments on office and related occupancy costs and depreciation and amortization. The following table sets forth the components of our general and administrative expenses for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) General and administrative Employee compensation and benefits 61,466 77,187 104,600 Compliance fees 8,740 11,213 13,065 Office related 10,078 14,678 27,834 Professional services 9,966 18,337 15,943 Depreciation and amortization 4,676 3,010 3,234 Other 864 2,382 3,966 Total 95,790 122,715 168,642 Taxation Cayman Islands We are an exempted company incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gains, and the Cayman Islands currently has no form of estate duty, inheritance tax or gift tax. In 2025, we applied for and received under the Tax Concessions Law an undertaking exempting us from any tax on profits, income, gains, or appreciation that might be introduced for twenty years. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in or brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands currently does not impose withholding tax on dividend payments. United States Our subsidiaries located in the United States are subject to a federal income tax rate of 21% for domestic taxable income earned. 89 Hong Kong SAR Our Hong Kong subsidiaries are subject to a profit tax rate of 16.5% under the current Hong Kong Inland Revenue Ordinance on their taxable income generated from operations in Hong Kong. Singapore Our Singapore subsidiaries are subject to a corporate income tax rate of 17%. Mainland China The standard corporate income tax rate in Mainland China is 25% and 15% for certain qualified enterprises. Our main operating subsidiary in Mainland China has applied and received approval for the reduced corporate income tax rate beginning with the tax year 2023. Non-GAAP Financial Measures We use adjusted operating expenses, adjusted operating profit and adjusted net income, all non-GAAP financial measures, to evaluate our operating results and for financial and operational decision-making purposes. Adjusted operating expenses represent total operating expenses excluding share-based compensation expense and one-time transactions. Adjusted operating profit represents income (loss) from continuing operations, before income taxes, excluding share-based compensation expenses, one-time transactions, and other expense, net. Adjusted net income represents net income attributable to the Company, excluding share-based compensation expense, foreign currency transaction gains and losses and one-time transactions. We believe that adjusted operating expenses, adjusted operating profit and adjusted net income helps identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we include in operating expenses, income from continuing operations, before income taxes, and net income attributable to the Company. We believe that adjusted operating expenses, adjusted operating profit and adjusted net income provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects and allows for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. Adjusted operating expenses, adjusted operating profit and adjusted net income should not be considered in isolation or construed as an alternative to total operating expenses, income from continuing operations, before income taxes and net income attributable to the Company or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical non-GAAP financial measures to the most directly comparable GAAP measures. Adjusted operating expenses, adjusted operating income and adjusted net income presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. 90 The table below sets forth a reconciliation of our adjusted operating expenses. For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Total operating expenses (GAAP) 366,623 404,583 512,523 Less: Share-based compensation expense 29,412 32,588 43,873 One-time transaction: Less: Webull Pay transaction related employee distributions - - 7,925 Adjusted operating expenses (Non-GAAP) 337,211 371,995 460,725 The table below sets forth a reconciliation of our adjusted operating profit to income (loss) from continuing operations, before income taxes. For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Income (loss) from continuing operations, before income taxes (GAAP) 20,178 (12,051 ) 45,198 Add: Other expense (income), net 2,801 (2,303 ) 13,275 Add: Share-based compensation expense 29,412 32,588 43,873 One-time transaction: Add: Webull Pay transaction related employee distributions - - 7,925 Adjusted operating profit (Non-GAAP) 52,391 18,234 110,271 The table below sets forth a reconciliation of our adjusted net income to net income (loss) attributable to the Company for the periods indicated. For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Net income (loss) attributable to the Company (GAAP) 6,069 (22,694 ) 24,771 Add: Share-based compensation 29,412 32,588 43,873 Add: Foreign currency transaction losses (gains) 2,296 (1,973 ) 12,192 One-time transactions: Add: Equity offering costs - - 10,977 Add: Webull Pay transaction related employee distributions - - 7,925 Less: Gain from Webull Pay step-acquisition - - (15,496 ) Adjusted net income (loss) (Non-GAAP) 37,777 7,921 84,242 91 Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this Report. The results of operations in any period are not necessarily indicative of our future trends. For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Revenues Equity and option order flow rebates 192,233 197,070 304,127 Interest related income 155,792 130,452 154,256 Handling charge income 30,678 49,045 87,294 Other revenues 10,900 13,663 25,319 Total revenues 389,603 390,230 570,996 Operating expenses(1) Brokerage and transaction 66,419 79,307 128,749 Technology and development 52,156 63,840 79,184 Marketing and branding 152,258 138,721 135,947 General and administrative 95,790 122,715 168,643 Total operating expenses 366,623 404,583 512,523 Other expense (income), net 2,801 (2,303 ) 13,275 Income (loss) from continuing operations, before income taxes 20,179 (12,050 ) 45,198 Provision for income taxes 16,141 13,824 20,832 Income (loss) from continuing operations, net of tax 4,038 (25,874 ) 24,366 Income from discontinued operations, net of tax 1,784 2,691 - Net income (loss) 5,822 (23,183 ) 24,366 Less net loss attributable to noncontrolling interest (247 ) (489 ) (405 ) Net income (loss) attributable to the Company 6,069 (22,694 ) 24,771 Preferred shares redemption value accretion (340,080 ) (495,088 ) (21,703 ) Fair value of ordinary shares issued to preferred shareholders - - (513,081 ) Fair value of ordinary share warrants issued to preferred shareholders - - (15,600 ) Excess carrying value of preferred shares repurchased - - 38,094 Net loss attributable to ordinary shareholders (334,011 ) (517,782 ) (487,519 ) Note: (1) Share-based compensation expenses were allocated in operating expenses as follows: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Technology and development 7,749 8,290 5,953 Marketing and branding 1,699 2,028 2,018 General and administrative 19,964 22,269 35,902 Total 29,412 32,587 43,873 92 Period Ended December 31, 2025 Compared to Period Ended December 31, 2024 Revenues Our total revenues increased by $180.8 million from $390.2 million for the year ended December 31, 2024 to $571 million for the year ended December 31, 2025, primarily due to increases in equity and option order flow rebates, stock lending income, margin financing interest, customer bank deposit interest, platform and trading fees, and other income of $107.1 million, $2.4 million, $9.2 million, $10.1 million, $39.1 million and $11.7 million, respectively. The reasons for