{"url_path":"/sec/rct/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 EXHIBITS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/2027360/0001493152-26-023944-index.html","accession_number":"0001493152-26-023944","cik":"0002027360","ticker":"RCT","issuer_name":"RedCloud Holdings plc","edgar_url":"https://www.sec.gov/Archives/edgar/data/2027360/0001493152-26-023944-index.html","primary_entity_key":"0002027360","primary_entity_name":"RedCloud Holdings plc"},"word_count":19680,"has_tables":true,"body_markdown":"**ITEM\n19. EXHIBITS**\n\n \n\n**Exhibit\nNo.**\n \n**Description**\n\n1.1\n \n[Articles of Association of RedCloud Holdings plc, adopted on December 9, 2024 (incorporated by reference to Form F-1/A filed February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225001828/ex3-1.htm)\n\n2.1\n \n[Form of Representative’s Warrant (incorporated by reference to Exhibit 4.10 to the Registration Statement on Form F-1/A filed February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225001828/ex4-8.htm)\n\n2.2\n \n[Form of Warrant, dated July 8, 2025 (incorporated by reference to Exhibit 4.1 to the Report of Foreign Private Issuer on Form 6-K filed with the SEC on July 9, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000164117225018453/ex4-1.htm)\n\n2.3\n \n[Form of Senior Convertible Note, dated February 27, 2026 (incorporated by reference to Exhibit 4.1 to the Report of Foreign Private Issuer on Form 6-K filed with the SEC on February 27, 2026)](https://www.sec.gov/Archives/edgar/data/2027360/000149315226008374/ex4-1.htm)\n\n2.4\n \n[Description of Securities](ex2-4.htm)\n\n4.1\n \n[Form of Securities Purchase Agreement, dated July 3, 2025 (incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K filed with the SEC on July 9, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000164117225018453/ex10-1.htm)\n\n4.2\n \n[Registration Rights Agreement, dated July 3, 2025 (incorporated by reference to Exhibit 10.3 to the Report of Foreign Private Issuer on Form 6-K filed with the SEC on July 9, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000164117225018453/ex10-3.htm)\n\n4.3\n \n[Form of Ordinary Share Purchase Agreement, dated February 26, 2026 (incorporated by reference to Exhibit 10.1 to the Report of Foreign Private Issuer on Form 6-K filed with the SEC on February 27, 2026)](https://www.sec.gov/Archives/edgar/data/2027360/000149315226008374/ex10-1.htm)\n\n4.4\n \n[Form of Note Securities Purchase Agreement, dated February 26, 2026 (incorporated by reference to Exhibit 10.2 to the Report of Foreign Private Issuer on Form 6-K filed with the SEC on February 27, 2026)](https://www.sec.gov/Archives/edgar/data/2027360/000149315226008374/ex10-2.htm)\n\n4.5\n \n[Form of Equity Line of Credit Registration Rights Agreement, dated February 26, 2026 (incorporated by reference to Exhibit 10.3 to the Report of Foreign Private Issuer on Form 6-K filed with the SEC on February 27, 2026)](https://www.sec.gov/Archives/edgar/data/2027360/000149315226008374/ex10-3.htm)\n\n4.6\n \n[Form of Note Registration Rights Agreement, dated February 26, 2026 (incorporated by reference to Exhibit 10.4 to the Report of Foreign Private Issuer on Form 6-K filed with the SEC on February 27, 2026)](https://www.sec.gov/Archives/edgar/data/2027360/000149315226008374/ex10-4.htm)\n\n4.7*\n \n[Framework Loan Agreement, dated March 25, 2026, by and between RedCloud Technologies Limited and Lienhardt & Partner Privatbank Zürich AG](ex4-7.htm)\n\n4.8*\n \n[Amended and Restated Framework Loan Agreement, dated October 27, 2025, by and between RedCloud Technologies Limited and Lienhardt & Partner Privatbank Zürich AG](ex4-8.htm)\n\n4.9*\n \n[Loan Facility Agreement, dated November 26, 2025, by and between RedCloud Technologies Limited and Christina Elisabeth Byland](ex4-9.htm)\n\n4.10*\n \n[Loan Facility Agreement, dated December 17, 2025, by and between RedCloud Technologies Limited and Christina Elisabeth Byland](ex4-10.htm)\n\n4.11+\n \n[Form of Service Agreement with Mr. Justin Floyd (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225001828/ex10-1.htm)\n\n4.12+\n \n[Form of Service Agreement with Ms. Soumaya Hamzaoui (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225001828/ex10-2.htm)\n\n4.13+\n \n[Form of Option Exchange Agreement (incorporated by reference to the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225001828/ex10-6.htm)\n\n4.14+\n \n[2024 Equity Incentive Plan (incorporated by reference to the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225001828/ex10-7.htm)\n\n4.15+\n \n[Form of RTL Enterprise Management Incentive Plan (incorporated by reference to the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225001828/ex10-8.htm)\n\n \n\n75\n\n \n\n \n\n4.16+\n \n[Form of RTL Share Option Plan for Contractors (incorporated by reference to the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225001828/ex10-9.htm)\n\n4.17+\n \n[Form of Non-Executive Director Offer Letter (incorporated by reference to the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225001828/ex10-10.htm)\n\n4.18+\n \n[Form of Director Offer Letter with Prem Parameswaran (incorporated by reference to the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315225004473/ex11-11.htm)\n\n8.1*\n \n[Subsidiaries of RedCloud Holdings plc](ex8-1.htm)\n\n12.1*\n \n[Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2022](ex12-1.htm)\n\n12.2*\n \n[Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2022](ex12-2.htm)\n\n13.1**\n \n[Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. 1350](ex13-1.htm)\n\n14.1\n \n[Code of Ethics of RedCloud Holdings plc (incorporated by reference to Exhibit 14.1 to the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315224043717/ex14-1.htm)\n\n15.1*\n \n[Consent of PKF Littlejohn LLP, Independent Registered Public Accounting Firm](ex15-1.htm)\n\n15.2*\n \n[Consent of Turner, Stone & Company, L.L.P., Independent Registered Public Accounting Firm](ex15-2.htm)\n\n19.1\n \n[Insider Trading Policy of RedCloud Holdings plc (incorporated by reference to Exhibit 19.1 the Registration Statement on Form F-1/A filed with the SEC on February 27, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000149315224043717/ex19-1.htm)\n\n97.1\n \n[Compensation Clawback Policy (incorporated by reference to Exhibit 97.1 to RedCloud Holdings plc’s Annual Report on Form 20-F for the fiscal year ended December 31, 2024 filed with the SEC on May 16, 2025)](https://www.sec.gov/Archives/edgar/data/2027360/000164117225011298/ex97-1.htm)\n\n101.INS*\n \nInline\nXBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within\nthe Inline XBRL document.\n\n101.SCH*\n \nInline\nXBRL Taxonomy Extension Schema Document\n\n101.CAL*\n \nInline\nXBRL Taxonomy Extension Calculation Linkbase Document\n\n101.DEF*\n \nInline\nXBRL Taxonomy Extension Definition Linkbase Document\n\n101.LAB*\n \nInline\nXBRL Taxonomy Extension Label Linkbase Document\n\n101.PRE*\n \nInline\nXBRL Taxonomy Extension Presentation Linkbase Document\n\n104\n \nCover\nPage Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)\n\n \n\n*\nFiled\nherewith.\n\n**\nFurnished\nherewith.\n\n†\nCertain\nportions of this exhibit (indicated by “[*]”) have been omitted pursuant to Item 601(b)(10)(iv). The Company hereby agrees\nto furnish supplementally an unredacted copy of the exhibit to the SEC upon its request.\n\n+\nDenotes\nmanagement contract or compensatory plan or arrangement.\n\n \n\n76\n\n \n\n \n\n**SIGNATURE**\n\n \n\nThe\nregistrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized\nthe undersigned to sign this annual report on its behalf.\n\n \n\nMay\n15, 2026\nREDCLOUD\nHOLDINGS PLC\n\n \n \n \n\n \nBy:\n\n*/s/\nJustin Floyd*\n\n \n \nJustin\nFloyd\n\n \n \nChief\nExecutive Officer\n\n \n\n77\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\n \n\nTABLE\nOF CONTENTS\n\n \n\n**REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS**\n \nF-1\n\n \n \n \n\n**CONSOLIDATED\nFINANCIAL STATEMENTS**\n \n \n\n[Consolidated Balance Sheets](#sa_002)\n \nF-3\n\n[Consolidated Statements of Operations](#sa_003)\n \nF-4\n\n[Consolidated Statements of Comprehensive Loss](#sa_004)\n \nF-5\n\n[Consolidated Statements of Stockholders’ Deficit](#sa_005)\n \nF-6\n\n[Consolidated Statements of Flows](#sa_006)\n \nF-7\n\n[Notes to the Consolidated Financial Statements](#sa_007)\n \nF-8\n- F-43\n\n \n\n78\n\n \n\n  \n\n**Report\nof Independent Registered Public Accounting Firm**\n\n \n\nTo\nthe Board of Directors and Stockholders of RedCloud Holdings PLC\n\n \n\n**Opinion\non the Consolidated Financial Statements**\n\n \n\nWe\nhave audited the accompanying consolidated balance sheets of RedCloud Holdings plc (the “Company”) as of December 31, 2025,\nthe related consolidated statements of operations, comprehensive loss, stockholders’ deficit , and cash flows for the year in the\nperiod ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).\nIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company\nas of December 31, 2025, and the results of its operations and its cash flows for the year in the period ended December 31, 2025, in\nconformity with accounting principles generally accepted in the United States of America.\n\n \n\n**Basis\nfor Opinion**\n\n \n\nThese\nconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion\non the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public\nCompany Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company\nin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission\nand the PCAOB.\n\n \n\nWe\nconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain\nreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.\nThe Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part\nof our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing\nan opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur\naudits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether\ndue to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence\nregarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles\nused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.\nWe believe that our audits provide a reasonable basis for our opinion.\n\n \n\n**Substantial\nDoubt about the Company’s Ability to Continue as a Going Concern**\n\n \n\nThe\naccompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described\nin Note 2 to the consolidated financial statements, the Company currently is loss making, has not yet achieved profitability, continues\nto operate with limited liquidity and has a working capital deficiency and needs to raise additional funds to meet its obligations.\n\n \n\nSources\nof liquidity have been provided from the issuance of senior convertible notes, the Equity Line of Credit (ELOC) and shareholder loans.\nThere is no assurance the sources of funding will be available in the future or under similar terms. These conditions raise substantial\ndoubt about the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described\nin Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result\nfrom the outcome of this uncertainty.\n\n \n\nPKF\nLittlejohn LLP\n\nPCAOB\nRegistration Number 2814\n\nLondon,\nEngland\n\n \n\nWe\nhave served as the Company’s auditor since 2025.\n\n \n\nF-1\n\n \n\n \n\n**Report\nof Independent Registered Public Accounting Firm**\n\n \n\nTo\nthe Board of Directors and Stockholders of\n\n \n\nRedCloud\nHoldings plc\n\n \n\n**Opinion\non the Financial Statements**\n\n \n\nWe\nhave audited the accompanying consolidated balance sheet of RedCloud Holdings plc (the “Company”) as of December 31, 2024 and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ deficit\nand cash flows for the year then ended, and the related notes to the financial statements (collectively referred to as the\n“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the\nfinancial position of the Company as of December 31, 2024 and the results of its operations and its cash flows\nfor the year then ended, in conformity with accounting principles generally accepted in the United States of America.\n\n \n\n**Going\nConcern**\n\n \n\nThe\naccompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note\n2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that\nraise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also\ndescribed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\n \n\n**Basis\nfor Opinion**\n\n \n\nThese\nfinancial statements are the responsibility of the Company´s management. Our responsibility is to express an opinion on these financial\nstatements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United\nStates) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal\nsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe\nconducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to\nobtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.\nThe Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As\npart of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose\nof expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we\nexpress no such opinion.\n\n \n\nOur\naudit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,\nand performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts\nand disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant\nestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit\nprovides a reasonable basis for our opinion.\n\n \n\n*/s/*\n*Turner, Stone & Company, L.L.P**.*\n\n \n\nTurner, Stone & Company, L.L.P.\n\n \n\nPCAOB\nID: 76\n\n \n\nDallas,\nTexas,\n\nMay\n16, 2025\n\n \n\nWe\nhave served as the Company’s auditor from 2023 through September 24, 2025.\n\n \n\nF-2\n\n \n\n  \n\n**REDCLOUD\nHOLDINGS PLC**\n\nCONSOLIDATED\nBALANCE SHEETS\n\n*DECEMBER 31, 2025 AND 2024*\n\n* *\n\n  \n  \n   \n  \n\n  \n \nDecember 31,  \nDecember 31, \n\n(In United States dollars, except shares and par value) \nNotes \n2025  \n2024 \n\nASSETS \n  \n   \n  \n\nCurrent Assets: \n  \n    \n   \n\nCash and cash equivalents \n  \n$478,983  \n$800,735 \n\nRestricted Cash \n  \n -  \n 31,936 \n\nAccounts receivables and other receivables, net \n3 \n 2,771,443  \n 5,528,826 \n\nIncome taxes receivable \n  \n 257,304  \n 1,657,829 \n\nPrepayments \n4 \n 1,660,661  \n 2,269,493 \n\nOther current assets \n4 \n 176,044  \n 509,333 \n\nTotal Current Assets \n  \n 5,344,435  \n 10,798,152 \n\n  \n  \n    \n   \n\nNon Current Assets: \n  \n    \n   \n\nProperty and equipment, net \n5 \n 444,967  \n 593,357 \n\nIntangible assets, net \n6 \n 6,730,155  \n 6,168,534 \n\nInvestment in Joint Venture \n  \n 134,475  \n - \n\nTotal Non Current Assets \n  \n 7,309,597  \n 6,761,891 \n\nTotal Assets \n  \n$12,654,032  \n$17,560,043 \n\n  \n  \n    \n   \n\nLIABILITIES AND STOCKHOLDERS’ DEFICIT \n  \n    \n   \n\nCurrent Liabilities: \n  \n    \n   \n\nAccounts payable \n  \n$2,364,291  \n$3,373,487 \n\nVouchers payable \n  \n 2,897,175  \n 6,477,256 \n\nAccrued expenses \n7 \n 2,232,670  \n 3,128,515 \n\nValue-added tax payable \n  \n 233,441  \n 32,387 \n\nOther current liabilities \n8 \n -  \n 143,073 \n\nShareholder loans payable \n  \n 8,123,835  \n 50,057,013 \n\nShort-term borrowings \n  \n 3,765,234  \n 558,206 \n\nTotal Current Liabilities \n  \n 19,616,646  \n 63,769,937 \n\n  \n  \n    \n   \n\nNon Current Liabilities: \n  \n    \n   \n\nConvertible Shareholder loans, at fair value \n9 \n -  \n 22,560,124 \n\nTotal Non current Liabilities \n  \n -  \n 22,560,124 \n\nTotal Liabilities \n  \n 19,616,646  \n 86,330,061 \n\n  \n  \n    \n   \n\nCommitments and Contingencies (Note 15) \n  \n -  \n - \n\n  \n  \n    \n   \n\nStockholders’ Deficit: \n  \n    \n   \n\nCommon stock £0.002 par value; [79,420,315] shares authorized; 55,318,354 and 25,000,043 shares issued and outstanding as of December 31, 2025 and 2024, respectively \n11 \n 137,820  \n 65,280 \n\nAdditional paid-in capital \n  \n 183,489,676  \n 74,374,429 \n\nAccumulated deficit \n  \n (194,657,170) \n (148,420,321)\n\nAccumulated other comprehensive income \n  \n 4,067,061  \n 5,210,594 \n\nTotal Stockholders’ Deficit \n  \n (6,962,613) \n (68,770,018)\n\nTotal Liabilities and Stockholders’ Deficit \n  \n$12,654,033  \n$17,560,043 \n\n \n\nThe\naccompanying notes are an integral part of these financial statements.\n\n* *\n\nF-3\n\n \n\n**\n\n* *** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nCONSOLIDATED\nSTATEMENTS OF OPERATIONS\n\n*FOR\nTHE YEARS ENDED DECEMBER 31, 2025 AND 2024*\n\n* *\n\n  \n \nDecember 31,  \nDecember 31, \n\n  \n  \nFor the years ended \n\n  \n \nDecember 31,  \nDecember 31, \n\n  \nNotes \n2025  \n2024 \n\nRevenue \n  \n$48,539,353  \n$46,499,285 \n\n  \n  \n    \n   \n\nOperating expenses: \n  \n    \n   \n\nGeneral and administrative \n  \n 10,474,040  \n 3,922,348 \n\nSalaries, benefits, contractor costs \n  \n 21,761,699  \n 19,256,255 \n\nMarketing and commissions \n  \n 49,124,527  \n 52,918,949 \n\nTravel \n  \n 988,075  \n 1,930,599 \n\nProfessional fees \n  \n 2,691,821  \n 2,112,047 \n\nProduct and technology development \n  \n 4,386,105  \n 3,126,087 \n\nDepreciation and amortization \n  \n 2,717,640  \n 1,881,323 \n\nTotal operating expenses \n  \n 92,143,907  \n 85,147,608 \n\nNet loss from operations \n  \n (43,604,554) \n (38,648,323)\n\n  \n  \n    \n   \n\n  \n  \n    \n   \n\nOther expense: \n  \n    \n   \n\nInterest (income)/expense \n  \n 2,189,964  \n 3,120,054 \n\nOther Income \n13 \n (1,165,544) \n - \n\nGain on Debt Extinguishment \n  \n -  \n 4,377,051 \n\nLoss from change in fair-value of convertible shareholder loans \n  \n -  \n 5,951,087 \n\nForeign currency loss \n  \n 1,607,877  \n 470,219 \n\nNet loss before income taxes \n  \n (46,236,851) \n (52,566,734)\n\n  \n  \n    \n   \n\nIncome tax benefit \n13 \n -  \n 1,851,038 \n\nNet loss \n  \n$(46,236,851) \n$(50,715,696)\n\n  \n  \n    \n   \n\nLoss per Share \n  \n    \n   \n\nLoss per Share, basic and diluted \n  \n$(1.03) \n$(2.09)\n\nWeighted-average common shares outstanding, basic and diluted \n  \n 45,017,170  \n 24,297,063 \n\n \n\nThe\naccompanying notes are an integral part of these financial statements.