Fintech Scion (FINR) 10-K/A2023 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 5)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________________ to ___________________________

Commission file number 000-55685

+603 9226 0908

(Registrant’s telephone number, including area code)

Portman House, 2 Portman Street

London, W1H 6DU

United Kingdom

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant’s most recently completed fiscal year was $2,628,493 (computed using the closing sales price of $2.25 per share of common stock on such date). 

198,742,643 shares of common stock were issued and outstanding as of September 30, 2024.

Documents Incorporated by Reference: None.

Explanatory Note

Except as otherwise indicated herein, this Form 10-K/A does not reflect events occurring after the date of the Original Filing or modify or update those disclosures, including the exhibits to the Form 10-K affected by subsequent events. Information not affected by the restatement is unchanged and reflects the disclosures made at the time of the Original Filing. Accordingly, this Form 10-K/A should be read in conjunction with our filings made with the Securities and Exchange Commission subsequent to the Original Filing. For the convenience of the reader, this Form 10-K/A presents the Original Report in its entirety, subject to the changes described below. The following items have been amended and restated as a result of the restatement:

In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934 as amended (the “Exchange Act”) we are also filing new certifications by the Company’s Principal Executive Officer and Principal Financial and Accounting Officer are filed herewith as Exhibit 31.1, 31.2 and 32.1, respectively, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act.

Description of Restatement

On October 15, 2024, the staff of the SEC issued a comment letter to our Form 10-K for the fiscal years ended December 31, 2023 and 2022 (the “SEC Staff Statement”). The SEC Staff Statement addresses certain accounting and reporting considerations related to the statements of income (loss) and comprehensive income (loss), stockholders’ equity, and cash flows for the period from January 1, 2022 to November 30, 2022. In the light of this SEC Staff Statement, the Board of Directors, after discussion with management, has determined that the financial statements previously filed with the SEC should be restated to reflect the recognition of the results of operation for the acquisition of Fintech.

In connection with the restatement, management has re-evaluated the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of December 31, 2023 and 2022. As a result of that assessment, management has concluded that our disclosure controls and procedures and internal controls over financial reporting were not effective as of December 31, 2023 and 2022, due to a material weakness in our internal control over financial reporting. See Part II, Item 9A, “Controls and Procedures.”

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Annual Report on Form 10-K/A contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:

All of our forward-looking statements are as of the date of this Annual Report on Form 10-K/A only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Annual Report on Form 10-K/A or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Annual Report on Form 10-K/A, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Annual Report on Form 10-K/A that modify or impact any of the forward-looking statements contained in this Annual Report on Form 10-K/A will be deemed to modify or supersede such statements in this Annual Report on Form 10-K/A.

This Annual Report on Form 10-K/A may include market data and certain industry data and forecasts, which we may obtain from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third-party sources.

PART I.

ITEM 1. Business

Overview

Fintech Scion Limited (“Fintech Scion”, the “Company”, “we”, “our”, or “us”) is a fintech enterprise poised to revolutionize the financial landscape through our digital Banking-as-a-Service (BaaS) platform. Our mission is to empower merchants by furnishing them with an integrated suite of tools, skills, and solutions that streamline payment services, unlocking a realm of secure, online, and fully managed transactions and settlements. We currently operate through our wholly-owned subsidiaries based in Malaysia and the United Kingdom.

At the core of our enterprise lies a sophisticated financial ecosystem, underpinned by a robust technological infrastructure. This infrastructure has been developed with the mission of empowering financial institutions to offer seamless, consolidated experiences across diverse verticals encompassing business-to-business, business-to-consumer, and consumer-to-business domains.

In an era where merchants are leveraging an array of software solutions and digital tools to bolster their competitive edge, our role has emerged as a pivotal enabler. The intricate challenge of managing disparate software systems sourced from various providers has become an impediment for merchants of all sizes to seamlessly embrace payments.

Our current clientele encompasses an array of enterprises and organizations, spanning varied sectors, including, but not limited to the management consultancy services, development of software and programming activities, e-commerce, tours and entertainment operations, information technology and investment banking all with a common objective: to minimize the intricacies and costs associated with fund transfers. We extend our services to online businesses, providing comprehensive solutions encompassing payment collection, cross-border transactions, FX services, and corporate bank accounts.

Our cutting-edge payments platform boasts a comprehensive suite of integrated payment products and services tailored to various channels–be it in-store, online, or through mobile and tablet interfaces. This suite encompasses end-to-end payment processing for an array of payment types, merchant acquiring and issuing, diverse methods of mobile and contactless payments, and QR code-based solutions. Complementary software integrations, virtual international bank account numbers (IBAN), integrated mobile point-of-sale (POS) solutions, risk management tools, and robust reporting and analytics capabilities augment our platform’s offerings.

Our payment services seamlessly integrating e-money remittance solutions within the global marketplace, spanning open banking and credit card processing to wire transfers. Our unique Software-as-a-Service (SaaS) model empowers clients to focus on their core operations and sales while we handle the intricate aspects of payment processing. This streamlined approach facilitates efficient onboarding, elevates customer retention, and cultivates new revenue streams.

Our vision transcends boundaries as we aspire to cement our position as a global leader in the payments and banking sphere. Our team, comprising seasoned experts across operations, technology, sales, legal, compliance, and more, forms the backbone of our enterprise.

The crux of our vision lies in simplifying and automating global fund transfers while upholding the highest standards of security. We endeavor to furnish merchants with an all-encompassing Merchant Payment Ecosystem (MPE), a unified platform catering to their diverse payment needs. Our technology leverages the Gateway Cashier Technology to deliver unparalleled services.

Our diverse merchant base ranges from small to medium-sized enterprises, or SMEs, to large enterprises, spanning sectors such as hospitality, e-gaming, consulting, retail, marketing, and e-commerce. While we are rooted in the SaaS framework, our belief in democratizing technology has led us to offer an initial free platform, generating revenue through value-added services.

Our revenue streams encompass processing fees based on payment volumes, a hybrid model featuring fixed transaction fees and monthly charges, and diverse layers that allow us to cross-sell services and nurture lasting client relationships. Currently, we derive all our revenues from our operating subsidiaries based in Malaysia and the United Kingdom. For the fiscal year ended December 31, 2023, we recorded revenue of $2,420,184, with 81.9% of such revenue being derived from our operating subsidiaries in the United Kingdom and the remaining 18.1% from our Malaysian subsidiaries. We also recognized a net loss of $40,662,716 during the fiscal year ended December 31, 2023, primarily resulting from an impairment loss of $39,136,871 (see Note 5 to the consolidated financial statements for a discussion of the Company’s Goodwill).

In the competitive landscape, our distinct layers constitute the heart of our approach, underpinned by a commitment to exemplary customer service. We understand the nuanced needs of various merchants and have meticulously curated layers tailored to their requirements, including cutting-edge technology, diverse payment processing and integrated banking. These layers collectively form the bedrock of our operations, fostering seamless merchant experiences and propelling us to the forefront of the industry.

As we chart our course, we stand poised to not only cater to our diverse clientele but to exceed their expectations. Our pursuit of excellence remains unwavering as we continue to innovate, expand our offerings, and forge new partnerships to reshape the payments and banking landscape.

Corporate History and Structure

We were incorporated in the state of Nevada on November 19, 2013 as “Albero, Corp.” On January 8, 2016, we changed our name to “Vitaxel Group Limited.” On March 2, 2022, we changed our name to “HWGC Holdings Limited.” On May 16, 2023, we changed our name to “Fintech Scion Limited.”

On July 21, 2022, we entered into a share exchange agreement with FintechCashier Asia P.L.C. (formerly known as HWGG Capital P.L.C.), a Labuan company (“FintechAsia”), and all of the shareholders of FintechAsia pursuant to which all shareholders of FintechAsia irrevocably agreed to transfer and assign to the Company all FintechAsia’s shares held by the shareholders in exchange for newly issued shares of the Company’s common stock, par value $0.001 per share. Following the closing of the share exchange on November 15, 2022, FintechAsia became a wholly-owned subsidiary of the Company.

On August 9, 2022, we entered into another share exchange agreement with Fintech Scion Limited (“Fintech”), a private limited company incorporated in the United Kingdom, and all of the shareholders of Fintech pursuant to which All shareholders of Fintech irrevocably agreed to transfer and assign to the Company all of Fintech’s shares held by such shareholders in exchange for an aggregate of 101,666,666 newly issued shares of the Company’s common stock, par value $0.001 per share. Following the closing of the share exchange on November 30, 2022, Fintech became a wholly-owned subsidiary of the Company.

On December 30, 2022, we entered into a stock purchase agreement with Mr. Leong Yee Ming, the previous Chief Executive Officer of the Company (the “Purchaser”), pursuant to which the Company sold to the Purchaser all issued and outstanding shares of Aelora Sdn Bhd (“ASB” and formerly known as Vitaxel Sdn Bhd) and Vitaxel Online Mall Sdn Bhd (“Vionmall”, and together with ASB, the “Former Subsidiaries”). The Company sold the Former Subsidiaries for an aggregate purchase price of RM4,500,002 (the “Purchase Price”), with RM4,500,000 allocated for the purchase price of ASB and RM2 for the purchase of Vionmall. The Purchase Price was paid by the Purchaser’s assumption of a certain amount of intercompany debt owed by the Company to ASB. Pursuant to the terms of the agreement, the Company and ASB assigned, and the Purchaser’s assumed, that portion of intercompany debt equal to the Purchase Price and in full satisfaction of the Purchase Price. Following the completion of the disposal of the Former Subsidiaries to the Purchaser on the same day, ASB and Vionmall ceased to be the subsidiaries of the Company as of December 30, 2022.

On October 11, 2023, we entered into an Asset Conveyance Agreement (the “Purchase Agreement”) with CICO Digital Solutions Limited, a British Columbia company (“CICO” and a related party company that has a common control by a major shareholder of the Company). The Purchase Agreement provided for the acquisition by the Company of substantially all of the assets of CICO (the “Assets”) related to CICO’s business of providing a service platform and software application for payment services from CICO. As consideration for the transfer and sale of the Assets, the Company issued CICO 100,000,000 restricted shares of common stock of the Company, par value $0.001 per share (the “Shares”).

On December 27, 2023, the Company and CICO mutually and voluntarily agreed to unwind the transaction contemplated by the Purchase Agreement. Upon termination, each of the parties to the Purchase Agreement were relieved of their respective rights, liabilities, expenses and other obligations under the Purchase Agreement. In connection therewith, CICO transferred the Shares back to the Company for cancellation upon receipt. The Shares were cancelled and removed from the Company’s issued and outstanding shares of common stock on January 30, 2024.

The diagram below illustrates our corporate structure:

*HWGC KZ Limited and HWG Cash Singapore Ptd Ltd. are dormant. 

Range of Services

Our comprehensive suite of services is carefully tailored across six strategic business areas, each designed to cater to the distinct needs of our diverse clientele. These business areas represent the core of our operations, enabling us to offer a seamless and integrated payment ecosystem to merchants worldwide.

Our PSP service provides an intermediary payment platform to facilitate efficient payment transactions between merchants. Users of our PSP platform have the ability to initiate payment to a supplier, or collect payment from a customer. These payments are processed through our banks with all fund movement reflected in the user’s individualized e-wallet. Our PSP service offers both merchant and supplier users the flexibility to choose their preferred currency when initiating and collecting payment, respectively. We collect a fee from a user’s e-wallet for each completed transaction. Therefore, users must have sufficient funds to complete each payment transaction and pay our fee prior to being able to complete the transaction.

Users have the option of utilizing our PSP services through an already established API operating system, e-mail and mobile messaging services, or in tandem with our Business Accounts service as more fully described below.

Our Business Account services establish the operating system needed to utilize our PSP service platform, including use of our e-wallet feature allowing users to monitor funds, track payment transactions in real time and review transaction history. Users of our Business Accounts services experience our full payment service ecosystem to seamlessly integrate our PSP service platform and operating system to maximize the potential customer experience. We charge an annual fee for our Business Accounts services.

Our PSP service platform utilizes SEPA and SWIFT payments through our partner banks to carry out all payment transactions. We do not currently have direct access to SEPA or SWIFT payments and rely on our bank partners to utilize these services to ensure our customers experience smooth and secure transfers of funds.

We do not charge an additional fee for incoming or outgoing SEPA or SWIFT payment services as the fee is included in our PSP service fees. We absorb all fees charged by our partner bank for use of SEPA or SWIFT payments.

Our FX conversion services provide foreign currency conversion services for our customers. Through third party brokers, users of our PSP services or Business Accounts services are able to exchange currency, provided they have the sufficient balance in their e-wallet of in our designated bank account to fund the conversion transaction.

We require users of our FX conversion services to inform us of the currency they intend to convert, at which point we determine the fees associated with such conversion, including the exchange rate fee, our fee and other transaction-related fees such as bank charges. Upon the user’s agreement to the total fee amount, we instruct our brokers to carry out the exchange. These transactions typically take 1-2 days, but may take as long as one week depending on the customer requests or a disagreement on the exchange rate.

Our customers are not required to register with our brokers to utilize our FX conversion services, as the brokers work with us directly. Our fees are fixed and do not include mark-up fees on the exchange rate. Any mark-up fees on the exchange rate would be added by our brokers and passed on to the customers.

Within these strategic business areas, we have structured three distinct service layers, all seamlessly integrated within a single platform. This holistic approach empowers merchants to expand their operational horizons, fueling their growth within a unified payment ecosystem.

Fintech Digital Solution Limited is a software technology provider combining hundreds of payment providers and payment methods under one platform. In response to updated regulatory compliance mandates from the United Kingdom, potentially impacting our operations as of December 2023, our management has opted to discontinue the EMD agency service. However, our management team remains committed to collaborating with various firms across multiple jurisdictions where regulatory licenses or registrations are essential for our operations. We are actively engaging with licensed and regulated entities on a referral basis to ensure seamless continuity of our services including Business Accounts, SEPA & SWIFT Payments and Foreign Exchange (FX) Conversion services and maintaining our commitment to delivering reliable payment solutions without any interruption.

Integrated Solutions and Advanced Capabilities

Our Merchant Payment Ecosystem (MPE) is grounded in rigorous Know-Your-Customer (KYC) protocols and fortified by robust fraud and risk management tools. Certified compliance with the European Union’s General Data Protection Regulation (GDPR) and the Payment Card Industry Data Security Standard (PCI DSS) Level 1 underscores our commitment to safeguarding sensitive data. Operating at the nexus of multiple currencies and nations, we seamlessly facilitate payment services, encompassing transactions, payouts, and settlements.