the changes are discussed below: Option order flow rebates. Our option order flow rebates increased $74.3 million for the year ended December 31, 2025 as compared to the same prior year period. The increase is primarily due to (i) our option contract volume increasing by 88 million contracts between the periods and (ii) our improved rate card with market makers and liquidity providers that was implemented in the third quarter of 2024 and in effect for all of 2025. Equity order flow rebates. Our equity order flow rebates increased $32.7 million for the year ended December 31, 2025 as compared to the same prior period as a result of an increase of $272 billion in equity trading notional value between the periods. Stock lending income. Our stock lending income increased $2.4 million for the year ended December 31, 2025 as compared to the same prior year period. The increase was mainly due to our omnibus accounts having access to our fully paid stock lending program for the entire year. Omnibus accounts were able to participate in the fully paid stock lending program beginning in August 2024. Margin finance interest. Our margin finance interest increased $9.2 million during the year ended December 31, 2025 as compared to the same prior year period as a result of higher average margin balances between the periods. Customer bank deposit interest. Our interest income on customer bank deposits increased $10.1 million during 2025 due to higher average customer cash balances. Our annual yield slightly decreased from 2.55% during 2024 to 2.10% during 2025 as a result of lower average federal funds rate in 2025. Platform and trading fees. Our platform and trading fees increased $39.1 million during the year ended December 31, 2025 as compared to the same prior year period due to (i) an increase of $19.8 million in our futures and event contract products; (ii) an increase of $8.2 million from platform users’ debit card funding and withdrawal transasctions; and (ii) $11.1 million in growth in our non-US broker-dealers products. The growth in our non-US broker-dealers was primarily from Canada, Thailand, United Kingdom and Japan and in the amounts of $3.1 million, $2.8 million, $1.3 million, and $1.1 million, respectively. Other revenues. Other revenues increased $11.7 million between the year ended December 31, 2025 as compared to the same prior year period, primarily a result of increases in syndicate fees, foreign exchange fees, non-trading rebates and proxy income of $1.1 million, $2.5 million, $5.6 million and $1.0 million, respectively. Increase in syndicate fees, foreign exchange fees and proxy income is attributable to growth in our global brokerage platform. The increase in non-trading rebates is due to the 2025 launch of a new platform feature that allows our platform users to use their debit cards for instant funding and withdrawals to and from their brokerage accounts. Operating expenses Our total operating expenses increased by $108.0 million from $404.5 million for the year ended December 31, 2024 to $512.5 million for the year ended December 31, 2025, primarily due to (i) growth in brokerage and transactions expenses due to growth in our trading revenues and (ii) increase in our general and administrative expenses as a result of increasing our scale and global expansion. Brokerage and transaction. Our brokerage and transaction expenses increased by $49.4 million from $79.3 million for the year ended December 31, 2024 to $128.7 million for the year ended December 31, 2025, primarily consisting of a $42.8 million increase in clearing and handling expenses due to increased equity and options contract volume and a $6.6 million increase in our market and data fees as a result of growth in our existing markets as well as launching in new markets. 93 Technology and development. Our technology and development expenses increased by $15.4 million from $63.8 million for the year ended December 31, 2024 to $79.2 million for the year ended December 31, 2025. The increase is due to higher technology personnel costs, cloud services and system costs in connection with our efforts to grow existing markets as well as launch in new markets. Marketing and branding. Our marketing and branding expenses decreased by $2.8 million from $138.7 million for the year ended December 31, 2024 to $135.9 million for the year ended December 31, 2025, primarily reflecting a decrease of $9.2 million in free stock promotions offset by increases of $2.9 million in advertising and promotional activities and $3.5 million in employee compensation and benefits. The overall decrease in marketing and branding is due to our efforts to grow the number of our client accounts utilizing more cost-effective customer acquisition promotions and advertising. For example, we reduced free stock promotions to focus on more asset-based promotional activities, and we did not renew our Brooklyn Nets sponsorship, which ended in September 2024. General and administrative. Our general and administrative expenses increased by $45.9 million from $122.7 million for the year ended December 31, 2024 to $168.6 million for the year ended December 31, 2025, primarily reflecting increases in stock compensation expense of $13.6 million, employee compensation and benefits of $13.8 million, $9.5 million in office related expenses, $5.3 million in professional services, and $2 million in compliance costs. The increases were incurred as we grew our business scale and continued our global expansion. Additionally, $3.2 million of the increase in our professional services pertains to an increase in our litigation loss contingency accrual. Other (income) expense, net We had other expense, net for the year ended December 31, 2025 of $13.3 million compared to other income, net for the same prior year period of $2.3 million, a decrease of $15.6 million. The decrease was primarily driven by increase in foreign currency transaction losses of $14.2 million, a write-off of deferred equity costs of $11.0 million, and an increase of $5.3 million in interest expense, offset by a $15.5 million gain from the Webull Pay step-acquisition. Income (loss) from continuing operations, before income taxes As a result of the foregoing, we recognized income from continuing operations, before income taxes, of $45.2 million for the year ended December 31, 2025, as compared to a loss from continuing operations, before income taxes, of $12.1 million for the year ended December 31, 2024, representing an increase of $57.2 million. Provision for income taxes Our provision for income taxes increased from $13.8 million for the year ended December 31, 2024 to $20.8 million for the year ended 2025 due to higher profitability. Income (loss) from continuing operations, net of tax As a result of the foregoing, we recognized income from continuing operations, net of tax, of $24.4 million for the year ended December 31, 2025, as compared to a loss from continuing operations, net of tax, of $25.9 million for the same prior year period, representing an increase in profitability of $50.3 million. Income from discontinued operations, net of tax We had income from discontinued operations, net of tax of $1.8 million for the year ended December 31, 2023. Although we spun off Webull Pay, LLC on July 14, 2023, we were able to deduct, based upon a transfer pricing analysis, additional expenses attributable to Webull Pay, Inc prior to the spin-off transaction on our US federal consolidated return, which led to us recognizing an income tax benefit of $2.7 million. Net income (loss) As a result of the foregoing, we recognized net income of $24.4 million for the year ended December 31, 2025 as compared to a net loss of $23.1 million for the year ended December 31, 2024, an increase of $47.5 million. 