\n\n \n\nF-4\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nCONSOLIDATED\nSTATEMENTS OF COMPREHENSIVE LOSS\n\n*FOR\nTHE YEARS ENDED DECEMBER 31, 2025 AND 2024*\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n` \nFor the years ended \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nNet Loss \n$(46,236,851) \n$(50,715,696)\n\nForeign currency translation adjustment net of tax \n (1,513,200) \n 3,239,828 \n\nOther comprehensive income, net of tax \n (1,513,200) \n 3,239,828 \n\nComprehensive loss \n$(47,750,051) \n$(47,475,868)\n\n \n\nThe\naccompanying notes are an integral part of these financial statements.\n\n \n\nF-5\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nCONSOLIDATED\nSTATEMENTS OF STOCKHOLDERS’ DEFICIT\n\n*FOR\nTHE YEARS ENDED DECEMBER 31, 2025 AND 2024*\n\n* *\n\n  \n**Shares**  \n**Amount** ** **\n**Capital**** **** **\n**Deficit**** **** **\n**Income (Loss)**** **** **\n**Deficit** \n\n  \nCommon Stock  \nAdditional Paid-In   \nAccumulated   \nAccumulated Other Comprehensive   \nTotal Stockholders’  \n\n  \n**Shares**  \n**Amount** ** **\n**Capital**** **** **\n**Deficit**** **** **\n**Income (Loss)**** **** **\n**Deficit** \n\nBalances, January 1, 2024 \n 21,667,738  \n$56,798  \n$73,108,399  \n$(97,704,625) \n$1,970,765  \n$(22,568,663)\n\nCommon stock issued \n 3,332,305  \n 8,482  \n (8,482) \n -  \n -  \n - \n\nStock-based compensation \n -  \n -  \n 1,275,425  \n -  \n -  \n 1,275,425 \n\nNet loss \n -  \n -  \n -  \n (50,715,696) \n -  \n (50,715,696)\n\nForeign currency Translation adjustment, net of tax \n -  \n -  \n (913) \n -  \n 3,239,829  \n 3,238,916 \n\nBalances, December 31, 2024 \n 25,000,043  \n$65,280  \n$74,374,429  \n$(148,420,321) \n$5,210,594  \n$(68,770,018)\n\n \n\n  \nCommon Stock  \nAdditional Paid-In   \nAccumulated   \nAccumulated Other Comprehensive   \nTotal Stockholders’  \n\n  \n**Shares**  \n**Amount** ** **\n**Capital**** **** **\n**Deficit**** **** **\n**Income (Loss)**** **** **\n**Deficit** \n\nBalances, January 1, 2025 \n 25,000,043  \n$65,280  \n$74,374,429  \n$(148,420,321) \n$5,210,594  \n$(68,770,018)\n\nBalances \n 25,000,043  \n$65,280  \n$74,374,429  \n$(148,420,321) \n$5,210,594  \n$(68,770,018)\n\nCommon stock issued through IPO \n 4,444,445  \n 11,580  \n 20,290,650  \n -  \n -  \n 20,302,230 \n\nConversion of shareholder loan into common shares \n 14,782,149  \n 38,776  \n 73,499,761  \n -  \n -  \n 73,538,537 \n\nPreference shares - redeemed \n -  \n -  \n -  \n -  \n -  \n - \n\nStock-based compensation \n -  \n -  \n 7,824,176  \n -  \n -  \n 7,824,176 \n\nExtinguishment of Debt \n -  \n -  \n (3,838,715) \n -  \n -  \n (3,838,715)\n\nIPO and share issuance direct costs \n -  \n -  \n (5,276,018) \n -  \n -  \n (5,276,018)\n\nShare issue \n 9,000,000  \n 18,000  \n 13,482,000  \n -  \n -  \n 13,500,000 \n\nWarrants issued \n 2,091,717  \n 4,184  \n 3,133,393  \n -  \n -  \n 3,137,577 \n\nNet loss \n -  \n -  \n -  \n (46,236,849) \n -  \n (46,236,849)\n\nForeign currency Translation adjustment, \n -  \n -  \n -  \n -  \n (1,143,533) \n (1,143,533)\n\nBalances, December 31, 2025 \n 55,318,354  \n$137,820  \n$183,489,676  \n$(194,657,170) \n$4,067,061  \n$(6,962,613)\n\nBalances \n 55,318,354  \n$137,820  \n$183,489,676  \n$(194,657,170) \n$4,067,061  \n$(6,962,613)\n\n \n\nThe\naccompanying notes are an integral part of these financial statements.\n\n \n\nF-6\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nCONSOLIDATED\nSTATEMENTS OF CASH FLOWS\n\n*FOR\nTHE YEARS ENDED DECEMBER 31, 2025 AND 2024*\n\n* *\n\n  \nDecember 31,  \nDecember 31, \n\n  \nFor the year-ended \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nCash flows from operating activities: \n    \n   \n\nNet loss \n$(46,236,851) \n$(50,715,696)\n\nAdjustments reconcile net loss to cash used in operating activities: \n    \n   \n\nDepreciation and amortization \n 2,717,640  \n 1,881,323 \n\nStock-based compensation \n 7,824,176  \n 1,275,425 \n\nBad debt expense \n 99,217  \n 44,457 \n\nLoss from change in fair-value of convertible shareholder loan \n -  \n 5,951,087 \n\nNon-cash gain on debt extinguishment \n -  \n 4,377,051 \n\nAccrued interest expense on shareholder loans \n 199,605  \n 1,957,401 \n\nShareholder loan debt discounts \n -  \n 192,632 \n\nUnrealised loss/(gains) \n (1,160,857) \n (488,158)\n\nChanges in operating assets and liabilities: \n    \n   \n\nAccounts receivable and other receivables \n 2,658,166  \n (3,957,116)\n\nPrepayments and Other current assets \n 942,121  \n (2,663,083)\n\nAccounts payable and vouchers payable \n (4,589,278) \n 7,361,586 \n\nAccrued expenses \n (895,845) \n 2,107,266 \n\nValue-added tax payable \n 201,054  \n (670,241)\n\nIncome taxes receivable \n 1,400,525  \n (1,390,745)\n\nOther current liabilities \n (143,073) \n 57,356 \n\nNet cash used in operating activities \n (36,983,400) \n (34,679,455)\n\n  \n    \n   \n\nCash flows from investing activities: \n    \n   \n\nPurchases of property and equipment \n (147,196) \n (629,958)\n\nPurchases of intangible assets \n (2,983,675) \n (3,261,930)\n\nAcquisition of investment in joint venture \n (134,476) \n - \n\nNet cash used in investing activities \n (3,265,347) \n (3,891,888)\n\n  \n    \n   \n\nCash flows from financing activities: \n    \n   \n\nProceeds from issuance of common stock \n 36,670,703  \n - \n\nProceed from issuance of debt (convertible loans) \n -  \n 7,228,736 \n\nProceed from shareholder loan \n -  \n 27,820,784 \n\nProceeds from short-term borrowings \n 3,207,028  \n - \n\nNet cash provided by financing activities \n 39,877,731  \n 35,049,520 \n\n  \n    \n   \n\nEffect of exchange rate changes on cash and cash equivalents \n 17,328  \n 3,767,344 \n\n  \n    \n   \n\nChange in cash, cash equivalents and restricted cash during the year \n (353,689) \n 245,521 \n\nCash, cash equivalents and restricted cash, beginning of year \n 832,671  \n 587,150 \n\n  \n    \n   \n\nCash, cash equivalents and restricted cash, end of period \n$478,982  \n$832,671 \n\n  \n\n*Non-cash transactions in the year related to the folowing: \n    \n   \n\nConversion of Shareholders loans to equity on IPO \n 42,132,783  \n$- \n\nConvertible loans to equity \n 22,560,124  \n$- \n\n \n\nF-7\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n1 - Nature of business**\n\n** **\n\nRedCloud\nHoldings plc (“RedCloud Holdings” or the “Parent Company”), together with its wholly-owned subsidiaries\n(collectively, the “Company” or “RedCloud Group”), operates a business-to-business intelligent\ninfrastructure for global trade, RedAI. The Company’s intelligent infrastructure facilitates digital trade in Nigeria,\nSouth Africa, Brazil, Peru, and Argentina, with supporting operations and cost centers located in the United Kingdom and\nPortugal.\n\n \n\nRedCloud\nTechnologies Ltd (“RedCloud Technologies”) was incorporated in the United Kingdom on February 3, 2014, and historically served\nas the operating and holding entity of the RedCloud Group. On October 23, 2024, a corporate restructuring was completed pursuant to which\nRedCloud Holdings PLC, a private company limited by shares incorporated under the laws of England and Wales, was formed as the new ultimate\nparent of the RedCloud Group. RedCloud Holdings PLC was established to facilitate future strategic and capital market initiatives, including\npotential public listing activities. This restructuring had no impact on the underlying operations of the business.\n\n \n\nThe\nCompany provides services through the RedAI infrastructure, enabling commerce between registered users. Buyers (typically\nsmall-to-medium merchants) can purchase fast-moving consumer goods (“FMCG”) from Sellers (brands and distributors)\nconnected by trading networks, Red101 and TradeX. RedInsights provides data analytics and insights drawn from over 50,000 individual\nmarket data points in real-time. The Company continues to offer payments and finance capabilities through leading payments providers\nin each operating country.\n\n \n\nToday,\nthe Company generates revenue primarily through transaction-based commissions calculated as a percentage of the value of goods sold\nacross RedAI’s trading networks.\n\n \n\n**Note\n2 - Summary of significant accounting policies**\n\n** **\n\n**Basis\nof presentation**\n\n** **\n\nThese\nconsolidated financial statements (“financial statements”) have been presented in United States dollars (“$”\nor “USD”) unless otherwise indicated and are prepared in accordance with United States generally accepted accounting principles\n(“US GAAP”) and in accordance with the requirements of the Companies Act 2006.\n\n \n\nThe\ntransition to US GAAP is in line with the provisions of The Accounting Standards (Prescribed Bodies) (United States of America and Japan)\n(Amended) Regulations 2023, which permit UK-incorporated companies with securities listed on a US stock exchange to prepare their group\nfinancial statements in accordance with US GAAP for a transitional period of up to four years. This transitional relief is intended to\nfacilitate redomiciliation and reduce the administrative burden of immediate conversion to UK GAAP or IFRS as adopted in the UK. Accordingly,\nthese financial statements represent the Group’s first annual financial statements prepared under US GAAP.\n\n \n\nThe\nprincipal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently\napplied to all the periods presented, unless otherwise stated.\n\n \n\nThe\nCompany was incorporated on 14 April 2024 and on 23 October 2024, the Company (“RCH”) acquired 100% of the share capital\nof Redcloud Technologies Limited (“RCT”) in exchange for shares in the Company.\n\n \n\nWhilst\na separate legal entity, the consolidated financial statements are a continuation of that of RCT. As there were no changes in the rights\nor proportion of control exercised as a result of the share-for-share exchange, the financial statements were prepared applying the principles\nof predecessor accounting ownership. This transaction is considered a combination of entities under common control and therefore falls\noutside the scope of ASC 805 “Business Combinations” under U.S. GAAP. U.S. GAAP provides specific guidance for common control\ntransactions, which are accounted for using the carryover basis. Under the carryover basis, the assets and liabilities of the combining\nentities are recognized at their existing book values, and no fair value adjustments or goodwill are recorded.\n\n \n\nF-8\n\n \n\n  \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n \n\nThe\nfinancial statements reflect the historical carrying amounts of the entities involved, consistent with the principles applicable to common\ncontrol transactions under U.S. GAAP. Under this method, the financial statements of the parties to the combination are aggregated and\npresented as though the combining entities had always been part of the same group, rather than from the restructuring date.\n\n \n\nAs\na result, the comparatives presented in these financial statements represent the audited consolidated results of the Group for the year\nended December 31, 2024 (as filed with the U.S. Securities and Exchange Commission), presented on a predecessor basis and updated to\nreflect the share capital structure of RedCloud Holdings PLC The 2024 comparative information is audited; earlier periods are not presented\nin these financial statements.\n\n \n\nThe\ncurrent period consolidated statement of financial position reflects the legal change in ownership of the Group, including the share\ncapital of the Company. The opening consolidated statement of changes in equity as at January 1, 2024 has been restated to reflect the\nCompany’s share capital structure as if it existed on that date.\n\n \n\nThe\ninvestment by the Company in RCT is eliminated and the difference between the fair value and nominal value of the shares was adjusted\nthrough the merger reserve in the Group statement of financial position, along with any existing share capital and share premium in Redcloud\nTechnology Limited.\n\n \n\n**Going\nconcern**\n\n** **\n\nThe\nconsolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to realise its\nassets and discharge its liabilities in the normal course of business.\n\n \n\nThe\nGroup generated revenue of $48.5 million for the year ended 31 December 2025 (2024: $46.5 million), reflecting continued growth in its\noperations. However, the Group incurred a net loss of $46.2 million (2024: $50.7 million) and, as at 31 December 2025, held cash and\ncash equivalents of $0.5 million. While losses have reduced year on year, the Group has not yet achieved profitability and continues\nto operate with limited liquidity.\n\n \n\nAs\nof December 31, 2025, the Company had a stockholders’ deficit of $6,962,613 working capital deficiency of $426,330 and cash used\nin operating activities of $36,983,400. The largest component of current liabilities creating this working capital deficiency is by way\nof loans from a long-term shareholder.\n\n \n\nAccordingly,\nthe Group remains dependent on its ability to generate sufficient cash flows from operations and/or raise additional capital to meet\nits obligations as they fall due and to fund ongoing operations and growth initiatives.\n\n \n\nThese\nconditions indicate the existence of a material uncertainty that may cast significant doubt on the Group’s ability to continue\nas a going concern and therefore its ability to realise its assets and settle its liabilities in the normal course of business.\n\n \n\nNotwithstanding\nthis material uncertainty, the Directors consider it appropriate to prepare the consolidated financial statements on a going concern\nbasis, taking into account the following factors:\n\n \n\n●\nThe Group entered into an Equity Line of Credit (ELOC) providing access to up to $30.0 million over a 24 month period, subject to customary conditions.\n\n●\nThe Group issued senior convertible notes, raising approximately $4.0 million in gross proceeds.\n\n●\nThe Group executed ELOC\ndrawdowns in April and May 2026, generating approximately $1.4\nmillion in additional proceeds.\n\n●\nPreviously issued warrants were exercised, generating approximately $0.9 million in cash proceeds.\n\n●\nThe Group obtained a GBP 1.0 million shareholder loan, providing additional short term liquidity support.\n\n \n\nIn\naggregate, the Group raised approximately $5.3 million in cash proceeds (excluding the GBP facility) subsequent to year end and retains\naccess to significant additional funding under the ELOC.\n\n \n\nManagement\nbelieves the Company will be able to continue to develop new opportunities and will be able to obtain additional funds through debt and\n/ or equity financing to facilitate its business strategy. These consolidated financial statements do not include any adjustments to\nthe recorded assets or liabilities that might be necessary should the Company have to curtail or be unable to continue operations.\n\n \n\nF-9\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n** **\n\n**Basis\nof consolidation**\n\n** **\n\nThese\nconsolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions\nwere eliminated in consolidation. Subsidiaries are entities the Company controls when it is exposed, or has rights, to variable returns\nfrom its involvement in the entity and can affect those returns through its power to direct the relevant activities of the entity. Subsidiaries\nare included in the consolidated financial results of the Company from the date of acquisition up to the date of disposition or loss\nof control.\n\n** **\n\nAt\nDecember 31, 2025, and 2024, the Company had the following subsidiaries:\n\n Schedule of subsidiaries\n\nSubsidiaries \nCountry\nof Incorporation \n\nOwnership\n\n%\n2025\n  \n\nOwnership\n\n%\n2024\n  \nFunctional\nCurrency\n\nMarketplace Technologies Nigeria Limited \nNigeria \n 100  \n 100  \nNigerian Naira\n\nRedCloud Peru S.A.C \nPeru \n 100  \n 100  \nPeruvian Sol\n\nRedCloud Technology Argentina SA \nArgentina \n 100  \n 100  \nUnited States Dollar\n\nRedCloud IP Limited \nUnited Kingdom \n 100  \n 100  \nBritish Pound\n\nRedCloud Technologies Brazil Servicos Digitais Ltda \nBrazil \n 100  \n 100  \nBrazilian Real\n\nRedCloud Technologies (Pty) Ltd \nSouth Africa \n 100  \n 100  \nSouth African Rand\n\nRedCloud Technologies (Portugal) Unipessoal Lda \nPortugal \n 100  \n 100  \nEuropean Euro\n\nRedCloud Technologies, Inc. \nUnited States \n 100  \n 100  \nUnited States Dollar\n\nRedCloud Technologies UK Ltd \nUnited Kingdom \n 100  \n 100  \nBritish Pound\n\n \n\n**Audit\nExemption for Subsidiaries**\n\n** **\n\nUnder\nSection 479A of the Companies Act 2006, exemption from an audit of individual accounts will be taken by the following subsidiary undertakings:\n\n \n\n●RedCloud\nIP Limited\n\n●RedCloud\nTechnologies Ltd\n\n \n\nThe\nParent Company, RedCloud Holdings Plc, has provided a guarantee for all outstanding debts and liabilities to which the subsidiary companies\nlisted above are subject at the end of the financial year, in accordance with Section 479C of the Companies Act 2006.\n\n \n\n**Basis\nof measurement –**\n\nThe\nconsolidated financial statements have been prepared on the historical cost basis, except for financial instruments measured at fair\nvalue when required as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration\ngiven in exchange for goods and services.