Our ethos is rooted in agility and innovation, with a steadfast dedication to swift and precise operations. Our service portfolio extends across the entire end-to-end payment continuum, spanning clients, merchants, PSP providers, affiliates/partners, and harmonious integration with acquiring banks and solution providers. This inclusive approach ensures seamless interactions across the global payments landscape.

Powered by our cutting-edge technology and advanced payment solutions, businesses can manifest their service visions without being constrained by the intricacies of payment plan budgeting. Our meticulously designed layers cater to diverse merchant needs, ensuring a tailored fit for every scenario. The FintechCashier onboarding engine serves as a discerning guide, meticulously analyzing applications and seamlessly aligning merchants with the most pertinent service layer or offering.

Our payment ecosystem comprises essential components that collaborate seamlessly to facilitate secure and efficient electronic transactions. These integral elements collectively underpin businesses’ ability to accept and process electronic payments from customers. Whether provided by a Payment Services Provider (PSP) as an integrated solution or crafted in-house by merchants, these components are essential building blocks within the payment landscape:

Collectively, these interwoven elements coalesce to form the foundation of an efficient and secure payment stack. This stack can be seamlessly delivered as a comprehensive solution by a PSP or meticulously assembled in-house by merchants, utilizing an assortment of specialized tools. Embracing these core components empowers businesses to confidently engage in electronic payment processing, enhancing their capacity to provide exceptional service while maintaining robust security measures. 

These pivotal layers form the cornerstone of FintechCashier’s holistic approach, aimed at harnessing the full potential of the market. By offering a comprehensive spectrum of efficient payment services, we empower our customers with a range of benefits, including:

Our competitive edge as a comprehensive payment hub eliminates the need for customers to seek disparate service providers. We cater to every facet of merchants’ payment solution requirements, providing an encompassing gateway to manage operations and relationships. Services like KYC and AML compliance, customer relationship management (CRM), transaction monitoring, and comprehensive reporting stand testament to our commitment to ensuring seamless, secure, and efficient payment solutions for merchants across diverse industries.

Diverse Customer Base

We cater to a wide array of customers, embracing:

In stark contrast to relying on a handful of major customers for our revenue stream, our approach emphasizes a diverse customer portfolio. This strategic stance fortifies our stability and resilience in the market, safeguarding against over-dependence on any single client. 

Operational Excellence and Support Services

Our operational infrastructure is meticulously crafted to deliver unparalleled customer experiences across the entire payment ecosystem. Our suite of operations and support services encompasses:

Business Strategy and Revenue Generation

Over the forthcoming five years, Fintech Scion and its subsidiaries are resolutely committed to expanding market presence and becoming a preeminent force in the Banking-as-a-Service realm and a global in payment solutions. This entails broadening our current array of services and licenses to establish an even more extensive and comprehensive payment ecosystem.

A pivotal facet of this strategy involves strategic acquisitions and investments within the payment landscape. This approach, as envisioned by our directors, will foster rapid revenue growth while maintaining prudent control over operating costs.

Our overarching strategy encompasses the following elements: 

Our business cases are compelling, with clear value propositions for various segments:

Value Addition to Customers

We augment the value for our customers in the following ways:

Marketing Approach

Our marketing initiatives encompass a diverse range of channels, ensuring broad and effective outreach:

Industry Opportunity

We believe the fintech industry is attractive for a number of reasons:

Broad Universe of Potential Targets: The total global fintech market attained a value of more than $140 billion in 2023, and expected to grow at a CAGR of 12% to reach over $270 billion by 2027⁽²⁾.

Market Opportunity

In general, FinTech-as-a-Service (FaaS) is gaining attention, leveraging modern technology to aid multiple segments, including Lending, Credit, and Payments, in resolving long-standing challenges. Businesses are increasingly turning to FaaS to optimize their processes and increase efficiency. Customer satisfaction and customer retention are two compelling reasons why numerous companies are now adopting FaaS. Legal compliance and optimal security mechanisms are additional benefits. Using FaaS, financial and non-financial companies can automate their financial processes and offer customers hassle-free access to credit and services.

‍FaaS automates financial processes and makes them efficient, eliminates cumbersome paperwork, and reduces human intervention. Robotic automation frees up working hours for more valuable tasks. The result—streamlined workflows, thorough document analyses, and quick results. By integrating FaaS, companies can significantly reduce the turnaround time for the entire financial process and improve customer experience.

We believe FaaS has tremendous growth potential with its ability to bridge the gap between traditional legacy structures and next-generation technology. We predict both financial and non-financial companies will continue to adopt FaaS in effort to improve financial processes, reduce human intervention and increase personalization.

In a recently published Financial Services Global Market Report 2024 published by The Business Research Company, it is predicted that the global financial services market will grow from $31.14 trillion in 2023 to $44.93 trillion in 2028 (CAGR 7.6%).

‍FinTech-as-a-Service (FaaS) exhibits immense growth potential and is gaining considerable traction. By harmonizing traditional and modern elements and bridging the divide between legacy systems and cutting-edge technology, FaaS provides insights into the evolution of the hybrid future. Furthermore, as businesses strive to enhance financial operations, minimize manual intervention, and enhance personalization, FaaS is poised for rapid and enduring adoption across financial and non-financial sectors in the foreseeable future.

We believe our three layer diversified approach in the payment space minimizes our reliance on any one market to to best position our growth opportunities.

The below table summarizes these market opportunities:

We believe we will be able to maintain and even increase our market share revenues over the next two to three years based on the expected growth of the overall market.

Acquisition Strategy

We intend to acquire one or more high-quality businesses that can generate attractive, risk-adjusted returns for shareholders. To that end, our acquisition and value creation strategy is to identify, acquire and, after our initial business combination, enhance the growth of a company in the fintech industry that complements our experience and expertise.

We believe that the following value propositions will allow us to source businesses which will not only bring value to us but also bring transformative change and exponential growth to them :

Fintech Scion will actively pursue mergers and acquisitions to elevate the performance of our portfolio businesses. Our primary aim is to drive their growth by expanding their size, capabilities, and market presence in their respective industries. These strategic initiatives are designed to unlock synergies and enhance overall performance. Furthermore, we will allocate resources to develop scalable platforms that empower our portfolio businesses, enabling them to achieve accelerated growth.

Competitive Strengths

FintechCashier competes with a range of providers, each of whom may provide a component of our offering, but do not provide an integrated offering capable of solving complex business challenges for software partners and merchants. For certain services and solutions, including end-to-end payments, we compete with third-party payment processors and integrated payment providers.

The competitive landscape across the three layers are shown in the table:

We believe our market opportunity is demonstrated by a number of recent transactions completed by our competitors throughout the three layers outlined above. With respect to the technical layer, in a December 2021 Series E funding round, Mambu raised $265.7 million, for a company valuation of $5.4 billion post-money. With respect to the banking layer, our competitor Revolut, cites a $33 billion market cap while another competitor, Marqueta is valued today at nearly $3.7 billion.

Unlike many players in the market FintechCashier is not exclusively focused on payments. By targeting different layers, it can provide full solutions for customers covering all their payment needs.

Combining all layers under one platform, FintechCashier solution creates a greater market opportunity and potential for increasing market penetration.

The following direct competitors have been identified:

FintechCashier believes it can compete with these and other providers in the industry by virtue of:

Employees

As of the date of this Annual Report on Form 10-K/A, we have approximately 23 full-time employees who work primarily in onboarding, compliance and operation. We have employment contracts with all of our full-time employees.  We are not a party to any collective bargaining agreements, and we believe that we maintain good relations with our employees.

Intellectual Property

We rely on a combination of trademark, domain names, and trade secret laws, as well as employee and third-party nondisclosure, confidentiality, and other types of contractual arrangements to establish, maintain and enforce our intellectual property rights, including with respect to our proprietary rights related to our products and services. In addition, we use service platform technology, have an exclusive distribution technology license and license technology from third parties.

As of the date of this Annual Report on Form 10-K/A, we own rights to domains (fintechcashier.com, fintechcashier.co.uk, hwgc.tech, hwgcash.kz, hwggcapital.com and hwgcash.com) and trade names (FintechCashier) and their respective logos. In addition, we own a portfolio of trademarks in multiple jurisdictions around the world and have registered our primary trademark, FintechCashier.

Properties

Our corporate headquarters, which include the majority of our product development, sales, marketing, and business operations, is located at M Floor & 1^st Floor, No. 33, Jalan Maharajalela, 50150, Kuala Lumpur, Malaysia, supported by our United Kingdom branch located at 2 Portman Street, W1H 6DU, London, United Kingdom and Asian branch located at Lot 2-15, Labuan Time Square, Jalan Merdeka, 87007, Federal Territory of Labuan, Malaysia. Both properties are leased on a rolling contract basis. We believe this to be sufficient to meet our needs for the foreseeable future and that any additional space we may require will be available on commercially reasonable terms.

Legal Proceedings

We are not a party to existing or pending material legal proceedings against us, and we have no knowledge of any threatened litigation, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Government Regulations

Various aspects of our business and service areas are subject to U.S. federal, state, and local regulation, as well as regulation outside the U.S., as more fully described below. As we continue to expand our business globally, we will become subject to more government regulation in new markets.

The Dodd-Frank Act

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“the Dodd-Frank Act”) was signed into law in the U.S. The Dodd-Frank Act has resulted in significant structural and other changes to the regulation of the financial services industry. Among other things, Title X of the Dodd-Frank Act established the Consumer Financial Protection Bureau (“CFPB”) to regulate consumer financial products and services (including some offered by our partners). The CFPB may also have authority over us as a provider of services to regulated financial institutions in connection with consumer financial products.

Separately, the Dodd-Frank Act directed the Federal Reserve to regulate debit interchange transaction fees that a card issuer or payment network receives or charges for an electronic debit transaction. Pursuant to the Dodd-Frank Act, debit interchange transaction fees must be “reasonable and proportional” to the cost incurred by the card issuer in authorizing, clearing, and settling the transaction. Pursuant to the regulations promulgated by the Federal Reserve implementing this “reasonable and proportional” requirement, debit interchange rates for card issuers operating in the U.S. with assets of $10 billion or more are capped at the sum of $0.21 per transaction and an ad valorem component of 5 basis points (multiplied by the value of the transaction) to reflect a portion of the issuer’s fraud losses plus, for qualifying issuers, an additional $0.01 per transaction in debit interchange for fraud prevention costs. In addition, the regulations contain non-exclusivity provisions that ban debit card networks from prohibiting an issuer from contracting with any other card network that may process an electronic debit transaction involving an issuer’s debit cards and prohibit card issuers and card networks from inhibiting the ability of merchants to direct the routing of debit card transactions over any network that can process the transaction.

On November 14, 2023, the Federal Reserve issued a notice of proposed rulemaking, pursuant to which the Federal Reserve proposes to update certain interchange rates for card issuers operating in the U.S. with assets of $10 billion or more. Under the proposed rule, the base component would decrease from $0.21 per transaction to $0.144 per transaction, the ad valorem component would decrease from 5 basis points (multiplied by the value of the transaction) to 4.0 basis points (multiplied by the value of the transaction), and the additional fraud-prevention cost would increase from $0.01 per transaction to $.013 per transaction. Modifications to the interchange fees permitted could adversely affect our business, financial condition or results of operations. In addition, members of Congress have periodically introduced legislation to reduce credit card interchange, such as The Credit Card Competition Act of 2023. If any such legislation is passed, our business, financial condition or results of operations may be adversely affected.

Further, the ability of payment networks to impose certain restrictions are limited because the Dodd-Frank Act allows merchants to set minimum dollar amounts for the acceptance of a credit card (while federal governmental entities and institutions of higher education may set maximum amounts for the acceptance of credit cards). Depending on the card network rules, merchants are now also allowed to provide discounts or other incentives to entice consumers to pay with an alternative payment method, such as cash, checks, or debit cards.

The Dodd-Frank Act granted each the CFPB and the Financial Stability Oversight Council authority to determine whether any non-bank financial company, such as us, should be supervised by the CFPB or Board of Governors of the Federal Reserve System, respectively. Any new rules or regulations, implemented by the CFPB or the Financial Stability Oversight Council or in connection with the Dodd-Frank Act that are applicable to us, or any changes that are adverse to us resulting from litigation brought by third parties challenging such rules and regulations, could increase our cost of doing business or limit permissible activities.

Privacy and information security regulations

We, our partners and certain of our merchants provide services that may be subject to various state, federal, and foreign privacy laws and regulations, including, among others, the Financial Services Modernization Act of 1999, which we refer to as the Gramm-Leach-Bliley Act (“GLBA”), the EU General Data Protection Regulation 2016/679 (“EU GDPR”), the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (the “CPRA”), the United Kingdom General Data Protection Regulation and Data Protection Act 2018 (collectively, the “UK GDPR”), the Personal Information Protection and Electronic Documents Act in Canada and Israeli privacy laws, in particular in relation to Finaro. These laws and their implementing regulations restrict certain collection, processing, storage, use, and disclosure of personal information, require notice to individuals of privacy practices, and provide individuals with certain rights to prevent use and disclosure of protected information. These laws also impose requirements for the safeguarding and proper destruction of personal information through the issuance of data security standards or guidelines. Certain federal, state and foreign laws and regulations impose similar privacy obligations and, in certain circumstances, obligations to notify affected individuals, state officers or other governmental authorities, the media, and consumer reporting agencies, as well as businesses and governmental agencies, of security breaches affecting personal information. In addition, there are state and foreign laws restricting the ability to collect and utilize certain types of information such as Social Security and driver’s license numbers.

As a processor of personal data of EU and UK data subjects, we are also subject to regulation and oversight in the applicable EU Member States and United Kingdom with regard to data protection legislation. The EU GDPR and UK GDPR (collectively referred to as the “GDPR”) contains additional obligations on data controllers and data processors that have an establishment in the EU or UK or are offering goods or services to, or monitoring the behavior of, consumers within the EU or UK. The GDPR includes significant enhancements with regard to the rights of data subjects (which include the right to be forgotten and the right of data portability), stricter regulation on obtaining consent to processing of personal data and sensitive personal data, stricter obligations with regard to the information to be included in privacy notices and significant enhanced requirements with regard to compliance, including a regime of “accountability” for processors and controllers and a requirement to embed compliance with GDPR into the fabric of an organization by developing appropriate policies and practices, to achieve a standard of data protection by “design and default.” The GDPR includes enhanced data security obligations, requiring data processors and controllers to take appropriate technical and organizational measures to protect the data they process and their systems. Organizations that process significant amounts of data may be required to appoint a Data Protection Officer responsible for reporting to highest level of management within the business. There are greatly enhanced sanctions under GDPR for failing to comply, and penalties for certain breaches are up to the greater of EUR 20 million/ GBP 17.5 million or 4% of our global annual turnover. We are also subject to evolving EU and UK privacy laws on cookies, tracking technologies and e-marketing.