94 Net loss attributable to noncontrolling interest Our net loss attributable to noncontrolling interest represents our partial equity interest in PT Webull Sekuritas Indonesia. For the years ended December 31, 2024 and 2025, our equity interest was 80.1% and 95.1%, respectively. Our equity interest represents a controlling financial interest; and, therefore, we consolidate the results of PT Webull Sekuritas Indonesia and recognize a noncontrolling interest for the portion of equity interest we do not own. For the year ended December 31, 2025, the net loss attributable to noncontrolling interest decreased from $489 thousand to $405 thousand. Preferred shares redemption value accretion On April 10, 2025, our preferred shares were converted into Webull Class A Ordinary Shares (“Preferred Share Conversion”) in connection with the closing of the Business Combination Agreement. Prior to their conversion, we were required to adjust the carrying value of our preferred shares to their redemption value at each reporting period end. An increase in the redemption value of our preferred shares is accounted for as reduction to income attributable to the Company. Such reduction reduces the net income attributable to ordinary shareholders. We recognized $495.1 million and $21.7 million of preferred shares redemption value accretion for 2024 and 2025, respectively, representing a decrease of $473.4 million. The decrease is attributable to less of an increase in the fair value of our equity for the period of time our preferred shares were outstanding in 2025. Fair value of ordinary shares issued to preferred shareholders On April 10, 2025, we issued 42.7 million Webull Class A Ordinary Shares to certain preferred shareholders for no cash proceeds. The aggregate fair value of these shares was $513.1 million. We accounted for the fair value of these shares as a reduction to income attributable to the Company, effectively reducing the net income attributable to ordinary shareholders by $513.1 million. No such issuances were made during the year ended December 31, 2024. Fair value of ordinary share warrants issued to preferred shareholders On April 10, 2025, in connection with the closing of the Business Combination Agreement, we issued 20 million Webull Incentive Warrants to certain former preferred shareholders. The fair value of the Webull Incentive Warrants issued was $15.6 million and was accounted for as a reduction to income attributable to the Company, effectively reducing the net income attributable to ordinary shareholders by $15.6 million. No such issuances were made during the year ended December 31, 2024. Excess carrying value of preferred shares repurchased On April 10, 2025, immediately prior to the Preferred Share Conversion, we repurchased 3,017,119 Series D preferred shares, with a carrying amount of $138.1 million, from certain preferred shareholders in exchange for unsecured promissory notes with an aggregate principal balance of $100 million. The difference between the carrying value of the repurchased shares and the aggregate principal balance issued as consideration was $38.1 million, which was recorded as an increase to the net income attributable to the Company, effectively decreasing the net loss attributable to ordinary shareholders. No such transaction occurred during the year ended December 31, 2024. Net loss attributable to ordinary shareholders Our net loss attributable to ordinary shareholders improved from $517.8 million in 2024 to $487.5 million in 2025. The decrease of $30.3 million primarily reflects improved profitability, which contributed an additional $47.5 million in income attributable to the Company, partially offset by $17.2 million net increase in reductions to income attributable to the Company associated with preferred shareholder transactions detailed above. 95 Period Ended December 31, 2024 Compared to Period Ended December 31, 2023 Revenues Our total revenues increased by $0.63 million from $389.6 million for the year ended December 31, 2023 to $390.2 million for the year ended December 31, 2024, primarily due to increases in equity order flow rebates, margin financing interest, platform and trading fees, and other income of $10.2 million, $6.7 million, $18.5 million and $2.8 million, respectively, which was mostly offset by decreases in option order flow rebates, stock lending income and corporate bank deposit interest of $5.4 million, $29.9 million and $1.9 million, respectively. The reasons for the changes are discussed below: Option order flow rebates. Although we experienced an increase of 31 million option contracts traded during the year ended December 31, 2024 as compared to the same prior year period, we experienced a decrease in option order flow revenue of $5.4 million as a result of a shift in the composition of our customers’ option transactions towards securities with narrower spreads, specifically short-dated options tied to indices, which resulted in lower order flow rebates from market makers and liquidity providers. However, options order flow rebates improved in the third and fourth quarters following the implementation of a new rate card with market makers and liquidity providers. Equity order flow rebates. Our equity order flow rebates increased $10.2 million during the year ended December 31, 2024 as compared to the same prior period as a result of an increase of $89 billion in equity trading notional value between the periods. Stock lending income. Our stock lending income decreased $29.9 million for the year ended December 31, 2024 as compared to the same prior year period, primarily due to the migration of our U.S. client accounts to an omnibus clearing arrangement with Apex Clearing, as fully paid stock lending was not available to our omnibus accounts until August 2024, therefore only client accounts that remained on a fully-disclosed basis with Apex Clearing generated stock lending income during that time. Margin finance interest. Our margin finance interest increased $6.7 million during the year ended December 31, 2024 as compared to the same prior year period as a result of higher average margin balances between the periods. Client bank deposit interest. Our interest income on customer bank deposits remained consistent between 2023 and 2024 despite growth in our average customer bank deposit balances as a result of launching our off-balance sheet sweep program in April 2023. The launch of our off-balance sheet sweep program had the effect of lowering our annual yield from 3.83% during 2023 to 2.55% during 2024. Platform and trading fees. Our platform and trading fees increased $18.5 million during the year ended December 31, 2024 as compared to the same prior year period due to (i) $8.1 million increase in platform trading fees of our foreign broker-dealers, as we continued to expand our business outside the U.S. by growing our existing markets such as Hong Kong, Singapore, and Australia, and launching in new markets such as Japan, the U.K. and Canada; (ii) an increase of $7.9 million due to the 2024 launch of our futures product; and (iii) $2.5 million increase in banking, transfer and other miscellaneous fees earned as a result of more client accounts on an omnibus clearing arrangement with our clearing broker. Other revenues. Other revenues increased $2.8 million between the year ended December 31, 2024 and 2023 because of revenue we earned from our proxy distribution vendor in connection with our omnibus client accounts. As a result of our client account migration efforts, we had more client accounts on an omnibus clearing arrangement with our clearing broker during the year ended December 31, 2024 than during the same prior year period. Operating expenses Our total operating expenses increased by $38.0 million from $366.6 million for the year ended December 31, 2023 to $404.6 million for the year ended December 31, 2024, primarily due to the overall growth in our general and administrative expenses as a result of increasing our scale and global expansion. Brokerage and transaction. Our brokerage and transaction expenses increased by $12.9 million from $66.4 million for the year ended December 31, 2023 to $79.3 million for the year ended December 31, 2024, primarily consisting of a $8.9 million increase in clearing and handling expenses due to increased equity and options contract volume and a $3.3 million increase in our market and data fees as a result of launching in new markets. 