\n\n \n\nFair\nvalue is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between\nmarket participants at the measurement date. When the Company is required to calculate the estimated fair value of financial instruments\nor other financial statement items, it uses quoted market prices when available. When quoted market prices are not available, fair value\nis determined based on valuation techniques using the best information available and may include quoted market prices, market comparable,\nand discounted cash flow projections.\n\n \n\nF-10\n\n \n\n  \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n** **\n\n**Fair\nValue Measurements**\n\n** **\n\n*Financial\nAccounting Standards Board (“FASB”) / Accounting Standards Codification (“ASC”)*820 – *Fair Value\nMeasurements and Disclosures*defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures\nabout fair value measurements. In accordance with ASC 820, we have categorized our financial assets and liabilities based on the priority\nof the inputs to the valuation technique into a three-level fair value hierarchy as set forth below. If the inputs used to measure the\nfinancial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant\nto the fair value measurement of the instrument.\n\n \n\nFinancial\nassets and liabilities recorded in the accompanying consolidated balance sheets are categorized based on the inputs to the valuation\ntechniques as follows:\n\n \n\n*Level\n1* – Financial instruments whose values are based on unadjusted quoted prices for identical assets or liabilities in an active\nmarket which we have the ability to access at the measurement date.\n\n \n\n*Level\n2*– Financial instruments whose values are based on quoted market prices in markets where trading occurs *infrequently*or\nwhose values are based on quoted prices of instruments with similar attributes in active markets.\n\n \n\n*Level\n3*– Financial instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable\nand significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions\na market participant would use in pricing the instrument.\n\n \n\nAs\nof December 31, 2025, and 2024, the carrying value of the Company’s financial assets and liabilities not measured at fair value\napproximated their fair value mainly because of their short-term maturity. These assets and liabilities included cash and equivalents,\naccounts receivable, accounts payable, and salaries and benefits payable, and taxes payable. The Company’s shareholder loans are\nstated at amortized cost, consistent with the terms of the agreement.\n\n \n\nThe\nCompany elected the fair value option to record its convertible shareholder loan balances at fair value. The elections were held at the\ninception date of each loan. Changes in fair value of these loans are recorded each reporting period on a recurring basis in the consolidated\nstatement of operations, which includes contractual interest in the loan agreements as well as fair value changes. See additional fair\nvalue discussion in Note 9 for these loans.\n\n \n\n**Use\nof Estimates –**\n\n** **\n\nThe\npreparation of the consolidated financial statements are prepared in accordance with US GAAP requires management to make estimates and\nassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date\nof the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but\nnot limited to, accounting for allowance for credit losses, share-based compensation, convertible shareholder loans, at fair value, and\ncapitalized development costs. Actual results could differ from those estimates.\n\n \n\n*Allowance\nfor Credit Losses:*\n\n* *\n\nAccounts\nreceivables are recognized initially at fair value and subsequently measured at amortized cost, less any provisions. Provisions are estimated\nusing the allowance for current expected credit losses (“CECL”) where any expected future credit losses are provided for,\nirrespective of whether a loss event has occurred at the reporting date. Estimates of expected credit losses consider the Company’s\ncollection history by country and customer, deterioration of collection rates during the average credit period, as well as observable\nchanges in and forecasts of future economic conditions that affect default risk. The Company utilizes a provision matrix by country to\nestimate lifetime CECL’s for accounts receivables, supplemented by specific allowance based on customer-specific data.\n\n \n\n*Share-Based\nCompensation:*\n\n* *\n\nShare-based\ncompensation to employees, contractors and the Company’s Board of Directors (the “Board”) are measured at the fair\nvalue of the instruments issued and amortized over the vesting periods. Share based compensation to non-employees is measured at the\nfair value of goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the\ngoods or services cannot be reliably measured and are recorded at the date the goods or services are received. The Company operates an\nemployee stock option plan. The corresponding amount is recorded to the additional paid-in capital caption within shareholders’\ndeficit, and the expense to the consolidated statements of operations and consolidated statements of comprehensive loss caption General\nand Administrative over the vesting period. The fair value of options is determined using the Black–Scholes pricing model which\nincorporates all market vesting conditions.\n\n \n\nF-11\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n \n\n*Useful\nLife of Intangible Assets*\n\n* *\n\nIntangible\nassets consist of software development costs, which are valued at historical cost. Intangible assets with definite useful life are amortized\nover the period of estimated benefit to be generated by those assets and using the straight-line method; their estimated useful life\nis five years.\n\n \n\n*Impairment\nof Long-Lived Assets*\n\n* *\n\nThe\nCompany reviews long-lived assets for impairments whenever events or changes in circumstances indicate that the carrying value of an\nasset may not be recoverable. The impairment evaluation is performed at the lowest level of identifiable cash flows independent of other\nassets. The recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the undiscounted\nfuture net cash flows expected to be generated by the asset. If such asset is considered to be impaired on this basis, the impairment\nloss to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of such asset.\n\n \n\n*Convertible\nShareholder Loans at Fair Value:*\n\n* *\n\nConvertible\ninstruments are measured at fair value using valuation techniques that incorporate observable and unobservable inputs, including market\ninterest rates, credit risk, and conversion features. Changes in fair value are recognized in the income statement.\n\n* *\n\n*Capitalized\nDevelopment Costs:*\n\n* *\n\nThe\nCompany capitalizes eligible development expenditures when technical feasibility is established and it is probable that the asset will\ngenerate future economic benefits. Estimates are required to assess the stage of development, expected future cash flows, and useful\nlife of the asset\n\n \n\n*Off\nBalance Sheet Arrangements*\n\n* *\n\nWe\nhave no obligations, assets or liabilities which would be considered off-balance sheet arrangements. As such, we are not materially exposed\nto any financing, liquidity, market or credit risk that could arise if we had engaged in such financing arrangements.\n\n \n\nF-12\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n \n\n*Fair\nValue of Equity Instruments Issued in Non-Cash Transactions*\n\n* *\n\nIn\nconnection with our IPO and the conversion of shareholder loans into equity, we issued ordinary shares and other equity instruments\nin transactions that involved significant non-cash components. The determination of the fair value of these equity instruments\nrequires management to apply valuation techniques that incorporate unobservable inputs, including estimates of the expected IPO\nvaluation, discount rates, timing of conversion events, and market participant assumptions. These estimates involve significant\njudgment and changes in such assumptions could materially impact the amount recorded in additional paid-in capital, the\nclassification of the transaction as a modification or extinguishment, and the recognition of gains or losses in the consolidated\nstatements of operations.\n\n \n\n*Debt\nExtinguishment and Modification Accounting*\n\n* *\n\nDuring\nthe year ended December 31, 2025, the Company completed several financing transactions, including the conversion of shareholder and convertible\nloans into equity. Determining whether such transactions should be accounted for as debt extinguishments or modifications under ASC 470\nrequires significant judgment. Management evaluates the economic substance of the revised terms, changes in contractual cash flows, the\nfair value of equity issued, and whether the transaction represents a substantive change from the original debt arrangement. These assessments\nrequire complex valuation inputs and considerations of market terms for instruments with similar credit risk profiles. Different judgments\nor the use of alternative valuation methodologies could result in materially different outcomes in the consolidated financial statements.\n\n \n\n*Estimation\nof Voucher Redemption Liabilities (ASC 606 Consideration Payable)*\n\n* *\n\nThe\nCompany utilizes marketing voucher programs that provide incentives to Red101 customers. Under ASC 606, these vouchers represent\nconsideration payable to customers and therefore reduce revenue. Management is required to estimate the expected redemption rate, breakage,\nand timing of voucher usage based on historical redemption behaviors, current customer activity levels, and expected future platform\nusage. These estimates involve significant judgment due to the variability of customer behavior, macroeconomic conditions, and promotional\nintensity. Changes in redemption patterns or updates to historical data may result in material adjustments to revenue, marketing and\ncommissions expense, and voucher liabilities.\n\n \n\n*Foreign\nCurrency Translation and Functional Currency Determination*\n\n* *\n\nThe\nCompany operates in multiple countries with differing regulatory environments and volatile currency regimes, including Nigeria, Argentina,\nand other emerging markets. Determining the appropriate functional currency for each subsidiary requires management to assess the primary\neconomic environment in which each entity generates and expends cash. In addition, translating foreign operations into U.S. dollars requires\nevaluating exchange rates, remeasurement methods, and the impact of significant currency devaluations. These assessments involve substantial\njudgment, particularly in jurisdictions subject to high inflation, price controls, or rapid currency fluctuations. Changes in functional\ncurrency determinations or translation assumptions could materially impact foreign currency gains and losses recorded in the consolidated\nstatements of operations and accumulated other comprehensive income.\n\n \n\nIn\neconomies determined to be highly inflationary (generally where cumulative three-year inflation approximates or exceeds 100%), the Company\napplies the provisions of ASC 830 applicable to such environments. In these circumstances, the functional currency of the relevant subsidiary\nis deemed to be the Company’s reporting currency (U.S. dollar), and the financial statements are remeasured rather than translated.\nMonetary assets and liabilities are remeasured at period-end exchange rates, while non-monetary items and equity are remeasured at historical\nrates. Resulting remeasurement gains and losses are recognized in the consolidated statements of operations.\n\n \n\nAs\nof December 31, 2025, the Company has concluded that Argentina is a highly inflationary economy and has applied remeasurement accounting\nfor its Argentine operations. Nigeria, while subject to significant currency volatility and inflationary pressures, did not meet the\nthreshold for highly inflationary accounting at period end; however, it remains subject to ongoing monitoring given the potential for\nrapid changes in economic conditions.\n\n \n\nFor\nentities operating in non-highly inflationary economies, assets and liabilities are translated into U.S. dollars at period-end exchange\nrates, while income and expense items are translated at average exchange rates for the period. Resulting translation adjustments are\nrecorded in accumulated other comprehensive income.\n\n \n\nThese\nassessments, including functional currency determinations, evaluation of highly inflationary status, and selection of appropriate exchange\nrates, require significant judgment. Changes in these assumptions or in economic conditions could materially impact foreign currency\ngains and losses recognized in the consolidated statements of operations and accumulated other comprehensive income, and may increase\nvolatility in reported earnings.\n\n \n\nF-13\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n \n\n*Going\nConcern Assessment and Forecasting Assumptions*\n\n* *\n\nIn\nevaluating the Company’s ability to continue as a going concern, management must estimate future cash flows, operating performance,\nworking capital needs, and the availability of external financing. These estimates require significant judgment, particularly given the\nCompany’s historical operating losses, the timing and magnitude of expected revenue growth, and assumptions regarding future capital-raising\nactivities. Management also incorporates uncertainty related to macroeconomic conditions, foreign market risks, and the performance of\nnewly launched business lines. Changes in these assumptions or unforeseen adverse developments could materially affect the outcome of\nthe going concern assessment and related disclosures.\n\n \n\n*Capitalization\nof Software Development Costs and Useful Life Estimation*\n\n* *\n\nThe\nCompany capitalizes certain software development costs associated with enhancements to its RedAI infrastructure and related products. Determining which expenditures meet the capitalization criteria under ASC 350-40 involves significant judgment regarding the\ntechnological feasibility of the platform, the nature of development activities, and the expected future economic benefits. In\naddition, the estimated useful life of capitalized software requires management to assess the speed of technological change,\nanticipated product roadmap, and the expected period of customer utility. A change in the estimated useful life or the determination\nof which development efforts qualify for capitalization could materially impact amortization expense and the carrying value of\nintangible assets.\n\n \n\n**Cash,\ncash equivalents and restricted cash**\n\n** **\n\nThe\nCompany considers all highly liquid investments with an original maturity of three months or less when purchased, consisting primarily\nof deposits held at call with banks and other short-term liquid investments, to be cash equivalents.\n\n \n\nThe\nCompany’s management assesses balances for credit losses included in cash and cash equivalents, except for those recorded at fair\nvalue with impact on the statement of operations, based on a review of the average period for which the financial asset is held, credit\nratings of the financial institutions and probability of default and loss given default models. The Company did not recognize any credit\nloss on the cash and cash equivalents for the years ended December 31, 2025, and 2024.\n\n \n\nThe\nbalance of restricted cash on December 31, 2025, and 2024, was $Nil\nand $31,936,\nrespectively.\n\n \n\n**Allowance\nfor credit losses**\n\n** **\n\nAccounts\nreceivable is recognized initially at fair value and subsequently measured at amortized cost, less any provisions. Provisions are estimated\nusing the allowance for current expected credit losses (“CECL”) where any expected future credit losses are provided for,\nirrespective of whether a loss event has occurred at the reporting date. Estimates of expected credit losses consider the Company’s\ncollection history by country and customer, deterioration of collection rates during the average credit period, as well as observable\nchanges in and forecasts of future economic conditions that affect default risk. The Company utilizes a provision matrix by country to\nestimate lifetime CECL’s for accounts receivables.\n\n \n\nChanges\nin the allowance are recognized as bad debt expense in the consolidated statements of operations. When the Company determines that no\nrecovery of the amount owed is possible, the amount is deemed irrecoverable, and the financial asset is written off. The write-off policy\nvaries by country, which could be a statutory period of time, while in other countries this is determined by judgment or otherwise when\ndischarged by bankruptcy or other legal proceedings.\n\n \n\n**Concentration\nof credit risk**\n\n** **\n\nCash\nand cash equivalents, and accounts receivable are potentially subject to credit risk. A substantial portion of the Company’s cash\nbalance is held with a single financial institution in the United Kingdom on December 31, 2025, and 2024, and at least 15% of the Company’s\ncash held in Peru and Nigeria on December 31, 2024. The Company believes the cash balances are liquid.\n\n \n\n**Property\nand equipment, net**\n\n** **\n\nProperty\nand equipment are recorded at their acquisition cost and depreciated over their estimated useful lives using the straight-line method.\nRepair and maintenance costs are expensed as incurred.