Personal Data Protection Act 2010 and Personal Data Protection Regulations 2013

The Personal Data Protection Act 2010 (PDPA) pertains to the legislation and rules governing data privacy and the safeguarding of personal data. Under the PDPA, it is generally mandated that an individual’s consent is required for the processing and disclosure of their personal data, unless specified otherwise in the provisions of the PDPA. The term “processing” has a broad definition, encompassing activities such as collecting, recording, retaining, or storing personal data, as well as carrying out any operation or series of operations involving personal data, including the following:

The Personal Data Protection Regulations of 2013 stipulate that consent must be obtained for the processing of personal data, regardless of the form in which it can be accurately recorded and maintained by the data user.

Data users have an obligation to provide written notice regarding the processing of personal data. This notice should include various details such as a description of the personal data being processed, the purpose for which it is being processed, the source of the data, the recipients to whom it may be disclosed, whether providing the personal data is mandatory or voluntary, the individual’s rights to access and correct their personal data, and the options available to limit the processing of the data. The notice must be provided in both English and the national language of Bahasa Malaysia.

Unfair trade practice regulations

We, our partners and certain of our merchants are subject to various federal, state, and international laws prohibiting unfair or deceptive trade practices, such as Section 5 of the Federal Trade Commission Act and the prohibition against unfair, deceptive, or abusive acts or practices (“UDAAPs”) under the Dodd-Frank Act, and prohibiting misrepresentations and other activities related to telemarketing, such as the Telemarketing Sales Act. Various regulatory agencies, including the Federal Trade Commission (“FTC”) and state attorneys general, have authority to take action against parties that engage in unfair or deceptive trade practices or violate other laws, rules, and regulations, and to the extent we are processing payments for a client that may be in violation of laws, rules, and regulations, we may be subject to enforcement actions and incur losses and liabilities that may impact our business. For example, all persons offering or providing financial services or products to consumers, directly or indirectly, can be subject to the prohibition against UDAAPs. The CFPB has enforcement authority to prevent an entity that offers or provides consumer financial services or products or a service provider from committing or engaging in UDAAPs, including the ability to engage in joint investigations with other agencies, issue subpoenas and civil investigative demands, conduct hearings and adjudication proceedings, commence a civil action, grant relief (e.g., limit activities or functions; rescission of contracts), and refer matters for criminal proceedings.

Anti-money laundering, anti-bribery, sanctions, and counter-terrorist regulations

We are contractually required to comply with the anti-money laundering laws and regulations in certain countries. In the U.S., we comply with certain provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, and its implementing regulations (collectively “the BSA”) which are enforced by the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury and the U.S. Department of Justice. We are also subject to anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and other laws, that prohibit the making or offering of improper payments to foreign government officials and political figures and includes anti-bribery provisions enforced by the Department of Justice and accounting provisions enforced by the SEC. The FCPA has a broad reach and requires maintenance of appropriate records and adequate internal controls to prevent and detect possible FCPA violations. Many other jurisdictions where we conduct business also have similar anticorruption laws and regulations. We have policies, procedures, systems, and controls designed to identify and address potentially impermissible transactions under such laws and regulations.

We are also subject to certain economic and trade sanctions programs that are administered by the Department of Treasury’s Office of Foreign Assets Control (“OFAC”), which prohibit or restrict transactions to or from, or dealings with, specified countries, their governments, and in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations. Other group entities may be subject to additional local sanctions requirements in other relevant jurisdictions. We have policies, procedures, systems, and controls designed to identify and address compliance with sanctions programs.

Similar anti-money laundering, counter-terrorist financing, and proceeds of crime laws apply to movements of currency and payments through electronic transactions. These laws also apply to dealings with persons specified in the lists of OFAC-like organizations of several other countries, and require specific data retention obligations to be observed by intermediaries in the payment process. Our businesses in those jurisdictions are subject to those data retention obligations.

Corporate Information

Our principal executive office is located at M Floor & 1^st Floor, No. 33, Jalan Maharajalela, 50150, Kuala Lumpur, Malaysia, and our telephone number is +603 9226 0908.

Our website is www.fintechcashier.com. Information provided on, or accessible through, our website, however, is not part of this Annual Report on Form 10-K/A and is not incorporated herein by reference.

ITEM 1A. Risk Factors

Risks Related to Our Business and Industry

We have a limited operating history with a history of net losses, and our revenue growth rate is likely to slow down as our business matures.

We recognized a net loss of $40,662,716, primarily resulted from an impairment loss of $39,136,871 during the year ended December 31, 2023. As a result of our limited operating history, we have limited financial data that can be used to evaluate our current business, and such data may not be indicative of future performance. In particular, we have experienced periods of high revenue growth since we began selling our products and services, and we do not expect to be able to maintain the same rate of revenue growth as our business matures. In addition, estimates of future revenue growth are subject to many risks and uncertainties, and our future revenue may be materially lower than projected.

We have encountered, and expect to continue to encounter, risks and difficulties frequently experienced by growing companies, including challenges in financial forecasting accuracy, hiring of experienced personnel, hiring of technology employees, determining appropriate investments, developing new products and features, assessing legal and regulatory risks, among others. Any evaluation of our business and prospects should be considered in light of our limited operating history, and the risks and uncertainties inherent in investing in early-stage companies.

Impairment of goodwill may adversely impact future results of operations.

Accounting standards require that we account for acquisitions using a method that could result in goodwill. If the purchase price of the acquired assets exceeds the fair value of the acquired net assets, the excess will be included in our Statement of Financial Condition as goodwill. We have a significant goodwill balance, and in accordance with GAAP, we evaluate it for impairment at least annually and more often if events or circumstances indicate the possibility of impairment. Evaluations may be based on many factors, some of which are the price of our common stock, discounted cash flow projections and data from comparable market acquisitions. A significant and sustained decline in our stock price and market capitalization, a significant decline in our expected future cash flows, a significant adverse change in the business climate or slower growth rates could result in impairment of our goodwill. Future evaluations of goodwill may result in the impairment and write-down of our goodwill balance which could have a material adverse impact on our earnings and adversely affect our operating results.

We have identified a material weakness in our internal control over financial reporting and if our remediation of this material weakness is not effective, or if we fail to maintain an effective system of internal controls over financial reporting in the future, we may not be able to accurately or timely report our financial condition or operating results, which may adversely affect our business.

In June 2024, we identified a material weakness in our internal controls over financial reporting related to the recognition of the results of operation for the acquisition of Fintech, and management has determined that, as of December 31, 2023 and 2022, we did not maintain effective internal control over financial reporting. This material weakness and our remediation efforts are described in “Controls and Procedures.” Although management does not believe the misstatements are material to any of the impacted financial statements, we cannot assure you that we will adequately remediate the material weakness or that additional material weaknesses in our internal controls will not be identified in the future. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in additional material weaknesses, or could result in material misstatements in our financial statements. Such misstatements have resulted in the restatement of the financial statements included in this Annual Report and misstatements could result in future restatements of our financial statements, cause us to fail to meet our reporting obligations in addition to stock exchange listing requirements, investors may lose confidence in our reported financial information, our stock price may decline as a result, and we could be subject to litigation or regulatory enforcement actions.

We are in the process of remediating the identified material weakness in our internal controls, but we are unable at this time to estimate when the remediation effort will be completed. If we fail to remediate this material weakness, there will continue to be an increased risk that our future financial statements could contain errors that will be undetected. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses. The potential consequences of any material weakness could have a material adverse effect on our business, results of operations and financial condition. Further and continued determinations that there are material weaknesses in the effectiveness of our internal controls could impact the operations of our business, including our ability to obtain financing, the cost of any financing we obtain or require additional expenditures of resources to comply with applicable requirements.

Our independent auditors have issued an audit opinion for our company, which includes a statement in the critical audit matters, describing the impairment of goodwill and its financial implications.

In their audit report included in this Annual Report on Form 10-K/A, our auditors expressed any further goodwill impairment will cause a significant adverse financial impact on the Company, and that could raise substantial doubt about the Company’s ability to continue as a going concern.

We may operate in jurisdictions with historically high rates of inflation.

High rates of inflation may have an adverse impact on our business, results of operations, financial condition and prospects, and the market price of our shares of common stock. Rates of inflation in the countries in which we operate have been historically high, and there can be no assurance that inflation will not return to high levels. Inflationary pressures may adversely affect our ability to access foreign financial markets, leading to adverse effects on our capital expenditure plans. In addition, inflationary pressures may, among other things, reduce consumers’ purchasing power or lead certain anti-inflationary policies to be instituted by the relevant governments, such as an increase in interest rates. There is no assurance that measures taken by the relevant governments will curb inflation. Inflationary pressures may harm our business, results of operations, financial condition and prospects, or adversely affect the price of shares of our common stock.

General fluctuations in interest rates may adversely affect our business and operations.

Instability and volatility in interest rates may also increase the risks inherent in our business operations. The ability to refinance debt may depend on the ability to sell new securities in the debt and equity markets, to borrow from banks or otherwise, which may not be achievable on favorable terms or at all. A deterioration of the global debt markets (particularly the U.S. debt markets), any possible future failures of financial services companies or a significant rise in market perception of counterparty default risk will likely significantly reduce demand and liquidity for senior bank high-yield and investment grade debt, which in turn is likely to lead some banks and other lenders to be unwilling or significantly less willing to engage in our operations, or to only engage on less favorable terms than had been prevailing in the past. Our ability to generate returns may be adversely affected we are unable to obtain favorable financing terms for our operations. A market turmoil may have an adverse impact on the availability of credit to businesses generally, which in turn may adversely affect or restrict our ability to sell or liquidate assets at favorable times or at favorable prices or which otherwise may have an adverse impact on our business and operations. Interest rate changes may also affect the value of a debt instrument directly (in the case of adjustable-rate instruments) or indirectly (in the case of fixed rate instruments). In general, rising interest rates will negatively impact the price of a fixed rate debt instrument and falling interest rates will have a positive effect on price. The U.S. Federal Reserve may at some point in the future tighten the monetary supply and increase benchmark interest rates, which would be expected to negatively impact the price of debt securities and could adversely affect the value of our assets.

If we cannot keep pace with rapid developments and changes in our industry and continue to acquire new merchants and partners rapidly, the use of our services could decline, reducing our revenue.

The electronic payments market in which we compete is subject to rapid and significant changes. This market is characterized by rapid technological change, new product and service introductions, evolving industry standards, changing client needs, consolidation and the entrance of non-traditional competitors. In order to remain competitive and continue to acquire new merchants and partners rapidly, we are continually involved in a number of projects to develop new services and improve our existing services. These projects may not be successful and carry some risks, such as cost overruns, delays in delivery, performance problems and lack of client adoption, and may cause us to become subject to additional regulation. Moreover, the merchant base that we target is varied and non-geographically bound or restricted by scale, making it more challenging to predict demand for our offerings. Any inability to develop or delay in the delivery of new services or the failure to differentiate our services or to accurately predict and address market demand could render our services less desirable, or even obsolete, to our clients. In addition, many current or prospective customers may find competing services more attractive if we do not keep pace with market innovation, and many may choose to switch to competing services even if we do our best to innovate and provide superior services.

We rely in part, and may in the future rely in part, on third parties, including some of our competitors and potential competitors, for the development of and access to new technologies. If we are unable to maintain these relationships, we may lose access to new technologies or may not have the speed-to-market necessary to launch new offerings successfully. 

Our future success will depend on our ability to adapt to technological changes and evolving industry standards. We cannot predict the effects of technological changes on our business. If we are unable to adapt to technological changes or evolving industry standards on a timely and cost-effective basis by introducing new services and improving existing services, our business, financial condition, and results of operations could be materially adversely affected.

Substantial and increasing competition, both within our industry and from other payment methods, and disintermediation from other participants in the payment chain may harm our business.

The market for payment processing services is highly competitive. Other providers of payment processing services have established a sizable market share in the merchant acquiring sector. Our growth will depend on a combination of the continued growth of electronic payments and our ability to increase our market share.

Our competitors include traditional merchant acquirers such as financial institutions, affiliates of financial institutions and global payment providers, as well as local payment providers. These competitors and other industry participants may develop products and services that compete with or replace our value-added products and services, including products and services that enable payment networks and banks to transact with consumers directly.

Many of our competitors, particularly those affiliated with large financial institutions, also have substantially greater financial, technological, operational, and marketing resources than we have. Accordingly, these competitors may be able to offer their products and services at more competitive prices. As a result, we may need to reduce our fees or otherwise modify the terms of use of our products and services to retain existing clients and attract new ones. If we are required to materially reduce our fees to remain competitive, we will need to aggressively control our costs to maintain our profit margins, and our revenue may be adversely affected. Our risk management team monitors our client relationships and we have at times terminated, and may continue to terminate, client relationships that may no longer be profitable to us due to such pricing pressure. Moreover, our competitors may have the ability to devote significantly more financial and operational resources than we can to the development of new products, services or new technologies or to acquire other companies or technology so that they can provide improved operating functionality and features to their existing service offerings. If successful, their efforts in this regard could render our products or services less desirable to clients, resulting in the loss of existing clients, an inability to obtain new clients, or a reduction in the fees we could generate from our offerings.

Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

In addition, we are currently facing new competitive pressure from non-traditional payment processors and other parties entering the payments industry, which may compete in one or more of the functions performed in processing merchant transactions. These competitors have significant financial resources and robust networks and are highly regarded by consumers. If these competitors gain a greater share of total electronic payments transactions, or if we are unable to successfully react to changes in the industry spurred by the entry of these new market participants, then it could have a material adverse effect on our business, financial condition and results of operations.

Interruption or failure of our information technology and communications systems could impair our operations, which could also damage our reputation and harm our results of operations.

Our success and ability to process payments and provide high quality client service depend on the efficient and uninterrupted operation of our computer and information technology systems, as our merchant customers expect a consistent level of quality in providing our services. Any failure of our computer systems and information technology to operate effectively or to integrate with other systems, performance inadequacy or breach in security may cause interruptions in the availability of our sites, delays in payment processing and reduced efficiency of our operations. Factors that could occur and significantly disrupt our operations include system failures and outages caused by fire, floods, earthquakes, power loss, telecommunications failures, sabotage, vandalism, terrorist attacks and similar events, software errors, computer viruses, worms, physical or electronic break-ins and similar disruptions from unauthorized tampering with our computer systems and payments platform. While we have certain backup systems and basic recovery plans for certain aspects of our operations and business processes, we do not have full redundancy in our infrastructure and our planning does not account for all possible scenarios, and requires further development, review and updates. Any disruptions or service interruptions that affect our systems could damage our reputation, require us to spend significant capital and other resources and expose us to a risk of loss or litigation and possible liability. Certain of our agreements with third-party service providers do not require those providers to indemnify us for losses resulting from any disruption in service. Furthermore, certain critical processes, such as hosting, cloud and other IT related services, rely on single vendors or components without built-in redundancy. Accordingly, we are exposed to potential single point of failure issues that could lead to service interruptions. Any such disruptions could materially adversely affect our results of operations.