96 Technology and development. Our technology and development expenses increased by $11.6 million from $52.2 million for the year ended December 31, 2023 to $63.8 million for the year ended December 31, 2024. The increase is due to higher technology personnel costs, cloud services and system costs in connection with our efforts to grow existing markets as well as launch in new markets. Marketing and branding. Our marketing and branding expenses decreased by $13.6 million from $152.3 million for the year ended December 31, 2023 to $138.7 million for the year ended December 31, 2024, primarily reflecting a decrease of $31.2 million in free stock promotions offset by increases of $16.0 million in advertising and promotional activities and $1.6 million in employee compensation and benefits. The overall decrease in marketing and branding is due to our efforts to grow the number of our client accounts utilizing more cost-effective customer acquisition promotions and advertising. For example, we reduced free stock promotions to focus on more asset based promotional activities, and we did not renew our Brooklyn Nets sponsorship, which ended in September 2024. General and administrative. Our general and administrative expenses increased by $26.9 million from $95.8 million for the year ended December 31, 2023 to $122.7 million for the year ended December 31, 2024, primarily reflecting increases in stock compensation expense of $2.3 million, employee compensation and benefits of $13.4 million, $4.6 million in office related, $2.0 million depreciation and amortization of right-of-use assets and $1.5 million in other non-income-based taxes and surcharges. The increases were incurred as we grew our business scale and continued our global expansion. Additionally, we experienced an increase in our compliance costs of $2.5 million between the periods as we (i) settled certain regulatory matters and (ii) increased our loss contingency accrual. Other expense (income), net. Our other expense, net decreased from $2.8 million for the year ended December 31, 2023 to other income, net of $2.3 million for the year ended December 31, 2024. The decrease was primarily related to an increase in foreign currency exchange gains between the periods. Income (loss) from continuing operations, before income taxes As a result of the foregoing, our income from continuing operations, before income taxes, decreased from $20.2 million for the ended December 31, 2023 to a loss of $12.1 million for the year ended December 31, 2024. Provision for income taxes Our provision for income taxes decreased from $16.1 million for the year ended December 31, 2023 to $13.8 million for the year ended 2024 due to lower profitability. Income (loss) from continuing operations, net of tax As a result of the foregoing, our income from continuing operations, net of tax, decreased from $4.0 million for the year ended December 31, 2023 to a loss of $25.9 million for the year ended December 31, 2024. Income from discontinued operations, net of tax We had income from discontinued operations, net of tax of $1.8 million for the year ended December 31, 2023. Although we spun off Webull Pay, LLC on July 14, 2023, we were able to deduct, based upon a transfer pricing analysis, additional expenses attributable to Webull Pay, Inc prior to the spin-off transaction on our US federal consolidated return, which led to us recognizing an income tax benefit of $2.7 million. Net income (loss) As a result of the foregoing, our net income decreased from $5.8 million for the year ended December 31, 2023 to a net loss of $23.2 million for the year ended December 31, 2024. 97 Net loss attributable to noncontrolling interest On January 18, 2023, we acquired an 80.1% equity interest in PT Mahastra Andalan Sekuritas, subsequently renamed PT Webull Sekuritas Indonesia. Our equity interest represents a controlling financial interest; and, therefore, we consolidate the results of PT Webull Sekuritas Indonesia and recognize a noncontrolling interest for the portion of equity interest we do not own. For the year ended December 31, 2024, the net loss attributable to noncontrolling interest increased from $247 thousand to $489 thousand. Preferred shares redemption value accretion We adjust the carrying value of our preferred shares to the redemption value for each reporting period. The redemption value of our preferred shares as of December 31, 2024 increased from their redemption value as of December 31, 2023 which resulted in recognizing accretion for the year ended December 31, 2024 of $495.1 million. The redemption value increase is attributable to the increase in the fair value of our equity between the periods. Net loss attributable to ordinary shareholders Our net loss attributable to ordinary shareholders of $334.0 million for the year ended December 31, 2023 increased to $517.8 million for the year ended December 31, 2024 as a result of incurring a $25.9 million loss from continuing operations, net of tax and recognizing $495.1 million of accretion as the redemption value of our preferred shares increased during the year ended December 31, 2024. Liquidity and Capital Resources As of December 31, 2023, 2024, and 2025, we had cash and cash equivalents of $372.3 million, $270.7 million, and $653.2 million, respectively. Our cash and cash equivalents represent demand deposits held at banks which are unrestricted as to withdrawal or use and highly liquid investments with original maturities of less than 90 days. Prior to closing our business combination transaction on April 10, 2025 and the listing of our Class A ordinary shares on the Nasdaq stock exchange, we had financed our operating and investing activities primarily through cash proceeds from the sales of our convertible redeemable preferred shares and cash generated by operations. Subsequently, we have raised $213.8 million in proceeds from the exercise of various warrants that were either issued or assumed in connection with the business combination transaction. We also have raised $172.7 million in proceeds from the sale of our ordinary shares pursuant to the Purchase Agreement. We have issued unsecured promissory notes with an aggregate principal amount of $100 million to repurchase a portion of our preferred shares prior to the closing of the business combination transaction. We did not receive any loan proceeds from the issuance of the unsecured promissory notes. As of December 31, 2025, the aggregate principal balance was $65,000,000. See Note 16 — Unsecured Promissory Notes to our consolidated financial statements for more details on the promissory notes. We have a syndicated revolving credit agreement (“Syndicated Loan”) for an amount up to $150 million whereby we can borrow solely to finance withdrawals from our US broker dealer subsidiary’s reserve account that is maintained for the exclusive benefit of our customers in accordance with Rule 15c3-3 of the SEC. We are unable to use the Syndicated Loan for general corporate purposes. See Note 15 – Revolving Credit Agreement for more details on the Syndicated Loan. We believe that our current cash and cash equivalents will be sufficient to meet our anticipated working capital requirements and capital expenditures for at least the next 12 months. We may decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. 