\n\n \n\nF-14\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n** **\n\n**Leases**\n\n** **\n\nThe\nCompany determines if an arrangement is a lease at inception. For the years ended December 31, 2025 and 2024, the Company determined\nits arrangements for office space are service agreements, and outside the scope of lease accounting and FASB ASC 842. As such, there\nare no amounts recorded for the right of use assets or lease liabilities. Costs associated with these arrangements are included in general\nand administrative expenses on the consolidated statements of operations.\n\n \n\n**Intangible\nassets**\n\n** **\n\nIntangible\nassets consist of software development costs, which are valued at historical cost. Intangible assets with definite useful life are amortized\nover the period of estimated benefit to be generated by those assets and using the straight-line method; their estimated useful life\nis five years. Development expenditure is capitalized during the application development stage, which includes costs such as design,\ncoding, hardware installation and testing. See disclosure of the Company’s intangible assets subject to amortization in Note 6,\nIntangible Assets.\n\n \n\nThe\nCompany’s “Product and technology development” costs on the consolidated statements of operations include costs to\noperate and maintain the ecommerce site, as well as costs that are not eligible for capitalization and are expensed as incurred.\n\n \n\n**Impairment\nof long-lived assets –**\n\n** **\n\nThe\nCompany reviews long-lived assets for impairments whenever events or changes in circumstances indicate that the carrying value of an\nasset may not be recoverable. The impairment evaluation is performed at the lowest level of identifiable cash flows independent of other\nassets. The recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the undiscounted\nfuture net cash flows expected to be generated by the asset. If such asset is considered to be impaired on this basis, the impairment\nloss to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of such asset. As of\nDecember 31, 2025, and 2024, there were no events or changes in circumstances that indicate that the carrying value of an asset may not\nbe recoverable.\n\n \n\n**Share-based\npayments**\n\n** **\n\nShare-based\ncompensation to employees, contractors and the Company’s Board are measured at the fair value of the instruments issued and amortized\nover the vesting periods. Share-based compensation to non- employees is measured at the fair value of goods or services received or the\nfair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured,\nand are recorded at the date the goods or services are received.\n\n \n\nThe\nCompany operates an employee stock option plan. The corresponding shared-based compensation is recorded as an increase in additional\npaid-in capital, and the expense is recorded in the consolidated statements of operations within general and administrative expense over\nthe vesting period. The fair value of options is determined using the Black–Scholes pricing model which incorporates all market\nvesting conditions.\n\n \n\nAccruals\nof compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition.\nCompensation cost is accrued if it is probable that the performance condition will be achieved and is not accrued if it is not probable\nthat the performance condition will be achieved. Performance conditions that restrict the ability of the award holder to exercise the\noption unless stated events occur (such as a change in control, public offering of the Company’s common shares, or other exit event)\nare deemed not probable to occur until they occur. Such conditions also affect the vesting period and expected life of the options for\naccounting purposes, which is calculated with respect to the passage of time from the grant date until the date the awards is exercisable\nby the award holder.\n\n \n\nFor\nawards with graded vesting schedules, the Company has elected to calculate the fair value as a single award and recognize expense over\nthe total expected vesting period rather than in tranches. The Company has elected to recognize forfeitures as they occur. The number\nof shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for\nservices received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually\nvest.\n\n \n\nF-15\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n \n\nThe\nCompany accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Stock-based compensation\ncost is measured at the grant date based on the estimated fair value of the award and is recognized as an expense over the vesting period\non a straight-line basis. The Company recognizes compensation expense for all stock-based awards with graded or cliff vesting, net of\nestimated forfeitures if applicable.\n\n \n\nUpon\nexercise of a stock option, the proceeds received are credited to common stock and additional paid-in capital (APIC). The Company issues\nnew shares upon exercise; there have historically been no treasury shares.\n\n \n\nForfeitures\nand expirations of stock options do not result in reversal of previously recognized compensation expense. Any previously recognized amounts\nremain in APIC.\n\n \n\n**Income\nTaxes**\n\n** **\n\n**Deferred\nIncome Taxes - Overall**\n\n** **\n\nThe\nCompany is subject to income taxes in the United Kingdom (“UK”), where the Parent Company is domiciled and the foreign jurisdictions\nof the Company’s subsidiaries. The Company accounts for income taxes under the asset and liability method. Deferred income taxes\nare recognized for temporary differences between financial statement carrying amounts and the tax basis assets, liabilities, and loss\ncarryforwards at income tax rates expected to be in effect when such amounts are realized or settled. The effect on deferred income taxes\nfrom a change in tax rates is recognized in income tax (expense) benefit in the period that includes the enactment date.\n\n \n\nThe\nCompany’s income tax (expense) benefit consists of income taxes that are currently payable or refundable, and the change during\nthe reporting of the Company’s deferred income tax assets and liabilities.\n\n \n\n**Deferred\nIncome Taxes – Valuation Allowance**\n\n** **\n\nManagement\nevaluates the realizability of net deferred income tax assets to determine if a valuation allowance is required. We assess whether a\nvaluation allowance should be established based on the consideration of all available evidence using a “more-likely-than-not”\nstandard, with significant weight being given to evidence that can be objectively verified. Since we operate in multiple jurisdictions,\nwe assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, considering the effects of local tax law. In connection\nwith Management’s assessment, factors such as the nature, frequency, and magnitude of current and cumulative losses on an individual\nsubsidiary basis, projections of future taxable income, the duration of statutory carryforward periods, as well as feasible tax planning\nstrategies that would be employed by the Company to prevent tax loss carryforwards from expiring.\n\n \n\n**Deferred\nIncome Taxes – Undistributed Earnings from Foreign Subsidiaries**\n\n** **\n\nManagement\nassesses whether undistributed earnings from its foreign subsidiaries will be reinvested indefinitely or eventually distributed to the\nUK Parent. The Company is required to record a deferred tax liability for undistributed earnings from foreign subsidiaries that will\nnot be reinvested indefinitely and will be eventually repatriated to the UK Parent.\n\n \n\n**Deferred\nIncome Taxes – Uncertain Income Tax Positions**\n\n** **\n\nThe\nCompany recognizes an income tax benefit for an income tax position taken or expected to be taken on an income tax return if the more-likely-than-not\nrecognition threshold is met by the end of the reporting period, or is effectively settled through examination, litigation, or negotiation,\nor if the statute of limitations for the relevant taxing authority to examine and challenge the tax position has expired. The income\ntax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than\n50% likelihood of being realized upon ultimate resolution.\n\n \n\nF-16\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n** **\n\nPenalties\nand interest related to uncertain income tax positions are recorded as an expense. Significant judgment is required in the identification\nof uncertain income tax positions and in the estimation of penalties and interest on uncertain income tax positions.\n\n \n\n**Comprehensive\nloss**\n\n** **\n\nComprehensive\nloss is comprised of two components, net income (loss) and other comprehensive income (loss). This last component is defined as all other\nchanges in the equity of the Company that result from transactions other than with shareholders. Other comprehensive income (loss) includes\nthe cumulative foreign currency translation adjustments relating to the translation of the consolidated financial statements of the Company’s\nforeign subsidiaries outside of the United Kingdom.\n\n \n\n**Reporting\nand foreign currency**\n\n** **\n\nThe\nParent Company entity’s functional currency is the Great British Pound, however as an anticipated foreign private issuer with the\nSEC, the Company elects to report in US dollars as permitted by SEC Regulation S-X 210.3. All the Company’s foreign operations\nhave determined the local currency to be their functional currency, except for Argentina, which is discussed in more detail below. Accordingly,\nthe foreign subsidiaries with local currency as functional currency translate assets and liabilities from their local currencies into\nUS dollars by using year-end exchange rates while income and expense accounts are translated at the average monthly rates in effect during\nthe year, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction\nare used. The resulting translation adjustment is recorded as a component of other comprehensive income (loss). Gains and losses resulting\nfrom transactions denominated in non-functional currencies are recognized in earnings in the consolidated statements of operations as\nforeign currency loss (gain).\n\n \n\n**Argentine\ncurrency status**\n\n** **\n\nThe\nCompany reports its Argentine operations as highly inflationary status in accordance with US GAAP for the years ended December 31, 2025,\nand 2024, and changed the functional currency for its Argentine subsidiary from Argentine Pesos to the United States Dollar, which is\nthe appropriate functional currency of the entity based on the highly inflationary status. Transactions are then converted to the US\nDollar, which is the reporting currency of its Parent Company. Argentina’s three-year cumulative inflation rate for the years ended\nDecember 31, 2025, and 2024 was 953.25% and 1213.56%, respectively, based on data from the International Monetary Fund.\n\n \n\n**Argentine\nexchange regulations**\n\n** **\n\nIn\nthe second half of 2019, the Argentine government instituted exchange controls restricting the ability of companies and individuals to\nexchange Argentine Pesos for foreign currencies and their ability to remit foreign currency out of Argentina. An entity’s authorization\nrequest to the Central Bank of Argentina (“CBA”) to access the official exchange market to make foreign currency payments\nmay be denied depending on the circumstances. As a result of these exchange controls, markets in Argentina developed trading mechanisms,\nin which an entity or individual buys US dollar denominated securities in Argentina (i.e. shares, sovereign debt) using Argentine peso,\nand subsequently sells the securities for US dollars, in Argentina, to access\n\n \n\nUS\ndollars locally, or outside Argentina, by transferring the securities abroad, prior to being sold (the latter commonly known as Blue-Chip\nSwap Rate). The Blue-Chip Swap Rate has diverged significantly from Argentina’s official exchange rate (commonly known as exchange\nspread).\n\n \n\nThe\nCompany uses Argentina’s official exchange rate to account for transactions in its Argentine business, which as of December 31,\n2024, reflected a devaluation of approximately 272% against the U.S. dollar. During the year ended December 31, 2025, the Argentine peso\nfurther depreciated by approximately 32**%** based on official exchange rates from the Argentine Central Bank.\n\n \n\nF-17\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n* *\n\n**Note\n2 - Summary of significant accounting policies (continued)**\n\n* *\n\n**Revenue\nrecognition**\n\n** **\n\nThe\nCompany’s revenue comes from a single product offering – the final value fees of sales that occurs on its ecommerce platform.\nSee disaggregation of the Company’s revenue in Note 10, Reportable Segments.\n\n \n\nThe\nCompany enters written contracts with platform sellers entitling the Company to a stated percentage of the platform seller’s sales\non the Company’s ecommerce platform (“final value fees”). The Company has one performance obligation to its Sellers\non the Marketplace platform and this performance obligation is to connect buyers and sellers on the Company’s ecommerce platform.\n\n \n\nThe\nCompany recognizes revenue when it transfers control of promised goods or services to customers. The Company’s compensation of\nfinal value fees is recognized at the point in time when an item is sold on the platform, satisfying this performance obligation.\n\n \n\nRevenue\nis recognized in an amount that reflects the consideration to which the Company expects to be entitled. Revenue is recognized net of\nany taxes collected, which the Company subsequently remits to governmental authorities. The Company invoices the platform sellers monthly\nbased on the contracted percentage based final value fee of transaction activity occurring on the Company’s ecommerce platform.\nPayments are due from customers within 30 to 90 days.\n\n \n\nThe\nCompany provides incentives to buyers and sellers in various forms including discounts on fees, discounts on items sold, coupons and\nrewards. Evaluating whether a promotion or incentive is a payment to a customer may require significant judgment. Promotions and incentives\nthat are consideration payable to a customer (platform seller) are recognized as a reduction of revenue at the later date of when revenue\nis recognized or when the Company pays or promises to pay the incentive. Promotions and incentives to platform buyers on our platform,\nto whom the Company has no performance obligation, are recognized as marketing and commissions expense and are recorded on the consolidated\nstatements of operations under the “Marketing and commissions” caption.\n\n \n\nThe\nCompany determined it is an agent regarding sales transactions on its ecommerce platform and not a principal. As such, the Company’s\nrevenue reflects only the final value fees and not the gross transaction value of products and services sold on the platform.\n\n \n\nThe\nCompany elected as a permitted practical expedient to not adjust the customer contract consideration for significant financing components\nwhen the period between the transfer of the Company’s services and customer payment is one year or less.\n\n \n\nThe\nCompany elected as a permitted practical expedient to expense, as incurred, the costs of obtaining a customer contract such as sales\ncommissions and other selling transaction costs when the amortization period of the assets otherwise would be one year or less. Accordingly,\nthe Company has no assets recorded for costs to obtain a customer contract as there are no contracts where the underlying asset would\nhave a life exceeding one year.\n\n** **\n\n**Segment\nInformation**\n\n** **\n\nOperating\nsegments are identified as components of an enterprise about which discrete financial information is available for evaluation by the\nchief operating decision-maker (“CODM”) in deciding resource allocation and assessing performance. The Company’s Chief\nExecutive Officer is its CODM. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes\nof making operating decisions, allocating resources, and evaluating financial performance. See “Note 10 - Reportable Segments”\nfor the Company’s revenue segment disclosures.\n\n** **\n\n**Marketing\nand commissions costs**\n\n** **\n\nThe\nCompany expenses the costs of advertisements in the period during which the advertising space or airtime is used within Marketing and\ncommissions costs on the consolidated statements of operations. Internet advertising expenses are recognized based on the terms of the\nindividual agreements, which is generally over the greater of the ratio of the number of clicks delivered over the total number of contracted\nclicks, on a pay-per-click basis, or on a straight-line basis over the term of the contract. Marketing and commissions costs for the\nyears ended December 31, 2025, and 2024 amounted to $49,124,526 and $52,918,949, respectively.\n\n \n\nF-18\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n** **\n\n**Note 2 - Summary of significant accounting policies (continued) **\n\n** **\n\n**Offering\nCosts**\n\n** **\n\nOffering\ncosts include the legal, accounting, printing, mailing and filing fees, charges of our escrow holder and transfer agent, the reimbursement\nof bona fide due diligence expenses of broker dealers and commissions of selling broker dealers. These offering costs will be accounted\nfor as a deferred charge until the Company begins selling the respective shares from the Initial Public Offering (“IPO”)\n(see Note 17), after which the offering costs will be offset against proceeds received from the Offering in the consolidated statement\nof changes in stockholders’ equity (deficit).