Nukkleus deepens losses as Match valuation drops $2.8 mln

Software and technology solutions firm Nukkleus, which controls FXDD Trading and FXMarkets brands, has reported its financials for the three months ending December 31, 2021.


Over this period, New Jersey-based Nukkleus saw its trading revenue unchanged from a year ago, coming in at $4.8 million in FY Q4 2021, which came from support services rendered to FXDD Malta. Though the company had incurred a 25 percent decrease in revenues in 2020 due to the amendment of its agreement with FXDD Malta, the retail broker reduced services fees it currently pays from $2 million per month to $1.6 million.

In terms of its net income, Nukkleus deepened its operating loss of $53,595 in the prior year’s quarter to the sum of $1.94 million for the September-December quarter. This big leap was attributed to a third-party’s revaluation of assets it acquired from Match Financial Limited. Nukkleus acquired London-based financial services firm Match Financial back in July 2021 as part of the US-listed group’s effort to scale its operations and expand its offerings to the crypto space.

As a result, the company adjusted the previous estimated allocation to reflect the decreased value of intangible assets by $2,861,631.  Nukkleus also adjusted the estimated “useful life” of trade names and regulatory licenses from 10 years to 3 years and the estimated useful life of technology from 10 years to 5 years.

“This change in accounting estimate was effective in the first quarter of fiscal year 2022. Based on the carrying value of intangible assets as of September 30, 2021 and those adjustments during the three months ended December 31, 2021, the effect of this change in estimate was an increase in amortization expense of $559,802 and an increase in net loss of $559,802,” the filing further explains.

That aside, the operating costs were pointedly higher on a yearly basis, according to the company’s latest filing with the US Securities and Exchange Commission. The primary culprit for this has been the rise in the amortization of intangible assets.

Specifically, the general and administrative expenses that the company incurred in the last quarter were reported at $353,121, relative to $40,313 for the previous year.

Nukkleus is seeking additional capital

On April 16, 2021, the company was named as a defendant in the case related to the bankruptcy of Boston Prime and BT Prime, the liquidity providers of Boston Technologies. In the amended complaint, BT Prime seeks to hold Nukkleus and its affiliates liable for all of the debts and liabilities stemming from its bankruptcy proceedings. BT Prime incurred huge losses as a result of unprecedented market volatility following SNB announcement to remove the euro-franc peg in 2015.

The troubled firm alleges that Nukkleus has no activity other than it does through collective business relationship with Forexware, Currency Mountain Holdings LLC, Forexware Malta Holdings Ltd., FXDIRECT, FXDD Malta and CMH. Based on this theory, BT Prime alleges that the company should be jointly liable for any liability attributable to other defendants

“It is the Company’s position that there is no basis for BT Prime’s claim against it and intends to vigorously defend against the claim at trial, the date for which has not yet been set,” Nukkleus said.

Looking at the rest of the filing, Nukkleus highlighted that it is currently seeking additional capital through private placements or public offerings of its securities. In addition, the company wants to secure funding through public or private debts to finance its business or any mergers or acquisitions in the future.