98 The following table sets forth a summary of our cash flows for the periods presented: For the Year Ended December 31, 2023 2024 2025 $ $ $ (in thousands) Selected consolidated cash flow data: Net cash provided by operating activities 470,597 185,215 566,424 Net cash (used in) provided by investing activities (10,040 ) (2,412 ) 45,503 Net cash provided by financing activities 12,837 40,346 352,082 Net (decrease) increase in cash, cash equivalents, segregated cash and cash of discontinued operations* 473,394 223,149 964,009 Effect of exchange rate changes 2,451 (7,331 ) 16,340 Cash, cash equivalents, segregated cash and cash of discontinued operations at beginning of the period 518,297 994,142 1,209.959 Cash, cash equivalents, segregated cash and cash of discontinued operations at end of the period 994,142 1,209,960 2,190,308 * Our discontinued operations pertains to our digital asset business that was spun off on July 14, 2023. Consequently, there were no discontinued operations operating, investing or financing cash flows for the years ended December 31, 2024 and December 31, 2025. Cash flows from operating activities Net cash provided by operating activities for the year ended December 31, 2025 was $566.4 million, as compared to net income of $24.4 million for the year ended December 31, 2025. The increase in operating cash flow was primarily driven by continued migration of our U.S. client margin accounts to an omnibus basis with our clearing organization. We carry our customers’ uninvested cash balances for accounts that are on an omnibus basis. Net cash provided by operating activities for the year ended December 31, 2024 was $185.2 million, as compared to net loss of $23.2 million for the year ended December 31, 2024. Subsequent to December 31, 2023, we continued migrating our U.S. client non-margin accounts and began migrating our U.S. client margin accounts from a fully disclosed basis to an omnibus basis with our clearing organization, which primarily led to the overall increase in net cash provided by operating activities as we carry our customers’ uninvested cash balances for accounts that are on an omnibus basis. Net cash provided by operating activities in the year ended December 31, 2023 was $470.6 million, as compared to net income of $5.8 million in the year ended December 31, 2023. The difference was primarily attributable to us migrating our U.S. client non-margin accounts from a fully disclosed basis to an omnibus basis with our clearing organization in 2023. We carry our customers’ uninvested cash balances for accounts that are on an omnibus basis. Our discontinued operations had net cash provided from operating activities of $1.9 million for the year ended December 31, 2023, respectively. Cash flows from investing activities Net cash provided by investing activities for the year ended December 31, 2025 was $45.5 million, consisting primarily of net cash received from our acquisition of Webull Pay. Net cash used in investing activities for the year ended December 31, 2024 was $2.4 million, consisting primarily of purchases of property, equipment and intangible assets for business expansion. Net cash used in investing activities during the year ended December 31, 2023 was $10.0 million, consisting of $4.5 million of purchases of property and equipment and intangible assets and $5.5 million of net cash paid for the acquisitions of Webull PT Webull Sekuritas Indonesia and Miflink, S.A.P.I. de C.V. Our discontinued operations had no cash flows from investing activities for the year ended December 31, 2023. 99 Cash flows from financing activities Net cash provided by financing activities for the year ended December 31, 2025 was $352.1 million, consisting primarily of $214.8 million in proceeds from the exercise of various warrants that were issued and/or assumed in connection with the business combination transaction, $172.7 million in net proceeds from the sale of ordinary shares, partially offset by $35 million in principal payments made on unsecured promissory notes . Net cash provided by financing activities for the year ended December 31, 2024 was $40.3 million, which represents proceeds from the sale of 1,215,817 of Series D preferred shares. Net cash provided by financing activities in the year ended December 31, 2023 was $12.8 million, consisting primarily of receipt of proceeds from the sale of preferred shares of $20 million, offset by the deconsolidation of Webull Pay, Inc. of $7.2 million. Our discontinued operations had cash used in financing activities of $11.9 million in 2023, which represents the discontinued operations aggregate distributions made to its parent entity. Regulatory capital requirements Webull Financial, our U.S. subsidiary that is a broker-dealer registered with the SEC, is subject to Rule 15c3-1 of the Exchange Act, or the Uniform Net Capital Rule, which sets minimum net capital maintenance requirements. Webull Securities HK, our Hong Kong subsidiary that is a securities dealer registered under the HK SFC, is subject to the Securities and Futures (Financial Resources) Rules of Hong Kong, or the FRR, which sets minimum paid-up share capital and liquid capital maintenance requirements. Webull Securities (Japan) Co. Ltd., our subsidiary registered as a financial instruments business operator in Japan, is subject to minimum capital and net assets requirements. Webull Securities (Singapore) Pte. Ltd., our Singapore subsidiary that holds Capital Markets Services License from MAS, is subject to the Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licenses) Regulations, which sets forth minimum base capital requirements. Webull Securities (Australia) Pty. Ltd., our Australia subsidiary that holds the Financial Service License from ASIC, is subject to the Regulatory Guide RG 166 which sets forth minimum base capital requirements. Webull Securities (Canada) Limited, a Canada subsidiary that holds broker-dealer registered with CIRO, is subject to Rule 15c3-1 of the Securities Exchange Act which sets minimum net capital maintenance requirements. Webull Securities (UK) Ltd, our UK subsidiary that is authorized and regulated by the Financial Conduct Authority, for the conduct of investment business, is subject to the minimum capital maintenance requirement from FCA. PT Webull Sekuritas Indonesia, our Indonesia subsidiary that holds Capital Markets Services License from OJK, sets minimum net capital maintenance requirements. Our subsidiary Webull Securities (Thailand) Co. Ltd. is subject to the capital requirements of the Securities and Exchange Commission, Thailand. Our subsidiary Webull Securities (Malaysia) Sdn Bhd. is subject to the shareholders’ funds requirement of the Securities Commission Malaysia. The following tables set out a summary of the key regulatory requirements on minimum capital requirements which are applicable to our relevant operating entities: As of December 31, 2025 Net Capital Net Capital Requirement Excess Net Capital ($ in thousands) Webull Financial LLC 200,109 19,668 180,441 As of December 31, 2025 Paid-up Capital Paid-up Capital Requirement Excess Paid-up Capital (HK$ in thousands) Webull Securities HK 468,300 10,000 