In addition, our platform and internal systems rely on software developed by us or third parties that is highly technical and complex, and depend on the ability of such software to store, retrieve, process and manage large amounts of data. The software on which we rely has contained, and may now or in the future contain, undetected programming errors or flaws. Some errors may only be discovered after the code has been released for external or internal use. Errors or other design defects within the software on which we rely may result in a negative experience for companies or end users using any elements of our platform, disruptions to the operations of our merchants, errors, or compromise our ability to support effective user service and user engagement or make us susceptible to cybersecurity breaches and attacks, or delay introductions of new features or enhancements. Any errors, bugs or defects discovered in the software on which we rely could result in harm to our reputation and loss of users, which could adversely affect our business, results of operations and financial conditions.

If we cannot retain key personnel, our business, financial condition and results of operations may be adversely affected.

We are dependent upon the ability and experience of our senior leadership, including the President of our Fintech subsidiary, who have substantial experience with our operations, the rapidly changing payment processing industry, and emerging markets. It is possible that the loss of the services of one or a combination of our senior executives or key managers, including key executive officers, could have a material adverse effect on our business, financial condition, and results of operations.

In a dynamic industry like ours, the ability to attract, recruit, develop and retain qualified employees is critical to our success and growth. If we are not able to do so, our business and prospects may be materially and adversely affected.

Our business functions at the intersection of rapidly changing technological, social, economic and regulatory developments that require a wide-ranging set of expertise and intellectual capital. In order for us to successfully compete and grow, we must attract, recruit, develop and retain the necessary personnel who can provide the needed expertise across the entire spectrum of our intellectual capital needs. In addition, we must also develop our personnel to provide succession plans capable of maintaining continuity in the midst of the inevitable unpredictability of human capital. However, the market for qualified personnel is competitive, and we may not succeed in recruiting additional personnel or may fail to effectively replace current personnel who depart with qualified or effective successors, particularly in the technology business. We must continue to hire additional personnel to execute our strategic plans. Our effort to retain and develop personnel may also result in significant additional expenses, including option grants, which could adversely affect our profitability. We cannot assure that qualified employees will continue to be employed or that we will be able to attract and retain qualified personnel in the future. Failure to retain or attract key personnel could have a material adverse effect on our business, financial condition, and results of operations.

We are subject to economic and political risk, the business cycles and credit risk of our clients and volatility in the overall level of consumer, business and government spending.

The electronic payments industry depends heavily on the overall level of consumer, business and government spending. This spending depends on worldwide economic and geopolitical conditions. Key international economies have experienced cyclical downturns from time to time in which economic activity was impacted by falling supply or demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, inflation, volatility in credit, equity and foreign exchange markets, bankruptcies, pandemics such as COVID-19, and overall economic uncertainty. We are exposed to general economic conditions that affect consumer confidence, consumer spending, consumer discretionary income or changes in consumer purchasing habits. The current deterioration in general economic conditions, including the rise in unemployment rates, inflation and any increases in interest rates, particularly in Europe, the United States, the U.K. and Canada, may adversely affect consumer spending, consumer debt levels and credit and debit card usage, and as a result, adversely affect our financial performance by reducing the number or average purchase amount of transactions made using electronic payments. The conflict in Ukraine could lead to heightened volatility in the global markets and increase inflation, all of which could reduce our profitability and have a material adverse effect on our business, results of operations or financial condition.

More recently, in response to Russian military actions in Ukraine, the United States and certain allies have imposed economic sanctions and export control measures, and may impose additional sanctions or export control measures in the future, which have and could in the future result in, among other things, severe or complete restrictions on exports and other commerce and business dealings involving Russia, certain regions of Ukraine, and/or particular entities and individuals. Such actions could have a significant adverse impact on the Russian economy and related markets and in turn could adversely affect our customers and business partners with international operations and exposure to such risks. If our customers make fewer sales of their products and services using electronic payments or people spend less money per transaction, we will have fewer transactions to process and lower overall volume, resulting in lower revenue. 

In addition, a recessionary economic environment and markets experiencing relatively high inflation and/or unemployment could affect our customers through a higher rate of bankruptcy filings, in particular for our SMB clients, which could result in higher customer attrition and decrease our revenue. Any of the foregoing risks would negatively impact our business, financial condition and results of operations.

We may not realize the expected benefits of our recent acquisitions because of integration difficulties and other challenges.

The success of our recent share exchanges will depend, in part, on our ability to realize the anticipated revenue, cost-savings, tax, collaboration and other synergies from integrating our two recent acquisitions with our existing business. The integration process may be complex, costly, and time-consuming. The difficulties of integrating the operations could include, among others:

We may not accomplish the integration smoothly, successfully, or within the anticipated costs or time frame. The diversion of the attention of management from our current operations to the integration effort and any difficulties encountered in combining operations could prevent us from realizing the full benefits anticipated to result from the share exchanges and could adversely affect our business. In addition, the integration efforts could divert the focus and resources of the management of the Company from other strategic opportunities and operational matters during the integration process.

If we fail to raise additional capital, our ability to implement our business model and strategy could be compromised.

We have limited capital resources and operations. From time to time, we may seek additional financing to provide the capital required to expand the production of our business operation and development initiatives and/or working capital, as well as to repay outstanding loans if cash flow from operations is insufficient to do so. We cannot predict with certainty the timing or amount of any such capital requirements.

If we do not raise sufficient capital to fund our ongoing development activities, it is likely that we will be unable to carry out our business plans. We may not be able to obtain additional financing on terms acceptable, or at all. Even if we obtain financing for near term operations, we may require additional capital beyond the near term. If we are unable to raise capital when needed, our business, financial condition and results of operations would be materially adversely affected, and we could be forced to reduce or discontinue our operations.

The financial technology industry in which we operate is characterized by rapid technological changes, new product introductions, evolving industry standards and changing customer needs.

We are a relatively new company in the financial technology industry, and we compete with many established centralized and decentralized companies with greater financial and other resources. The industry continues to grow as a result of wider merchant acceptance, advances in payment solutions and digital processing technology, and migration to e-commerce, omnichannel and contactless payment solutions. The increase of credit and debit cards, as well as other digital payment solutions, has made the acceptance of digital payments a necessity for many businesses, regardless of size, in order to remain competitive. The COVID-19 pandemic has further accelerated the use of digital payments, the need for the development of technologies and digital-based solutions and expansion of e-commerce, omnichannel and contactless payment solutions. To remain competitive in this industry with constantly evolving standards, we need to develop new platforms, e-commerce services and other new products. Such projects carry the risks associated with any development effort, including cost overruns, delays in delivery and performance problems. In the payment solution technology markets, these risks are even more acute. Any delay in the delivery of new services or the failure to differentiate services could render our services less desirable to our clients. In addition, since the payment solution services provided by us are designed to process complex transactions at high volumes and processing speed and deliver reports and other information on those transactions, any failure to deliver an effective and secure product or any performance issue that arises with a new product or service could result in significant processing or reporting errors or other losses. As a result of these factors, our development efforts could result in higher costs that could reduce our earnings in addition to a loss of revenues if new services are not delivered timely to our customers or do not perform as anticipated. If we are not able to respond to our competitors effectively, our business, operating results, and financial condition may be adversely affected.

We may experience software defects, undetected errors, and development delays, which could damage client relations, decrease our potential profitability and expose us to liability.

We depend on the efficient and uninterrupted operation of our computer systems, software, telecommunications networks, as well as the systems and services of third parties. The services provided by us are based on software and computing systems that may often encounter development delays, and the underlying software may contain undetected errors, viruses or defects. Defects in these software services and errors or delays in the processing of digital transactions could result in additional development costs, diversion of technical and other resources from other development efforts, loss of credibility with current or potential clients, may harm our reputation and expose it to liability claims. A system outage or data loss in these services could have a material adverse effect on the business, financial condition, results of operations and cash flows. In addition, we rely on technologies and software supplied by third parties that may also contain undetected errors, viruses or defects that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Failure to deal effectively with various types of fraud could materially adversely affect our reputation and our business, results of operations and financial condition, and could severely diminish merchant confidence in our services.

Various third parties and internal parties may engage in a variety of fraudulent activity against us using our platform, the components of our platform, or our alternative payment methods, or APM. For example, a party may knowingly use a stolen or counterfeit credit, debit or prepaid card, card number, or other credentials to record a false sales transaction or process an invalid card. A merchant representative, agent or FinTech employee could submit changes in bank account details, thereby resulting in a settlement of funds to inappropriate persons. Bank employees could engage in fraud in respect of our bank accounts and make illicit withdrawals of our funds or our clients’ funds, or third parties could impersonate our employees or our clients to gain access to our bank accounts. Alternatively, our employees could knowingly process unauthorized changes to bank account details or provide or change such details after falling victim to scamming attempts (such as phishing emails or a fraudulent call posing as FinTech management, requesting an unauthorized payment of funds or access to information systems), which could also result in a settlement of funds to inappropriate persons. Moreover, our internal controls may not be sufficient to prevent such actions, especially given our rapid growth across a variety of jurisdictions.   

Criminals are using increasingly sophisticated methods to engage in illegal fraudulent activities. We also face risks and increasingly receive complaints from buyers and sellers who may not have received the goods, or have not received the goods that were advertised, that they had contracted to purchase or payment for the goods that a buyer had contracted to purchase that was paid for using our platform, including as a result of merchant fraud or user fraud, which may subject us to reputational damage and adversely affect our brand and business. In addition, in some of the jurisdictions where we operate, regulatory authorities or courts may freeze or block access to our accounts in response to consumer complaints, which may have a material adverse effect on our business and financial condition.

It is possible that incidents of fraud could increase in the future, and our failure to catch such incidents may result in sanctions and/or fines from regulators, lawsuits, contract disputes with counterparties or merchants, and a decline in our reputation. We have taken measures to detect and reduce the risk of these types of fraud, but such measures must be continually improved and may not be effective against new and continually evolving forms of fraud or in connection with new services offerings. If our fraud prevention measures do not succeed, our business, reputation, brands, financial condition and results of operations could be materially adversely affected.

Our controls and procedures may fail or be circumvented, our risk management policies and procedures may be inadequate, and operational risks could adversely affect our consolidated results of operations.

We have a limited operating history and are developing various controls, procedures, policies and systems to monitor and manage risk. We cannot provide assurance that those controls, procedures, policies and systems are or will be adequate to identify and manage internal and external risks, including risks related to service providers, in our various businesses. We believe that any internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual rogue acts of some persons, including our employees, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, violations of our controls, procedures, policies and systems and misstatements due to error or fraud may occur and not be detected.

For example, failure to comply with the various foreign exchange regulations could result in liability under applicable law for circumventing applicable foreign exchange restrictions, procedures or governmental requirements. In addition, assessing the regulatory landscape for offering new products and services or expanding into new jurisdictions is complex, and we may not accurately assess the regulatory requirements or develop the necessary controls and procedures applicable to new products or services that we offer or that may be applicable to new jurisdictions where we seek to operate. As a result, our business operations and/or our ability to distribute profits could be materially and adversely affected. Furthermore, as foreign exchange regulations, especially in emerging markets, are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities.

The risk of individuals, either employees or contractors, engaging in harmful or misleading conduct, whether unintentional or intentional, such as consciously circumventing established control mechanisms to perform unauthorized or illegal transactions or otherwise exceed transaction limitations and restrictions, committing fraud or improperly selling products or services to clients, is particularly challenging to manage through a control framework. In addition, we are subject to increased resiliency risk, requiring continuous reinvestment, enhancement and improvement in and of our information technology and operational infrastructure, controls and personnel which may not be effectively or timely deployed or integrated. Moreover, the financial and reputational impact of control or conduct failures can be significant. Persistent or repeated issues with respect to controls, information technology and operational resiliency or individual conduct have raised and may in the future raise concerns among regulators regarding our culture, governance and control environment. There can be no assurance that our efforts to address such risks will be effective. While we seek to contractually limit our financial exposure to operational risk, the degree of protection that we are able to achieve varies, and our potential exposure may be greater than the revenue we anticipate that we will earn from servicing our merchants.

Internal control policies and procedures and employee training and compliance programs that we have implemented to deter prohibited practices may not be effective in prohibiting our and our affiliates’ directors, employees, contractors or agents from violating or circumventing our policies and the law. If we or our affiliates, or either of our respective directors, employees or agents fail to comply with applicable laws or policies governing our operations, we may face investigations, prosecutions and other legal proceedings and actions, which could result in civil penalties, administrative remedies and criminal sanctions. Any such government investigations, prosecutions or other legal proceedings or actions could adversely affect our business, performance, prospects, value, financial condition, and results of operations

We compete with companies that have various competitive advantages.

Many innovative start-up companies and larger companies have made, and continue to make, significant investments in research and development, and we expect these companies to continue to develop similar or superior products and technologies that may compete with our products and services. We compete with many companies that have and expected to have various competitive advantages over us, such as:

If we are unable to compete successfully, or if competing successfully requires it to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

Any factors that reduce cross-border trade in goods or services or make such trade more difficult could harm our business.

Cross-border trade of goods and/or services (i.e., transactions where the merchant and consumer are in different countries) is an important source of our revenues and profits. Cross-border transactions generally provide higher revenues and operating income than similar transactions that take place within a single country or market.

Cross-border trade may be negatively impacted by various factors, including regional or international tensions, trade wars or international conflicts of any kind, foreign currency exchange rate fluctuations, and the interpretation and application of laws of multiple jurisdictions in the context of cross-border trade and foreign exchange. Moreover, governmental authorities in certain countries may decide to block some or all of our merchants, which could significantly disrupt our operations in such countries. Any factors that increase the costs of cross-border trade for us, our customers or their end users or that restrict, delay, or make cross-border trade more difficult or impractical, such as trade policy or higher tariffs, could reduce our cross-border transactions and volume, negatively impact our revenues and profits, and harm our business.

Certain shareholders may exercise significant control over our business policies.

Lim Chun Hoo, an officer and director of both the Company and our subsidiaries, holds ownership of approximately 14.88% of our equity securities as of September 30, 2024 and has the ability to exercise significant control over our business policies and other corporate matters, including the composition of our board of directors and any actions requiring the approval of our shareholders, such as the adoption of amendments to our articles of incorporation, approval of a merger, share exchange or sale of substantially all of our assets. He will be able to vote his shares in favor of his interests that may not always coincide with the interests of other shareholders.