\n\n \n\n**Supplemental\ncash flow disclosures -**\n\n** **\n\nThere\nwas $nil and $nil cash paid for income taxes in the years ended December 31, 2025 and 2024, respectively. Non-cash investing and financing\nactivities: for the year ended December 31, 2025, the Company converted $73,538,537 (2024: $21,178,928) of shareholder loans into common\nshares of the Company.\n\n \n\n**Recently\nadopted accounting standards**\n\n** **\n\nDuring\nthe year ended December 31, 2025, the Company did not adopt any new accounting standards issued by the Financial Accounting Standards\nBoard (“FASB”) that had a material impact on its consolidated financial statements.\n\n \n\n**Recent\naccounting pronouncements not yet adopted**\n\n** **\n\nIn\nNovember 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures. The amendments\nin this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses,\nas well as new disclosure requirements for entities with a single reportable segment. The amendments are effective for fiscal years beginning\nafter December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted this guidance\neffective January 1, 2024. The adoption did not have a material impact on the consolidated financial statements but resulted in enhanced\nsegment disclosures, which are reflected in the consolidated financial statements for the year ended December 31, 2025.\n\n \n\nIn\nDecember 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this\nupdate enhance transparency in income tax disclosures, including more detailed rate reconciliation categories, disaggregation of income\ntaxes paid by jurisdiction, and disclosure of pretax income (or loss) and income tax expense (or benefit) by jurisdiction. The amendments\nare effective for annual periods beginning after December 15, 2024. The Company adopted this guidance effective January 1, 2025. The\nadoption did not have a material impact on the consolidated financial statements but resulted in enhanced income tax disclosures, which\nare reflected in the consolidated financial statements for the year ended December 31, 2025.\n\n \n\nIn\nNovember 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income – Expense Disaggregation Disclosures.\nThe amendments in this update require public business entities to provide more detailed disclosures about the nature of certain income\nstatement expenses, enhancing the transparency and usefulness of financial reporting. The guidance is effective for annual reporting\nperiods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption\nis permitted. The standard may be applied either prospectively or retrospectively to all prior periods presented. The Company is currently\nevaluating the impact of this standard on its consolidated financial statements and related disclosures.\n\n \n\nIn\nSeptember 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use\nSoftware (Subtopic 350-40). The amendments in this update modernize the accounting for internal-use software costs to better reflect\ncurrent software development practices, including iterative and agile development methodologies. The guidance removes the requirement\nto apply a project-stage model in determining when to capitalize software development costs and instead requires capitalization to begin\nwhen management has authorized and committed to funding the project and it is probable that the software will be completed and used for\nits intended purpose (the “probable-to-complete” threshold). The amendments do not change the types of costs that may be\ncapitalized, and costs such as training, maintenance and data conversion will continue to be expensed as incurred. The guidance is effective\nfor annual reporting periods beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted.\nThe standard may be applied prospectively, retrospectively or using a modified transition approach. The Company is currently evaluating\nthe impact of this standard on its consolidated financial statements and related disclosures.\n\n \n\nF-19\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n** **\n\n**Note\n3 - Accounts receivables and other receivables (continued)**\n\n \n\nThe\nCompany’s accounts and other receivable are recorded at amortized cost. The accounts and other receivables balance at December\n31, 2025 and 2024, consists of the following:\n\n Schedule of accounts receivables and other receivables\n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nAccounts receivable \n$3,020,898  \n$5,611,980 \n\nOther receivables \n 36,244  \n 934 \n\nTotal \n 3,057,142  \n 5,612,914 \n\nAllowance for credit losses \n (285,699) \n (84,088)\n\nTotal accounts and other receivables, net \n$2,771,443  \n$5,528,826 \n\n \n\nChanges\nin allowance for doubtful accounts in the year ended December 31, 2024, relate to establishing an additional allowance for expected credit\nlosses. The Company has no amounts written-off that are still subject to collection enforcement activity at December 31, 2025. \n\n \n\nThe\nCompany’s December 31, 2025, aging of accounts receivable is as follows:\n\n Schedule\nof aging accounts receivable\n\n1-30 Days \n$2,738,517 \n\n31-60 Days \n 82,971 \n\n61-90 Days \n 45,669 \n\n91+ Days \n 189,985 \n\nTotal accounts receivables \n$3,057,142 \n\n \n\nThe\nCompany’s December 31, 2024 aging of accounts receivable is as follows:\n\n \n\n1-30 Days \n$5,481,279 \n\n31-60 Days \n 25,670 \n\n61-90 Days \n 21,986 \n\n91+ Days \n 83,979 \n\nTotal accounts receivables \n$5,612,914 \n\n \n\nF-20\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n3 - Accounts receivables and other receivables (continued)**\n\n \n\nA\ncontinuity schedule of the allowance for expected credit losses for the years ended December 31, 2025, and 2024 is as follows:\n\n** Schedule\nof allowance for expected credit losses**\n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nBalance at January 1 \n$(84,088) \n$- \n\nCurrent period additions for expected credit losses \n (300,828) \n (84,088)\n\nWrite-offs charges against allowance \n 99,217  \n   \n\nBalance at December 31 \n$(285,699) \n$(84,088)\n\n**** \n\nTrade\nreceivables are stated at amortized cost, net of an allowance for expected credit losses. The Company estimates this allowance using\na matrix-based aging model in accordance with ASC 326, which applies predefined loss rates to receivables grouped by aging buckets. These\nrates are derived from historical loss experience and adjusted for management’s expectations of future conditions.\n\n \n\nReceivables\nare aged by invoice date and netted against any customer payables where contractual offset rights exist. The aging buckets and corresponding\nestimated credit loss percentages are as follows:\n\n** Schedule\nof Receivables\nare aged**\n\nAging Bucket \nEstimated Credit Loss % \n\nCurrent (0–29 days) \n 5%\n\n30–59 days \n 15%\n\n60–89 days \n 25%\n\n90–119 days \n 50%\n\n120+ days \n 90%\n\nAging Bucket Estimated Credit Loss Percentage \n 90%\n\n \n\nThe\nallowance is calculated by applying these rates to the net aged receivable balances across each operating entity. No additional quantitative\noverlays were applied, and management has determined that the current model sufficiently captures expected losses.\n\n \n\n**Note\n4 - Prepayments and other current assets**\n\n** **\n\n**Prepayments**\n\n \n\nPrepayments\nconsisted of the following at December 31:\n\n Schedule of Prepayments\n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nPrepayments \n$1,660,661  \n$467,089 \n\nDeferred Offering Costs \n -  \n 1,802,404 \n\nTotal prepayments \n$1,660,661  \n$2,269,493 \n\n \n\nOther current assets\n\n \n\nOther current assets consisted of the following at December 31:\n\n Schedule of other current assets\n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nSales tax receivable \n$86,756  \n$509,333 \n\nDeposits \n 89,288  \n - \n\nTotal current assets \n$176,044  \n$509,333 \n\n \n\n \n\nF-21\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n5 - Property and equipment, net**\n\n \n\nThe\nfollowing table presents the changes in property and equipment for the year ended December 31\n\n \n\nSchedule of property and equipment, net\n\n  \n  \n**Opening**  \n   \nAccumulated  \n  \n\n2025 \nUseful Lives \nbalance  \nAdditions  \nDepreciation  \nNet \n\nComputer equipment \n3 years \n$593,357  \n$139,997  \n$291,671  \n$441,683 \n\nOffice equipment \n3 years \n -  \n 7,199  \n 3,915  \n 3,284 \n\n  \n  \n$593,357  \n$147,196  \n$295,586  \n$444,967 \n\n \n\n \n\n  \n  \n**Opening**  \n   \nAccumulated  \n  \n\n2024 \nUseful Lives \nbalance  \nAdditions  \nDepreciation  \nNet \n\nComputer equipment \n3 years \n$127,148  \n$758,936  \n$292,727  \n$593,357 \n\nOffice equipment \n3 years \n -  \n 2,878  \n 2,878  \n - \n\n  \n  \n$127,148  \n$761,814  \n$295,605  \n$593,357 \n\n \n\nDepreciation\nexpense for the years ended December 31, 2025 and 2024 was $295,586 and $163,748, respectively, and was recorded in the “Depreciation\nand amortization” caption on the consolidated statements of operations.\n\n \n\nAt\nDecember 31, 2025, and 2024, the Company’s property, plant and equipment had no significant restrictions on title or pledges as\nsecurity for liabilities, there are no significant commitments for future purchases, and there were no significant disposals during the\nyears ended December 31, 2025, and 2024.\n\n \n\n**Note\n6 - Intangible assets, net**\n\n \n\nA\ncontinuity schedule of intangible assets at December 31, 2025, and 2024 is as follows:\n\n Schedule of intangible assets\n\n  \nDecember \n\n  \nCapitalized Software Development \n\n  \n2025  \n2024 \n\nCost \n    \n   \n\nBalance at January 1 \n$10,231,824  \n$7,044,658 \n\nAdditions \n 2,499,179  \n 3,367,579 \n\nForeign exchange impact \n 825,073  \n (180,413)\n\nBalance at December 31, 2025, 2024 \n 13,556,076   \n 10,231,824 \n\n  \n    \n   \n\nAccumulated Amortization \n    \n   \n\nBalance at January 1 \n 4,063,291  \n 2,420,479 \n\nAdditions \n 2,422,054  \n 1,717,575 \n\nForeign exchange impact \n 340,577  \n (74,763)\n\nBalance at December 31, 2025, 2024 \n 6,825,922  \n 4,063,291 \n\n  \n    \n   \n\nNet Book Value at December 31, 2025, 2024 \n$6,730,154  \n$6,168,534 \n\n \n\n****\n\nF-22\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n** **\n\n**Note 6 - Intangible assets, net (Continued)**\n\n** **\n\nThe\nCompany’s intangible assets consist of capitalized software development costs for its hosted ecommerce platform with related ongoing\nfunctionality and enhancements. The gross cost of the intangible assets is amortized over their estimated useful lives of five years,\nas the Company does not expect the assets to have significant residual value.\n\n \n\nAmortization\nexpense for the years ended December 31, 2025 and 2024 was $2,422,054 and $1,717,575 and was recorded in “Depreciation and amortization”\ncaption on the consolidated statements of operations.\n\n \n\nAt\nDecember 31, 2025, the estimated aggregate amortization expense for each of the next five years is as follows:\n\n Schedule of aggregate amortization expense\n\n  \n **31 December 2025** \n\n2026 \n 2,692,062 \n\n2027 \n 2,422,854 \n\n2028 \n 1,292,190 \n\n2029 \n 258,438 \n\n2030 \n 64,609 \n\nTotal amortization expense \n 6,730,154 \n\n** **\n\n**Note\n7 - Accrued expenses**\n\n \n\nAccrued\nexpenses consisted of the following at\n\n Schedule of accrued expenses\n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nAccrued payables \n$1,593,439  \n$2,058,395 \n\nEmployment taxes payable \n 639,231  \n 1,070,456 \n\nOther accrued expenses \n -  \n (336)\n\nTotal accrued expenses \n$2,232,670  \n$3,128,515 \n\n \n\nCertain\nemployees of the Company’s United Kingdom legal entities participate in defined contribution pension plans. The Company recorded\n$396,142 and $135,153 in the years ended December 31, 2025 and 2024, respectively, in the caption “Salaries and wages” on\nthe consolidated statement of operations related to its contributions to this plan.\n\n \n\nF-23\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n8 – Other current liabilities**\n\n** **\n\nOther\ncurrent liabilities consisted of the following at:\n\n Schedule of other current liabilities\n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nWithholding tax payable \n -  \n$143,073 \n\nTotal other current liabilities \n$-  \n$143,073 \n\n \n\n**Note\n9 – Borrowings**\n\n \n\nIndebtedness\nand other financial liabilities at December 31, 2025 comprise (i) unsecured shareholder term loans (current) of $8,123,835, (ii) short-term\nborrowings of $3,765,234, and (iii) no outstanding convertible shareholder loans following conversion to equity prior to the IPO; the\n2024 comparative included convertible shareholder loans at fair value of $22,560,124 within non-current liabilities (see Note 17).\n\n \n\n**Unsecured\nShareholder Term Loans**\n\n \n\nDuring\n2024, the Group consolidated multiple historic shareholder term loans into a restated consolidated facility executed in September 2024.\nIn March 2025, immediately prior to the IPO, a substantial portion of these borrowings—including the October and December 2024\nloans and the January 2025 loan—was capitalized and converted into equity as part of the pre-IPO capital structure actions (see\nNote 17).\n\n \n\nThe\nremaining balances presented as current borrowings at December 31, 2025 and December 31, 2024 totaled $8,123,835 and $50,057,013, respectively.\n\n \n\nIn\nSeptember 2024, following expiry of the December 2023 restated consolidated loan agreement, the Company executed a new unsecured term\nloan agreement in September 2024. This new facility consolidated the November 2023, December 2023, January 2024, May 2024, June 2024,\nJuly 2024, and August 2024 unsecured term loans, including rolled-up interest.\n\n \n\nKey\nterms:\n\n●Commencement\ndate: September 1, 2024\n\n●Interest\nrate: 15% per annum\n\n●Up\nto £10,000,000 ($12.5 million) repayable upon IPO completion\n\n●Remaining\nbalance due on the earlier of:\n\n○September\n1, 2029, or\n\n○Within\n15 business days following written notice on set dates tied to the IPO anniversary or, if\nno IPO occurred, rolling monthly dates after 18 months from agreement execution.\n\n \n\nIn\naccordance with ASC 470-50, the Company assessed whether the refinancing represented a modification or extinguishment. The present value\nof future cash flows under the new terms was £30,425,804 ($40,425,804), a 12.85% increase from the carrying value of the original\ndebt. As this exceeded the 10% threshold, the transaction was accounted for as a debt extinguishment.\n\n \n\nF-24\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n9 - Borrowings (continued)**\n\n \n\nThe\nCompany recognized a loss on extinguishment of £Nil ($4,377,051) within Other expenses (Gain/Loss on Debt Extinguishment) during\nthe year ended December 31, 2024. The new debt was initially recognized at fair value and is being amortized over its 5five-year term,\nwith an effective interest rate of 9.665%.\n\n \n\nOn\nJanuary 23, 2025, the Company entered into an unsecured term loan with a shareholder for £1,500,000, bearing 15% interest per annum.\nThis loan was executed on identical terms to the September 2024 restated facility.\n\n \n\nThis\nloan was converted to equity immediately prior to the IPO (see Note 17).\n\n \n\nThe\nCompany entered into two additional unsecured loans with a shareholder during Q4 2025:\n\n \n\n●November\n26, 2025: Loan of CHF 2,000,000 at 10% per annum\n\n●December\n17, 2025: Loan of CHF 2,000,000 at 10% per annum\n\n \n\nBoth\nloans were provided by C. Byland (shareholder) and remained outstanding as at December 31, 2025**.**\n\n \n\n**Short-term\nborrowings**\n\n \n\nDuring\n2025, the Company obtained two external bank facilities from Lienhardt & Partner Privatbank Zürich AG, each fully guaranteed\nby related-party shareholders.\n\n \n\n●September\n22, 2025 – £2,000,000 facility, guaranteed by C. Byland (shareholder) and N. Senn\n(shareholder and director).\n\n●On\nOctober 27, 2025, the Company drew an additional £800,000\nunder the same facility, with the same related-party guarantees.\n\n \n\nThe\ntotal outstanding balance under this facility at December 31, 2025 was £2,800,000.\n\n \n\n**Convertible\nshareholder loans — fair value option (eliminated in 2025)**\n\n \n\nThe\nCompany had previously elected the fair value option for certain convertible shareholder loans, with fair value changes recognized in\nother expense until conversion. Immediately prior to the March 2025 IPO, all outstanding convertible shareholder loans were converted\ninto ordinary shares, resulting in no outstanding balance at December 31, 2025 (see Note 17). Until conversion, these instruments were\nmeasured using observable inputs (Level 2), including market-based discount rates and instrument-specific conversion features.\n\n \n\n**Roll-forward\n— Shareholder convertible loans (at fair value)**\n\n \n\nPrior\nto conversion, fair value changes on the convertible loans were recorded in “Loss from change in fair-value of convertible shareholder\nloans” within other expense in the consolidated statements of operations. Following conversion, no convertible loan balances remain\noutstanding.\n\n \n\n**Maturities\nand classification**\n\n \n\nAt\nDecember 31, 2025, interest-bearing liabilities consist of current unsecured shareholder term loans of $8,123,835 and short-term borrowings\nof $3,765,234. There were no non-current borrowings outstanding at year-end following the conversion/capitalization of prior facilities\nin connection with the IPO.