458,000 100 As of December 31, 2025 Liquid Capital Liquid Capital Requirement Excess Liquid Capital (HK$ in thousands) Webull Securities HK 168,312 19,344 148,968 As of December 31, 2025 Base Capital Base Capital Requirement Excess Base Capital (SGD in thousands) Webull Securities (Singapore) Pte. Ltd 39,430,859 5,000 39,425,859 As of December 31, 2025 Capital Stock Capital Stock Requirement Excess Capital Stock (JPY in thousands) Webull Securities (Japan) Co., Ltd 1,376,974 300,000 1,076,974 As of December 31, 2025 Net Assets Net Assets Requirement Excess Net Assets (JPY in thousands) Webull Securities (Japan) Co., Ltd 2,745,986 2,000,000 745,986 As of December 31, 2025 Core Capital Core Capital Requirement Excess Capital Stock (AUD in thousands) Webull Securities (Australia) Pty. Ltd. 10,033 2,000 8,033 As of December 31, 2025 Net Tangible Assets Net Tangible Asset Requirement Excess Net Tangible Assets (AUD in thousands) Webull Securities (Australia) Pty. Ltd. 9,817 5,000 4,817 101 As of December 31, 2025 Risk Adjusted Capital Risk Adjusted Capital Requirement Excess Risk Adjusted Capital (CAD in thousands) Webull Securities (Canada) Limited 35,559 250 35,309 As of December 31, 2025 Liquid Cash Liquid Cash Requirement Excess Liquid Cash (GBP in thousands) Webull Securities (UK) Ltd. 3,293 130 3,163 As of December 31, 2025 Net Adjusted Working Capital Net Adjusted Working Capital Requirement Excess Capital (IDR in thousands) PT Webull Sekuritas Indonesia. 62,129,757 25,000,000 37,129,757 As of December 31, 2025 Net Capital Net Capital Requirement Excess Net Capital (THB in thousands) Webull Securities (Thailand) Co. Ltd. 526,657 25,000 501,657 As of December 31, 2025 Shareholders Funds Shareholders Funds Requirement Excess Shareholders Funds (MYR in thousands) Webull Securities (Malaysia) Sdn. Bhd. 36,586 5,000 31,586 Regulatory capital requirements could restrict our operating entities from expanding their business and declaring dividends if their net capital does not meet regulatory requirements, and it is possible that a regulator could take an adverse action with respect to our operating entities for historical and/or future non-compliance with net capital requirements. As of December 31, 2025, each of our relevant operating entities was in compliance with its respective regulatory capital requirements. 102 Material Cash Requirement Our material cash requirements as of December 31, 2025, primarily include our undiscounted operating lease payments, future repayment of unsecured promissory notes and an ongoing construction project. Our undiscounted operating lease payments consist of the lease of office space under non-cancelable operating lease agreements, which will expire at various dates until August 2032. As of December 31, 2025, our undiscounted operating lease payments amounted to $12.5 million. We have unsecured promissory notes with an aggregate outstanding principal balance of $65 million as of December 31, 2025. The notes require principal repayment on or before April 9, 2027. In late 2023, we entered into a land use agreement with the City Changsha for the purpose of constructing a research and development center. The agreement requires construction to be completed by December 31, 2026. Construction has commenced and is expected to be completed before the end of 2026. The anticipated capital requirement for construction is RMB 125.5 million, or the equivalent of USD 17.9 million as of December 31, 2025. Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2025. Off-Balance Sheet Commitments and Arrangements We provide a guarantee to our clearing partner in the ordinary course of business. Our clearing partner has a contractual right of recovery from us in the event of non-performance by customers, and we indemnify our clearing partner from all losses incurred in connection with customer’s unsecured margin loans and securities borrowing. The guarantee provided to our clearing partner relates to the margin financing services that we provide to our customers. As an introducing broker, we cooperate with our clearing partner to provide margin financing services, whereby we introduce our customers to our clearing partner on a fully disclosed basis. For eligible customers who have entered into the relevant margin trading agreement with us and our clearing partner, our clearing partner provides the following services during the extension of margin and earns margin interests from the provision of the margin: ● extends margin to them and permits them to buy or short securities on margin; ● performs margin management and maintenance according to the related regulatory rules and their house rules, and communicates to the customers via our platform; and ● buys in, liquidates or sells out positions in its discretion, if it deems such actions appropriate and regardless of whether the applicable customer’s margin account is then in or about to come into compliance with applicable margin maintenance requirements or other circumstances requested by applicable regulations. 103 There is no maximum time limit for the extension of margin to customers. A customer may be extended margin by our clearing partner so long as his or her margin account has sufficient cash to pay margin interest and no margin calls are triggered by his or her trading positions. On the other hand, during the extension of margin by our clearing partner, we are obligated to: ● communicate with the customers on the margin requirements made by our clearing partner and advise the customers of any changes of such requirements; and ● pay our clearing partner an amount equal to the value of any unsecured debit balance or short position (on a “mark to market” basis) in a given customer’s margin account if that position has not been promptly resolved by payment or delivery (to the extent that our clearing partner decides to charge us for the value of such unsecured debit balance or short position). Interest on margin trading is calculated on a daily basis according to the margin extended by our clearing partner to the customers and a relevant interest rate. The margin interest rates are variable and determined by the size of margin loan at the discretion of our clearing partner. Our clearing partner retains part of the total margin interest charged to the customers, according to a Target Federal Funds Rate plus a premium pre-agreed with us. In terms of the residual part of the total margin interest charged to the customers, it is transferred to us as our revenue. We recognize the revenue ratably over the service period during the extension of margin by our clearing partner as the performance obligation is satisfied, and record it as interest related income. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. Quantitative and Qualitative Disclosures about Market Risk Market-Related Credit Risk We are exposed to market and credit risk primarily through customer margin activities. Changes in market conditions may affect the value of securities collateralizing margin receivables and, therefore, our exposure to customer credit risk. We monitor customer accounts and collateral levels on an ongoing basis and may require customers to deposit additional collateral or reduce positions in response to market movements or changes in risk profiles. Periods of heightened market volatility may increase the likelihood of margin deficiencies and the need for additional risk management actions. We do not engage in securities lending or borrowing activities. Our only securities lending exposure arises from customer participation in a fully-paid securities lending program administered by our clearing broker, Apex Clearing Corporation (“Apex”). Under this program, Apex acts as the lending agent and is responsible for borrower selection, collateralization, and the daily management of lending activity, including marking positions to market and maintaining collateral levels. As a result, we do not control the key risk management functions associated with securities lending, including counterparty approval and collateral management. While this structure limits our direct exposure to securities lending-related credit risk, our reliance on Apex introduces operational and counterparty considerations. Any failure by Apex to effectively manage the program or perform its obligations could adversely affect customer accounts and, in turn, our business, results of operations, and reputation. Credit Risk We engage in various investment and brokerage activities in which the counterparties primarily include broker-dealers, banks, and other financial institutions. In the event counterparties do not fulfill their obligations, we may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. Our policy is to act only as an agent in a transaction and to review the credit standing of each counterparty as necessary. 104 We maintain our cash and cash equivalents and cash segregated under federal and foreign requirements in financial institutions throughout the world. Financial institutions in the U.S. and Hong Kong hold 81% and 6%, respectively, of our total cash as of December 31, 2024. As of December 31, 2025, financial institutions in the U.S. and Hong Kong hold 69% and 14%, respectively, of our total cash. Our cash in accounts at financial institutions exceed insured limits. We are subject to credit risk to the extent any financial institution we use is unable to fulfill their contractual obligations. We have not experienced any losses in such accounts, and we believe that we have placed our cash on deposit with financial institutions which are financially stable. We do not believe we are subject to any significant credit risk. Foreign Currency Risk Our consolidated financial statements are prepared using the U.S. dollar as our reporting currency. Our non-U.S. subsidiaries operating around the world primarily use the currency of their country of domicile as their functional currency. Each of our non-U.S. subsidiaries’ financial statements is first prepared in its functional currency and then translated into our reporting currency. Changes in foreign exchange rates between the U.S. dollar and the functional currencies of our non-U.S. subsidiaries may result in material foreign currency translation gains and/or losses that are accounted for as an item of other comprehensive income within our statement of operations and other comprehensive loss. We also enter into transactions that result in monetary assets and liabilities that are denominated in a foreign currency. These transactions are remeasured each reporting period and may result in material foreign currency exchange gains and/or losses depending on changes in the applicable foreign exchange rate. Our cash accounts at financial institutions are mainly held in U.S. dollar denominated accounts to limit foreign currency risk. As of December 31, 2024 and 2025, 90% of our total cash balances were held in U.S. dollar denominated accounts. Concentration Risks Concentration of Revenue Of the counterparties with whom we conduct business, there were three counterparties who each made up 10% or more of our revenues for the year ended December 31, 2023. Their revenue percentages were 41%, 24% and 11%. For the year ended December 31, 2024, we had three counterparties who each made up 10% or more of our revenues. Their revenue percentages were 24%, 19% and 11%. For the year ended December 31, 2025, we had four counterparties who each made up 10% or more of our revenues. Their revenue percentages were 14%, 14%, 12% and 12%. Concentration of Receivables As of December 31, 2024, we had one counterparty with current, outstanding receivable balances exceeding 10% of our receivables from brokers, dealers, and clearing organization representing 85% of such receivables. As of December 31, 2025, we had two counterparties with current, outstanding receivable balances exceeding 10% of our receivables from brokers, dealers, and clearing organization representing 73% and 17% of such receivables, respectively. Concentration of Execution and Clearing We rely on third parties for the execution and clearing of trades requested by customers. In instances where these parties fail to perform their obligations, we may be temporarily unable to find alternative suppliers to satisfactorily deliver services to our customers in a timely manner, if at all. In the United States, we utilize a single clearing partner for the security transactions of our platform users. Research and Development Our research and development costs are expensed when incurred and mainly consist of employee salaries and share-based compensation and are classified within our technology and development expense categories within our consolidated statements of operations and comprehensive (loss) income. 105 Critical Accounting Estimates Use of estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported revenues and expenses during the reporting period and accompanying notes. Making estimates requires management to exercise significant judgment. It is reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the future due to one or more future confirming events. Such estimates reflected in our consolidated financial statements include, but are not limited to, the fair value of share-based compensation expense, redemption value of our redeemable preferred shares, depreciable lives of property and equipment, useful lives of intangible assets, purchase price allocation for business combinations, allowances for expected credit losses, loss contingency accruals, present value of lease liabilities, and provision for income tax, including unrecognized tax benefits and deferred tax asset valuation allowances. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable. Actual results could differ from those estimates Asset Acquisitions We account for the acquisition of an entity as an asset acquisition when substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. In accordance with ASC 805, Business Combinations, the value of the consideration paid in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair values with no resulting goodwill. Business Combinations We account for acquisitions of entities or asset groups that qualify as businesses in accordance with ASC 805, Business Combinations. The purchase price of the acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the consolidated statements of operations and comprehensive (loss) income. Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination and is allocated to reporting units expected to benefit from the business combination. We test goodwill for impairment at least annually, in the fourth quarter, or whenever events or changes in circumstances indicate that goodwill might be impaired. In testing for goodwill impairment, we first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if we conclude otherwise, we proceed to a quantitative assessment. The quantitative assessment compares the estimated fair value of a reporting unit to its book value, including goodwill. If the fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary. However, if the book value of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. As of December 31, 2025, we performed a qualitative assessment of our goodwill. Based upon our assessment, we noted no qualitative factors that indicate our goodwill is more than likely impaired; and, therefore, we did not perform the quantitative assessment. Income taxes Our income tax expense is an estimate of current income taxes payable in the current fiscal year based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences and carryforwards that we recognize for financial reporting and income tax purposes at enacted tax rates expected to be in effect when taxes are actually paid or recovered. 