Risks Related to Our Intellectual Property

If we are unable to successfully obtain, maintain, protect, enforce, or otherwise manage our intellectual property and proprietary rights, we may incur significant expenses, and our business may be adversely affected.

Our success depends in part, and we place considerable emphasis, on obtaining, maintaining, protecting and enforcing relevant intellectual property and proprietary rights, which may include patent, design, utility model, trademark, copyright and trade secret protection, as well as regulatory exclusivity periods and confidentiality agreements (collectively, “IP Rights”). We cannot be sure that our means of obtaining, maintaining and enforcing our IP Rights in the United States or abroad will be adequate to protect such rights against infringement, misappropriation or other violation. We may not receive protection for pending or future applications relating to IP Rights owned by or licensed to us, and the scope of protection granted under any issued or registered IP Rights may not be sufficiently broad to protect our technology, products, services, systems, brands, trademarks or information. Also, because of the rapid pace of technological change in our industry, aspects of our business and our products and services rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms or at all. Moreover, the laws of certain jurisdictions, including emerging countries, do not protect IP Rights to the same extent as the laws of the United States. If we cannot adequately obtain, maintain, protect or enforce our IP Rights, third parties may be able to compete more successfully against us and develop and commercialize substantially identical products, services or technologies, which could have a material adverse effect on our business, financial condition or results of operations.

Third parties may challenge, invalidate, circumvent, infringe or misappropriate our IP Rights, and such IP Rights may be lost or no longer sufficient to permit us to take advantage of current market trends or to otherwise provide competitive advantages, which could result in costly redesign efforts, discontinuance of certain service offerings or other competitive harm. Others, including our competitors, may independently develop similar technology, duplicate our products and services or design around our IP Rights, and in such cases, we could not assert our IP Rights against such parties. Moreover, third parties may infringe, misappropriate or otherwise violate IP Rights owned or licensed by us and we may assert claims against such third parties to enforce, or determine the scope and enforceability of, our IP Rights, which could result in lengthy litigation or other proceedings and could cause a diversion of resources and may not prove successful. Such third parties could also counterclaim that any IP Rights we assert are invalid or unenforceable and if such counterclaims are successful, we could lose valuable IP Rights.

We rely heavily on trade secrets and proprietary know-how to protect our products, services and technology and their development and commercialization, and rely in part on confidentiality agreements with suppliers and other partners, employees, independent contractors and consultants. However, we cannot guarantee that we have entered into such agreements with each party that has or may have had access to our trade secrets. Moreover, these agreements may be breached, and we may not have or be able to enforce adequate remedies for any such breach. There is also no guarantee that these agreements or other precautions will provide sufficient protection against any unauthorized access, use or misuse, misappropriation, counterfeiting, cloning, reverse engineering or disclosure of any of our trade secrets, proprietary know-how and any other information or technology. Trade secrets can be difficult to protect and some courts inside and outside of the United States are unwilling or less willing to protect trade secrets as compared to other forms of intellectual property. Defending against unauthorized access, use or misuse, misappropriation, counterfeiting, cloning, reverse engineering or disclosure of our technology, trade secrets, proprietary know-how and other IP Rights and technology may result in lengthy and expensive litigation or other proceedings with uncertain outcomes and cause significant disruption to our business and operations. If we are unable to obtain, maintain, protect or effectively enforce our IP Rights, it could impact the development, manufacture and commercialization of our products, services and solutions and have a material adverse effect on our business, financial condition or results of operations.

Claims by others that we have infringed their proprietary technology or other IP Rights could harm our business.

Our success depends, in part, on our ability to develop and commercialize our services and technologies without infringing, misappropriating or otherwise violating the IP Rights of third parties. However, we may not be aware that our products, services, solutions or technologies are infringing, misappropriating or otherwise violating third-party IP Rights, and such third parties may bring claims alleging such infringement, misappropriation or violation. Third parties may have issued, or may eventually issue, patents that could be infringed by our services or technology. Any of these third parties could make a claim of infringement against us with respect to our services or technology. We may also be subject to claims by third parties for breach of copyright, trademark, license usage or other IP Rights. When any such claims are asserted against us, we may seek to license the third party’s IP Rights, which could be expensive. We may be unable to obtain the necessary licenses on satisfactory terms, if at all. Any claim from third parties may result in a limitation on our ability to use the intellectual property subject to these claims or could prevent us from registering our brands as trademarks. Even if we believe that intellectual property-related claims are without merit, defending against such claims is time-consuming and expensive, and could result in the diversion of the time and attention of our management and employees. Claims of intellectual property infringement also might require us to redesign affected services, enter into costly settlement or license agreements, pay costly damage awards, change our brands or face a temporary or permanent injunction prohibiting us from importing, marketing, selling or operating certain of our services, using certain of our brands or operating our business as presently conducted. Even if we have an agreement for indemnification against such costs, the indemnifying party, if any in such circumstances, may be unable to uphold our contractual obligations.

We may be subject to adverse publicity or reputational harm, even if claims against us are later shown to be unfounded or unsubstantiated. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have an adverse effect on the price of our common stock. The award of damages, including material royalty payments, or the entry of an injunction against the manufacture, import, marketing, sale or operation of some or all of our products or services, or our entry into any license or settlement agreement in connection with such claims could affect our ability to compete with third parties and have a material adverse effect on our business, financial condition and results of operations.

If we are unable to obtain or fail to comply with the required licenses to operate our business or experience disputes with licensors or disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

We have entered into license agreements with third parties and may need to obtain additional licenses from our existing licensors and others to advance or allow commercialization of our solutions. It is possible that we may be unable to obtain any additional licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to redesign our solutions or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected solutions, which could disrupt and adversely affect our business.

Disputes may arise regarding intellectual property, including software and data, that is subject to a licensing agreement, including the scope of rights granted under the license agreement and other interpretation-related issues. In addition, the agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology or increase what we believe to be our financial or other obligations under the relevant agreement. If these events were to occur, we may lose the right to continue to use and exploit such licensed intellectual property or technology in connection with our operations and solutions, which could have a material adverse effect on our business, financial condition and results of operations.

Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.

We may also be subject to costly litigation in the event our services and technology infringe upon another party’s proprietary rights. Third parties may have, or may eventually be issued, patents that could be infringed by our services or technology. We might employ individuals who were previously employed at other companies, including their competitors or potential competitors. Although we are trying to ensure that their employees and consultants do not use the proprietary information or know-how of others in their work, it may be subject to claims that it or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Any of these third parties could make a claim of infringement against us with respect to our services or technology. We may also be subject to claims by third parties for breach of copyright, trademark or license usage rights. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our management and other employees.

Risks Related to Regulation

Complex and enhanced regulatory oversight in the banking and financial services industry could adversely affect our operations or our relationships with our banking partners.

The financial services and banking industry is subject to extensive regulation and oversight. In light of increased regulatory oversight in recent years, a number of banks are continually examining their business relationships, and certain major national and international banks have already withdrawn from providing service to payments processing providers, especially in foreign exchange transactions. In certain markets, we rely on and may in the future rely on local, regional or global banks to process payments and conduct foreign exchange transactions in local currency, and we may not be able to obtain a license to directly operate in such markets in order to reduce our reliance on such banks. Changes in foreign exchange controls could make it difficult for us to engage in foreign exchange transactions or local regulators enforcing such regulations may use their power to slow or halt payments from global merchants to banks in emerging markets and vice-versa or otherwise prohibit us from providing payment services in a country or from expanding our services to include additional products. In addition, banks may be reluctant to transact or to accept certain transaction volumes due to different interpretations of the applicable foreign exchange, anti-money laundering and tax laws. If we are not able to complete foreign exchange and other transactions with certain banks due to enhanced regulation or different interpretations of the legal framework, our business could be materially adversely affected.

We are subject to chargeback and refund liability risk when our merchants refuse to or cannot reimburse chargebacks and refunds resolved in favor of their customers. Any increase in chargebacks and refunds not paid by our merchants may adversely affect our business, financial condition or results of operations.

We are currently, and will continue to be, exposed to certain risks associated with chargebacks and refunds in connection with payment card fraud or relating to the goods or services provided by our merchant customers. In the event that a billing dispute between a cardholder and a merchant is not resolved in favor of the merchant, including in situations in which the merchant customer is engaged in fraud, the transaction is typically “charged back” to the merchant and the purchase price is credited or otherwise refunded to the cardholder. In certain circumstances where we are unable to collect chargeback or refunds from the merchant’s account, or if the merchant refuses to or is unable to reimburse us for a chargeback or refunds due to closure, bankruptcy, or other reasons, we may bear the loss for the amounts paid to the cardholder. Our financial results would be adversely affected to the extent these merchants do not fully reimburse us for the related chargebacks. In addition, our exposure to these potential losses from chargebacks increases to the extent that we have provided working capital solutions to such merchants, as the full amount of the payment is provided up front rather than in installments. While most of our merchant agreements establish that the chargeback and refund liability risk is with the merchant, and would permit us to collect and retain reserves, we generally do not collect and maintain reserves from our merchants to cover these potential losses, and for customer relations purposes we sometimes decline to seek reimbursement for certain chargebacks. If we are unable to maintain our losses from chargebacks at acceptable levels, the payment network providers could fine us, increase our transaction fees, or terminate our ability to process payment cards. Any increase in our transaction fees or liability for incorrect charges could damage our business, and if we were unable to accept payment cards, our business would be negatively affected.

We have not encountered any significant chargeback of fraud issues to date. Nonetheless, this does not assure immunity from such risks in the future.

We are subject to costs and risks associated with new or changing laws and regulations and governmental action affecting our business.

We operate in a complex regulatory and legal environment and are subject to a wide variety of laws and regulations in the several jurisdictions in which we operate. Some of the laws and regulations in jurisdictions in which we operate that affect or may affect us include: those relating to anti-money laundering and cross-border and domestic money transmission; those relating to consumer products, product liability and consumer protection; those relating to financial services; those relating to the manner in which we advertise, market and sell products; labor and employment laws, including wage and hour laws; tax laws or interpretations thereof; bank secrecy laws; data protection and privacy laws and regulations; and securities and exchange laws and regulations. The laws and regulations specifically applicable to us may also change on the basis of a change in the nature of our products or services, or a change in the jurisdictions in which those products or services are being offered, including, but not limited to, as a result of acquisitions. There can be no guarantee that we will have sufficient resources to comply with new laws, regulations or government action, or to successfully compete in the context of a shifting regulatory environment. Moreover, these laws and regulations may change, sometimes significantly, as a result of political, economic and social events. Our ability to comply with applicable laws and rules is also largely dependent on the establishment and maintenance of compliance, review and reporting systems, as well as the ability to attract and retain qualified compliance and other risk management personnel. We cannot provide any assurance that our compliance policies and procedures will always be effective or that we will always be successful in monitoring or evaluating our risks. In the case of alleged non-compliance with applicable laws or regulations or suspension or cancellation of a license, we could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits, including by customers, for damages, restitution or other remedies, which could be significant. Any of these outcomes, individually or together, may among other things, materially and adversely affect our reputation, business, operating results and financial condition.

We also generate a significant portion of our revenue from customers operating in the regulated services sectors. Regulations in these sectors vary significantly among different countries and localities. In many cases, they may be unclear and may also change, sometimes dramatically.

From time to time, we may also acquire entities subject to local regulatory supervision or oversight. There are substantial costs and potential operational challenges involved in maintaining and renewing licenses, certifications, and approvals, and we could be subject to fines, other enforcement actions, and litigation if we are found to violate any of these requirements. There can be no assurance that we will be able to (or decide to) continue to apply for or obtain any licenses, renewals, certifications, and approvals in any jurisdictions. In certain markets, we may rely on local banks or other partners to process payments and conduct financial services transactions in local currency, and local regulators may use their authority over such local partners to prohibit, restrict, or limit us from doing business. The need to obtain or maintain licenses, certifications, or other regulatory approvals could impose substantial additional costs, delay or preclude planned transactions, product launches or improvements, require significant and costly operational changes, impose restrictions, limitations, or additional requirements on our business, products and services, or prevent us from providing our products or services in a given market.

Changes in tax law, changes in our effective tax rate or exposure to additional tax liabilities could affect our profitability and financial condition.

We carry out our business operations through entities in multiple foreign jurisdictions. As such, we are required to file corporate income tax returns that are subject to foreign tax laws. The foreign tax liabilities are determined, in part, by the amount of operating profit generated in these different taxing jurisdictions, as well as by other factors such as the internal services we provide within certain jurisdictions. Our effective tax rate, earnings and operating cash flows could be adversely affected by changes in the mix of operating profits generated in countries with higher statutory tax rates as well as by the positioning of our cash balances globally. or the internal services we provide in certain jurisdictions. If statutory tax rates or tax bases were to increase or if changes in tax laws, regulations or interpretations or in our business operations were made that impact us directly, our effective tax rate, earnings and operating cash flows could be adversely impacted.

Any such adverse changes in the applicability of tax to us could increase the levels of taxation payable by us, which would have an adverse effect on our business, financial condition, results of operations and prospects.

In addition to the possibility of a substantial tax burden being imposed on us, the risk that we may become subject to an increased level of taxation may result in us needing to change our corporate or operational structure, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Additionally, the tax authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements. For example, various levels of government and international organizations, such as the OECD and the EU, increasingly focus on future tax reform and any result from this development may create changes to long-standing tax principles, which could adversely affect our effective tax rate. The OECD has issued significant global tax policy changes that include both expanded reporting as well as technical global tax policy changes. Many countries in which we operate have implemented tax law and administrative changes that align with many aspects of the OECD policy guidelines. The breadth of this project may impact all multinational businesses by potentially redefining jurisdictional taxation rights, and could materially impact the law for transfer pricing and permanent establishment taxation. Additionally, tax authorities at the international, federal, state, and local levels are currently reviewing the appropriate tax treatment of companies engaged in internet commerce and financial technology. These developing changes could affect our financial position and results of operations. In particular, due to the global nature of the internet, it is possible that tax authorities at the international, federal, state, and local levels may attempt to regulate our transactions or levy new or revised sales and use taxes, VAT, digital services taxes, income taxes, or other taxes relating to our activities in the internet commerce and financial technology space. New or revised taxes, in particular, sales and use taxes, VAT, and similar taxes, including digital service taxes, would likely increase the cost of doing business. New taxes could also create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could have an adverse effect on our business and results of operations.

Furthermore, any changes in other jurisdictions to the political and social perception of running a business out of a tax-friendly jurisdiction (such as Malta) or any action by any tax authority to investigate our tax arrangements could result in adverse publicity and reputational damage for us, which could have an adverse effect on our business, financial condition, results of operations and prospects. The applicability of taxes to certain arrangements, transactions or structures may involve areas that are inherently subjective, requiring significant management judgments. If any applicable tax authority is successful in challenging our tax arrangements, we may be liable for additional tax and penalties and interest related thereto, which may have a significant impact on our business, financial condition, results of operations and prospects.