\n\n** **\n\nF-25\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n** **\n\n**Note\n9 - Borrowings (continued)**\n\n \n\n**Convertible\nShareholder Loans at Fair Value**\n\n** **\n\nThe\nchanges in fair value appear in the caption “Loss from change in fair-value of convertible shareholder loans” on the consolidated\nstatement of operations. A continuity schedule of the convertible shareholder loans, including changes in fair value, for the years ended\nDecember 31, 2025, and 2024 is as follows:\n\n Schedule of shareholder convertible loans\n\n** **** **\n**2025**** **** **\n**2024**** **\n\n  \n**Shareholder convertible loans, at fair value** \n\n** **** **\n**2025**** **** **\n**2024**** **\n\n  \n    \n   \n\nBalance at January 1 \n$22,560,124   \n$9,380,301  \n\nChanges in fair value \n 232,041   \n 5,951,087  \n\nConversion to common shares \n (23,183,562)  \n - \n\nBorrowings \n -  \n 7,573,800  \n\nForeign exchange impacts \n 391,397   \n (345,064) \n\nBalance at reporting period end \n$-  \n$22,560,124  \n\n \n\n**Debt\nMaturities**\n\n** **\n\nThe\nlong-term Shareholders loan was converted to equity [see note 17].\n\n \n\nThe\nfollowing table summarized the stated debt maturities and scheduled amortization payments, excluding debt premiums and discounts, for\neach of the five years subsequent to December 31, 2025, and thereafter:\n\n Schedule of debt maturities\n\n  \nShareholder loans payable- current and long-term  \nShort-term borrowings  \nShareholder convertible loans at fair value \n\n  \n31 December 2025 \n\n  \nShareholder loans payable- current and long-term  \nShort-term borrowings  \nShareholder convertible loans at fair value \n\nRemaining 2025 \n$-  \n$-  \n$- \n\n2026 \n -  \n 3,765,234  \n - \n\n2027 \n -  \n -  \n - \n\n2028 \n -  \n -  \n - \n\n2029 \n -  \n -  \n - \n\nThereafter \n 8,123,835  \n -  \n - \n\nDebt maturities \n 8,123,835  \n 3,765,234  \n 0 \n\nLess: debt discount \n -  \n -  \n - \n\nTotal borrowings \n$8,123,835  \n$3,765,234  \n$0 \n\n \n\n**Reconciliation\nof liabilities arising from financing activities**\n\n \n\nThe\nfollowing table provides a reconciliation of the Company’s liabilities arising from financing activities for the year ended December\n31, 2025, including both cash and non-cash movements:\n\n** **Schedule\nof reconciliation\nof liabilities arising from financing activities\n\n  \nShareholder loans  \nShort-term borrowings  \nConvertible loans  \nTotal \n\n  \nDec-25 \n\n  \nShareholder loans  \nShort-term borrowings  \nConvertible loans  \nTotal \n\nBalance at January 1, 2025 \n 50,057,013  \n 558,206  \n 22,560,124  \n 73,175,343 \n\nCash flows - Proceeds from borrowings \n 5,100,708  \n 3,765,234  \n -  \n 8,865,942 \n\nCash flows - Repayments \n    \n (558,206) \n -  \n (558,206)\n\nNon-cash - Conversion to equity \n (47,070,333) \n -  \n (22,560,124) \n (69,630,457)\n\nNon-cash - Accrued interest \n 199,605  \n -  \n -  \n 199,605 \n\nNon-cash - FX and other \n (163,158) \n -  \n -  \n (163,158)\n\nBalance at December 31, 2025 \n 8,123,835  \n 3,765,234  \n -  \n 11,889,069 \n\n** **\n\nThe\nsignificant non-cash movement during the year primarily relates to the conversion of shareholder and convertible loans into equity in\nconnection with the Company’s initial public offering and capital restructuring.\n\n** **\n\n**Note\n10 - Reportable segments**\n\n \n\nSegments\nreflect how the Company’s operations are managed, how the Company Chief Executive Officer, who is the chief operating decision\nmaker, allocates resources and evaluates performance, and how the Company’s internal management financial reporting is structured.\nFor the years ended December 31, 2025, and 2024, the Company’s reporting segments are based on its significant countries of operation\n(Nigeria), aggregate of operating segments representing all other countries of operation (Argentina, Brazil, South Africa, Portugal and\nPeru), plus its corporate and software development operations in the United Kingdom.\n\n \n\nThe\nCompany develops and manages the global ecommerce platform in the United Kingdom, with its revenue seeking operations in the foreign\ncountries. The Company’s segments reported by country are consistent with its views of regulatory, economic and currency risks\nfor the businesses as well. Statements of operations for the Company’s reporting segments for the years ending December 31, 2025,\nand 2024 are as follows:\n\n \n\nF-26\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n10 - Reportable segments (continued)**\n\n** **Schedule of statements of operations for the company’s reporting segments\n\nYear Ended December 31, 2025 \nNigeria  \nSouth Africa  \nArgentina  \nUnited Kingdom  \nOther  \nTotal \n\nRevenue \n$38,541,234  \n$9,734,927  \n$98,834  \n$-  \n$164,358  \n$48,539,353 \n\n  \n    \n    \n    \n    \n    \n   \n\nOperating expenses: \n    \n    \n    \n    \n    \n   \n\nGeneral and administrative \n 159,247  \n 253,292  \n 188,871  \n 9,643,155  \n 229,474  \n 10,474,039 \n\nSalaries, benefits, contractor costs \n 1,390,893  \n 1,628,107  \n 481,044  \n 15,852,967  \n 2,408,688  \n 21,761,699 \n\nMarketing and commissions \n 38,450,947  \n 10,020,960  \n 87,879  \n 437,458  \n 127,282  \n 49,124,526 \n\nTravel \n 247,606  \n 2,427  \n 95  \n 737,981  \n (34) \n 988,075 \n\nProfessional fees \n 112,082  \n 4,658  \n 448,094  \n 1,892,675  \n 234,311  \n 2,691,820 \n\nProduct and technology development \n -  \n 8,774  \n 30,255  \n 4,332,454  \n 14,622  \n 4,386,105 \n\nDepreciation and amortization \n -  \n -  \n -  \n 2,717,640  \n -  \n 2,717,640 \n\nTotal operating expenses \n 40,360,775  \n 11,918,218  \n 1,236,238  \n 35,614,330  \n 3,014,343  \n 92,143,904 \n\nNet loss from operations \n (1,819,541) \n (2,183,291) \n (1,137,404) \n (35,614,330) \n (2,849,985) \n (43,604,551)\n\n  \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n   \n\nOther expense: \n    \n    \n    \n    \n    \n   \n\nInterest expense \n -  \n 6,901  \n 34,403  \n 2,154,175  \n (5,515) \n 2,189,964 \n\nLoss on Debt Extinguishment \n -  \n -  \n -  \n -  \n -  \n - \n\nLoss from change in fair-value of convertible Shareholder loans \n -  \n -  \n -  \n -  \n -  \n - \n\nStock based Compensation \n -  \n -  \n -  \n -  \n -  \n - \n\nOther Income \n -  \n -  \n -  \n (1,165,544) \n -  \n (1,165,544)\n\nGain/Loss of investment in subsidiaries \n -  \n -  \n -  \n -  \n -  \n - \n\nForeign currency loss/(gain) \n (6,001) \n (106,832) \n 1,978,367  \n (325,494) \n 67,838  \n 1,607,878 \n\nNet loss before income taxes \n$(1,813,540) \n$(2,083,360) \n$(3,150,174) \n$(36,277,467) \n$(2,912,308) \n$(46,236,849)\n\n  \n    \n    \n    \n    \n    \n   \n\nIncome tax benefit (expense) \n -  \n -  \n -  \n -  \n -  \n$- \n\nNet loss \n$(1,813,540) \n$(2,083,360) \n$(3,150,174) \n$(36,277,467) \n$(2,912,308) \n$(46,236,849)\n\n** **\n\n****\n\nF-27\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n* *\n\n**Note\n10 - Reportable segments (continued)*** *\n\n* *\n\nYear Ended December 31, 2024 \nNigeria  \nSouth Africa  \nArgentina  \nUnited Kingdom  \nOther  \nTotal \n\nRevenue \n$22,962,513  \n$4,070,887  \n$18,820,235  \n$-  \n$645,650  \n$46,499,285 \n\n  \n    \n    \n    \n    \n    \n   \n\nOperating expenses: \n    \n    \n    \n    \n    \n   \n\nGeneral and administrative \n 24,268  \n 651,136  \n 1,429,648  \n 1,542,840  \n 274,456  \n 3,922,348 \n\nSalaries, benefits, contractor costs \n 532,300  \n 1,707,079  \n 643,458  \n 13,056,513  \n 3,316,906  \n 19,256,255 \n\nMarketing and commissions \n 23,471,054  \n 4,698,161  \n 22,948,625  \n 688,850  \n 1,112,259  \n 52,918,949 \n\nTravel \n 230,141  \n 3,289  \n 16,552  \n 1,673,044  \n 7,573  \n 1,930,599 \n\nProfessional fees \n 84,017  \n 20,802  \n -  \n 1,907,956  \n 99,272  \n 2,112,047 \n\nProduct and technology development \n -  \n 9,010  \n 34,108  \n 3,082,969  \n -  \n 3,126,087 \n\nDepreciation and amortization \n -  \n -  \n -  \n 1,881,323  \n -  \n 1,881,323 \n\nTotal operating expenses \n 24,341,780  \n 7,089,477  \n 25,072,391  \n 23,833,495  \n 4,810,466  \n 85,147,608 \n\nNet loss from operations \n (1,379,267) \n (3,018,590) \n (6,252,156) \n (23,833,495) \n (4,164,816) \n (38,648,323)\n\n  \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n   \n\nOther expense: \n    \n    \n    \n    \n    \n   \n\nInterest expense \n (2) \n (775) \n 15  \n 3,104,140  \n 16,676  \n 3,120,054 \n\nLoss from change in fair-value of convertible Shareholder loans \n -  \n -  \n -  \n 4,377,051  \n -  \n 4,377,051 \n\n(Gain) loss from changes in fair value \n -  \n -  \n -  \n 5,951,087  \n -  \n 5,951,087 \n\nForeign currency loss \n (75) \n 1,086  \n (528,443) \n 991,016  \n 6,636  \n 470,219 \n\nNet loss before income taxes \n$(1,379,190) \n$(3,018,901) \n$(5,723,728) \n$(38,256,789) \n$(4,188,128) \n$(52,566,734)\n\n  \n    \n    \n    \n    \n    \n   \n\nIncome tax benefit (expense) \n -  \n -  \n -  \n (1,851,038) \n -  \n (1,851,038)\n\nNet loss \n$(1,379,190) \n$(3,018,901) \n$(5,723,728) \n$(36,405,751) \n$(4,188,128) \n$(50,715,696)\n\n \n\nF-28\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n** **\n\n**Note\n10 - Reportable segments (continued)**\n\n** **\n\nThe\nmajority of the Company’s revenue for the years ended December 31, 2025, and 2024 relates to sales activity on its ecommerce platform.\nIn 2025 and 2024, the Company did not have sales to a single customer exceeding 10% of its consolidated revenue.\n\n \n\nThe\nCompany has a significant portion of its operations and net assets outside its home country of the United Kingdom. See the table below\nfor the geographic concentration of the Company’s assets for the years ended December 31, 2025, and 2024.\n\n Schedule of geographic concentration of the company’s assets\n\n  \n2025  \n2024 \n\nUnited Kingdom \n    \n   \n\nCash and cash equivalents \n$361,678  \n$648,453 \n\nAccounts receivables and other receivables, net \n 201,715  \n - \n\nIncome taxes receivable \n 257,040  \n 1,607,754 \n\nOther current assets \n 1,124,836  \n 2,697,852 \n\nProperty and equipment, net \n 444,967  \n 593,358 \n\nIntangible assets, net \n 6,730,155  \n 6,168,534 \n\nInvestment on Joint Venture \n 134,476  \n - \n\nTotal United Kingdom \n$9,254,867  \n$11,715,951 \n\nNigeria \n    \n   \n\nCash and cash equivalents \n$60,264  \n$33,458 \n\nAccounts receivables and other receivables, net \n 2,539,143  \n 2,052,086 \n\nOther current assets \n 607,935  \n 35,125 \n\nTotal Nigeria \n$3,207,342  \n$2,120,669 \n\nArgentina \n    \n   \n\nCash and cash equivalents \n$35,878  \n$49,740 \n\nAccounts receivables and other receivables, net \n 18,584  \n 2,975,215 \n\nOther current assets \n 73,887  \n 6,818 \n\nTotal Argentina \n$128,349  \n$3,031,773 \n\nSouth Africa \n    \n   \n\nCash and cash equivalents \n$15,401  \n$109 \n\nAccounts receivables and other receivables, net \n 11,500  \n 500,114 \n\nOther current assets \n 6,903  \n 2,915 \n\nTotal South Africa \n$33,804  \n$503,138 \n\nOther \n    \n   \n\nCash and cash equivalents \n$5,761  \n$100,911 \n\nAccounts receivables and other receivables, net \n 501  \n 1,411 \n\nIncome taxes receivable \n 264  \n 50,075 \n\nOther current assets \n 23,144  \n 36,115 \n\nTotal Other \n$29,670  \n$188,512 \n\nTotal Assets \n$12,654,032  \n$17,560,043 \n\n** **\n\nF-29\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n** **\n\n**Note\n11 - Common stock**\n\n** **\n\n**Issued,\noutstanding and authorized shares**\n\n** **\n\n** **\n\nOn\nOctober 23, 2024, in connection with the corporate reorganization (the “Formation Transaction”), all existing security holders\nof RTL, a private limited company incorporated in England and Wales, exchanged the securities held in RTL for an equivalent class and\nnumber of securities in RedCloud Holdings plc, a public limited company organized under the laws of England and Wales.\n\n \n\nAs\na result of the Formation Transaction, 50,000,085 RTL ordinary shares (par £0.001 per share), 1 redeemable preference share (par\n£49,999.999; translated at historical rates to $63,905), 5,038,667 options to purchase ordinary shares, and £10,500,000 (approximately\n$13.14 million) unsecured convertible loan notes of RTL (together, the “RTL Securities”) were exchanged for 50,000,084 ordinary\nshares, 5,038,667 options and £10,500,000 (approximately $13.14 million) unsecured convertible loan notes of RedCloud Holdings\nplc (together, the “Company Securities”).\n\n \n\n*Initial\npublic offering and other 2025 equity activities*\n\n* *\n\n●In\n2025, the Company completed an initial public offering (“IPO”) and other equity\ntransactions:\n\n●Issued\n4,444,445 common shares in the IPO, increasing Common Stock by $11,580 and Additional Paid-in\nCapital (“APIC”) by $20,290,650.\n\n●Converted\nshareholder loans into 14,782,149 common shares, increasing Common Stock by $38,776 and APIC\nby $73,499,761.\n\n●Issued\nan additional 9,000,000 common shares (non-IPO), increasing Common Stock by $18,000 and APIC\nby $13,482,000.\n\n●Issued\n2,091,717 equity-classified warrants, increasing Common Stock by $4,183 and APIC by $3,133,392.\n\n \n\nThe\nUnited Kingdom Companies Act 2006 abolished the requirement for a company incorporated under the laws of England and Wales to have an\nauthorized share capital. In accordance with the articles of association of RedCloud and the United Kingdom Companies Act 2006, shareholders\nresolve to grant the directors of the company the authority to allot a specified number of shares as and when required for a specific\nequity issuance by way of shareholder resolution. This authority can then be increased or replaced from time to time by any subsequent\nshareholder resolution. There is no prescribed maximum authorized share capital in the articles of association of RedCloud.\n\n \n\n**Voting\nrights**\n\n** **\n\nEach\noutstanding share of common stock is entitled to one vote on all matters submitted to a vote of holders of common stock. Decisions of\nthe shareholders are determined by a simple majority of the votes cast unless such higher approval threshold is required under Companies\nAct 2006.\n\n \n\n**Note\n12 - Share-based payments**\n\n** **\n\nThe\nCompany adopted the 2021 Enterprise Management Incentive Plan (the “2021 Plan”) to retain and motivate independent directors,\nexecutives, the employees and consultants. The 2021 Plan was approved by the Company’s Board on December 20, 2021, and reserves\nan aggregate of 3,200,000 of the Company’s common shares for issuance in connection with Awards (as defined in the 2022 Plan) granted\nunder the 2021 Plan. Under the 2021 Plan, the Board may grant several types of stock options with varying vesting and performance conditions,\nand exercise prices. Common shares are newly issued from available authorized shares upon exercise of awards.\n\n \n\nF-30\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n12 - Share-based payments (continued)**\n\n \n\nThe\nstock options in the 2021 Plan included performance and future service conditions. The future service conditions vary from zero to three\nyears. When the Company updated the Plan rules in 2024 and granted options under the new 2024 Plan, the Company dropped the future service\nconditions and the differential between legacy, basic and bonus options. The options are not exercisable unless one or more of the following\nconditions are met: (1) the Company has a public listing of its common shares, (2) for 30 days following a change in control of the Company,\n(3) if the Board serves notice to the option holder that a change in control, asset sale, or voluntary wind-up is occurring, (4) an arrangement\nby the court between the Company and its members under Part 26 of the Companies Act of 2006 in the United Kingdom, (5) 30 days following\nan asset sale, (6) on the day immediately prior to the tenth anniversary of the option grant. For accounting purposes, the only exercise\ncondition considered probable at December 31, 2024, is condition (6), and as such, the Company used an expected term in the stock option\nvaluation models of ten years.\n\n \n\nThe\n2021 Plan was amended by the Board on or about 1 July 2024 to take into account recent changes and some minor updating alterations. Also,\non 1 July 2024, the Board approved a new Enterprise Management Incentive Plan (the 2024 Plan). The rules of the 2021 Plan and the 2024\nPlan are identical. In relation to the 2024 Plan, the Board and the Company’s shareholders approved the grant and exercise of options\nover 4,020,750 ordinary shares of £0.001 each in the capital of the Company.\n\n \n\nA\nnumber of the 2021 Plan participants proved ineligible to participate in the 2021 Plan and those participants agreed to release their\nrespective options and were regranted options in the 2024 Plan. The transfer affected 953,750 legacy options.\n\n \n\nUnder\nthe 2024 Plan the Company awarded 4,020,750 options; 1,973,500 options were issued from the surplus options remaining unallocated under\nthe 2021 Plan, with 2,047,250 being awarded from the new option pool created under the 2024 Plan.\n\n \n\nIn\nOctober 2024 the Company completed the Reorganization and as a consequence the options granted in RedCloud Technologies Ltd transferred\nup to RedCloud Holdings PLC,\n\n \n\nFollowing\nthe Reorganization, the Company granted 704,250 options in RedCloud Holdings PLC (“the 2024 Plc Plan”) The exercise price\nof each option was the IPO strike price, which turned out to be $4.50.\n\n \n\nAs\nat December 31, 2024, the options granted and outstanding under each Plan were as follows:\n\n \n\nSchedule of options granted under each plan\n\nThe 2021 Plan \n 619,167 \n\nThe 2024 Plan \n 4,020,750 \n\nThe 2024 Plc Plan \n 704,250 \n\n \n\nOn\nFebruary 25, 2025 the Company undertook a capital consolidation with every two options granted under each Plan being consolidated into\none option, the value of which and the amount payable at vesting doubled. The Company had the ability in the Plan rules to vary the options\nas appropriate following a variation in share capital. The general rule for options (and market practice) is that the total exercise\nprice payable by the option holders should remain the same following the variation of the share capital. This means that where there\nis a one for two consolidation (doubling the value of each share) the number of shares under option would be halved and the exercise\nprice would be doubled.