106 We account for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 requires the use of the asset and liability method, which requires recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements, but have not been reflected in our taxable income. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe that they will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets including, but not limited to, historical cumulative loss experience and expectations of future earnings, tax planning strategies, and the carry-forward periods available for tax reporting purposes. Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our tax provision would increase or decrease in the period in which the assessment is changed. We recognize a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized. We account for uncertain tax positions, including net interest and penalties, as a component of income tax expense or benefit. We make adjustments to these uncertain tax positions in accordance with applicable income tax guidance and based on changes in facts and circumstances. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact to our consolidated financial statements and operating results. Revenue Recognition We utilize the guidance of ASC 606, Revenue from Contracts with Customers to identify our customers for purposes of revenue recognition and accounting for consideration payable to customers. We have determined that our market makers are customers as we route our platform users’ trading orders to market makers in an agency capacity, as we do not buy or resell securities from or to platform users or market makers, in return for the market makers’ payments for order flow. In limited circumstances, we charge trading fees to our platform users; and, therefore, we have determined that (i) our platform users who pay us index option fees, large order option fees, futures contract commissions or fixed income execution fees and (ii) our international platform users who pay trading commissions are considered customers under ASC 606. We recognize revenue from contracts with customers when we satisfy our performance obligations by transferring the promised services to our customers. A service is transferred to a customer when the customer obtains control of that service. A performance obligation may be satisfied at a point in time or over time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised service. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. The amount of revenue recognized reflects the consideration we expect to receive in exchange for those promised services (i.e., the “Transaction Price”). In the event we have consideration payable to a customer, we account for consideration payable as a reduction to the Transaction Price when (i) the payment is not in exchange for a distinct good or service or (ii) the fair value of the consideration payable to the customer exceeds the fair value of the distinct good or service received from the customer in which case the excess fair value is accounted as a reduction to the Transaction Price. Our revenues from contracts with customers are recognized when the performance obligations are satisfied at an amount that reflects the consideration expected to be received in exchange for such services. Most of our performance obligations are satisfied at a point in time upon the successful execution of a platform user’s trade order. No significant judgement is required to assess the timing of satisfaction of our performance obligations, the Transaction Price or the amounts allocated to distinct performance obligations. The payment terms with our customers do not give rise to a significant financing component as the period between when we satisfy our performance obligations and when our customers are required to pay is one year or less. Our revenue does not include any variable consideration. 107 Share-based compensation We apply the guidance of ASC Topic 718, Compensation — Stock Compensation (ASC 718) with regard to our share-based awards issued to employees and non-employees. Accordingly, we must review each share-based award to determine the appropriate classification as either an equity or liability award. Our outstanding awards were determined to be equity awards and are classified as such as of December 31, 2024 and 2025. ASC 718 requires share-based compensation to be based on fair value. The fair value of our share-based awards is measured at the grant date which is when vesting commences. The grant date fair value is the basis for determining the amount of share-based compensation to recognize from the issuance of a share-based award. We record share-based compensation as an operating expense. We recognize share-based compensation using the graded vesting method of attribution and account for forfeitures in the period in which the share-based award is forfeited. See Note 21 — Share-Based Compensation within our consolidated financial statements included within this Report for further information on our share-based awards and the share-based compensation we recognized for the years ended December 31, 2023, 2024 and 2025. Fair value of our ordinary shares Prior to the Business Combination, we were a private company with no quoted market prices for our ordinary shares. We therefore make estimates of the fair value of our ordinary shares on various dates for the purpose of determining the fair value of our ordinary shares at the date of the grant of share-based compensation awards to our employees as one of the inputs into determining the grant date fair value of the award. Valuations of our ordinary shares were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants’ Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, and with the assistance of an independent valuation specialist. The assumptions we use in the valuation model are based on future expectations combined with management judgment, with inputs of numerous objective and subjective factors, to determine the fair value of our ordinary shares, including the following factors: ● our operating and financial performance; ● current business conditions and projections; 108 ● our stage of development; ● the prices, rights, preferences and privileges of our convertible redeemable preferred shares to our ordinary shares; ● the likelihood of achieving a liquidity event for the ordinary shares underlying these share-based awards, such as an initial public offering; ● any adjustment necessary to recognize a lack of marketability for our ordinary shares; and the market performance of industry peers. The determination of the fair value of our ordinary shares requires complex and subjective judgments to be made regarding our operating results, our unique business risks, the liquidity of our shares and our operating history and prospects at the time of valuation. Following the completion of the Business Combination and the listing of our Class A ordinary shares on the Nasdaq stock exchange, there is an active market for our Class A ordinary shares, so assumptions and estimates are no longer necessary to determine the fair value of our Class A ordinary shares. Recently Issued Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Note 3 to our consolidated financial statements included elsewhere in this Report.