Transfer pricing rules may result in increased tax costs.

Some of the jurisdictions in which we operate have rules on transfer pricing that require intra-group transactions to be conducted on arm’s-length terms. Transactions conducted between and among us and our subsidiaries are made on a commercial basis by application of international guidelines and national regulations. As a consequence of globalization and growing world trade, tax authorities worldwide have increased their focus on transfer pricing with respect to cross-border intra-group transactions as part of protecting their respective country’s tax base. Transfer pricing is an inherently subjective area, requiring significant management judgments. In the event the tax authorities in the jurisdictions where we operate consider our current transfer pricing not to be on arm’s-length terms and were to succeed with such claims, this could result in an increased tax cost, including tax surcharges, penalties and interest, which could adversely affect our business.  

New and evolving regulations in respect of the protection of personal data and any failure to comply with these regulations could have a material adverse effect on our business and financial condition.

We are subject to laws relating to the collection, use, storage and transfer of the personal data of our service providers, end user, employees and clients, including in respect of personal financial information.

Several jurisdictions have implemented new data protection regulations, and others are considering imposing additional restrictions or regulations. We expect data protection regulations to continue to increase both in number, complexity and in the level of stringency. The entry into force of the General Data Protection Regulation (EU) 2016/679, or the GDPR, in the European Union prompted various Latin American countries to begin processes to reform their data protection regimes. For example, Brazil has implemented a comprehensive data protection regulation intended to mirror the GDPR called the Lei Geral de Proteção de Dados, or LGPD, and also has a Bank Secrecy Law (Complementary Law No. 105) that applies to certain regulated entities. In addition, certain of our global enterprise merchants may be subject to data protection regimes or subject to enhanced scrutiny of data protection practices by the applicable regulatory authorities, which could impact their operations and indirectly impact their business with us. In many cases, data protection regulations have strict measures regulating both the transfer of data externally, and also the storage and transfer of data internally among our employees in the course of their work and among our subsidiaries and affiliates. Moreover, these regulations may have conflicting and/or inconsistent requirements, and compliance with one data protection regime does not necessarily entail compliance with another data protection regime, and compliance with one data protection regime could potentially create conflicts in compliance with another data protection regime. In particular, we may transfer data across jurisdictions in the ordinary course of our operations, and we may not be able to ensure compliance with all applicable data protection regulations in all jurisdictions at all times. Any failure to comply with applicable data protection regimes could subject us to significant penalties and negative publicity, which could have a material adverse effect on our business, financial condition, reputation before our merchants and providers, and results of operations.

We collect, process, store, and use data, including personal information, which subjects us to governmental regulation and other legal obligations, including EU financial services regulation, particularly related to privacy, data protection and information security, marketing, and consumer protection laws across different markets where we conduct our business. Our actual or perceived failure to comply with such obligations could harm our business and/or result in reputational harm, loss of customers, material financial penalties and legal liabilities.

In the U.S. and other jurisdictions in which our services are used, we are subject to various privacy, data protection and information security, and consumer protection laws (including laws on disputed transactions), related regulations, and industry standards (e.g., PCI-DSS). If we are found to have breached such laws, regulations, or standards in any such market, we may be subject to enforcement actions that require us to change our business practices in a manner which may negatively impact our revenue, as well as expose ourselves to litigation, fines, civil and/or criminal penalties and adverse publicity that could cause our customers to lose trust in us, negatively impacting our reputation, brand and business in a manner that harms our financial position.

As part of our business, we collect personal information, as well as other potentially sensitive and/or regulated data from our consumers and the merchants we work with. As a result, we are subject to certain laws and regulations in the U.S. that restrict how personal information is collected, processed, stored, transferred, used and disclosed, as well as set standards for its security, implement notice requirements regarding privacy practices, and provide individuals with certain rights regarding the use, disclosure and sale of their protected personal information. For example, the FTC and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of personal information. Such standards require us to publish statements that describe how we handle personal information and choices individuals may have about the way we handle their personal information. If such statements that we publish are found to be untrue or inaccurate, we may be subject to government claims of unfair or deceptive trade practices, which could lead to regulatory investigations, significant liabilities and other consequences. Moreover, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTC Act. State consumer protection laws provide similar causes of action for unfair or deceptive practices. Some states, such as California and Massachusetts, have passed specific laws mandating reasonable security measures for the handling of certain personal information. Further, privacy advocates and industry groups have regularly proposed and sometimes approved, and may propose and approve in the future, self-regulatory standards with which we must legally comply or that contractually apply to us.

In addition, the GLBA regulates, among other things, the use of non-public personal information of consumers that is held by financial institutions. We may be considered a service provider to “financial institutions” and therefore subject to various GLBA-related contractual obligations, including requirements relating to the physical, administrative and technological protection of non-public personal financial information. Breach of the GLBA can result in civil and/or criminal liability and sanctions by regulatory authorities and/or contractual liability.

Moreover, in the U.S., both the federal and various state governments have adopted or are considering, additional laws, guidelines or rules for the collection, distribution, use and storage of information collected from or about consumers or their devices. For example, California enacted the CPRA in 2020, which requires new disclosures to California residents, imposes new rules for collecting or using information about California residents, and affords California residents new rights with respect to their personal information, including rights to opt out of certain disclosures of personal information. The CPRA provides for civil penalties for violations, as well as a private right of action for certain data breaches that is expected to increase data breach litigation. The effects of the CPRA and its implementing regulations, and uncertainties about the scope and applicability of exemptions that may apply to our business (including an exemption as to data that is subject to the GLBA), are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply. Additionally, the enactment of the CPRA is prompting a wave of similar legislative developments in other states in the U.S., which creates the potential for a patchwork of overlapping but different state laws. For example, since the CPRA went into to effect, comprehensive privacy statutes that share similarities with the CPRA are now in effect and enforceable in Virginia, Colorado, Connecticut, and Utah, and will soon be enforceable in several other states as well.

We are also subject to data privacy and security laws in several foreign jurisdictions which have laws and regulations which are more restrictive in certain respects than the U.S. For example, in the European Economic Area (“EEA”), we are subject to the EU GDPR and in the United Kingdom, UK GDPR, in each case in relation to our collection, control, processing, sharing, disclosure and other use of data relating to an identifiable living individual (personal data). The GDPR, and national implementing legislation in EEA member states, and the UK GDPR, impose a strict data protection compliance regime including: providing detailed disclosures about how personal data is collected and processed (in a concise, intelligible and easily accessible form); demonstrating that an appropriate legal basis is in place or otherwise exists to justify data processing activities; granting rights for data subjects in regard to their personal data (including data access rights, the right to be “forgotten” and the right to data portability); introducing the obligation to notify data protection regulators or supervisory authorities (and in certain cases, affected individuals) of significant data breaches; defining pseudonymized (i.e., key-coded) data; imposing limitations on retention of personal data; maintaining a record of data processing; and complying with the principal of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.

The EU GDPR and UK GDPR regulate cross-border transfers of personal data out of the EEA and the UK. Case law from the Court of Justice of the European Union (“CJEU”) states that reliance on the standard contractual clauses - a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism - alone may not necessarily be sufficient in all circumstances and that transfers must be assessed on a case-by-case basis. On October 7, 2022, President Biden signed an Executive Order on ‘Enhancing Safeguards for U.S. Intelligence Activities’ which introduced new redress mechanisms and binding safeguards to address the concerns raised by the CJEU in relation to data transfers from the EEA to the U.S. and which formed the basis of the new EU-US Data Privacy Framework (“DPF”), as released on December 13, 2022. The European Commission adopted its Adequacy Decision in relation to the DPF on July 10, 2023, rendering the DPF effective as an EU GDPR transfer mechanism to U.S. entities self-certified under the DPF. On October 12, 2023, the UK Extension to the DPF came into effect (as approved by the UK Government), as a UK GDPR data transfer mechanism to U.S. entities self-certified under the UK Extension to the DPF. We currently rely on the DPF to transfer certain personal data from the EEA to the U.S. and on the UK Extension to the DPF to transfer certain personal data from the UK to the U.S. We also currently rely on the EU standard contractual clauses and the UK Addendum to the EU standard contractual clauses and the UK International Data Transfer Agreement as relevant to transfer personal data outside the EEA and the UK with respect to both intragroup and third party transfers. We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue. In particular, we expect the DPF Adequacy Decision to be challenged and international transfers to the U.S. and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators. As the regulatory guidance and enforcement landscape in relation to data transfers continue to develop, we could suffer additional costs, complaints and/or regulatory investigations or fines; we may have to stop using certain tools and vendors and make other operational changes; we may have to implement revised standard contractual clauses for existing intragroup, customer and vendor arrangements within required time frames; and/or it could otherwise affect the manner in which we provide our services, and could adversely affect our business, operations and financial condition.

We are also subject to evolving EU and UK privacy laws on cookies, tracking technologies and e-marketing. In the EU and the UK under national laws derived from the ePrivacy Directive, informed consent is required for the placement of a cookie or similar technologies on a user’s device and for direct electronic marketing. The GDPR also imposes conditions on obtaining valid consent for cookies, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology. Recent European court and regulator decisions are driving increased attention to cookies and tracking technologies. If the trend of increasing enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, as seen in recent guidance and decisions continues, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, and subject us to additional liabilities. In light of the complex and evolving nature of EU, EU Member State and UK privacy laws on cookies and tracking technologies, there can be no assurances that we will be successful in our efforts to comply with such laws; violations of such laws could result in regulatory investigations, fines, orders to cease/change our use of such technologies, as well as civil claims including class actions, and reputational damage.

Restrictions on the collection, use, sharing or disclosure of personal information or additional requirements and liability for security and data integrity could require us to modify our solutions and features, possibly in a material manner, could limit our ability to develop new services and features and could subject us to increased compliance obligations and regulatory scrutiny. Non-compliance with data protection and privacy requirements may result in regulatory fines (which for certain breaches of the GDPR are up to the greater of €20 million/£17.5 million or 4% of total global annual turnover), regulatory investigations, reputational damage, orders to cease/change our processing of our data, enforcement notices, and/ or assessment notices (for a compulsory audit). We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm.

We may not be able to continue to expand our share of the existing payment processing markets or expand into new markets, which would inhibit our ability to grow and increase our profitability.

Our future growth and profitability depend upon the growth of the markets in which we currently operate and our ability to increase our penetration and service offerings within these markets, as well as the emergence of new markets for our services and our ability to successfully expand into these new markets. It is difficult to attract new merchants because of potential disadvantages associated with switching payment processing vendors, such as transition costs, business disruption and loss of accustomed functionality. There can be no assurance that our efforts to overcome these factors will be successful, and this resistance may adversely affect our growth. A merchant’s payment processing activity with us may also decrease for a variety of reasons, including the merchant’s level of satisfaction with our products and services, the effectiveness of our support services, pricing of our products and services, the pricing and quality of competing products or services, the effects of global economic conditions, or reductions in consumer spending levels.

Our expansion into new markets is also dependent upon our ability to adapt our existing technology and offerings, or to develop new or innovative applications, to meet the particular service needs of merchants in each new market. In order to do so, we will need to anticipate and react to market changes and devote appropriate financial and technical resources to our development efforts, and there can be no assurance that we will be successful in these efforts.  

We are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations.

We operate in jurisdictions that have a high risk for corruption, and we are generally subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations, including the Clean Company Act and the United States Foreign Corrupt Practices Act of 1977, as amended, or the FCPA and the Proceeds of Crime Act prohibit corporations and individuals from engaging in improper activities to obtain or retain business or to influence a person working in an official capacity. Both the Clean Company Act and the FCPA impose liability against companies who engage in bribery of government officials, either directly or through intermediaries. Applicable money laundering regulations require firms to put preventative measures in place and to perform know-your-customer procedures, including conducting customer identification and verification and undertaking ongoing monitoring. In addition, regulations require companies to keep records of identity and to train their staff on the requirements of the relevant money laundering regulations. Although we have a compliance program focused on the anti-corruption, anti-bribery and anti-money laundering laws, rules, and regulations that we believe are applicable to our business, we may still be subject to a requirement to change various aspects of our business or the manner in which we carry out our business in certain countries, or to fines, injunctions or other penalties levied by regulators in one or more jurisdictions. Violations of the anti-corruption, anti-bribery and anti-money laundering laws and regulations could result in criminal liability, administrative and civil lawsuits, significant fines and penalties, forfeiture of significant assets, as well as severe reputational harm and the loss of our banking or other relationships.

Any determination that we have violated the anti-money-laundering laws could have a material adverse effect on our financial condition, results of operations and future prospects. For example, the BSA requires us to report currency transactions in excess of US$10,000, including identification of the customer by name and social security number, to the IRS. This regulation also requires us to report certain suspicious activity, including any transaction that exceeds US$2,000 that we know, suspect or have reason to believe involves funds derived from illegal activity or is designed to evade federal regulations or reporting requirements and to verify sources of such funds. Substantial penalties can be imposed against us if we fail to comply with this regulation. If we fail to comply with these laws and regulations, the imposition of a substantial penalty could have a material adverse effect on our business, financial condition and results of operations.

If any person in the Cayman Islands knows or suspects, or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or money laundering, or is involved with terrorism or terrorist financing and property, and the information for that knowledge or suspicion came to their attention in the course of business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion. If the disclosure relates to criminal conduct or money laundering, the knowledge or suspicion must be reported to the Financial Reporting Authority of the Cayman Islands (the “FRA”), pursuant to the Proceeds of Crime Act (as revised) of the Cayman Islands. If the disclosure relates to involvement with terrorism or terrorist financing and property the knowledge or suspicion must be reported to a police officer of the rank of constable or higher, or the FRA, pursuant to the Terrorism Act (As Revised) of the Cayman Islands.

Such laws and regulations are subject to changes and evolving interpretations and application, including by means of legislative changes, administrative changes and/or executive orders, and it can be difficult to predict how they may be applied to our business and the way we conduct our operations, particularly as we introduce new products and services and expand into new jurisdictions. Any perceived or actual breach of laws, regulations, and standards could result in investigations, regulatory inquiries, loss of licensure, litigation, fines, injunctions, negative customer sentiment, impairment of our existing or planned products and services, or otherwise materially and adversely impact our business.