\n\n \n\nFollowing\ncapital consolidation, as at the effective date of the Company’s IPO (March 20, 2025) the number of shares under option was 2,672,084\nas follows:\n\n \n\nSchedule of number of shares under option\n\nThe 2021 Plan \n 309,584 \n\nThe 2024 Plan \n 2,010,375 \n\nThe 2024 Plc Plan \n 352,125 \n\n \n\nOn\nthe effective date of the IPO, March 20, 2025, all 2,672,084 options vested.\n\n \n\nDuring\nthe years ended December 31, 2025, and 2024, there were no unexercised stock options that expired. There also were no recognized income\ntax benefits associated with stock options, and no amounts capitalized as part of the cost of an asset. As of December 31, 2025, the\ntotal remaining stock option cost for nonvested awards is expected to be $9,220,013.\n\n \n\nF-31\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n12 - Share-based payments (continued)** \n\n \n\nThe\ntotal stock-based compensation expense recorded for the years ended December 31, 2025, and 2024 was\n\n \n\n$7,824,176\nand $1,275,425, which related to stock options granted in December 2021. This expense is included in the “General and administrative”\ncaption on the consolidated statements of operations.\n\n \n\n**Valuation\nMethodology**\n\n** **\n\nThe\nfair value of the Company’s Ordinary Shares and options was determined using the Probability-Weighted Expected Return Method (PWERM),\nas outlined in the Scalar 409A valuation report dated September 17, 2024. This method incorporates multiple exit scenarios, including\na low IPO, high IPO, and remain private scenario, each weighted by management’s estimated probability of occurrence.\n\n \n\n**Black-Scholes\nAssumptions**\n\n** **\n\nFor\noption valuation purposes, the Black-Scholes model was used with the following assumptions derived from guideline public companies and\nmarket data:\n\n \n\n-Risk-free\nrate: 4.23%\n\n-Expected\nvolatility: 39.9%\n\n-Dividend\nyield: 0.0%\n\n-Expected\nterm: 2.0 years for remain private scenario; 0.16 years for IPO scenarios\n\n \n\n**Discount\nfor Lack of Marketability (DLOM)**\n\n** **\n\nA\nDiscount for Lack of Marketability (DLOM) was applied using the Finnerty model. The DLOM was calculated as 3.7% for IPO scenarios and\n12.6% for the remain private scenario, reflecting the reduced liquidity of the Company’s shares prior to a public offering.\n\n \n\n**Fair\nValue Determination**\n\n \n\nBased\non the PWERM and Black-Scholes model, the probability-weighted fair value per Ordinary Share on a non- marketable, minority basis was\ndetermined to be $2.43 as of September 17, 2024.\n\n \n\nThe\nfair values of the outstanding option classes were as follows:\n\n \n\n-$0.001\nOptions: $1.141 per option (net of DLOM)\n\n \n\n-$1.317\nOptions: $0.425 per option (net of DLOM)\n\n \n\nF-32\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC** \n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS \n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n12 - Share-based payments (continued)**\n\n \n\nInformation\nrelating to options outstanding and exercisable at December 31, 2025 and 2024 is as follows:\n\n \n\nSchedule of options outstanding and exercisable\n\nActivity \nNumber of Options  \nWeighted Avg. Exercise Price  \nGrant Date Fair Value  \nAggregate grant-date fair value  \nWeighted Avg. Remaining Life \n\nOutstanding options at Dec 31, 2023 \n **1,107,083**  \n 0,001  \n **851,860**  \n **849,698**  \n 7.9 \n\nGranted \n 1,885,625   \n 1,179  \n 7,590,933   \n 4,874,513   \n 10.0 \n\nForfeited \n (186,875)  \n 0,001  \n (76,219)  \n (76,025)  \n 7.4 \n\nRegranted \n 476,875   \n 0,169  \n 2,125,883   \n 1,924,636   \n 10.0 \n\nCancelled \n (610,625)  \n 0,001  \n (496,805)  \n (495,611)  \n 7.2 \n\nOptions outstanding and exercisable at Dec 31, 2024 \n **2,672,083**  \n -  \n$**9,995,652**  \n$**7,077,211**  \n   \n\nGranted \n -  \n -  \n -  \n -  \n - \n\nForfeited \n -  \n -  \n -  \n -  \n - \n\nRegranted \n -  \n -  \n -  \n -  \n - \n\nCancelled \n -  \n -  \n -  \n -  \n - \n\nOptions outstanding and exercisable at Dec 31, 2025 \n **2,672,083**  \n    \n$**9,995,652**  \n$**7,077,211**  \n   \n\n** **\n\nThe\naggregate intrinsic value of options outstanding and exercisable as of December 31, 2025 and 2024 was approximately:\n\n Schedule of aggregate intrinsic value of options outstanding and exercisable\n\n  \n2025 \n2024\n\nIntrinsic value of options outstanding \n$1.9 million \n$4.2 million\n\nIntrinsic value of options exercisable \n$1.9 million \n$4.2 million\n\n \n\nThe\nintrinsic value represents the difference between the Company’s share price at the reporting date and the exercise price of the\noptions, multiplied by the number of options that were in-the-money.\n\n \n\nSubstantially\nall options outstanding as of December 31, 2025 and 2024 had exercise prices significantly below the Company’s share price and\nwere therefore considered in-the-money.\n\n** **\n\nF-33\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n** **\n\n**Note\n13 - Income taxes**\n\n* *\n\n*Income\nTax Benefit (Expense) and Effective Income Tax Rate*\n\n* *\n\nThe\nentire income tax benefit of $1,851,038 for the year ended December 31, 2024 resulted from the UK R&D tax credit incentive and was\nallocated to loss from continuing operations. During 2025, the Company adopted presentation changes related to the UK merged R&D\nexpenditure credit regime. Eligible R&D credits are recognized in accordance with applicable accounting guidance and are presented\nwithin operating income where management considers the credits to be related to operating activities. As a result of the change in the\nUK R&D tax credit incentive regime for 2025, no tax benefit was recorded to continuing operations for 2025.\n\n \n\nIncome\ntax benefit consists of the following:\n\n Schedule of income tax benefit\n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nCurrent foreign \n    \n   \n\nUnited Kingdom (“UK”) \n$-  \n$1,851,038 \n\nDeferred foreign \n    \n   \n\nLoss carryforwards \n 9,744,082  \n 7,581,029 \n\nIncome tax provision to return adjustments \n 2,152,482  \n 1,027,496 \n\nOther \n (157,317) \n 615,516 \n\nValuation allowance \n (11,739,247) \n (9,224,041)\n\nTotal deferred foreign \n -  \n - \n\nDeferred foreign - other comprehensive Income (loss) \n    \n   \n\nForeign currency translation adjustments \n 1,545,477  \n (947,349)\n\nValuation allowance \n (1,545,477) \n 947,349 \n\n  \n -  \n - \n\nTotal income tax benefit \n$-  \n$1,851,038 \n\n \n\nLoss\nbefore income taxes related to our operations consists of:\n\n Schedule of loss before income taxes\n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nForeign \n    \n   \n\nCorporate - UK \n$(36,277,469) \n$(38,256,788)\n\nNigeria \n (1,813,539) \n (1,379,201)\n\nPortugal \n (2,255,825) \n (3,416,096)\n\nArgentina \n (3,150,173) \n (5,723,728)\n\nSouth Africa \n (2,083,360) \n (3,018,902)\n\nOther foreign entities \n (656,484) \n (772,019)\n\nTotal loss before income taxes \n$(46,236,850) \n$(52,566,734)\n\n \n\nThe\ntable below provides the updated requirements of ASU 2023-09 for the year ended December 31, 2025. See Note 2 “Significant Accounting\nPolicies - Recent Accounting Pronouncements” for additional details on the adoption of ASU 2023-09. A reconciliation of our income\ntax provision computed by applying the UK statutory income tax rate of 25% to income (loss) before taxes is as follows for the year ended\nDecember 31:\n\n** **\n\nF-34\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n** **\n\n**Note\n13 - Income taxes (continued)**\n\n Schedule of income tax rate and the effective income tax rate\n\n  \nDecember 31, 2025  \nDecember 31, 2025 \n\nUK Federal income tax rate \n (11,559,213) \n 25.0%\n\nForeign tax effects \n    \n   \n\nPortugal \n 563,956  \n (1.2)%\n\nNigeria \n    \n   \n\nChanges in valuation allowance \n 756,048  \n (1.6)%\n\nOther \n (302,662) \n 0.7%\n\nArgentina \n    \n   \n\nChanges in valuation allowance \n 951,315  \n (2.1)%\n\nOther \n (163,772) \n 0.4%\n\nSouth Africa \n 520,840  \n (1.1)%\n\nOther Foreign \n 164,122  \n (0.4)%\n\nChange in valuation allowance \n 9,335,291  \n (20.2)%\n\nNontaxable or nondeductible items \n    \n   \n\nEquity compensation \n 1,958,267  \n (4.2)%\n\nInterest expense \n (2,540,966) \n 5.5%\n\nOther \n 279,429  \n (0.6)%\n\nOther \n 37,345  \n (0.1)%\n\nEffective income tax rate \n (0) \n 0.0%\n\n** **\n\nAs\npreviously disclosed prior to the adoption of ASU 2023-09, the reconciliation of our income tax provision computed by applying the UK\nstatutory income tax rate of 25% to (loss) income before income taxes is as follows for the year ended December 31:\n\n \n\n  \nDecember 31, 2024  \nDecember 31, 2024 \n\nUK Federal income tax rate \n (13,141,685) \n 25.0%\n\nValuation allowance \n 9,516,297  \n (18.1)%\n\nChange in UK statutory income tax rate \n 22,003  \n 0.0%\n\nChange in fair value \n 1,487,821  \n (2.8)%\n\nLoss on Debt Extinguishment \n 1,106,869  \n (2.1)%\n\nNondeductible expense \n 805,252  \n (1.5)%\n\nR&D expenditures \n 25,085  \n 0.0%\n\nForeign income tax rate differential \n 371,640  \n (0.7)%\n\nOther true ups \n (2,044,320) \n 3.7%\n\nEffective income tax rate \n (1,851,038) \n 3.5%\n\n \n\nThe\nreconciliation of the consolidated effective income tax rate is based on the UK statutory income tax rates of 25% for the years ended\nDecember 31, 2025 and 2024. The Parent Company is domiciled in the UK, and therefore, the consolidated effective income tax rate reconciliation\nis based on the UK income tax rates rather than the statutory income tax rates in the United States.\n\n \n\nF-35\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n** **\n\n**Note\n13 - Income taxes (continued)**\n\n* *\n\n*Deferred\nIncome Taxes - Overall*\n\n* *\n\nThe\nincome tax affects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities consist\nof the following:\n\n Schedule of deferred income tax assets and liabilities\n\n  \nDecember 31, 2025  \nDecember 31, 2024 \n\nDeferred income tax assets: \n    \n   \n\nLoss carryforwards \n    \n   \n\nUK \n$27,103,533  \n$18,727,082 \n\nArgentina \n 1,771,158  \n 1,367,756 \n\nNigeria \n 1,877,176  \n 1,217,743 \n\nPortugal \n 102,497  \n 88,983 \n\nOther foreign entities \n 846,421  \n 492,391 \n\nTotal loss carryforwards \n 31,700,785  \n 21,893,955 \n\nCompensation (2) \n 464,064  \n 338,501 \n\nInterest expense carryover (2) \n 5,582,462  \n 2,500,175 \n\nAccruals & Reserves (3) \n 430,886  \n 32,179 \n\nOther, Net \n 891  \n - \n\nValuation allowance \n (37,572,309) \n (24,287,585)\n\n  \n    \n   \n\nTotal deferred income tax assets \n 606,780  \n 477,225 \n\n  \n    \n   \n\nDeferred income tax liabilities \n    \n   \n\nIntangible assets - R&D (2) \n (495,523) \n (328,874)\n\nProperty, plant, and equipment (2) \n (111,242) \n (148,339)\n\nOther (1) \n (15) \n (12)\n\nTotal deferred income tax liabilities \n (606,780) \n (477,225)\n\nNet deferred income tax assets (liabilities) \n$-  \n$- \n\n \n\n(1)Pertains\nto company’s operations located in Nigeria.\n\n \n\n(2)Pertains\nto company’s operations located in the UK.\n\n \n\n(3)Pertains\nto company’s operations located in the UK, Portugal and South Africa.\n\n \n\nAt\nDecember 31, 2025, the Company’s gross loss carryforwards totaled $130.1 million, with related income tax benefits of $31.7 million.\nOf the $130.1 million, the Company’s gross loss carryforwards related to the following income tax jurisdictions: (i) $108.4 million\n– UK; (ii) $5.7 million – Nigeria; (iii) $0.5 million – Portugal; (iv) $6.9 million – South Africa; (v) $7.1\nmillion – Argentina; and (vi) Brazil and other - $1.5 million. The Company’s loss carryforwards\ndo not expire, except for loss carryforwards associated with our operations located in Argentina, which such expiration period is five\nyears, and expiration dates ranging from calendar 2026 through calendar 2030.\n\n \n\nAt\nDecember 31, 2025, the Company also had a UK R&D credit carryforward totaling $0 million which can be carried forward indefinitely.\n\n \n\n*Deferred\nIncome Taxes – Valuation Allowance*\n\n \n\nManagement\nevaluates the realizability of its net deferred income tax assets to determine if a valuation allowance is required. Management assesses\nwhether a valuation allowance should be established based on the consideration of all available evidence using a “more-likely-than-not”\nstandard, with significant weight being given to evidence that can be objectively verified. Since the company operates in multiple jurisdictions,\nwe assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, considering the effects of local tax law.\n\n \n\nAt\nDecember 31, 2025, and 2024, Management evaluated the realizability of its net deferred income tax assets to determine if a full valuation\nallowance was required. Based on Management’s assessment, Management determined that the UK Parent and each of its foreign subsidiaries,\nhave a recent history of significant cumulative pre-tax losses, that were experienced from the UK Parent and each foreign subsidiaries’\ncommencement of operations through December 31, 2025. As a result of the significant weight of this negative evidence, we believe it\nis more likely than not that the Company’s net deferred income tax assets will not be fully realizable, and therefore Management\nprovided for a full valuation allowance against all its net deferred income tax assets.\n\n** **\n\nF-36\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n13 - Income taxes (continued)**\n\n \n\nA\nsummary of the change in the valuation allowances against the Company’s net deferred income tax assets for calendar years 2025\nand 2024, follows:\n\n Summary of change in the valuation allowances\n\n  \n2025  \n2024 \n\nBeginning balance, January 1 \n$24,287,585  \n$16,010,893 \n\nChange in valuation allowance associated with foreign \n    \n   \n\ncurrency translation adjustments during the current year \n 1,545,477  \n (947,349)\n\nChange in valuation allowance associated with foreign currency translation adjustments during the current year \n 1,545,477  \n (947,349)\n\nChange in valuation allowance associated with \n    \n   \n\ncurrent year earnings \n 11,739,247  \n 9,224,041 \n\nChange in valuation allowance associated with current year earnings \n 11,739,247  \n 9,224,041 \n\nChange in estimate during current year \n -  \n - \n\nEnding balance, December 31 \n$37,572,309  \n$24,287,585 \n\n \n\n*Deferred\nIncome Taxes – Undistributed Earnings*\n\n \n\nAt\nDecember 31, 2025, and 2024, the Company asserted that earnings and profits from its foreign subsidiaries will be indefinitely reinvested\nand not repatriated to the UK Parent due to liquidity constraints for each of its foreign subsidiaries. As of December 31, 2025, and\n2024, cash and cash equivalents and restricted cash related to the Company’s foreign subsidiaries outside the United Kingdom totaled\n$117,304 and $184,218 respectively. Accordingly, a deferred income tax liability related to undistributed earnings and profits was not\nrecorded as of December 31, 2025, and 2024, respectively.\n\n \n\n*Cash\nTaxes*\n\n \n\nIncomes\ntaxes paid, net of refunds, exceeds 5 percent of total income taxes paid, net of refunds, in the following jurisdictions for the year\nended December 31, 2025:\n\n Schedule of incomes taxes paid, net of refunds\n\n  \n2025 \n\nUK \n$1,835,365 \n\nTotal income taxes refunded \n$1,835,365 \n\n \n\n*Uncertain\nTax Positions*\n\n* *\n\nAt\nDecember 31, 2025, and 2024, the Company did not record any unrecognized income tax positions related to uncertain tax positions. The\nCompany’s policy is to record interest and penalties from unrecognized tax benefits as interest expense and other expense, respectively.\n\n \n\nThe\nCompany’s UK Parent and foreign subsidiaries’ income tax returns that have been filed by the Company, are subject to statute\nof limitation periods ranging from 3 years to 6 years from the date the respective tax year’s income tax return was filed.\n\n \n\nAccordingly,\n(i) UK income tax returns filed by the Company remain subject to examination for income tax year 2022 and subsequent; (ii) Nigerian income\ntax returns filed by the Company remain subject to examination for income tax year 2024 and subsequent; Portuguese income tax returns\nfiled by the Company remain subject to examination for tax year 2025 and subsequent, (iv) Argentinian income tax returns filed by the\nCompany remain subject to examination for tax year 2021 and subsequent; and (v) all other foreign entity returns filed by the Company\nremain subject to examination for tax years ranging from 2023 to 2025 and subsequent. However, to the extent allowed by law, the taxing\nauthorities may have the right to examine tax years where NOLs were generated and carried forward, and to make adjustments to the NOL\ncarryforward amounts. The Company is not currently under examination by any jurisdiction.\n\n \n\nF-37\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n14 - Net loss per share**\n\n** **\n\nBasic\nnet loss per share is computed by dividing net loss for the period by the weighted average number of common stock outstanding during\nthe year. Diluted net loss per share is computed by dividing net loss for the year by the weighted average number of shares of common\nstock and potentially dilutive instruments outstanding during the year. The dilutive effect of outstanding options and equity incentive\nawards is reflected in diluted net loss per share by application of the treasury stock method. The calculation of diluted net loss per\nshare excludes all anti-dilutive instruments.