In addition, regulators may increase enforcement of these obligations, which may require us to make adjustments to our compliance program, including the procedures we use to verify the identity of our customers and to monitor our merchants’ transactions. Regulators may conduct audits of our compliance framework, which can include a review of all applicable records to verify identities of customers, reporting of suspicious transactions and transactional activity including monitoring processes implemented and all components of the compliance framework, and compliance with these audit processes can result in increased costs or subject us to potential enforcement proceedings. We face risks related to our ability to comply with existing or new anti-corruption, anti-bribery and anti-money laundering laws and regulations, or being required to comply with anti-corruption, anti-bribery and anti-money laundering laws and regulations applicable to our merchant customers, as we may not be able to comply fully with, or obtain appropriate exemptions from, such laws and regulations. Costs associated with fines or enforcement actions, changes in compliance requirements, or limitations on our ability to grow could harm our business, and any new requirements or changes to existing requirements could impose significant costs, result in delays to planned product improvements, make it more difficult for new customers to join our network and reduce the attractiveness of our products and services. Any perceived or actual breach of compliance by us with respect to applicable laws, rules and regulations could have a significant impact on our reputation as a trusted brand and could cause us to lose existing customers, prevent us from obtaining new customers, require us to expend significant funds to remedy problems caused by breaches and to avert further breaches and expose us to legal risk and potential liability.

ITEM 1B. Unresolved Staff Comments

None.

ITEM 1C. Cybersecurity

Risk Management and Strategy

We have designed and implemented an information security program that is tailored to our operations and infrastructure, the nature of our products and services, and the sensitivity of data. Our information security program consists of processes that are designed to identify, assess, and manage material risks from cybersecurity threats.

We have implemented cybersecurity risk management processes that include, for example, vulnerability assessments, application security assessments, penetration testing, third party security assessments, security audits, and ongoing risk assessments. In addition, we have implemented technical, physical, and organizational safeguards designed to mitigate material risks from cybersecurity threats, including, for example, depending on the environment or system: information security policies and standards, data protection policies and standards, security training and awareness campaigns, information protection processes, and systems monitoring for cybersecurity threats. Further, our assessment and management of material risks from cybersecurity threats are an important element of our overall enterprise risk management program and included in our annual enterprise risk assessment which we provide to senior management and the Board.

We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example: professional services firms (including legal counsel), threat intelligence service providers, cybersecurity consultants, cybersecurity software and managed service providers, penetration testing firms, and forensic investigators.

Governance

Our Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives. Senior leadership, including our cybersecurity consultant, regularly briefs the Board of Directors on our cybersecurity and information security posture and the Board of Directors is apprised of cybersecurity incidents deemed to have a moderate or higher business impact, even if immaterial to us. The full Board retains oversight of cybersecurity because of its importance. In the event of an incident, we intend to follow our detailed incident response playbook, which outlines the steps to be followed from incident detection to mitigation, recovery, and notification, including notifying functional areas (e.g., legal), as well as senior leadership and the Board, as appropriate. Our Cybersecurity consultant has extensive information technology and program management experience. We have implemented a governance structure and processes to assess, identify, manage, and report cybersecurity risks.

ITEM 2. Properties

Our corporate headquarters, which include the majority of our product development, sales, marketing, and business operations, is located at M Floor & 1^st Floor, No. 33, Jalan Maharajalela, 50150, Kuala Lumpur, Malaysia, supported by our United Kingdom branch located at 2 Portman Street, W1H 6DU, London, United Kingdom and Asian branch located at Lot 2-15, Labuan Time Square, Jalan Merdeka, 87007, Federal Territory of Labuan, Malaysia. Both properties are leased on a rolling contract basis. We believe this to be sufficient to meet our needs for the foreseeable future and that any additional space we may require will be available on commercially reasonable terms.

ITEM 3. Legal Proceedings

We are not a party to existing or pending material legal proceedings against us, and we have no knowledge of any threatened litigation, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 4. Mine Safety Disclosures

Not Applicable.

PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock trades on the OTC Expert Market under the symbol “FINR.”

Holders

As of September 30, 2024, the Company had 1,903 stockholders of record. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. 

We have never declared dividends on our common stock, and currently do not plan to declare dividends on shares of our common stock in the foreseeable future. We expect to retain our future earnings, if any, for use in the operation and expansion of our business. Subject to the foregoing, the payment of cash dividends in the future, if any, will be at the discretion of our Board and will depend upon such factors as restrictions in debt agreements, earnings levels, capital requirements, our overall financial condition and any other factors deemed relevant by our Board of Directors. 

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

ITEM 6. [Reserved]

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K/A. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023, as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.

Throughout this Annual Report on Form 10-K/A, references to “we,” “our,” “us,” the “Company,” or “Fintech Scion” refer to Fintech Scion Limited, individually, or as the context requires, collectively with its subsidiaries.

Overview

Fintech Scion Limited (“Fintech Scion”, the “Company”, “we”, “our”, or “us”) is a fintech enterprise poised to revolutionize the financial landscape through our digital Banking-as-a-Service (BaaS) platform. Our mission is to empower merchants by furnishing them with an integrated suite of tools, skills, and solutions that streamline payment services, unlocking a realm of secure, online, and fully managed transactions and settlements. We currently operate through our wholly-owned subsidiaries based in Malaysia and the United Kingdom.

At the core of our enterprise lies a sophisticated financial ecosystem, underpinned by a robust technological infrastructure. This infrastructure has been developed with the mission of empowering financial institutions to offer seamless, consolidated experiences across diverse verticals encompassing business-to-business, business-to-consumer, and consumer-to-business domains.

In an era where merchants are leveraging an array of software solutions and digital tools to bolster their competitive edge, our role has emerged as a pivotal enabler. The intricate challenge of managing disparate software systems sourced from various providers has become an impediment for merchants of all sizes to seamlessly embrace payments.

Our current clientele encompasses an array of enterprises and organizations, spanning varied sectors, including, but not limited to the management consultancy services, development of software and programming activities, e-commerce, tours and entertainment operations, information technology and investment banking all with a common objective: to minimize the intricacies and costs associated with fund transfers. We extend our services to online businesses, providing comprehensive solutions encompassing payment collection, cross-border transactions, FX services, and corporate bank accounts.

Our cutting-edge payments platform boasts a comprehensive suite of integrated payment products and services tailored to various channels–be it in-store, online, or through mobile and tablet interfaces. This suite encompasses end-to-end payment processing for an array of payment types, merchant acquiring and issuing, diverse methods of mobile and contactless payments, and QR code-based solutions. Complementary software integrations, virtual international bank account numbers (IBAN), integrated mobile point-of-sale (POS) solutions, risk management tools, and robust reporting and analytics capabilities augment our platform's offerings.

Our payment services seamlessly integrating e-money remittance solutions within the global marketplace, spanning open banking and credit card processing to wire transfers. Our unique Software-as-a-Service (SaaS) model empowers clients to focus on their core operations and sales while we handle the intricate aspects of payment processing. This streamlined approach facilitates efficient onboarding, elevates customer retention, and cultivates new revenue streams.

Our vision transcends boundaries as we aspire to cement our position as a global leader in the payments and banking sphere. Our team, comprising seasoned experts across operations, technology, sales, legal, compliance, and more, forms the backbone of our enterprise.

The crux of our vision lies in simplifying and automating global fund transfers while upholding the highest standards of security. We endeavor to furnish merchants with an all-encompassing Merchant Payment Ecosystem (MPE), a unified platform catering to their diverse payment needs. Our technology leverages the Gateway Cashier Technology to deliver unparalleled services.

Our diverse merchant base ranges from small to medium-sized enterprises, or SMEs, to large enterprises, spanning sectors such as hospitality, e-gaming, consulting, retail, marketing, and e-commerce. While we are rooted in the SaaS framework, our belief in democratizing technology has led us to offer an initial free platform, generating revenue through value-added services.

Our revenue streams encompass processing fees based on payment volumes, a hybrid model featuring fixed transaction fees and monthly charges, and diverse layers that allow us to cross-sell services and nurture lasting client relationships. Currently, we derive all our revenues from our operating subsidiaries based in Malaysia and the United Kingdom. For the fiscal year ended December 31, 2023, we recorded revenue of $2,420,184, with 81.9% of such revenue being derived from our operating subsidiaries in the United Kingdom and the remaining 18.1% from our Malaysian subsidiaries. We also recognized a net loss of $40,662,716 during the fiscal year ended December 31, 2023, primarily resulting from an impairment loss of $39,136,871 (see Note 5 to the consolidated financial statements for a discussion of the Company’s Goodwill).

In the competitive landscape, our distinct layers constitute the heart of our approach, underpinned by a commitment to exemplary customer service. We understand the nuanced needs of various merchants and have meticulously curated layers tailored to their requirements, including cutting-edge technology, diverse payment processing, integrated banking, and strategic licensing solutions. These layers collectively form the bedrock of our operations, fostering seamless merchant experiences and propelling us to the forefront of the industry.

As we chart our course, we stand poised to not only cater to our diverse clientele but to exceed their expectations. Our pursuit of excellence remains unwavering as we continue to innovate, expand our offerings, and forge new partnerships to reshape the payments and banking landscape.

Results of Operations  

For the year ended December 31, 2023 compared to December 31, 2022

Revenue

We recognized revenue from transaction fees earned through financial payment and settlement services of $2,420,184 for the year ended December 31, 2023, a decrease of $56,747 from sales of $2,476,931 for the year ended December 31, 2022. The reduction in revenue primarily resulted from a restructuring of revenue streams and to the surrendering of our Credit Token license. Revenue recognized during the year are mainly from transaction fees earned through financial payment and settlement services provided by FintechCashier Asia P.L.C. (“FintechAsia” and previously known as “HWGG Capital P.L.C.”) and Fintech.  

Our revenue are mostly generated from our services rendered and therefore, we categorized our revenue as transaction fees, except for whitelabelling. Our revenue can be further categorized as follows:

 Cost of Revenue

Cost of revenue for the year ended December 31, 2023 was $688,630 compared to $415,010 for the year ended December 31, 2022. The increase for the year ended December 31, 2023 resulted primarily from the restructuring transactions that occurred during 2022; acquisition of FintechAsia and acquisition of Fintech as mentioned in Corporate History and Structure. In 2023, a full-year Cost of Revenue was recorded for both FintechAsia and Fintech, whereas in 2022, the Company only recorded FintechAsia’s Cost of Revenue after its acquisition date. Furthermore, the increase in Cost of Revenue in 2023 was also due to increase in processing fees for our business transaction.

Cost of revenue for the year ended December 31, 2022 has been restated from $430,281 (in the Original Filing of Form 10-K) to $415,010 due to recognition of exclusion of results of operation of the Group up to acquisition date.

Gross Profit

Gross profit for the year ended December 31, 2023 was $1,731,554 compared to $2,061,921 for the year ended December 31, 2022. The decrease resulted primarily from the restructuring of revenue streams as described above, increase in Cost of Revenue and the reduction of sources of revenue from FintechAsia and Fintech. 

Operating Expenses

For the year ended December 31, 2023, we incurred total operating expenses in the amount of $42,552,657 comprised of selling expenses of $nil, general and administrative expenses of $3,415,786, and impairment of goodwill of $39,136,871. For the year ended December 31, 2022, we incurred total operating expenses in the amount of $1,246,302, comprised of selling expenses of $977 and general and administrative expenses of $1,245,325. The decrease of $977 or 100% for the selling expenses, and the increase of $2,170,461, or 174% for the administrative expenses, and the increase of $39,136,871 or 100% for the impairment of goodwill, caused total operating expenses to increase by $41,306,355 or 3,314%.

Selling expenses refer the marketing costs incurred by FintechAsia. To align with the group expenses, the Company reclassified all marketing costs into general and administrative expenses in 2023, resulting in $nil selling expenses for the year.

The administrative expenses of the Company increased due to the preparation work for the Nasdaq listing, which saw a significant increases in legal fees ($264,373 in 2023 and $nil in 2022), director fees ($124,000 in 2023 and $nil in 2022) and share based payments amounting $52,000 in 2023 and $nil in 2022.

The increase in the Fintech’s expenses in 2023 also contributed to higher general and administrative expenses in the Company. These expenses included a 69% increase in salary costs, a 3,990% rise in consultancy fees, a 175% increase in audit fees, a 161% increase in rental expenses, a 245% increase in travel expenses, and the research and development costs totaling $409,866 in ($nil in 2022), a cost incurred for new development of fintech solution purposes.

Liquidity and Capital Resources

To date we have funded our operations primarily through the sale of equity and debt securities. As of December 31, 2023, we had approximately $3,765,959 in cash and marketable securities, working capital of approximately $1,591,522 and an accumulated deficit of approximately $40,140,592. Net cash generated by operating activities was $295,531 and $414,231 for the years ended December 31, 2023 and 2022, respectively. We incurred a loss of approximately $40,661,803 and a profit of $748,039 for the years ended December 31, 2023 and 2022, respectively. We believe that our existing cash as of December 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the date that our audited financial statements are available to be issued.

For the year ended December 31, 2023, we had a cash balance of $3,765,959. For the year ended December 31, 2023, net cash generated by operating activities totaled $295,531, net cash used in investing activities totaled $12,496 and net cash used in financing activities totaled $311,858. The resulting change in cash for the period was $25,419.

For the year ended December 31, 2022, we had a cash balance of $3,791,378. For the year ended December 31, 2022, net cash generated by operating activities totaled $414,231, net cash generated by investing activities totaled $3,422,146 and net cash used in financing activities totaled $180,120. The resulting change in cash for the period was $3,665,324.

For the year ended December 31, 2023, we had current liabilities of $2,755,862, including $755,040 due to related parties, other payables of $1,953,160 and accounts payable of $47,662. 

For the year ended December 31, 2022, we had current liabilities of $4,943,467, including $2,463,833 due to related parties, other payables of $1,861,979 and accounts payable of $617,655. 

For the years ended December 31, 2023 and December 31, 2022, we had net assets of $18,322,482 and $58,881,794, respectively.

For the year ended December 31, 2023, we have recognized goodwill of $16,657,653 compared to $55,794,524 for the year ended December 31, 2022. After completing our annual impairment review for each reporting unit during the fourth quarter of 2023, we concluded that goodwill of Fintech was impaired in the current year and an impairment loss of $39,136,871 has been recorded. 

Cash Flows

The following table sets forth summary cash flow information for the periods presented:

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons.

Critical Accounting Policies and Estimates

Goodwill and Intangible Assets – The Company evaluate the carrying value of goodwill and indefinite life intangible assets annually, or whenever events or circumstances indicate that the fair value is below its carrying amount. The Company evaluates the carrying value of finite life intangible assets whenever events or circumstances indicate the carrying value may not be recoverable. Significant assumptions are required to estimate the fair value of goodwill and intangible assets, most notably estimated future cash flows generated by these assets and risk-adjusted discount rates. As such, these fair value measurements use significant unobservable inputs. Changes to these assumptions could require us to record impairment charges on these assets.

In our annual impairment test in the fourth quarter of 2023, all our reporting units exceeded their carrying values by more than 50 percent. Fair value was determined using income and market approaches. Fair value under the income approach was determined by discounting to present value the estimated future cash flows of the reporting units. Significant assumptions are incorporated into the income approach, such as estimated growth rates, forecasted operating expenses and risk-adjusted discount rates. Fair value under the market approach utilized the guideline public company methodology, which uses valuation indicators determined from other businesses that are similar to our reporting units.

Significant unobservable inputs utilized in the income approach valuation method were the discount rate of 25.05% and the long-term growth rate of 1.50%. Significant increases (decreases) in growth rates, control premiums and multiples, assuming no change in discount rates, would result in a significantly higher (lower) fair value measurement. Significant decreases (increases) in discount rates, assuming no changes in growth rates, control premiums and multiples, would result in a significantly higher (lower) fair value measurement.

Future impairment in our reporting units could occur if the estimates used in the income and market approaches change. If our estimates of profitability in the reporting unit decline, the fair value estimate under the income approach will decline. Additionally, changes in the broader economic environment could cause changes to our estimated discount rates and comparable company valuation indicators, which may impact our estimated fair values. Further, changes in foreign currency exchange rates could increase the cost of services from foreign suppliers, which could reduce reporting unit profitability. 

There are no material changes in the critical accounting policies set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Please refer to Note 2 Summary of Significant Accounting Policies of the Financial Statements for disclosures regarding the critical accounting policies related to our business.

Recently Issued Accounting Standards

Our recently issued accounting standards are included in Note 2 Summary of Significant Accounting Policies of the Financial Statements for disclosures regarding the critical accounting policies related to our business.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

ITEM 8. Financial Statements and Supplementary Data

FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fintech Scion Ltd (the Company) as of December 31, 2023 and 2022, and the related consolidated statement of operations and comprehensive income (loss), changes in equity, and cash flow for each of the two years in the period ended December 31, 2023 and 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the result of its operations and its cash flow for each of the two years in the period ended December 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States.

Restatement of the 2023 Financial Statement.

As discussed in Note 14 to the financial statements, the accompanying financial statements as of December 31, 2023 and for the period from January 1, 2022 through December 31, 2022 have been restated.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates.

Goodwill

Critical Audit Matter Description

As reflected in the Company’s consolidated financial statements, at December 31, 2023, the Company’s goodwill was $16,657,653 (2022: $55,794,524). As disclosed in Note 5 to the financial consolidated financial statements, the Company’s evaluation of goodwill for impairment involves the comparison of the fair value of the reporting unit to its carrying value. The Company uses the discounted cash flow model to estimate fair value which requires management to make significant estimates and assumptions related to forecasts of future revenue and operating margin. In additional, the fair value estimates of the reporting units were sensitive to changes in significant assumptions such as discount rates, expected future cash flows, long-term growth rates and comparable company earnings multiples. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. Significant management judgment was required to forecast future revenue and operating margin to estimate the fair value of the reporting unit. In turn, a high degree of auditor judgment and an increase extend of audit effort were required when performing.

As discussed in Note 5 to the financial statements, the Company recognized goodwill of $16,657,653 (2022: $55,794,524) being the balance of goodwill deriving from the reverse acquisition that has occurred during the year ended December 31, 2022. As a result of the significant carrying amount of goodwill recognized, any further goodwill impairment will cause a significant adverse financial impact on the Company, and that could raise substantial doubt about the Company’s ability to continue as a going concern.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenue and operating margin and selection of comparable company valuation indicators

Related party balances and transaction

Critical Audit Matter Description

As disclosed in Note 10 to the financial consolidated financial statements, the Company conducted transactions with its related parties and affiliates during the normal course of its business in 2023. The Company has entered into a number of transactions with these related parties, including loan from ex-director and company expenses paid by the director. Auditor judgment was involved in assessing the sufficiency of the procedures performed to identify related parties and related party transactions of the Company.

How the Critical Audit Matter Was Addressed in the Audit

We performed the following procedures to evaluate the identification of related parties and related party transactions by the Company:

/s/ Pan-China Singapore PAC (6255)

Chartered Accountants 

Singapore  

May 9, 2024

Except for the effects of the restatement discussed in Note 14 as to which the date is October 28, 2024.

We have served as the Company’s auditor since 2021

 FINTECH SCION LIMITED   

CONSOLIDATED BALANCE SHEETS (AS RESTATED)

 (Stated in US Dollars) 

The accompanying notes are an integral part of the consolidated financial statements.

FINTECH SCION LIMITED 

CONSOLIDATED STATEMENTS OF INCOME OR LOSS AND COMPREHENSIVE INCOME OR LOSS (AS RESTATED) 

 (In U.S. dollars) 

The accompanying notes are an integral part of the consolidated financial statements.

FINTECH SCION LIMITED 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (AS RESTATED) 

 (Stated in US Dollars) 

The accompanying notes are an integral part of the consolidated financial statements.

FINTECH SCION LIMITED  

CONSOLIDATED STATEMENTS OF CASH FLOWS (AS RESTATED) 

The accompanying notes are an integral part of the consolidated financial statements.

FINTECH SCION LIMITED 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

 (In U.S. dollars)

Fintech Scion Limited (“the Company”) previously known as HWGC Holdings Limited, incorporated in Nevada.

The Company holds the following equity interests in its subsidiaries:

The Company is previously engaged in direct selling industry and online shopping platform primarily through its operating entities in Malaysia. On December 30, 2022, the Company restructured after the consummation of two share exchange agreements and the disposal of ASB and VOM. The Company upon the restructuring, offers digital banking services by providing the tools, skills, and solutions to facilitate payment services to merchants, offering a variety of secured, online and fully managed transactions and settlements.

Restructuring Transactions

The following restructuring transactions has occurred during the year ended December 31, 2023 and 2022:

Acquisition of FintechAsia

On July 21, 2022, the Company entered into a share exchange agreement with FintechAsia. Prior to the consummation of the share exchange agreement, FintechAsia is also under the control of the Company’s management. Under this share exchange agreement, the Company is to acquire all issued and outstanding ordinary shares of FintechAsia in exchange for an aggregate of $55,000,000. The number of exchange shares were calculated based on $0.60 share price. The number of shares of common stock of the Company issued upon consummation of the share exchange agreement was 91,666,667 shares.

On November 15, 2022, the Company completed the acquisition of FintechAsia upon the consummation of the share exchange agreement with the shareholders of FintechAsia.

HCS and HKZ become the subsidiaries of the Company upon the completion of the acquisition of FintechAsia.

The acquisition of FintechAsia is accounted for as a reorganization of entities under common control. As a result, the Company measured the recognized assets and liabilities combined at their historical cost at the acquisition date. The difference between consideration paid and assets and liabilities received are presented as a component of equity; merger reserves and additional paid-in-capital.

The number of common stock outstanding upon the consummation of the share exchange agreement was 97,075,977.

Acquisition of Fintech

On August 9, 2022, the Company entered into a share exchange agreement with Fintech. Under this share exchange agreement with Fintech, the Company acquired all issued and outstanding ordinary shares of Fintech from the Fintech’s shareholders in exchange for an aggregate of $61,000,000. The number of exchange shares were calculated based on $0.60 share price. The number of shares of common stock of the Company issued upon consummation of this share exchange agreement was 101,666,666 shares.

On November 30, 2022, the Company completed the acquisition of Fintech upon the consummation of the share exchange agreement with the shareholders of Fintech.

FDS and FDC become the subsidiaries of the Company upon the completion of the acquisition of Fintech.

Upon consummation of the share exchange with Fintech, the owners and management of Fintech have voting and operation control of the Company. This gives effect to the reverse acquisition transaction (“reverse acquisition”). The Company recognized goodwill arising from the excess in purchase consideration as compared to the estimated fair value of the Company.

In determining the purchase consideration for both the HWGG and Fintech acquisition, the Company adopted the acquisition date fair value at $0.60, which is also the most reliable reference estimate which approximate the quoted price of the Company at acquisition date.

The number of common stock outstanding upon the consummation of the share exchange agreement was 198,742,643.

Goodwill recognized is further disclosed in Note 5: Goodwill.

Disposal of ASB & VOM

On December 30, 2022, the Company entered into a stock purchase agreement with Mr Leong Yee Ming, the previous director and CEO of the Company, and for the purposes of the assignment of certain intercompany debt.

Pursuant to the terms of the agreement, the Company sold to Mr Leong, all issued and outstanding shares of ASB and VOM, for an aggregate purchase price of RM4,500,002 (approximately $1,124,998). The purchase price was paid by Mr Leong’s assumption of a certain amount of intercompany debt owed by the Company to ASB.

Acquisitions of Assets & Termination

On October 11, 2023, the Company entered into an Asset Conveyance Agreement (the “Purchase Agreement”) with CICO Digital Solutions Limited, a British Columbia company (“CICO” and a related party company that has a common control by a major shareholder of the Company). The Purchase Agreement provided for the acquisition by the Company of substantially all of the assets of CICO (the “Assets”) related to CICO’s business of providing a service platform and software application for payment services from CICO. As consideration for the transfer and sale of the Assets, the Company issued CICO 100,000,000 restricted shares of common stock of the Company, par value $0.001 per share (the “Shares”).

On December 27, 2023, the Company and CICO mutually and voluntarily agreed to unwind the transaction contemplated by the Purchase Agreement. Upon termination, each of the parties to the Purchase Agreement were relieved of their respective rights, liabilities, expenses and other obligations under the Purchase Agreement. In connection therewith, CICO transferred the Shares back to the Company for cancellation upon receipt. The Shares were cancelled and removed from the Company’s issued and outstanding shares of common stock on January 30, 2024.

Basis of presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s financial statements are expressed in U.S. dollars.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. On consolidation, all intercompany balances and transactions are eliminated.

Use of estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Significant areas of estimate include useful lives of property and equipment, impairment of long-term assets and deferred income tax obligations. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. 

Foreign currency translation and transactions

The functional currency of the Company is United States Dollar (US Dollars). The  Company translates the financial statements of its foreign subsidiary from the local (functional) currency into US Dollars using the year or reporting period end or average exchange rates in accordance with the requirements of Accounting Standards Codification subtopic 830-10, Foreign Currency Matters (“ASC 830-10”). Assets and liabilities of these subsidiaries were translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates in effect for the periods presented. Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders’ equity.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments, which are unrestricted from withdrawal or use, and which have original maturities of three months or less when purchased.

Accounts receivable

Accounts receivable are recognized and carried at original invoiced amount less an allowance for any potential uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. The Company generally does not require collateral from its customers. For the year ended December 31, 2023 and 2022, the Company wrote down $39,310 and $nil respectively, of its accounts receivable were written off as bad debts.  

Fair value of financial instruments

FASB ASC 820, “Fair Value Measurement,” specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). In accordance with ASC 820, the following summarizes the fair value hierarchy:

Level 1 Inputs – Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

Level 2 Inputs – Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3 Inputs – Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurements.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurements. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. As of December 31, 2023 and 2022, none of the Company’s assets and liabilities was required to be reported at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash, accounts receivables, payables and accrued liabilities, approximate their fair values due to the short-term nature of these financial instruments. There were no changes in methods or assumptions during the periods presented.

Inventories

Inventories consist of finished goods and prepaid cards. Inventories are stated at lower of cost or net realizable value, with cost determined on a weighted-average method, and not to exceed net realizable value. The Company writes down its inventory balances for obsolete amounts estimated on an individual basis for the finished goods. For the year ended December 31, 2023 and 2022, the Company wrote down $nil and $nil respectively, of its inventories that have been obsolete.

Goodwill

Goodwill is not amortized but is subject to annual impairment tests. Goodwill has been assigned to reporting units. Potential impairment of a reporting unit is identified by either comparing a reporting unit’s estimated fair value to its carrying amount or doing a qualitative assessment of a reporting unit’s fair value from the last quantitative assessment to determine if there is potential impairment. We may do a qualitative assessment when the results of the previous quantitative test indicated the reporting unit’s estimated fair value was significantly in excess of the carrying value of its net assets and we do not believe there have been significant changes in the reporting unit’s operations that would significantly decrease its estimated fair value. If a quantitative assessment is performed, the fair value of the reporting unit and the fair value of goodwill are determined based upon a discounted cash flow analysis and/or use of a market approach by looking at market values of comparable companies. Significant assumptions are incorporated into our discounted cash flow analyses such as forecasted net sales, revenue growth rates, forecasted operating expenses and risk-adjusted discount rates. We perform this test in the fourth quarter of the year or whenever events or changes in circumstances indicate that the fair value of the reporting unit is more likely than not below its carrying amount. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded in the amount that the carrying value of the reporting unit exceeds the fair value. See Note 5 for more information regarding goodwill.

Impairment of Long-Lived Assets

The Company periodically reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset.

Intangible assets

Intangible assets primarily include trademarks and trade secrets with indefinite lives and customer-relationships with finite lives. Intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis, or more frequently if indicators of impairment are present. Indefinite lived intangible assets are assessed using either a qualitative or a quantitative approach. The qualitative assessment evaluates factors including macro-economic conditions, industry and company-specific factors, legal and regulatory environments, and historical company performance in assessing fair value. If it is determined that it is more likely than not that the fair value of the intangible asset is less than its carrying value, a quantitative test is then performed. Otherwise, no further testing is required. When using a quantitative approach, the Company compares the fair value of the intangible asset to its carrying amount, including goodwill. If the estimated fair value of the intangible asset is less than the carrying amount of the intangible asset, impairment is indicated, requiring recognition of an impairment charge for the differential.

Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company reviews for impairment indicators of finite-lived intangibles and other long-lived assets as described in the “Impairment of Long-Lived Assets” significant accounting policy.

Property and equipment, net

Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: 

 Schedule of property, plant and equipment estimated useful lives

The residual values, useful lives and methods of depreciation of property and equipment are reviewed and adjusted if appropriate, on an annual basis.

Leases

The Company assesses, at the inception of contract, whether it contains a lease. A contract is classified as a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any indirect costs incurred.

The right-to-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-to-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses and adjusted for certain remeasurements of the lease liability, if any.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be determined, the Company’s incremental borrowing rate. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payment arising from a change in an index or rate, or changes in assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

Revenue recognition

The primary source of our revenue is the transaction fees from financial payment and settlement services.

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Revenue is generated through delivery services. Revenue is recognized when a customer receives services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those services. The Company applies the following five-step model in order to determine this amount:

(i)     identification of the services in the contract;  

(ii)    determination of whether the services are performance obligations, including whether they are distinct in the context of the contract;  

(iii)   measurement of the transaction price, including the constraint on variable consideration;  

(iv)   allocation of the transaction price to the performance obligations; and