\n\n \n\nFor\nthe years ended December 31, 2025 and 2024, the effects of the conversion of the convertible shareholder loans and stock options would\nhave been antidilutive and, as a consequence, they were not factored into the calculation of diluted earnings per share.\n\n Schedule of net loss per share\n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nNumerator: \n    \n   \n\nNet loss - basic and diluted \n$(46,236,851) \n$(50,715,696)\n\n  \n    \n   \n\nDenominator: \n    \n   \n\nWeighted average shares outstanding - basic and diluted \n 45,017,170  \n 24,297,063 \n\n \n\nSee\nNote 17 - Subsequent events that discusses the Company’s issuance of a convertible loan debt agreement in March 2024 that the holder\nhas the option of converting the loan into common shares of the Company, as well as discussion of common shares issued pro rata from\nadditional paid-in capital to existing shareholders in March 2024.\n\n \n\nF-38\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n15 - Commitments and contingencies and other legal matters**\n\n** **\n\nThe\nCompany is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings. The\nCompany accrues liabilities when it considers probable that future costs will be incurred and such costs can be reasonably estimated.\nExpected legal costs related to claims are accrued when the legal service is provided. Proceeding-related liabilities are based on developments\nto date and historical information related to actions claimed against the Company.\n\n \n\nThe\nCompany is subject to various legal proceedings, claims and disputes arising in the ordinary course of business. Provisions are recognized\nwhen the Company determines that a loss is probable and the amount of the loss can be reasonably estimated. Where a loss is reasonably\npossible but not probable, no provision is recorded and the matter is disclosed as a contingency.\n\n \n\n**United\nKingdom**\n\n** **\n\n●\nIn\nthe year ended December 31, 2025, the Company had a number of employment-related and commercial matters in the United Kingdom.\n\n \n \n\n●\nThe\nCompany recorded provisions totaling $197,500 within other current liabilities for its estimated exposure relating primarily to employment\ntribunal claims with former employees and a commercial matter with a former vendor. These provisions include estimated settlement\namounts and related legal and employment costs.\n\n \n \n\n●\nManagement\nbelieves it is reasonably possible that the ultimate resolution of these matters could differ from the amounts recorded; however,\nbased on information currently available, the Company believes the recorded provisions appropriately reflect its estimated exposure\nas of December 31, 2025.\n\n \n \n\n●\nDuring\nthe year ended December 31, 2024, the Company had recognized a provision of £350,000 in respect of a commercial dispute under\na purported loan agreement. On 2 May 2025, the Company entered into a settlement agreement resolving this dispute in full for £350,000,\ninclusive of interest and costs. No liability remained outstanding at December 31, 2025 in respect of this matter.\n\n \n\n**Brazil**\n\n** **\n\n●In\nthe year ended December 31, 2025, the Company was involved in several employment-related\nlegal proceedings in Brazil, primarily relating to former employees and governed by Brazilian\nlabor law.\n\n \n\n●The\nCompany recorded provisions totaling $317,000 within other current liabilities for these\nmatters, which relate to claims involving multiple former employees. The provision represents\nmanagement’s best estimate of potential settlement amounts together with related legal\nand employment costs.\n\n \n\n●While\nthese matters remain subject to judicial proceedings and ongoing assessment, management believes\nthat it is reasonably possible that the ultimate outcome could differ from the amount recorded.\nAs of December 31, 2025, management believes that the provision of $317,000 appropriately\nreflects its estimated exposure.\n\n \n\n**Argentina**\n\n** **\n\n●In\nthe year ended December 31, 2025, the Company recorded provisions totaling $30,000 within\nother current liabilities for employment-related and commercial matters involving former\nemployees and contractors in Argentina.\n\n \n\n●These\nprovisions relate to matters that were initiated in prior periods and continue to be assessed\nby management. The Company believes it is reasonably possible that the estimate of loss could\nchange; however, as of December 31, 2025, management believes the recorded amount appropriately\nreflects its estimated exposure.\n\n \n\n●In\naddition, during 2025 the Company received a claim from a former contractor seeking £203,140\nin relation to purported amounts due following termination of the engagement. The Company\ndenied the claim through pre-action correspondence and has not received any further communication.\nManagement does not consider a loss to be probable in respect of this matter and, accordingly,\nno provision has been recorded.\n\n \n\nAs\nof December 31, 2025, total provisions recognized in other current liabilities in respect of legal and regulatory matters amounted to\n$560,500, of which $197,500 related to the United Kingdom, $317,000 related to Brazil, and $30,000 related to Argentina.\n\n \n\nExcept\nas described above, the Company is not involved in any other material legal proceedings, and management does not believe that the outcome\nof any other known matters will have a material adverse effect on the Company’s financial position, results of operations or cash\nflows.\n\n** **\n\n****\n\nF-39\n\n \n\n** **\n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n16 - Related Party Transactions**\n\n** **\n\n**Executive\nDirectors’ Service Agreements**\n\n** **\n\nOn\nMarch 24, 2025, the Company entered into Executive Directors’ Service Agreements with Justin Floyd (Chief Executive Officer) and\nSoumaya Hamzaoui (Chief Operating Officer). Both agreements outline compensation, benefits, equity awards, and participation in standard\nemployee benefit plans, and constitute related-party transactions due to their roles as directors and executive officers.\n\n \n\n**Justin\nFloyd (CEO)**\n\n** **\n\nUnder\nthe terms of the agreement, Mr. Floyd is entitled to:\n\n \n\n●$500,000\nannual base salary, payable in accordance with normal payroll practices, and subject to increase\n(but not decrease) at the discretion of the Board;\n\n \n\n●A\n$200,000 relocation payment;\n\n \n\n●A\ntarget annual bonus equal to 100% of base salary, with the actual bonus determined based\non individual and/or Company performance goals approved by the Board or a designated subcommittee,\npayable no later than March 15 following the performance year;\n\n \n\n●A\ntarget annual equity compensation award of at least $4,000,000, subject to a four-year vesting\nperiod and other terms set by the Board;\n\n \n\n●Eligibility\nfor customary health, welfare, and fringe benefit plans.\n\n \n\nIn\nconnection with the Company’s initial public offering, the Board agreed to consider granting Mr. Floyd a one-time equity award\nvalued at $3,000,000, subject to a four-year vesting period under a separate grant agreement.\n\n** **\n\n**Soumaya\nHamzaoui (COO)**\n\n** **\n\nUnder\nthe terms of the agreement, Ms. Hamzaoui is entitled to:\n\n \n\n●$450,000\nannual base salary, payable in accordance with normal payroll practices and subject to increase\n(but not decrease) at the discretion of the Board;\n\n \n\n●A\ntarget annual bonus equal to 90% of base salary, with the actual bonus determined based on\nindividual and/or Company performance goals and payable no later than March 15 following\nthe performance year;\n\n \n\n●A\ntarget annual equity compensation award of at least $2,100,000, subject to a four-year vesting\nperiod and other terms set by the Board;\n\n \n\n●Eligibility\nfor customary health, welfare, and fringe benefit plans.\n\n \n\nIn\nconnection with the initial public offering, the Board agreed to consider granting Ms. Hamzaoui a one-time equity award valued at $2,000,000,\nsubject to a four-year vesting period under a separate grant agreement.\n\n \n\nF-40\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n16 - Related Party Transactions (continued)**\n\n** **\n\n**Non-Executive\nDirector Letters of Appointment**\n\n** **\n\nOn\nMarch 24, 2025, the Company entered into Non-Executive Director (NED) appointment agreements with Hans Kunz and Nikolaus Senn, both of\nwhom qualify as related parties.\n\n \n\n**Hans\nKunz (Chairperson of the Board)**\n\n** **\n\nUnder\nthe agreement, Mr. Kunz is entitled to:\n\n \n\n●An\nannual director fee of $55,000;\n\n \n\n●An\nadditional $75,000 for serving as Chairperson of the Board;\n\n \n\n●Options\nto acquire $95,000 worth of ordinary shares, vesting immediately at an exercise price equal\nto the IPO price, with the number of options determined using the Black-Scholes-Merton valuation\nmodel.\n\n \n\n**Nikolaus\nSenn (Non-Executive Director)**\n\n** **\n\nUnder\nthe agreement, Mr. Senn is entitled to:\n\n \n\n●An\nannual director fee of $55,000;\n\n \n\n●Options\nto acquire $95,000 worth of ordinary shares, vesting immediately at the IPO price, with the\nnumber of options determined using the Black-Scholes-Merton valuation model.\n\n \n\n**Shareholder\nLoan and Convertible Shareholder Loan Agreements**\n\n** **\n\nThe\nCompany’s shareholder loans and convertible shareholder loans discussed in Note 9 – Borrowings are transactions with certain\ncommon stock shareholders and therefore constitute related-party transactions.\n\n \n\nDuring\nthe year ended December 31, 2025, the Company also entered into additional related-party financing transactions, including the £1,500,000\nshareholder loan (converted to equity pre-IPO), the shareholder-guaranteed £2,800,000 bank facility, and two CHF 2,000,000 unsecured\nshareholder loans, all of which are described in Note 9.\n\n \n\nF-41\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n17 - Subsequent Events**\n\n** **\n\nThe\nCompany evaluated subsequent events occurring after 31 December 2025 through the date these financial statements were authorized for\nissuance. The following material non-recognized subsequent events were identified. These events did not provide evidence of conditions\nthat existed as of 31 December 2025 and therefore no adjustments have been made to the financial statements.\n\n \n\n**Changes\nin Executive Leadership**\n\n** **\n\n*Appointment\nof Chief Financial Officer (effective 5 January 2026)*\n\n* *\n\nFollowing\nthe expiry of the term of Neil Woodman on 31 December 2025, the Board appointed Maria Magdalena Gonzalez as Chief Financial Officer,\neffective 5 January 2026, replacing Mr. Woodman.\n\n \n\n*Subsequent\nCFO Transition*\n\n* *\n\nAfter\nher appointment, Ms. Gonzalez stepped down from the CFO role for personal reasons. The Company announced that Mr. Raju Datla, a senior\nfinance executive with over 20 years’ experience in corporate finance, capital markets and strategic transactions, assumed the\nrole of Chief Financial Officer. This leadership transition aligns the finance function with the Company’s capital-raising strategy\nand long-term operational plans.\n\n** **\n\n**Equity\nLine of Credit (“ELOC”) and Convertible Note Financing**\n\n** **\n\nOn\n5 February 2026, the Company entered into a Term Sheet with 3i Management LLC and its investor affiliates for (i) an Equity Line of Credit\n(“ELOC”) and (ii) Senior Convertible Notes. These agreements were executed after the reporting date and did not exist as\nof 31 December 2025. Key terms include the following:\n\n \n\n*Equity\nLine of Credit (ELOC)*\n\n* *\n\n●Aggregate\ncommitment of up to $30,000,000 in ordinary shares over a 24-month term.\n\n \n\n●Forward\npurchase price: 97% of lowest VWAP in 3-day period after notice.\n\n \n\n●Backward\npurchase price: 90% of lowest daily price during 5-day look-back.\n\n \n\n●Beneficial\nownership limit of 4.99%, with option to increase to 9.99%.\n\n \n\n●Requirement\nto file and maintain an effective registration statement for resale of ELOC shares.\n\n \n\n*Senior\nConvertible Notes*\n\n* *\n\n●Principal\namount of $2,173,913.04 per note, issued at an 8% original issue discount.\n\n \n\n●Aggregate\ncash proceeds of approximately $4,000,000 in respect of the two notes.\n\n \n\n●Interest:\n7% per annum, guaranteed through maturity.\n\n \n\n●Conversion\nprice: 120% of the lower of (i) closing price before signing or (ii) 5-day average closing\nprice.\n\n \n\n●Maturity:\n12 months from closing; monthly instalments begin two months after closing.\n\n \n\n●Change-of-control\nredemption at 110% of outstanding principal.\n\n \n\n●Obligation\nto maintain share reserve of 300% of shares required for conversion.\n\n \n\nThese\narrangements provide additional financing flexibility but had no financial impact on the 2025 results, as they were executed after year-end.\n\n \n\nSubsequent\nto December 31, 2025, the Company issued senior convertible notes to certain investor affiliates, resulting in aggregate gross cash proceeds\nof approximately $4.0 million, net of original issue discounts. The issuance of these notes occurred in February 2026.\n\n \n\nIn\naddition, during April and May 2026, the Company completed multiple drawdowns under the Equity Line of Credit, resulting in the\nissuance of ordinary shares to existing financing partners. These drawdowns generated aggregate gross cash proceeds of approximately\n$1.4 million. The shares were issued in accordance with the applicable VWAP-based pricing provisions and beneficial ownership\nlimitations set forth in the ELOC agreements.\n\n \n\nThe\nELOC drawdowns executed during April and May 2026 involved multiple existing financing partners, including Tumim Stone Capital LLC\n(“Tumim”) and Amiens Technology Investment LLC (“Amiens”).\n\n \n\nSubsequent\nto year end, warrants previously issued to Alto Opportunity Master Fund SPC were exercised, resulting in the issuance of 1,573,000 ordinary\nshares for aggregate cash proceeds of approximately $0.9 million, at an exercise price of approximately $0.57 per share.\n\n \n\nF-42\n\n \n\n \n\n**REDCLOUD\nHOLDINGS PLC**\n\nNOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n*DECEMBER\n31, 2025, AND 2024*\n\n \n\n**Note\n17 - Subsequent Events (continued)**\n\n** **\n\nNo\nadditional warrants were issued to Alto Opportunity Master Fund SPC subsequent to December 31, 2025. The activity described above relates\nsolely to the exercise of warrants that had been issued in prior periods.\n\n \n\nAs\na result of these financing activities, the Company received aggregate cash proceeds of approximately $5.3 million after December 31,\n2025.\n\n \n\n**Filing\nof Form F-1 Registration Statement**\n\n** **\n\nIn\nearly 2026, the Company prepared and filed a Form F-1 registration statement to register up to 8,800,000 ordinary shares for resale by\nexisting financing partners Tumim, Amiens, 3i, LP, and Alto Opportunity Master Fund SPC. These shares comprise issuances under the ELOC\npurchase agreements and shares issuable upon conversion of senior convertible notes.\n\n \n\nThe\nCompany will not receive proceeds from the resale of these shares, although it may receive future proceeds from discretionary drawdowns\nunder the ELOC.\n\n \n\nThe\nregistered shares include ordinary shares issued subsequent to year end pursuant to the ELOC, as well as shares issuable upon conversion\nof the senior convertible notes issued in February 2026.\n\n \n\nThe\nregistered shares also include ordinary shares issued upon the exercise of warrants, including warrants exercised by Alto Opportunity\nMaster Fund SPC subsequent to year end\n\n \n\n**New\nloan from major shareholder – Subsequent Event**\n\n** **\n\n**Loan\nfrom Major Shareholder**\n\n** **\n\nSubsequent\nto December 31, 2025, the Company entered into additional unsecured term loan arrangements with existing shareholders, as provided below:\n\n \n\n●On\nMarch 25, 2026, the Company received an unsecured loan of GBP 1.0 million from Ms. Christina\nByland;\n\n●On\nMarch 26, 2026, the Company received a further unsecured loan of GBP 136,000 from Dr. Nikolaus\nSenn; and\n\n●On\nMay 7, 2026, the Company received a further unsecured loan of $195,000, jointly provided\nby Ms. Christina Byland ($130,000) and Dr. Nikolaus Senn ($65,000). These loans are unsecured\nand interest-bearing, and mature on March 25, 2027.\n\n \n\nThese\nloans are unsecured and interest-bearing, and mature on March 25, 2027.\n\n \n\nThe\nloan provides short-term liquidity to support the Company’s ongoing operations and strategic initiatives. Further details of the\nloan terms will be disclosed in the period in which the arrangement is outstanding.\n\n \n\nThis\ntransaction represents a non-recognized subsequent event (Type II) under ASC 855, as it reflects conditions that did not\nexist as of December 31, 2025. Accordingly, no adjustments have been made to the accompanying consolidated financial statements.\n\n \n\nAll\nsubsequent events described above occurred prior to the date the financial statements were authorized for issuance.\n\n \n\nAll\nof the events described above:\n\n \n\n●occurred\nafter December 31, 2025, and\n\n \n\n●relate\nto new financing, governance, and market activities, and therefore are classified as non-recognized subsequent events. The financial\nstatements for the year ended December 31, 2025 have not been adjusted for these items.\n\n \n\nF-43"}